A Collection of Somersoft Forum Stories, Lessons & Updates

It’s the numerous investors’ stories on the Somersoft Forum and within the property magazines that garner and maintain a lot of my interest; I love to read individual investors stories, strategies utilised and the lessons learnt along the journey…. no matter what the strategy is as the various property markets move up, down or sideways; I’m always hoping to pick up a gem or two to assist me on my own jourmey

How investors at various levels have achieved additional portfolio growth or cashflow, mitigated their risk, or learnt lessons along the way as well as their practical insights into wealth creation and protection, are always of interest to me

In the same vein the books,” Building Wealth Story By Story” by Jan Sommers and “Ordinary Millionaires” by the late Jim Mcknight are both great reads IMHO

The Somersoft Interviews threads are worthy of a review also… but have been quiet for a while due I believe, to other circumstances; hence my thread here, as I dug into the depths and dredged up posts from the past, with an eclectic mix of posts from the forum and its members.

If you are not happy with your story as/if posted below, please let me know and I’ll delete it ASAP; if it’s outside of my/the <EDIT> window parameters….then I’m sure a friendly Moderator will assist ;)

I’d love to read your story if not included below, or even an update if you are indeed featured; as I’m sure I’ve missed many stories, and those that are included, may have additional updates and insights they are willing to add. The thread is also an somewhat selfish and indulgent one, as I put all of these interesting posts in in one place for myself :p

The current sixteen (16) Official Somersoft Interview threads as posted in the General Investment Discussions and Resources are pasted below for ease of access

Ruby said:

Enjoy the read if you have a few spare hours

I found this great thread by Sim..not sure whom has read it of late :D

Sim's Line: A story about love, savings, and small furry creatures that go squeak in the night.

- - -

... so there I was, 21 years old, half way through uni, and married ! Most of the other guys simply couldn't understand it. For us, it was just so right - we had been going out for exactly 3 years and a day when we got married, and we just couldn't imagine it being any other way.

Of course there were financial advantages to me being married - she was working now full time as a nurse, earning pretty decent money. With that money, she was able to pay off some of my debts - not that they were huge, just under $5000 not including HECS. It also made it much easier for me at uni, paying for my fees and books and such. No more skimping on money, doing everything on a shoestring budget, hanging out for $4.95 all you can eat on Tuesday nights at Pizza Hut (ahh, those were the days). We were by no means rich, but we were comfortable, and I was quite a bit more comfortable than I had been before we were married !

What did she get from the deal ? Apart from a husband who would cook for her (that's gotta be worth something doesn't it ?), from a financial point of view, there was little I could bring to the relationship except debt. But I did have potential - I was about to complete a Computer Science degree, and although the IT industry was in a bit of a slump, and I was certainly not being inundated with job offers, I was confident that I could get a decent paying job when I finished. A cynic might say that she "invested" in me, expecting some pretty good returns !

The first six months or our marriage, we didn't save much. We had bought a new car about a month after getting married - a brand new 1994 model 5 door Daihatsu Charade hatch - it was so much better to drive than the old heap my parents had bought for me. At least it wasn't expensive to run, although being only 21, the insurance cost a bit. My weekend pizza delivery job kept me in small doodads and helped contribute to our finances in a small way. We still have only that car - has served us extremely well for nearly 8 years now.

She had quite a bit of money invested, term deposits, mortgage trusts, even some Woolworths shares. She had been working since the age of about 16 as a checkout chick at Coles, and her father had instilled in her the need to save and invest. For her age, she was doing very well. All the proceeds from her investments were reinvested, so they added up to quite a tidy sum.

About 18 months into our marriage, I finally completed my studies and graduated. My first job was a contract IT position that paid reasonably, but it wasn't what I wanted to be doing. The money was great though, all of a sudden we were a pair of DINKS ! I'd never had so much money in my life. I had always liked playing with figures. I kept very good records of the little money that I had, and I had even started playing with Quicken when I got my first PC, a couple of years before we were married.

So anyway, I worked out that we were paying more interest on our car loan then we were getting from her mostly cash investments, so it didn't take much convincing to use some of the invested money to pay off the rest of the car loan. All of a sudden, we had a lot more cash available to us each month without that debt. The joys of cashflow !

We had furnished our rented unit with borrowed or hand-me-down furniture, so there were a few things we wanted to buy so that we could call it home. We didn't have credit cards or store cards, wouldn't even dream of taking out a personal loan, everything we bought we paid cash for. Of course, we didn't just have lots of cash lying around, and so these new things we wanted to buy just seemed so far away.
It was about then that I discovered this really cool new feature in Quicken that allowed you to set up "savings goals". It worked by creating a fictitious account for a particular item you wanted to buy, and you "transferred" money from your bank account into this account. It was all imaginary of course, but it worked well in that it showed a lower balance in your bank account than you really had, thus you didn't think you had as much money to spend as you really did. At least it worked for me !

So we made a list of things we wanted to buy, prioritised them, set up some savings goals in Quicken and proceeded to put aside money until we could afford these things. Although I'd like to take the credit for all this, it was really my wife's financial discipline (learned from her father) which made us successful in saving. Dining table and chairs, classic timber bedroom furniture, VCR, and other essential things - we became experts at saving and paying cash for things.

Next was the big one, a house. She had wanted to buy a house when we first got married. Rent is dead money and all that. Since I was still studying and she was in her first year of work, and we had debts, it would have been very very tight. I think we made the right decision to wait until we had learned some financial discipline before taking on that level of debt. So we looked at what we could afford to borrow on our salaries, worked out how much deposit we would need, and started saving. We were earning a combined salary of about $60K or so, and managed to save nearly $40K in around 18 months !!! Of course the cost of living in Adelaide was relatively cheap, $115pw rent for a large 2BR single storey unit 4km from the CBD suited us fine.

While we were saving, we started looking for a place to buy. Almost every weekend for 18 months we were out at open inspections, going to auctions, looking around. We got to the point where we were playing this little game. We would go to an open, and before asking the agent how much they were asking, we would look at the place, and both come up with a figure we thought they would ask for. We got very good at guessing right ! Auctions were also good for this, guessing what a property would sell for.

We had a fairly clearly defined area we were looking at to buy in, an area immediately south of the Adelaide CBD, about 10km deep by 5km wide. She had lived in Adelaide almost all her life, and I moved there when I started uni, and both lived within that area the entire time. We were ready to buy after about 12 months of saving and looking, and it took us 6 months of offers, bidding and missing out, and even pulling out of a contract when the building inspection indicated that the roof was likely to collapse at some stage. Eventually we chose a place we had originally passed over - the house was too small, but the block was huge, and had heaps of potential. This was it, the one place for us. They were expecting mid 100's at auction, we had finance approved to $170K and were prepared to spend it all.

Of course, the auction was over before I knew it... and I was the last bidder at exactly $150K. The other guy who was bidding against me came up immediately afterwards, shook my hand and said "well done" - no emotion at all about missing out. I found out later that the reserve was $150K, and put two and two together and realised that we were "bid up" by a dummy bidder. Not to worry, we were prepared to pay $20K more for the place, so we were still happy !

So we moved in at the beginning of 1998, and life was wonderful. Owning your own home - especially the first one, is such a nice feeling. The 5 burner BBQ I bought with some of the spare deposit money was a great touch, and we entertained out under the back pergola frequently.

Then it happened. I was headhunted - offered a job in the "big smoke" which would double my pay. Her sister had moved to Sydney soon after we had been married, so it was an opportunity to go and live somewhere different, spend some time with the sister-in-law and make more money ! The only condition on us moving was that whatever we did, we weren't allowed to lose that house. So we moved interstate after only 9 months of living in our dream house, and rented it out.

She had no problems finding work in Sydney, and with our combined higher incomes, we were saving heaps of money, despite the increased cost of living. Our goal from the beginning had been to pay off the debt, then borrow against the equity to fund a major renovation and extension to our house. So, we set about paying down the debt, and successfully got it to practically zero within 3 years. Another example of financial discipline that we had learned.

I knew we would have lots of cashflow coming in once we had paid off the debt, so I began to look around at what else we could do with our money. We weren't planning on moving back to Adelaide just yet, and doing an extension while the property was tenanted is not really practical, so I looked at investing. All of my colleagues were madly buying dot.com stocks, and sitting with a Comsec window open on their computers in the background while they worked. Shares seemed like the thing to do. I started researching, and even put in an application to buy a sizable package of shares in an internet startup called Spike. Fortunately the listing was way oversubscribed and I missed out. As it turned out, I made over $5000 just by NOT buying the shares !

