$58K to start with and read on

Discussion in 'Coffee Lounge' started by mflying, 5th Mar, 2015.

  1. mflying

    mflying Property Developer

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    There are few threads on currently on how to grow multimillion $$$ portfolio or What strategy or lot of newbies asking question what should I buy.. so I thought I ll share my story..

    Conclusion: started with $58k cash in 2012 and have around 2.5 M portfolio now across the country!
    (Sounds good.. but not as easy as it reads)



    Here it goes.


    Bit about me:

    I am 30 and arrived in Australia with little English and $2000 in pocket to study in one of highly regarded university to study.. 3-4 years later I got degree and started working in SME and Corporate world like everyone else. Everything I earned, I saved some and spent most on travelling and seeing different part of this amazing country.

    late 2011.
    Decided to invest in real estate market.. Bought a land (that nobody wanted it for last 6 months) with in sydney metro area. Paid $56K deposit and $1000 for conveyancing cost.


    Deal:
    $280k land (no stamp duty as it was vacant land and NSW had no stamp duty Under $300k for land)

    $600K Build cost (duplex build cost inc sell, hold, design)

    $880K total cost

    Sold for $1.2M (Completed in year 2014)

    Year 2012:

    Refinanced above land and bought a house on 1/4 acre block in regional NSW.

    $250K purchase and has potential to put townhouses on it.. current market indicates that circa$300k townhouses are flying out of door at the moment..
    To the the date, haven?t looked at what and how many we can fit on it.
    I have left this site for rainy day development.

    We funded this purchase from equity draw form land above.

    Mid 2012
    Bought 1/4 acre with full brick house in Brisbane metro. We can subdivide this in two lots and retain front and build at back.
    It was a deceased estate. I picked it up at right price. Used equity to purchase this site and used our own funds to complete reno.

    Year 2013
    Spent time learning and developing Sydney site. It was a steep learning curve. Developing properties is not easy and not for faint hearted ppl. It requires time, effort and money (lots and lots of it). Ppl who develop can back this up. It is not easy to develop and to make matter worst, I picked up worst site ever to develop on .



    In way it was good, because now I learnt all tricks in a book and went thru hell and back. It took toll but in a good way. It will pay off for any future developments.

    Around AUG 2013, We bought a potential triplex site in Perth metro and I am pretty happy with it so far..


    Nov 2013, we bought a site in Melbourne metro with vision of developing in to 4 townhouses, asked for longer settlement and settled on it on feb 2014.

    I started to educate myself about different planning code and requirement related to development for most metro areas around major metro city in country (Except SA, Adelaide)

    I was no longer in market to buy as i maxed out our borrowing capacity. However, I was still assessing and scanning properties that I can develop on. That lead me to suggesting it to friends and some SS members.. Needless to say they are happy with their purchase and they did pay me handsome Spotters fee, which really came handy as I was paying mortgage for construction loan (that was producing any income)

    Year 2014:

    We settled on Melbourne deve site on early 2014.
    Sold Sydney development in late 2014.

    Year 2015:

    We are about to knock out house on Melbourne and start 4 townhouse project.

    Bought a new site in Melbourne with view of potentially developing 3 story +basement apartment in bayside suburb.

    This is my development journey so far and it hasn?t been an easy one.

    I am glad I found somesoft and my broker (now good friend) to get me where we are today. Before I move on to what I had to scarify to get here, I must credit few ppl

    Shahin from Elite property finance (broker here) for crunching numbers and getting unbelievable deals thru in lightening fast speed. It is a tedious work of getting loan thru but he makes it look really easy

    i must say most of my success credit goes to shahin..
    .
    MTR for sort of being helpful in most deals and assessing numbers and market and provide excellent and honest market commentary

    RPI for doing all legal framework and planning report for Brisbane purchase.

    Oc1 for doing hard yard to get thru Melbourne deal, plans, permits and construction now.

    I have met few other amzing ppl thru forum, MsAil,monalisa, nhg to name few.

    Needless to say my wife and my family is been backbone of above story.



