$2m in 22 months - Rob's story ..

[chilliaa]

Seeing as though Ian and Jan started in '72, that's 37 years.....a tad different from 15. Your (+) symbol is more important than the figure in front of it. I guess I'm not as patient as Ian and Jan.




100% agreed.

This statement is misleading. I am sure that Ian and Jan has sufficient cash flow from property investments to lead a very comfortable life much earlier than 37 years (look when Jan started writing her books in the 1990's).

Sure there are faster ways to create wealth, but often increased return equals increased risk (and this includes commercial property).

In my opinion, there is no safer way for the average australian to acquire an alternative nest egg to superannuation than through SLOWLY accumulating a portfolio of averaged priced residential properties.

Where most people come unstuck is they listen to people who have turbo charged their wealth creation strategy (ie 0-130 properties in 3 years etc) without fully understanding the risks of such strategies and that such strategies MAY work within a certain time frame, but they cant be replacated over MOST time frames.

I strongly suggest reading:
http://www.somersoft.com/forums/showthread.php?t=27049

The other great thing about slowly investing in residential properties, is that it is a set and forget strategy. This allows most people to concentrate on their most productive asset: THEIR EMPLOYMENT CAREER.

 

[pully]

This is why its important in my opinion to buy a residential property only when it can approximate cash flow neautrality, either on itself or through revenovations and development.

You also must give due consideration that property price cycles and rent cycles may not occur together. From 2001-2006 rents hardly moved yet property prices whent gang busters. Now the rental cycle is really moving, yet property prices are more stagnant.

I still feel its possible to one day just live off the rents from your residential property portfolio. You just have to acquire more property than is needed. Then as you approach retirement, you sell some of the properties to pay off debt and just live of the rent proceeds of the remaining properties.
This is the strategy originally devised by Jan Somers, and if it worked for her it can work for you, but it involves a 15 year+ time horizon, its no get rich quick scheme and thats why i like it.

The trouble is too many people try to turbo charge their investments, and often get themselves into hot water. Its also why i am very suspicious of all those property spruiking seminars.

agree agree.
nothing wrong with slow and steady.
time does work like magic.
its an expensive business up front to purchase. especially the govt fees and charges.
collecting lots of property quickly is ok if affordable in long run.
but there is the potential for difficulties if the pace is manic rather than considered. in my opinion.
but i do not think it is easy to overcommit lately. money is harder to get although cheap for now.
regards

 

[oracle]

Seeing as though Ian and Jan started in '72, that's 37 years.....a tad different from 15. Your (+) symbol is more important than the figure in front of it. I guess I'm not as patient as Ian and Jan.

This is a quote from Ian Somers interview...

But in fact, we owned sufficient property to be financially independent within 20 years of purchasing our first house, and even then, with what we now know, we did a lot of things we could have done better.

Read full interview here

Considering they didn't know all the tricks of Residential property investing when they started I reckon they did alright within the first 20 years. Maybe they would have achieved the same results a lot earlier had they known all the tricks they probably know now.

Cheers,
Oracle.

 

[tarah]

Great story Rob! Love your advice about the things you learnt along the way!

You will definitely have 10 properties by 2010 and we can have fish & chips to celebrate!!

 

[Dazz]

Wow - just saw that litany of deleted posted -looks like I touched a nerve.

Sorry Sim. Sorry Rob.

 

[chilliaa]

Great story Rob! Love your advice about the things you learnt along the way!

You will definitely have 10 properties by 2010 and we can have fish & chips to celebrate!!

The important point from Rob's story is that IT CAN BE DONE.
Maybe the current period and near term future period will be such that it wont be appropriate to replicate Rob's story, who knows???
But the point is that here we have average australians (and please Rob, im not saying you are average, im just trying to make a point), that look at the market at different points in time, have a positive mind frame, that want to try to do something pro-active to set themselves up financially for the long term.

For myself i learnt alot from Keith's interview. Especially regarding using surplus LVR in property to invest in shares. Instinctively i knew that 2007 wasnt the time to START such a strategy, in 2008, i firstly used my own capital but as the share market became 'cheaper' i sensed an opportunity to replicate Keith's strategy (and i am not saying this is a suitable time for anyone to do this now, there are risks and very good long term opportunities, but i emphasise the risk of the share market at this point in time if you are a newbie).

This is what makes Somersoft such a great forum. There is no fixed investment strategy, you must enact the actions that fit your risk profile, but there are so many alternative strategies in this forum, that you can really learn from others. Often you have to have patience, because the strategies used by some people are only appropriate in certain time frames, but like life, like the world, like mother nature, things move in cycles, the key is to look at how other people have made successful investments, and wait for the opportunity in the cycle to replicate their investments.

 

[natecv8]

Thanks, Rob, for sharing your story.

Yours has been a very inspiring example for a keen, novice investor such as myself. Your positive attitude and humble approach is very refreshing.

 

[HandyAndy888]

Thanks Rob, great read...really liked the fact that you turned around after realising your Dad was onto something....that must have taken balls...well done.

 

[Piston Broke]

Sure investing in real estate is no get rich qwik scheme, but paying @271 per IP, per week is safe way to do it?
I do agree that it can be done by anyone.
Anyone willing to pay $271+ wk, can purchase an IP.
I can go out and by 5 tomorrow. And then wait for the rupture & Judgement Day
But that's not investing, it's working & slaving for others.
When you invest, the funds work for you not viceversa.
Until that point it's a liability.
Why would I pay such a premium when repos are at high levels and in the midst of a recession?
Now if you take the long term plan to buy & hold you eventually find your cashflow disappears, even if you buy bargains.
So you need specifically invest for it.

chilliaa that's just speculation about Ian & Jan. "Financially dependent" means many different things and it most likely did'nt all come from IP investing.