It was about October 2000 when my father-in-law handed me a well worn and dog-eared book which he suggested I read. It was Jan Somers book "Building Wealth through Investment Property". I liked property, but it just wasn't the thing to invest in these days. But I was searching for something to invest in, so I read it. By about page 5 I think I was hooked. When I discovered she had other books, I ran out and bought them too. Then I discovered the web site and... the discussion forum. I was blown away. I bought book after book, devoured them all. Searched the web, found even more sites... read and read and read, started posting on the forum.

Then it struck me. We had heaps of equity in our house, we had high incomes, we had opportunity, and I now had heaps of knowledge. But I almost had too much knowledge. I saw so many different ways of doing things, I didn't know which way to turn. Every day I read about some new technique, some new style of investing. I wanted to do them all. No, I wanted to do the best way. No, I actually didn't know what to do.

Okay, I admit it. It was analysis paralysis. The bane of people with too much time to think about and analyse things. It's always easier for those who simply have to do something because they have no choice - or their choices are simply limited.

So what did we do ? First step was to refinance our house with an equity loan. Had it revalued - $240K ! We were pretty stoked with that. So now we had equity to play with. We found a pair of 5BR townhouses on separate titles in Adelaide close to a university/hospital, and they had been converted into a pair of 3BR plus a pair of 2BR units. We found them by accident - they weren't advertised, except for a sign out the front. We only saw them because we were in that street looking at another property. Yield at purchase 9.5%, and 6 months later after some rental increases showing almost 10% yield. Not bad when yields within 10km of the Adel CBD are almost entirely below 7%, with the vast majority at below 5%.

We are actually about to settle this week on another 3BR house in the same area, 7% yield (hopefully, but haven't got a tenant yet). This one was a failed contract - we picked it up on the rebound. Another case of being in the right place at the right time.

We are also negotiating on a dual occupancy, 2 houses on a 1500m2 block, subdivision approved pending some work (fencing, paving, carports etc). If we can get it for a decent price, we will hopefully get some instant equity from the deal. But that will leave us pretty much at our limit of servicability. Time to get creative after that.

So what's my strategy ? I'm not really sure yet. I certainly like having my properties pay for themselves overall. When people (non-investors) find out that we've bough yet another property, they almost always exclaim that I earn way too much money. What they don't realise is that I paid for one house completely (the first one), and that was before I earned the big bucks I now do. Since then I have not paid a cent of my own money into any of the property I have purchased.

People keep on at me about the negative gearing benefits I am losing out on. But they are only focused on the short term - they say I have high income, I should be negatively gearing. But I don't want to stay in this job any longer than I have to. If my income plummets because I quit and go start up my own business, then I lose both my tax benefits and my ability to service that negatively geared debt. It doesn't make sense to me to base my investing around something that will lock me into my PAYE job rather than freeing me from it like it is supposed to.

I want to buy some more higher growth properties, but I don't want to have to pay for them. I suppose my overall strategy now is somewhat similar to that expressed by Jeremy - a mixture of cashflow and growth property, with cashflow paying for the holding costs of the growth and the growth providing more equity to purchase more cashflow.

My next step will probably to be investigating some purchases in Sydney, using renovation to create instant equity and to increase rental yields, making it easier to hold them.

- - -

So what have I actually learned in the last 12 months ? How have I dealt with my analysis paralysis ?

One thing I should have remembered from my studies at school and uni, is when things get confusing and complicated, always go back to first principles, go back to basics. Keep it simple ! Spend too much time trying to come up with the perfect plan, and you will never get anywhere.

My advice to people who may be struggling:

1. Keep it simple

If in doubt, go back and read Jan Somers books again. Her strategy is safe and boring. But it works. You will have plenty of opportunity to get creative later. Just start with the simple stuff until you build up your confidence, knowledge and experience.

2. Know your market.

The reason I invest in Adelaide at the moment is that I know my area extremely well. Having lived there for 8 years and delivered pizzas extensively throughout that time - I know just about every street and alley in my area. This makes life so much easier since I do not have the time to be searching on foot for all the deals. I don't have time to be flying over to check out every property that comes on the market. I'm taking my time, picking off the best stuff that comes along and keeping my finger on the pulse as best I can. I do intend to buy in Sydney, but I haven't been looking all that long here, and I don't know much more that the suburb where I live. I hope to change that over the next couple of months.

3. Network.

Some of the best advice I have been given was as a result of me being able to talk frankly to some close friends I have made through this forum and the chatroom. I have been able to ask them about what I'm trying to do with a particular deal. Their questions and comments have challenged my thinking and helped me sort things out in my own mind. Remember, friendship comes first. There are some people who I get nothing more out of the relationship than friendship. I don't expect or need anything more than that. I am fortunate in that there are also some friends I have made who have been willing and able to discuss stuff with me and give me their honest opinion, and I am able to return the service by being a sounding board for their ideas too.

4. Read.

You can never have too much information. Just remember to keep it all in perspective. Just because it has been published in a book, in the media, on a website, in a newsletter, does not necessarily make it correct. More importantly, just because something worked for someone else, does not mean it will or even can work for you. There is no strategy that will work for you other than your own. You need to find your own way. If you get stuck looking for a place to start, go back to the basics.

5. Set and manage your goals.

One simple thing to help you filter out the noise around you. If you have a clearly defined and documented set of goals, you can evaluate everything that comes your way by simply asking "does this get me closer to my goals".

6. Learn the technical stuff.

Someone has to learn all the technical stuff, and worry about the details. At the end of the day, your financial well-being is your responsibility alone. No advisors, no mentors, no professionals, no gurus can make things work for you - they can only point the way, or provide a particular service. If you can get your partner to worry about the details and leave you to do the deals, then great. But someone has to do it. Too hard ? Too much to learn ? Try tackling one subject at a time. One of the fastest way to learn is to try and answer the many newbie questions that are posted daily on the forum. Find a question, look up an answer, post it and learn from the corrections (if needed) that people post. Do not be afraid to be wrong, but be prepared to admit it when you are. Do not be too proud to make mistakes, and be prepared to be humble enough to listen and learn when you do. You will often find that there is no right or wrong anyway.

7. Learn the difference between investing and speculating.

If you don't know the difference, find out. It can have a profound effect on your strategy.

8. Follow the money trail.

Before you accept advice, make sure you know where the money is coming from. Free services never are. Make sure you can work out why someone is giving you the advice they are giving, it is usually money speaking the loudest.

9. Be patient.

Getting rich quick is a low percentage play, most people don't have the knowledge and experience to make it. Think carefully about why you need to do things so quickly. There is almost always another way to get where you want to go.

10. Keep it in perspective.

Life is not all about money. Money is nothing more than a tool that allows you to enable your goals. Money doesn't hug back.


And Jeremy's Law

Well thanks for the interest!

What I do is essentially very simple, but has worked well, and seems to be what a lot of people have reached independently. A little about the history first...

I started buying property while my parents were setting themselves up for retirement. I didn't really know what to buy, so I bought neither a true IP, nor a property I would live in.

My second property was similar though I 'rented' to my then girlfriend. I became very short of cash so looked for properties that would at least cover themselves, and hopefully cover the losses on my 'neither/nor' properties. This strategy worked a treat and I have replicated it ever since.

My first two properties after a time started to increase in value and I used the equity and cashflow to buy an inner city terrace, combined with a pair of 'proper' IP's providing the cashflow to cover my losses. The terrace increased in value in short order and I took out an LOC to buy more property. Question then was 'What sort?' I had a major setback at work at about the same time and I guess because of this I was able to be a little radical.

I ended up chasing cashflow to fund myself so came up with either 1)buying commercial property in Australia, or 2) buying residential property in the USA. I felt that overall it was a better risk getting the same returns from residential property in the US than what I perceived as slightly more risk and less understood (to me) commercial property in Australia. I also had the massive benefit of turning a 10% equity LOC into a 10% deposit in California, thus almost doubling my portfolio in one deal.

The cashflow from the USA helped with everything else as well. I had decided to renovate my terrace, which turned out to be a nightmare, taking over 2 years, and over $250,000 so I needed all the cash I could get. This was when I discovered the use of credit cards to get you out of trouble if needed.

Kellie Dutton and I found out about the ground lease financing deals on big cashflow properties in USA and tried to do this as well. Nearly made it too! Learnt a lot and almost got an 86 unit apartment complex in Miami with only $50,000AUD of my credit cards at risk. The cash on cash return on that deal would have been phenomenal, but I learnt a lot, and will hopefully soon get my $50k back!

So, where too next? Wrapping appeared, and whilst not nearly as good as the US (one of my apartment complexes there was in fact 'wrapped' to me so I knew the process well) it offered as good as you could get in good 'ol Oz. All but one of the deals I did collapsed through essentially being too high a price of property. I ended up with very good rental returning property, and massive capital growth on those in again a very short space of time. In conjunction with this I bought my first business 'Berowra Waters Inn' which came free with a stunning property. So now I am learning how to make restaurants work. In order to do this I have sold a couple of properties, which may turn out to be silly. If berowrawatersinn.com stops operating, you will know I was silly!