    What did I scarify (Sort of)

    No PPoR
    No Kids (As yet)
    No fancy car (I just rewarded my self with new $25k car)
    Frugal lifestyle for 2-3 years (And counting)

    Why chose above journey/strategy?

    We are young couple and don?t need a big house and cant afford to live far off city, so never felt a need of McMansion.

    Everything I bought for my personal use, I paid cash for it (Car, furniture, overseas trips around the wold) that allowed us to borrow money for IPs.

    I say to ppl that all our properties are female properties, it can produce more dwellings and mitigates risk of negative market movements. I chose to manufacture growth rather than Mr Market dictating my journey and path.


    It may seem that 2.5 or 3m portfolio is big or makes us look rich? it is hardly the case.. i am just average joe.. still work for someone, spent most of time travelling around country and world for work.

    most days of the week I hardly have around $100 to $200 in my savings account. Our PAYG jobs helps us to pay our living expenses and ongoing property expenses and whatever we earn thru development just get reinvested in to buying, developing more properties.


    This is my story and I am sticking to it.... (mental note for me)
     
    Last edited: 5th Mar, 2015
    handyandy, jkat, Gockie and 6 others like this.
  2. Brady

    Brady Big 4 Banker

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    Thanks for sharing Kudos!

    This is why I'm on SS to read of real live stories and leverage off people like you.
     
  3. TMNT

    TMNT Member

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    Frigging awesome and congratulations!!!!

    Love to see people start with nothing and absolutely kick *** while leaving others who are much more fortunate who whinge how tough their life is in their tracks!

    Truly inspiring
     
  4. S.T

    S.T Member

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    Thanks for sharing, great to see someone do something a bit different to get to there instead of the simple buy/reno/hold that most do. Really shows you've put a lot of effort in to finding property and developing. Great story!
     
  5. MTR

    MTR Bling Bling

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    Kudos to you, good work

    You have a talent for sourcing good sites:)

    Am looking forward to revising this post in 2 years for an update

    MTR
     
  6. TMNT

    TMNT Member

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    Ps what sort of entry price are these land if you dont mind
     
  7. WattleIdo

    WattleIdo Member

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    You've done so much in just a short time. Very impressive!
     
  8. oc1

    oc1 Developer

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    Yes, great story. Goes to show that the more you put in the more you get out.

    Kudos! :)
     
  9. Michael_X

    Michael_X Member

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    So good to read these stories :)

    Thanks for sharing! Big congrats on your journey and I am sure lots more to come.
     
  10. mflying

    mflying Property Developer

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    Thanks ppl for good words!!

    TMNT
    280k
    260k
    240k
    380k
    450k
    1m

    In order of events.. Except 1st one all has house on it and more or less paying itself.
     
    Last edited: 5th Mar, 2015
  11. mflying

    mflying Property Developer

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    Let;s see..

    I wont have enough funds to develop my last purchase, it is apartment site and will need to spend couple of million to re-develop it.

    i am sure i have excellent team and they would work something up! they always do...
     
  12. Hodge

    Hodge Member

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    I love your quote " I tell my friends all my properties are female as they can produce more dwellings" My properties are exactly the same. Good on you for having a go.
     
  13. johnpendles

    johnpendles Member

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    Inspirational story. Not just the investment outcomes, but the willingness to work hard and make sacrifices. Too many people in this country whinge and whine and rely on the government for various welfare payments. You have shown what is possible despite starting from absolute scratch, not just in a financial sense but also from the point of view of arriving in a new country etc. Congratulations.
     
  14. MsAli

    MsAli www.propertytwins.com.au

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    Well done mflying!
    Have to agree MTR has been a great sounding board on our investment journey also!
     
  15. Blacky

    Blacky Member

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    Fantastic effort! Very impressive.

    without prying too deep I would be interested to know how you have funded these deals to date. You mention that most of them have houses on them so are self funding? What is the level of cash out of pocket required?

    Having completed a development myself via remote control (i.e. in a town/city I am not living in) I know a few of the challenges involved.
    I would be interested to know how you manage the developments remotely. Who do you have on your team to source builders, trades etc and monitor progress? Or do you do it all yourself.

    How do you source your sites - you have covered a huge area (well, all of Australia by the looks) how do you narrow down the areas to look at?