 

[VBman]

Congrats!
Just a question, you're a bit vague on what you started with, You got half ur wife's stuff, you got 1 complete property and an undisclosed sum of cash. Seems like a bit of a headstart to me, I reckon the hardest part of the whole process would be developing your first 200k of equity?

 

[Rob Williams]

Congrats!
Just a question, you're a bit vague on what you started with, You got half ur wife's stuff, you got 1 complete property and an undisclosed sum of cash. Seems like a bit of a headstart to me, I reckon the hardest part of the whole process would be developing your first 200k of equity?

Yes, I was a bit vague. I'm happy to disclose what I need to in order to encourage others to "have a go", but don't want to disclose my entire balance sheet to the world.
I didn't get half my wife's stuff. She ended up with WAY more than I did, but chose to do nothing with it. She believes scrimping and saving is the way of the future.
The unit I ended up with was valued at around $180K in March 2007 (now $270k) and had a small mortgage (<$20k) against it.
I would imagine that I would have had a net worth at the time comparable to what a lot of people in my age group would have as equity in their PPOR.
I also had only one income, private school fees to pay and nearly $1,000pm child support. I'm not complaining. Just trying to illustrate that I didn't start off with a huge head start. It's what I chose to do with my disposable income and asset base that's the real point of the story.

 

[Piston Broke]

Maybe my post did'nt quite explain that from what I see, Rob you are not "ordinary". You are way above ordinary.
I very much doubt that an "ordinary" or average person can afford those outgoings, let alone have that much outgoings and still think it's ok.
It's almost 35k yr! And that's before you spend a single $.
Yes anybody can start the road to being in that position, but not anybody
can go out and create such outgoings within that timeframe and be able to then afford to wait it out.

 

[vincenzo]

Maybe my post did'nt quite explain that from what I see, Rob you are not "ordinary". You are way above ordinary.
I very much doubt that an "ordinary" or average person can afford those outgoings, let alone have that much outgoings and still think it's ok.
It's almost 35k yr! And that's before you spend a single $.

Most people i know will blow $35k+ on outgoings, which is all trivial crap, and the left over ~$15-20k of thier wage is spent on essentials like food, water, gas & electricity.

I agree that Rob is way above ordinary, as in way smarter than ordinary.

 

[chilliaa]

Maybe my post did'nt quite explain that from what I see, Rob you are not "ordinary". You are way above ordinary.
I very much doubt that an "ordinary" or average person can afford those outgoings, let alone have that much outgoings and still think it's ok.
It's almost 35k yr! And that's before you spend a single $.
Yes anybody can start the road to being in that position, but not anybody
can go out and create such outgoings within that timeframe and be able to then afford to wait it out.

I love these sought of posts.
I can just imagine in future years if Rob makes it big time, yeah Rob did it, but thats because his income was so large, the average australian would never be able to do such things, or even better, yeah but Rob did it, when it was more appropriate to invest in property as a long term wealth creation strategy, unfortunately today its a different game.

A bit like your comment that the Somers didnt make all their wealth from residential property: technically not a lie, but im sure thats where the vast proportion of their wealth is both sourced and derived from.

But then its always easier to sit on the sidelines, and say why someone else has an easier road to easy streat.

 

[Piston Broke]

"but im sure thats where the vast proportion of their wealth is both sourced and derived from."

You don't know that, your speculating again. It also means making it up.
I don't sit on the side lines, I been doing this long before most here even thought about it. And those before me long before Ian & Jan contemplated it.
I know what happens in this game before most even see it in the rear view mirror. And I know what has happened behind the media embellishments.
My retirement plan was already in place before I was eighteen, but the date got postponed due to boredom.

btw I do like their books very much, they are very detailed, specific & clear.

 

[vincenzo]

"but im sure thats where the vast proportion of their wealth is both sourced and derived from."

You don't know that, your speculating again. It also means making it up.
I don't sit on the side lines, I been doing this long before most here even thought about it. And those before me long before Ian & Jan contemplated it.

You don't know that, you're speculating.

I know what happens in this game before most even see it in the rear view mirror.

Speculation.

And I know what has happened behind the media embellishments.

You don't know that either, you're speculating again.

My retirement plan was already in place before I was eighteen, but the date got postponed due to boredom.

Stop speculating so much Chilliaa! You're having an effect on other forum users!!!

 

[Lily House]

Wow, Rob, I've only just noticed this thread.

Thanks for your generosity in sharing your story.
I think you are brave taking on so much debt at this time, but hope it all pays off for you in the near future.
I'd really like to see you stick it to that nasty ex of yours.

Lily/Caroline

 

[Rob Williams]

I'd really like to see you stick it to that nasty ex of yours.

Part of me wants to do that, too. But it wouldnt be very "Zen" or "Shibumi", would it
I'm not afraid of the debt. My values are not only holding up strongly, but moving ahead quite nicely. The tenants are paying their rent on time and there are rent increases in the pipline, so it's all on track, regardless of the GFC.
My LVR prior to my most recent purchase was 65%. It's now 70% and I'm quite happy with that.
Thanks again for taking the time to look at the thread. I hope you got something out of it. That's why I shared it.

 

[Dazz]

I'm not afraid of the debt. My values are not only holding up strongly, but moving ahead quite nicely. The tenants are paying their rent on time and there are rent increases in the pipline, so it's all on track, regardless of the GFC.

Now that's a proper property investor talking right there.

I shall be glad to make your acquaintence Rob when I travel to Adelaide.

 

[Player]

Global Financial Christmas

......... regardless of the GFC....

That's because you have opportunity eyes in your head and for people like you GFC stands for Global Financial Christmas