The trick as I see it, is to buy two or three cash positive properties in order to cover the loss on a less 'cashy' but higher capital growth property. You then lever off the faster increase in CG in order to buy more of the cashflow properties. These in turn go up.

It MUST be recognised that property at the moment is historically (in this country) overpriced. We have had a great run though! We WILL have a flattening out of the market for probably 2-3 years at least, then I guess an 88-89 style boom after which 'watch out'. I am particularly scared of inner city (SYD-MEL mainly) units/townhouses one of which I bought a year or so ago, and I have amazingly sold at a small profit. I believe a couple of years (1-2) and these properties will be available at GREAT prices.

I was asked to add up what I have a while ago by a friend and was stunned that in AUD terms I 'control' about 7m worth of property. It is fairly highly geared, and I must point out I am selling about $500k worth to fund the restaurant, so it is reducing, but the numbers still look big!

I made $1m inside 5 years, and bought my first property 8 years ago. The important thing is that anyone can do this, as John Symonds famously says 'It's not rocket science ya know' and it all started when I read about a school teacher's book on property investment in the Financial Review.

I hope you all found that interesting - it's nice to read about real stories, without disguising wins and losses, and without exaggerating. I learnt from a lot of generous people, and I feel the same as they do. Hopefully one day someone will get something out of the things I have done.

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Another great read

Our story

Hi jingo, mostly we have told everybody, in dribs n drabs, what there is of our story. But as someone who is happy talking the legs off a chair, here it is in full.

Go Big, or go home
Cant go Home, Aus is too long a flight, so we are going big.
Capital gains are slower here than in Aus.
Incomes from properties are huge in comparison.

We bought the worst property in OK neighbourhoods, not the best neighbourhoods, but bordering them, renovation, both real and cosmetic that makes them the best property in an ok neighbourhod. Demand for good rentals is high, so there are never vacancies.

Nova Scotia is a collection of small cities, of 20000+ population, who mostly never move far from the town they were born in.

Our First property a single home, for our daughter, because there was not a reliable landlord in our small town, Daughter started work and wanted to be independent. (picthure the upstairs apartment's toilet flushing through the ceiling into the bath tub) Then the bug hit, it seemed like a good idea,Second was an eleven unit (6*2bed 5*3bed) brick apartment building on 1 acre of land. on the edge of the archetypical small town. the owner had not maintained the property, and it had only 5/11 occupied.

Purchase price of $310K, which would probably cost 2 million+ in geelong or ballarat, low in Aus, and low even here. spent 30000 on repairs 20000 on renovations, revalued at 450k in 3 months, draw out new equity buy something else

Income 82500/year
costs ~37000/year
3000+ use to fuel further purchase

have become known as honest landlords, something of value here where nearly everyone rents for 3-5 years, and people call to ask what we have, if we dont have any advertisements in the paper, they ask our tenants if they are moving out, when they are moving in

part 2 to follow soon

Part two, The Bug

Our daughter, now 23, going on 13, wanted to be independent, took an apartment in town.

Aside: Nova Scotia was in this period struck sequentially by a Flood, major hurricane, & blizzard
The property she leased was not good, if she had asked before signing the lease there is no way she would have taken that apartment. I wouldnt move MotherInLaw1.0 in there. Windows were smashed, in a hurricane, that were still papered over 18 months later. there was often no heat(remember winter is minus 20c here) and the bathroom from the upstairs apartment provided a permanent water feature, with chunks, in the tub. The landlord entered the premises at random intervals "to fix things", great pleasure for a single teen girl. When she complained he pulled the breaker out of the fuse box, against the law for anyone to tamper with the power company's side of the box. to force her to leave.

We took him to the tenancy board, got 1100 returned rent, lease voided, got the daughter out. So we had to find a decent landlord.it turned out to be US. We thought that if that can make a living, we would '**** it in' bought a transportable home put her in it, and started there.

Of course the tenancy board officer remembers 'the Australian', we had a good start attending hearings as landlords, He knew that we would have the Ts crossed, Is dotted & all the ducks in a row, when we go to evict or demand payment.

Then we went looking around, ladylove found a building in a 'for sale By owner' website, that we thought had to be a typo. It wasnt, the owner had done no homework and did not know what the property was worth.

Caveat Vendor, Nope. Emptor did Caveat, so we bought it. and talked them down 20k from the already low asking price, just for practice.

Today was fun, running between Clerk of the courts, registry of deeds & back again,(literally they are in adjacent buildings) to register liens and garnishee the wages of the tenants I evicted last month.

When they move in I tell em, "pay me or I will chase you forever, and make your life hell, even for one dollar."
Cant think why they dont believe me.


Capital gains are about 13% per year,
incomes after all expenses about 10% of cost of purchase per year.
rental increases about 16% per year

Did we ever mention that we got started on the cusp of a large upswing, if we didnt yet, I will now, we got started at just the right time.
This region is stealing jobs from the US, at an increasing rate.
There arent enough rentals for renters, or new construction for those who can buy, for the workers moving here from other regions.

There are large housing projects stalled in councils by (really idiotic) objections, when there is a definite need for the housing.

Part 3 to follow

Part 3, Learning the Hard Way

We have had a collection of tenants,
Teenage girls dont rent to them they'll have parties all the time good tenants
Single mums dont rent to them they'll never pay good tenants
Prior evictees dont rent to them they'll never pay good tenants
6 20-something males dont rent to them they'll wreck the place good tenants
fully employed family men they'll be great wrecked the place
immigrant from Newfoundland dont rent to them they'll never pay good tenants
some of whom are (now 'were' every landlord in the area now has all their personal information) professional defaulters, knowing that it takes such a long time to force eviction, they stop paying rent. We made a choice to follow every one of them through tenancy board and courts, and always get paid. Current tenants with whom others had difficuties now pay on time or give post dated cheques, they say because we gave them a chance, and were fair.

Because, I think, we tell applicants that we will chase them through the courts, and do, there are far fewer defaults in our properties, than any other local landlord. The most consistent offender ever now telephones the sherrifs frequently to check her outstanding balance, and is working lots of overtime to pay up, the sherrifs charge $800 extra for fees 21% interest & seize bank accounts and salaries .

Digital Video tape, digital camera, recorded conversations, dated note book, a regular Sam Spade.

How do you tell if a tenant is lying.?, their lips are moving.

I dont want to use a pm, everyone that does seems to have the same problems we do self-managing, and pays for the priveledge.

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Sanzy's Commercial Story

My First Comm Property Purchase

Hi All,

I have been reading this site now for a bit over 3 years and have taken a lot of information from it and thought it was about time to give back for all the information I have taken from it. I will start by saying this will probably be a long post that many may find boring but I hope it helps some one looking to move into CIP.

Firstly I would like to say thanks to all of the regular posters on this site for the large amount of information they have willingly put out into the Forum for people like me to read. Dazz’s posts have been especially inspiring in the commercial property section as well as Gross Real who I had the pleasure of meeting once and have been able to take a lot from his posts. Ridin-High also who has been a help in keeping me encouraged thru the long process that is buying Commercial property.

Ok so to the meat of the post. I currently have two Residential Properties in outer western Sydney and had an amount in the bank that I had spent a long time trying to figure out what the best way to use it would be, I also work a full time 9 – 5 but do have the luxury of being able to take personal calls and having my personal email open to conduct extracurricular activities like investing as long as it does not affect my normal work. This post is basically the story of my first CIP purchase and I hope it will help others who are thinking about getting into Commercial Property, I know I would have liked some more information when starting to look into if commercial property.

After researching residential property, shares, keeping money in high interest accounts and commercial property I decided that Commercial property was the vehicle I chose to use. Now after reading thru this forum and others for a number of months I found that I would need at least 30% of purchase price plus costs (at this point I was working off costs being residential costs) using this I figured I would just be able to reach to the magic $1M mark for purchase, this is where CIP starts to really look attractive. Much less outlay and the numbers and conditions are little better the RIP but with more outlay. So the next thing I needed to do was to figure out what type of commercial property to invest in and how much to spend on this property. This took a lot of time searching commercial real estate sites looking thru literally thousands (possibly 10’s of thousands) of property listings of all types, slowly I was able to narrow the search to a price range, property types and locations that suited me and would provide the return I was after, this mainly consisted of removing most retail and professional office from my searches as they did not look as attractive as other types of CIP. Once this had been done I narrowed down to around 10 properties. I emailed the agents asking for more information and then waited. The main information I was after was purchase price, monthly rental and any outgoings the land lord was liable for (while I would love to be like Dazz and have the tenant liable for the lot some deals did have an amount the land lord payed so I worked them into the figures) . I already knew how much I would get investing in high interest savings accounts (around 6%) so to make the risk worth it I wanted at least 10% net return. As each agent contacted me back (mainly by phone then follow up email) I got the numbers I needed and then decided if I wanted to keep looking into the deal or to shelve it, this was really a very quick do the numbers add up yes/no, most were a no but a couple did stick out. So I started to look into them a bit more.