    Congratulations again

    Blacky
     
  16. alexm

    alexm Member

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    mflying, your story so far is truly inspiring. A wonderful lesson in hard work, perseverance, and determination. I salute you!

    I would also like to know abit more about how you went about financing these properties (if you don't mind sharing this information).

    Regards
    Alex
     
  17. mflying

    mflying Property Developer

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    Sydney.Melbourne,Brisbane

    Good questions! (sums up most txt/pm i received since this thread)

    I will try n answer as much as i know


    Finance:

    As one of the thread Redom posted, it is important to use right Broker/Banker.

    In my case, Shahin is architecture of our finance structure(to say the least!)

    here is how we did it

    1. 280k - Used 56k of own money
    2. 260k - Refinanced and used equity of 1 to fund 2
    3. 240k - used equity of 1 to fund 3 + our own money to do reno
    4. 380k - Used SMSF to purchased this as re zoning is few years away
    5. 450k - we knew we are getting XXX,XXX from development of 1. so we got personal loan to fund the deposit and asked for 6 month settlement. Shahin already has exception approved by lender of non genuine saving. when it time came to settle on it. we used personal loan, plus some of our own money.
    6. 1m - sold development 1. paid off equity loan, personal loan, bought car, paid of plans and permit cost of 5. planning permits and funding deposit for no 6 and using spare cash to fund development 5.



    2,3 we paid LMI. however on circa 230k of contract price it wasn't too much we gained over 20% since we bought those.

    5. Was risky move, we did.. but it paid off.. site is worth more as it is. + i found Oc1 and have an ongoing commercial dealings.


    6. is way out of my league, and still not sure what we are going to draw on that blank canvas (oc1 is working on it) and who will provide colors (i am sure shahin will work out something) i don't have to worry about this one till mid 2016.


    Finding sites around country:


    From year 2000 to till date (as part of work) i have been travelling to most metros around country (atleat 25 week out of 52 week). so i am aware of most meto city areas and have seen how property prices and areas have transformed.

    Plus power of Somersoft, education of planning codes and targeting specific area with a view of development.

    i have built extensive network of REA across the country (except SA) and they send me listing before properties get listed on market.. not all of them but some of them do..

    or

    i just found them thru RE or Domain.

    To be clear, i didn't physically see purchase 3,4,5 after few months of settlement.

    I use simple hack.

    check prop thru google maps
    order B & P
    send local PM to to prop (during cooling off time) to give me rental appraisal and condition of property and feedback on location.
    check dial a dig ( to see what underneath of ground)
    Check title to see easements.
    pass it thru experienced town planners to check out full potential on development.

    if all boxes are tick, shahin gets money to fund it and conveycner does what is needed.


    i have not yet develop site remotely as yet. we are about to start Melbourne development. Based on my dealings with Oc1 so far, i have confident that we wont have to many hurdles.

    also, Blacky i am subscribed to your beer and sketle thread and from things i learnt from first development, i have (i think) knowledge of what not to do.

    i keep my ears open and learn from lot of members i mentioned in my first post.


    strategy

    so far except purchase 6, i have been only investing in low figures deal, below 500k deal... something that we can comfortably hold on to, should we not decided to develop it.

    plus

    i make sure that new developed product is in budget range of that market.
    i.e new stock in most metro around $400k- $600k is hot.(it attracts FHB and investors)


    since our first purchase every penny we earned has gone to

    80% in property investing
    10% in living expense
    10% in overseas holidays

    It hasn't been an easy one but it may work out for us one day!!!!
     
    oracle and Blacky like this.
  18. oc1

    oc1 Developer

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    That's one of the most honest posts I've seen here lately. Kudos for sharing the nuts and bolts!
     
  19. aussieB

    aussieB Member

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    Excellent post. I am truly motivated. I wish you more luck mate.
    Cheers
     
  20. kum yin lau

    kum yin lau Member

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    Hi, well done indeed! Especially looking at the dates of your purchases, it took GUTS. It was easy to do it [well, relatively] in 1998 when I started.

    But having said that, I bought my 1st devt site in 2006. And that took guts!

    KY