It was at this point I did the normal setup of a company and trust to buy this property within.

There was a false start of a property that looked good but once the bank valuation came back turned up a number of issues that killed the deal after around 2 months work. But I did take a lot from this set back; mainly the cost of doing a commercial property purchase was a lot higher than I had first thought. A commercial deal costs more to get thru a bank. Instead of a valuation costing around $400 per RIP I ended up paying around $3000 for the first valuation as well as an amount (around $500) for time spent with my solicitor looking over the deal. That is a lot of money for a deal that did not get thru. An expensive lesson but I now knew to budget around $10000 for bank costs instead of around $2000 for a RIP. I will say at this point I had a great relationship manager at my bank that was able to give me great advice and help to make sure I had the info I needed.

So by now I was probably 6 months into my foray into commercial investing a few thousand spent on a deal not done and a trust setup sitting idle, I went back to searching the commercial investment sites but did remembered a deal I had seen while negotiating the purchase of the deal that fell thru. This was for the purchase of a small industrial lot in regional South Australia, 11 shed on a 1 acre lot split over two separate titles and was returning just over 10% net. This was exactly what I had been looking for. I called the agent and made an offer expecting to get a counter offer to my surprise the vendor accepted the offer and the deal was on at a similar price to what my last deal was so I knew the bank funding would be ok if the valuation came back fine.

At this point I got a SA based solicitor on board to work with me on this purchase and also spoke to my bank guy and we started to organise the valuations, and here came the shock. The cost was going to be between $5000 and $7000 for the valuation and they would not start for around 4 weeks with around 3 – 4 weeks to complete the valuations. Now this was partly because of the number of tenants in the deal and party because of the distance from Adelaide to the town this was in, so I booked the one who could do it quickest. So I now had to go to the vendor and ask for a subject to finance clause to be added to the deal as we were still arranging for the contracts to be signed (being from NSW I did not think of this initially and it was a reminder to make sure you keep in mind the rules of the game your playing to get best advantage from it) I was lucky the vendor said yes and we agreed on a sunset date and a settlement date around 2 weeks after the sunset date (this comes back to bite me later). While I was organising this my bank relationship manager found a valuer who had an agent local to the property so they were able to start straight away but still take around 3 weeks to value, so we had around 1 week to spare on the sunset clause. Whereas the valuer I had booked would be delivering around spot on the sunset date. We changed valuer in the hope a local guy would know the local market better and we would have some spare time.

Now it was just a matter of hurry up and wait, I spent 3 weeks asking the bank and my solicitor if there was anything left to do or that could be done now instead of waiting. The response was nope nothing everything is going fine. Then the valuation came back 2 days before the sunset clause and it was good, it came back at almost spot on what I had a contract for. I was stoked, the bank were now going to lend me my money. So I gave my solicitor the ok to go ahead, we still were waiting for formal written approval but I was told it would be fine, this would arrive 1 week before settlement was meant to happen. So I booked a plane and flew out to look at the property I was buying and also meet the agent who was selling it (and I had been speaking to about managing it for me once I owned it). The viewing went excellent (this was a formality, I did not mind if I saw it or not and after talking to the agent it looked like we could increase the net return to around 12 % straight up with rent reviews and with the addition of a 12th Shed that already had building approval increase it to around 15%, so lots of potential to grow.

At this point the paperwork started to flow thick and fast mainly from the bank and from my insurance broker so I could insure the property (a condition from the bank and a prudent step anyway). In the 2 weeks between sunset and settlement I thought it was all going well but settlement was delayed by a week. The vendor still had to provide my solicitor information and my bank were not ready to settle yet either (the whole 2 weeks coming back to bite me). Settlement did go ahead one week later, everything was ready and an added nice little surprise, the vendor hit me up with penalty interest. Even thought they were not ready to settle on settlement day, they could charge it so they did. Another expensive lesson, give yourself time as a bank will take as much as you give them plus a bit more.

So now I am the proud owner of my first CIP, It was not as scary as it looked when I first started. The process was exactly the same as a RIP, you just need to spend much more time looking into the leases, how much they are worth and how long they are for. The lease makes a CIP. I was able to get 5 year funding at a decent 8.15% interest due to sufficient length leases on most of the sheds.

If I could give anyone advice I would say, jump in and do it. Once you have you will look at all those for sale signs in commercial/industrial areas a lot differently. Just make sure you budget enough time and expenses money for the deal to work.

I would welcome any feedback or advice. Or just to hear from others at what their experience has been I just hope this helps break that mystery of CIP that some people have of it being really hard to get into and much more complex than RIP.


Andrew Jackson

Andrew Jackson's story

How did you start?

I have been fumbling around this forum over the last week or two and have become quite addicted. I thought I'd join in by introducing myself through the thread "How did you start"?

Allow me my indulgace as I clamber onto my soapbox!

Bought a house with my fiance in 1987, (Little more than a fibro shack) for $46.5K. Married in 1988. In the same year I changed jobs from working as a kitchen hand to learning how to build home improvements, ( Awnings, carports screen and glass enclosures) originally the idea was to go into the sales side of the business but It was decided that if I were to sell the products I had to know how they went together. 1994 I started my own Home improvement business and I never looked back. Paid the house off in 20 monthes (56 K) in 1996 and also did every improvement imaginable... brick veneered it, two extensions, new kitchen, bathroom ra ra ra.
The Final house payment was gratifying, there was a sense of crossing the finishing line ...... and I was only 31. I floundered for a few monthes and decided that I needed to commit myself to another property as I wasn't saving any money and those weekly payments that I used to make seemed to be just frittered away.

I ended up buying another hardiplank shack across the road from me in the same street. Paid $97 K. Spent another $23 K
doing it up, new kitchen, bathroom, carport, windows etc.
Rented it out for $175.00 per week to excellent tenants. Managed the property myself. No problems. This house was actually paying itself. Everything was looking sweet as........

1998..... Wife wanted to seperate.....

Things wern't looking as sweet anymore....

1999 moved to Umina on NSW central coast, I owned a caravan
there and thought that if I was going to be miserable ,I might as well be miserable by the sea.
My wife got the house I got $50 K. We settled amicably although we actually lost money on our investment property.

2000 Bought an old red brick house with an inground pool for
$220K. I was about to move in then decided that I wasn't going to spend the next ten years doing this one up. So I took to it with a crow bar and rendered it uninhabitable. I removed all the doors, skirting, architraves , demolished the bathroom, pulled up the carpets. I had that many skips that my neighbours must have wondered what was actually left inside the house. After 6 monthes I finally moved in and the inside of the house was complete.... or so I thought.

2002 Using house No 1 I bought another brick veneer home in the same suburb. I was at an auction and the property was passed in. I bought it a few days later for $230K. I improved the house with new a new carport, awnings, fencing and a new paint job. This house also has a rear lane access with a garage.
I partitioned the back yard and kept the garage for my own use and rented out the house to new tennants. I manage the property myself.

2003. Using House 1 & 2 I have just had loan approved on another old red brick house for $325K.
House 1 valued @ $400K
House 2 valued @ $330K
House 3 Valued @ $325K

Being self employed I have used Low doc loans, with a LVR of 80%, sure you pay a premium in interest rates but considering the capital growth of the peninsula recently, I figure it is well worth it. My strategy is buy and hold. Both investments are negatively geared and there is only so many -ve geared properties that one can afford. I would like to investigate +ve
cashflow properties at a later stage, but for the moment I am thinking about capital growth. I have read a number of books and have been bitten by the bug. I think this forum is an invaluable resource.
Things are looking sweet again...............

Angela Anaconda

"Divorce....better at 33 than 53.....!!!!
Andrew Jackson


Toony's Story

I am married with 2 kids. Both at primary school (Grade prep and Grade one). Now a one income family.

We bought our PPOR - small 2 bed unit. Built some equity by living within our means while on two incomes prior to kids. Borrowed 110% on an investment property (another two bed unit) interest only.

Got married, had the average wedding - church, cars, reception etc. Spent 12 months in San Francisco - housing was too expensive so moved back. Sold two bed unit and upgraded for house and had the kids. Borrowed for 2 more units.

Got retrenched after 10 yrs with the one employer, but with the equity built over that time i was not too worried about it. Now contracting in the same field.

The keys to making it a success.
1. Be patient. Property takes time to grow.
2. Live within your means.
3. When you have equity in PPOR - borrow to buy an investment property. Subject to servicibility and sleep at night factor.
4. Borrow interest ONLY
5. Use the tax refunds to offset PPOR borrowings.
6. Buy for growth. I have bought near beach, schools and railway station.
7. Be patient. Did i say that again.

My objective is to have $2m in property including PPOR. If property appreciates by 5%, then I have made $100,000 for sitting on my bum and doing very little.

I have subscribed to API since 1998. I even got it sent to us in San Francisco. I love it and have subscribed ever since.


Tcocaro's Story

My story in a nutshell

I have just come back from Canberra and have not been able to reply till now. I am amazed and the amount of feedback from my original post.

I am still reading through the posts but wanted to quickly write a reply for now until I have a chance to finish reading all posts and answering all questions which are varied and many.

However quickly reading through some of the posts I got the impression that there is scepticism on my apparent success.

In my original post I thought it best to not delve into the details of my purchases as I wanted to bring more attention to the questions I had rather than trying to stroke my ego with any kind of wow factor regarding the number of properties I have amassed.

Below I will provide my story in a nutshell and I hope this provides some light to the "hows" of my original post. I will then post a detailed answers to people answers\questions to my original post i.e. book keeping, strategy etc which I want to learn more about.

My story, I am 24 and I have finished a bachelor of computer science degree at USYD majoring in computer science and economics. I started university at 18 and finished at 21 (3 year course). I did 36 hours a week in order to complete the course in 3 years rather than 4.

After completing my studies I worked at PwC as an IT consultant and then IBM which I left only early this year which I consider my resignation from PAYG.

Where did I find the time to open a cafe? start a finance brokering business? invest in property?

If anyone here knows or is an IT consultant knows that for the past 2-3 years the IT industry has been tough and as a consultant this can be prolonged periods on the beach or doing nothing.

During these times of doing nothing I thought of investing I tried shares but after reading 1000 books I concluded that first I needed money 100k at least as investing with 20k just wont work. (I tried investing but found it too hard to balance risk mitigation and % return on such a low amount)

So my strategy began, invest in property and use the equity to invest in shares. (which has since changed to invest in property and invest in business, later I will mix share trading but have not done so yet).

I didn’t have much money so I tried to find a cash flow positive property and found one at Glenmore park 272,500 purchase at 95% lend. It wasn’t cash flow positive but very close.

I then felt very defeated for i planned for 6 months and now I have a property that would take years to appreciate so I went looking for another property and that’s when I went to Canberra thinking it would be a farming community.

1st stop Jerrabomberra. What a head turner I found it incredible the property boom was in full swing and the properties looked great. I mention this because I thought buying in Canberra would involve buying a fibro house surrounded by cows "I apologise to all Canberians for my Sydney City ignorance". (This is a lesson of moving out of your comfort zone)

I had a limit on how expensive the house I wanted to buy could be this was 300k. After looking around I found this to be impossible but then I saw an agent who said but if you build you can probably get something under that figure. I said great looked into it and found that land and construction would cost 260k! not including interest etc.

I purchased this property as well at 95% but on completion got valued at 380k. I used the equity to setup an cafe which provided me additional income and in combination with rents allowed me to purchase more properties.

ANZ had refused to lend me anymore money so I approached another funder (this was a major step as I found smaller lenders to be much more flexible and will to find away around financing limitations). I asked about everything and found that some funders provide loans against valuation. This meant if I found properties at cost which was 80% of valuation I could buy without a deposit.

So this is when it all began, I looked for the cheapest high quality builder and then concentrated on finding the cheapest block of land. Simply right? Sounds easier on paper but its possible if you sweat blood negotiating.

So basically I started buying this way, IBM provided income, rent provided income and so did the cafe.

I started to find more and more deals and hence more and more people got interested with what I was doing.

I provided brokerage services to such people and the growing numbers of investors meant I was able to negotiate ever discounted prices for carpets, building etc. etc.

So now I am here today 2 years later with an ever growing property portfolio, roaring brokering trade and successful cafe.

I hope this quick summary of my property investing career provides some insight and some validation of my story, probably not as sceptics will always be sceptics but for those who are snoopy please feel free to check rpdata and search me up you will find Glenmore park and the price and year will at least show I started 2 years ago unfortunately rpdata doesn’t cover Canberra.

I will keep reading the posts and reply concentrating on my original question and again apologies for taking so long to reply! Please note that I am not offended by anyone scepticism and welcome it as long as its backed with But how could you do this when "blah" is in your way and "Serviceability" and this and that. This way I can respond.

I look forward to reading the rest of the posts.


My story is from 5-6 years ago. Kids are now in year 7 (starts secondary school) this year and the other is in Grade 6.

At as Jan 2012

Portfolio is $2.5m with negative cashflow of $25k. This now includes a PPOR, 3 two bedroom units, a two unit development site with an old house in a Melbourne beachside surburb and a holiday home in the high country near Mansfield that is on the holiday rental market.

I am still working and my wife works part time. Same strategy but now have the holiday home. Its a lifestyle investment.

No more acqusitions for moment. I would like to develop the development site but probably cannot raise the money as I blew it on the holiday home. But having said that, after inside renovation, the property has almost doubled in 3 years.

From the vaults of 2002 another SS Retiree


I feel a little strange writing this as there are so many more qualified and experienced investors who could tell you more - but since a couple of people have asked . . .

I was a wild child that someone decided could become an accountant with a little bit of manhandling. It was time for my life to turn around anyway as the direction I was heading in was not good.

I married Sue when we were still kids and we had children immediately.

We had nothing at that stage other than a desire to make something special for ourselves. Sue often tells people it was my "potential" that she married as she was not born to be poor!!

We bought and sold a number of houses and just did not get the concept of wealth planning as we progressed through our 20's and concentrated on my career which continued to flourish between temper tantrums.

In 1993 I decided it was time to build my own accounting practice and we sold up everything to move home (from Qld) to start a business that we "knew" would be the start of something special for us. I left a job back then that paid me in excess of $75,000 plus benefits, plus bonuses, plus . . . to live off social security with 3 small children whilst we built a business for the future.

We had squandered a lot of money before then, but, this period of time saw us have to manage our money very well to live off very little. We learned to make sacrifices and defer our wants to a later date.

In 1997 I discovered Robert Kiyosaki's book RDPD and it was like a light was turned on in my brain. This was followed very quickly by learning abt John Burley and many other incredible people as well. I shared what I learned with Sue and my children and together we set abt making huge differences to the way that we did things.

We continue to learn all the time and I share that knowledge with my family and as some of you know, James is ready to take on the world himself soon - and this is our greatest investment reward!!

We bought our first house that year and a block of two more in 1999. This year, we bought our 4th and we've started looking again.

In the meantime, my business provides us with ample cashflow given that we're still pretty frugal with our money (ask my frustrated and "spendingly challenged" teenage daughter!) and it is an asset that is now worth $300,000 on it's own. This value climbs every year and will only continue to do so.

In addition to buying properties, we buy shares for the long term abt every 4 months and we now hold a very tidy parcel.

Our aim with the properties is to pay them off completely within a certain time frame (15 years now) so that the income will be something that I can retire on outside of the shares and my business and our superannuation. I don't need the cashflow now, so, we are happy to work to this plan and strategy to provide us with ample cashflow in the future.

The properties are all nice properties in the far eastern suburbs of Melbourne. Nothing special, but, very nice homes that rent well. They are worth abt $1m.

Our strategies are not particularly sexy or exciting, but, the journey that we're on suits us and is one that we get much joy and excitement from.

The future looks ever brighter and we know that we'll be more than financially comfortable forever now.

Thank you for asking



Another one from the vaults of 2002 that is a great read

I can't believe that I've been nominated to share! I'm incredibly flattered, blushing as I type...

I have to agree with Dale when I say that in many ways I still feel that I'm at the beginning of my journey, and am in total awe of what others here have achieved, and have every intention of emulating them (yes, GoAnna, my plans for world domination continue unabated! hehehe)

Ummm... well I'll skip the boring bits where I left school and started working in advertising and stuff... Although I should mention my grandpa, who when I was about 13 started talking to me about some term deposits he'd set up for me and was probably the very person in my life to start me thinking about saving and investing.

Then I managed to meet my husband to be, we went out, two weeks later he asked me to marry him, and I said yes. Always said I wouldn't be able to resist a man on bended knee with a red rose.

So at the tender age of 21 I married, shifted out of my flat and house sat for my brother for 1.5 years. At that time we bought land on the outer outskirts of Melbourne (thanks to grandpa's lessons, bought it outright!), and proceeded to build a house in the late 80s gulp Our builder, who until then had been a small boutique builder, got greedy and grew too fast, used some dodgy contractors... learnt a lot fast!

Anyway, we settled into our home with my husband working endless hours of overtime, me doing temporary secretarial work and later running a personal development seminar as well. Busy people! But we paid our house off in two years, hubby got retrenched and shortly afterwards headed off around the world for a year. Awesome adventure!

Came back, I started on my less than stellar writing career (blush blush) and hubby went back to the same company and started to climb the corporate ladder.
In 1993 we bought land in the Dandenongs (the hills east of Melbourne) and worked hard to pay that off. A huge bargain, half what it would have cost us in the late 80s.

Then we started on plans to build our dream home.

Somewhere around then I got pregnant, we sold our first home and were aiming to move into my grandma's old house before bubs arrived. Bubs totally ruined all that and basically due to a very traumatic arrival where we both nearly didn't make it, we went into something of a black hole for a year. Hubby developed post traumatic depression, I didn't know and was struggling to cope virtually as a single mum, and life hit rock bottom. We also hated my grandma's home!

In amongst all this I started to build our dream home as an owner builder. What a challenge! Still think it got us the best result though, in hindsight. At the time it was stress to the max along with all our other troubles!

Anyway, to cut a long story short, we hit rock bottom, and started to claw our way back out again, realised that we wanted to be together, and we wanted a different life to everyone else and so decided to do something about it.

Moved into our dream home in 1999 ( which has since doubled in value, great equity base!)

Late in 1998 bought a unit OTP in Flemington Melbourne, which didn't settle until mid 2000. Also bought a townhouse in Brisbane in late 1999, so both properties were up and running around the same time - and both negatively geared, I didn't know any different then, and certainly hubby could take advantage of the tax deductions!

Through all of this I'm a stay at home mum.

I also started dabbling in shares.

Had teething problems with both properties, which almost blew us out of the water. I think it's fair to say that hubby was never hugely keen on all this in the first place, but trusted me and let me talk him into it, I can clearly remember sitting in the driveway at Flemington and hubby very foolishly asking me what I saw in the future, and silly me answering a third property in a year's time.... oh boy! Now he's a huge convert to property investing, but I digress.....

Some time in 2000 I started a property investment board at ninemsn, and got exposed to a lot of different ideas about property, and started to realise the limits of negative gearing. Our goals also changed, from building a portfolio over 10 years or so, to hubby wanting to retire asap.

So I went on a huge learning curve, which included finding the Somers forum, and learning lots about shares.

I then commenced my career as an options trader, which was hugely stressful and volatile returns, but I did make some money. Helped pay down some debt, but I don't think it was ever going to be the ultimate solution, I was never going to convince ultra conservative hubby to retire on my options income!

Along came 2002 and my son started preschool 4 afternoons a week (by the way, I had my daughter early 2001) and my share career was over, I was in and out at all the wrong times of the day, and started to lose money because I missed things.
So back to the drawing board, and after assessing a lot of different choices and with our goal in mind, at the moment I'm pursuing wraps, I'm still in the starting blocks, I have offers in on some properties right now. So that's a work in progress!

I sold the Brisbane property to free up equity, that's supposed to settle this week if the bank can actually get its act together.

So there we go, a totally long winded story of my life, I hope someone finds it useful! I guess the future plans are to build a good cashflow using wraps, then use that to fund a mixture of positive cashflow and negatively geared propeties. My goal is to retire hubby by the time he's 40 (I have about 15 months to do it!) by replacing his income with wraps cashflow. Once he's retired he wants to start doing renos with his dad who's a carpenter/builder/handyman.

Phew. Happy investing everyone!

Keep smiling
Felicity :cool:

Rob Williams

A well read thread on the forum from 2009 however, I've included Rob's post on his mindset journey also

My mindset journey

If you have any doubts as to the importance of mindset in the context of creating an abundant and balanced life, then maybe I can give you some food for thought by sharing my own experiences.

My property investment strategies have been well documented in API, YIP and here on the forum: (http://www.somersoft.com/forums/showthread.php?t=51677)

What is not so widely known is the story that precedes my slow and steady property investment journey over the last couple of years. It’s not a fun story, but if sharing it helps someone push through some obstacles or take a leap of faith then it’s worth the effort in sharing.

In 2006, I was officially broke. Worse than broke, in fact. Not only did I have a bank balance of $0.00, I’d been living on my credit card for many months just to get by from payday to payday and had accumulated a $5,000 debt. If that wasn’t enough, a nice chunk of interest being added each month, just to brighten my day each time I got the statement.

Each month, my legal bills, child support payments and living costs were exceeding my take home pay. Lucky I had a big credit limit to keep me afloat.

I tried hard to save money each month, but this seemed to do nothing but promote a cycle of saving and paying more bills. My bank balance never increased and my Visa debt hovered around the same amount.

If I saved $500 one month, I’d get a car insurance bill for $500 the next week. One month, I managed to save $1,000. Woo Hoo!! I was on my way, at last. Then the radiator blew on my car and the transmission overheated as a result. Total repair cost? You guessed it, $1,200. This cycle went on and on. Month after month. One step forward. One and a half back.

I’m not ashamed to admit I became terribly depressed. There was no light at the end of the tunnel. I just felt that there was no hope. I began to understand why people take their own lives. I had never understood that before. I began to realise that there does come a point at which the pain just becomes too much to bear.
At some point, I must have bottomed out and realised that nothing was going to change until something changed. I couldn’t change my financial situation until I changed myself. From within.

Coincidently (and I know longer believe in coincidences) a friend of mine shared an eBook “A Happy Pocket Full of Money” by David Cameron Gikandi with me. When the student is ready, the teacher will appear.

This book was the first of many I read dealing with abundance mindset and was one of the first that changed my mindset with respect to finance, relationships and life in general.

Another book I read at around this time was Mind Over Money by Andreas Ohrt. This was a 30 day program. 30 days!! I’d never stuck at anything that long in my life. Who could do something every day for 30 days? Not me. Until then. I made a commitment to myself that I would follow, to the letter, each activity and instruction given in the book for each and every day in the 30 day program.

Maybe the book itself didn’t change my life (although I’m sure it did) but the process of following the program for the 30 days changed my mindset, my perception of myself and my self esteem.

Changes started to occur in my life as my actions stated to come from my revised “abundance” mindset, not the old “victim” or “scarcity” mindset. One of the things I learned was the concept of money being a form of energy that flows, sticking to some people more than others.

Previously, I would not open my mail if I knew it contained bills which I couldn’t pay. Wrong mindset! I then started opening my mail and looking forward to paying bills so I could keep money circulating to others, who would use that money to circulate to other creditors and employees. The idea being that as money flowed freely from me, I was also opening up the possibility of it flowing equally freely to me. In other words, moving from a scarcity to an abundance mindset.

At around this time, I started getting rid of baggage I had accumulated over the years. No more emotional attachment to physical objects that were reminders of a life I no longer lived a a person I no longer was.

First cab off the rank was my Omega Speedmaster watch. First and only watch certified for manned space missions (according to the engraving on the caseback). My plans for space travel were on hold for the time being, so no point keeping the watch. Sold on eBay for US$1,000 within minutes of listing.

Second item was a dusty old instrument panel from a Chrysler R/T Charger which I found in an old box of junk I hadn’t looked at in over a decade. A mate gave it to me for my birthday 20 years ago, as a joke as I had a VH Valiant sedan. It was worth $50 at the time. Within 3 minutes of listing, the bid was up to $460. It finally sold for $1,000. Who knew petrol heads were building replica R/T Chargers and willing to pay a premium for a genuine instrument panel?

Clearing out the junk got rid of items I no longer valued and circulated them to others out there who did value them. Money flowed into my bank account as part of that flow or cycle. Within a few months of selling junk on eBay my Visa balance was down to $0.00.

I was into goal setting at the time in a big way. I had a written goal to have no debt within a year. I achieved it within a few months. So I decided to dream big and set bigger goals. I went off the chart and actually wrote down that I would have a $10,000 bank balance within 12 months.

I still have a screen shot of my Netbank summary. I achieved that goal within a few months. Changing my mindset allowed me to see opportunities I had never been aware of before. I also had the courage to take the opportunities and run with them.

Within a year, I had traded a share portfolio (specialising in oils stocks) and my $10,000 became $20,000 within 6 months.

The profit from share trading was “invested” in precious stones ie a diamond engagement ring for my fiancé. Then she decided to play “Diamond Mine”. Anyone know that game? She got the diamond. I got the shaft. Ouch!

Another lesson learned. Every lesson comes at a price. That’s the nature of education. Learn the lesson, pay the price, then apply it as you move forward.
Before I got heavily into property investment, I learned and applied 3 very important concepts. All are “F” words. Only one of them has 4 letters.

Focus. Focus on what you want more of, not what you don’t want. When you focus on your goal, you invariably filter out information that does not help you achieve that goal. You see opportunities that you would have missed with the wrong mindset and without focus.

Fear. Overcome fear. The things we fear are often the things least likely to actually happen. In part, my success in investment has been due to lack of fear. I no longer fear being broke, homeless or in debt. Having been there, I know what it’s like, so I no longer fear it. You make much better investment decisions when they are not fear driven (eg. fear of failure or fear of missing out)

Faith. Have faith that when you take a leap out of your comfort zone, the resources, contacts and information you need will come to you. As my journey gathered pace, more and more people came into my life, sharing experience and advice with me.

There are many books and seminars out there on wealth and abundance mindset. I used to think it was all a bunch of “hippy” stuff. It wasn’t until I hit rock bottom and had, literally, nowhere else to go that I decided I had nothing to lose by experimenting with the concept of embracing an abundance mindset.

I look at where I am now and reflect on where I was a few years ago and it’s hard to believe how much I have grown emotionally, spiritually and financially.
The rest, as they say, is history. If you made it through to the end, thanks for taking the time.

I’d also like to thank my great friend Karina for inspiring me to reflect on my journey and share my gratitude. Karina rocks!!!

Remember, if I can do it, anyone can!!


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

Today is settlement day on my 7th IP and my one thousandth post on Somersoft . So, I thought that was something worth sharing with my very good and supportive friends here on the forum. Thanks to you all for your advice and support.

I’ve been asked many times over the past year or so to share my story, strategies and philosophies with a lot of people on this forum. Usually, I do this by way of PM and have never felt the urge to share it more widely as I didn’t think it was all that interesting. Seems some people challenge that, so what better way to celebrate my 1000th post than to share my journey in the hope that it might inspire others to either get started or think bigger than they have been.

March 2007 – my divorce and property settlement were finalised. It had been many years since the separation. During the marriage, I had no say in how money was spent or invested. My pay was totally controlled by my wife. As was I, I came to realise, later. So, when I left, I left with nothing.

The settlement left me with a small unit in a 6 pack in the leafy Adelaide suburb of Leabrook and some cash. Of the cash component, some was used to fully pay down the mortgage on Leabrook, around $12,000 was invested in another car as my crusty old Magna just wasn’t floating my boat an longer and the balance was put aside as investment funds for the strategy I was yet to formulate.

From the time I was in high school, I’d been quite pro shares and anti property as an investment strategy. My Dad did commercial property, so maybe it was the rebel in me that steered me in the opposite direction. I also perceived shares as being cool and exciting, while property always seemed such a boring “Mum & Dad” type investment.

Having spent 18 years in a marriage in which I was constantly told that I wasn’t “good enough” to manage the finances and that I wasn’t “smart enough” to come up with nay good ideas, I knew that this was my time. Given my age, I knew that I had just one shot at making something good happen in my life and to achieve that I’d need a bold and decisive plan.

It was quite clear that the share market wasn’t the place to be putting all my eggs. The fact that so many of my friends were investing heavily in both shares and share trading software told me that the market was reaching a critical phase in the cycle. Sometimes the best investment is the one you don’t make.

So, residential property became my investment vehicle of choice, due to the timing of my entry into the investment market. While I was still formulating my grand plan, I started looking around at opportunities. There were quite a few small units close to the CBD coming up for sale as “renovator specials”. These appealed to me as I had a strong skill set in renovating and a good imagination when it came to visualising the end result.

While looking at such opportunities, I checked out a fully renovated 2BR unit in a 10 pack at Dulwich. The idea was to see how they had done the reno and learn lessons I could apply to my own projects. I ended up buying it for less than I would have spent on some of the other deals I was looking at. The vendor was looking for a very quick sale to relieve her financial stress, so she accepted the first firm offer that came along after the first open. A short settlement and unconditional contract helped, in this case, too. She rented it back from day one so it’s been a win-win deal ever since.

As I wait for settlement day to approach, I start to look at the big picture and a strategy starts to take shape based on the following random thoughts, in no particular order:

1. Many home buyers and renters (empty nesters and Gen X & Y) are moving away from the traditional, larger family home on a quarter acre block. Seems a lot of them are over mowing lawns and maintaining gardens.

2. Many within this same demographic want to live nearby lifestyle facilities such as restaurants, cafes, cinemas, quality shopping precincts etc.

3. Smaller, strata properties offer an affordable entry point into well located suburbs which offer good quality schools, shopping, entertainment and efficient transport to the CBD and other transport hubs.

4. Fuel costs will continue to be an issue and proximity to the CBD and other major employment centres will be a major factor when choosing a home.

5. Suburbs which have consistently show high capital growth over a number of years should continue to perform well. I’m not prepared to punt on the next hot spot. I’d rather take the sure bet, to get steady and consistent growth.
The suburbs in which I have invested most heavily are suburbs which I have observed solid growth over a 20 year timeframe. Statistics can lie, but my first hand observations are reliable.

6. Buying smaller, cheaper strata properties offers (in the context of my strategy) many advantages over buying larger, more expensive houses.
These include, but are not limited to:
- In one particular suburb in which I invest, I can buy 4 strata properties for the cost of one house. This allows me to spread my cash flow risk. For example, if I have one vacancy, I still have 3 other rents coming in to pay the interest bill. Also, I’m going to find it easier & faster to get a tenant for a unit/villa at $250pw than someone looking for a $600-$700 house. The cheaper end of the market is less transient, too, so less downtime between tenants.
- Buying a greater number of cheaper properties is also a risk management strategy in terms of being at the effect of a changing market in any one area. If I only have 4 big houses, then my maximum spread is 4 suburbs. 8 smaller properties can allow me to spread my portfolio across a greater number of suburbs.
- Strata properties allow me to self manage a greater number of properties than would otherwise be the case with Torrens Title properties as many management issues are dealt with by the body corporate. Building insurance, leaky roof, fencing, garden maintenance etc are all issues for the body corporate. This allows me to leverage my time and benefit from self management.
- Land tax liability is another advantage of the types of properties I buy. The unimproved capital value of each property is very low relative to larger, Torrens Title properties so the aggregate value reduces my land tax liability. The same portfolio value in Torrens Title properties would significantly increase my land tax liability.

So based on all of the above, I started looking at strata villas and homettes within 7km of the CBD, close to quality shopping and schools with cafe and restaurant strips nearby. Nearby transport is a must and properties on a bus “Go Zone” (one every 15 minutes) get bonus points on the checklist. I focus on the eastern and north eastern suburbs as I have over 20 years experience watching price movements and demographic changes in these areas. I figured it was better to capitalise on this expertise rather than re invent the wheel by looking at new areas.

The types of properties of interest to me have always provided a healthy yield, but have, by and large, lagged in term of capital growth compared to traditional houses. There was some evidence, however that this trend was changing and will continue to do so. House and unit capital growth statistics on a state by state basis published by Your Investment Property magazine have provided strong evidence of this.

OK, so now IP #2 has settled and with a strategy in mind, I’m on the hunt for another. By this time, I’m committed to residential real estate as the primary vehicle for my wealth creation and the “big plan” is to accumulate 5 properties in total over the next 5 years, although I’ve yet to formulate an exit strategy, I’m fully aware that I can put this together as I begin my accumulation phase. Right now it’s more important to start getting runs on the board.

IP #3 was a very run down homette (villa), purchased in June 2007. Major reno job. The owner has lived there for 30 years and has never painted the interior or performed any maintenance at all. Got to love those bright orange kitchen bench tops. They had to go, even though there’s a chance they will make a comeback one day! At $217,000 it was a great deal. Current value, nearly 2 years later is around $295,000 with a total reno investment of $13,000. Most of the reno was complete well before settlement and I even had a tenant signed up by settlement day.

Given the low entry price of this one and the great rental yield due to the makeover, the current monthly shortfall on this property is only around $225 per month. It would be CF+ now if not for the fact that I fixed the loan for 7.4%.

I’ve pretty much out of cash at this stage in the game, but have plenty of cash flow from my day job to fund another acquisition. Given that the net rental income from IP #1 funds the shortfall on IP #2 and IP #3 only costs me, before tax, $225 out of my own pocket, I’m still in a situation in which I can leverage the tax advantages to fund more acquisitions.

Up to this point, my freehold Leabrook unit has always been my Black Chip. The one I don’t bet. The backup plan. If something goes wrong with the investment strategy or I lose my job, I can either use the income to help keep me afloat or move in and live rent free. Either way, it’s a safety net.

It’s September 2007 and I’m feeling encouraged by what I have done so far and the ease with which property can be purchased, financed, renovated and rented out in a very short space of time. I realise that many of my earlier fears have no foundation, so I make the decision to utilise the equity in Leabrook to help my buy IP #4 at an 80% LVR. No more Black Chips. If things go awry, then I just sell an IP and balance is restored. Besides, what could go wrong?

By now, I’ve lodged an Income Tax Withholding Variation (ITWV) with the ATO to improve my cash flow enough to enable me to purchase another property (or two). Instead of waiting until July to get a nice big tax return, each pay my tax gets reduced, effectively increasing my net pay. Nearly half of my monthly shortfall on my portfolio is covered by this tax benefit.

IP #5 is a 3BR homette in the same group as IP #4. It’s been on the market for many months due to a contract failure on a previous sale. That seems to have put buyers off. I secure it at a rock bottom price from a very motivated and disheartened vendor. Once again, I tap into IP #1 equity for the purchase of this one and the next.

IP #6 is in the same group as IP #3. Deceased estate and offered to me off market at way below market value. It had been freshly painted and needed very little work. I could have done a reno, but elected to rent it as is because I was running low on funds for a reno and my borrowing capacity with my one and only lender had reached its limit.

On that subject, keen observers will note that I’ve broken a couple of rules. I’ve not diversified lenders and I’ve cross collateralised. Yet I survived and the bank didn’t take all of my properties away, as some spruikers would have us believe.

Up to this point, having a single lender was a huge bonus and helped me accumulate a portfolio I might not have been able to with another lender on board. I did look into spreading my loans but the reception I received had me continue the great relationship with my primary lender.

I couldn’t have purchased IP’s # 4, 5 or 6 without cross collateralisation. It’s not an inherently bad thing, although it’s often portrayed as such. It’s just another tool that can be used to move ahead in the game of property investment.

Prior to buying IP #5, I considered myself at the limit of my capacity to make up the monthly shortfall on my IP’s. It was during a casual conversation with the legendary Rixter that I had one of those rare satori moments. Rick asked me when I was buying #5 and I told him that I wouldn’t be buying for 4 years, after number two daughter finished school and I wasn’t paying school fees any longer.

I was aware of the concept of capitalising interest, but had never considered using the strategy myself. I guess it was unfamiliar to me as nobody I knew was actually doing it. Only when Rick told me he utilised that strategy did I start to see how it could work for me. It suddenly moved from being an unknown quantity to being a safe way of growing the portfolio. Tried and tested by Rick himself. Thanks Rick!!

Around this same time, I also discovered Xenia’s Adprop sponsored Adelaide Network Group. The monthly meetings are a great place to meet likeminded investors and share ideas and strategies. Just knowing there are others out there giving it a go is encouraging and very supportive. Thanks Xenia!!

At this point, I started to use words like “consolidation”, “pay down some debt this year and maybe try to live of the equity in the portfolio” and “retirement”. Those sentiments lasted about 2 weeks.

Then the opportunity to buy IP #7 came up. However, it became clear that I had hit the serviceability wall with my lender. This was a strategic purchase in that it was in the same group of 5 villas as IP #3 and #6. I just had to have it! So, through a very stressful and complicated process, I re financed 2 of my variable loan properties away from my original lender to another lender and came out of that with $70k equity. This enabled me to fund the 20% deposit and reno costs on IP #7, with some change to act as a buffer in the offset account. I obtained finance with a 3rd lender for IP #7.

Misc things I’ve learned along the way:

1. Know yourself! Your risk profile, strengths, circumstances, lifestyle
etc. These will underpin any successful investment strategy.
2. Think big, push out of your comfort zone and never give up.
3. Focus on the goal and the dream NOT the obstacles.
4. Specialise. Find your “thing” (inner city villas, suburban subdivision,
build and hold etc) then keep doing it. Rinse and repeat.
5. Challenge everything and find out what works for YOU. Don’t always
accept what the “experts” say. Houses vs Villas & Units, buy old vs
build new, use a different lender for each property, never cross
collateralise etc etc. There are no hard and fast rules. Different
strategies work for different people depending on timing and
circumstances. There is no right or wrong. Only what’s right for

6. Stay under the radar with any one lender. From my experience, as
soon as the lenders exposure gets to around the $1m mark, the
previously easy money grinds to a halt. So, at some point
diversification of lenders is a must in order to grow a portfolio.

7. If you’re just starting out, you don’t have to know everything and
have all the answers to all of the potential problems. Just get stuck
into it and the rest will follow. You can learn more and course
correct along the way.

8. I don’t subscribe to the view that things have to be hard to be
worthwhile. If they are that hard, then maybe you’re not doing the
thing that resonates with you. If I can’t have fun doing something, I
don’t do it.

So there you have it. A $2m resi property portfolio in 22 months. If I can do it, anyone can. What I’ve done isn’t very exciting or glamorous. However, most of the people who have done well with IP’s could say the same. It seems to be the simple, repeatable strategies, when applied consistently over time that produce amazing results.

Where to from here? I want 10 in the portfolio by the end of 2010. If I don’t get there I’ll have had fun trying.


Another great post from Karina, this one from 2005

23 properties in 5 years

Hi everyone,

I had a request in a previous post to post my story so here goes.

Just over 5 years ago my marraige broke down and I found myself divorced and living with my parents. I wouldn't wish it on anyone , a really difficult time in my life.

After a year or so I decided to buy my own place and settled on a unit in sydney. I was having a chat with a friend of mine that was really into wealth creation at the time and he mentioned a book he had read and suggested I read it. "rich dad , poor dad , by Robert Kiyosaki" The book really opened my eyes as to the power of real estate and motivated me to read more and get out there and buy more property.

I stumbled across another book by John Fitzgerald "7 steps to wealth" which taught me some great lessons like , land appreciates, buildings depreciate so from now I on I was set on buying affordable houses instead of units which has been a good strategy for me.

I was also introduced to the concept of the property cycle and during John Fitzgerald's seminar (it is advertised at the back of the book) in 2000 the presenter showed us information that suggested that brisbane prices start to rise after sydney prices start to boom. The presenter was recommending brisbane as the place to invest (of course they were selling property there, but I wasn't really interested in buying off them, feel more comfortable soucing my own deals)

I had never really considered buying properties interstate but after spending hours on the internet checking out brisbane I thought it was worth a look as prices were so much cheaper than sydney and it was easier to find properties there that were close to nuetrally geared than it was in sydney.

After doing some searches of key words like " boom suburbs, hot property" in yahoo search engine I came across some articles that suggested that redcliffe was an undervalued suburb , prices started at around 80k at the time so I booked a flight to brisbane and off I went to buy some property. I had a budget of $216k to work with and on that weekend I bought 2 houses. One for $108,000 renting for $140 per week and the other for $107,500 renting for the same.

When I was booking the flight over the phone I asked if she could organise accomodation in redcliffe and she asked me why on earth I was going to redcliffe to buy property, she said brisbane prices don't go up in fact she had a place and sold it because they never go up there and that redcliffe is a dump! ...hmmmm I thought not a good start. (lesson number 2, be careful of who's advise you take , it could cost you a lot of money)

Anyway flight was booked and I was going to have a look. Spent the whole weekend looking at properties (I had lined up appointments with agents in advance so had the 2 days fully booked) Offered on 2 houses and signed contracts on the monday.

When I returned I told a good friend of mine what I had done and he was a bit concerned suggested that I should only buy 1 not 2....also called my other friend the one that suggested I read the kiyosaki book and he told me to be careful not to buy in brisbane that all these people are getting ripped off....so as you can see I didn't have that much encourgament...except for my parents that thought it was great, they have always been supportive.

My strategy at the time was that in 5-10 years when prices doubled I could sell 1 and pay the other 1 off in full. Prices went crazy in QLD and 3 years later I sold one of them in the 280's

My first 3 purchases all occured in 2000. A few months after my purchase I was questioning whether I had done the right thing so you do go through that self doubt.

I then got a little distracted from investing as I met the man that is now my husband but that is another story all together so I will stick to property.

In 2002 a friend of mine asked me if I would go to brisbane with her and help her buy a property I thought sure why not and in the excitment of it all I bought another 2 properties. A similar property in redcliffe to what I orginally bought except it now cost me 145k and a house in redland bay for 167k

I then met through a property forum a young lady that was into positive cashflow, she had purchased many properties and spoke about buying blocks of units and properties that generated multiple rents. I had never heard of such a thing. I thought what a good idea...She mentioned that she had bought a house with 2 flats in broken hill for 49k and was getting 250 in rent...I though what the...so I had a dabble in positive cashflow ended up buying a block of 4 x 2 bedroom units for 175k renting for 440 per week. Also bought a house in elliott heads QLD for 150k (later sold for 225k) and and a house in sandy beach NSW for 169k (later sold for 215k)

I then read some more books, Jan Somers , Peter Spann and one that really stood out for me..."Ordinary Millionares by Jim McNight" it's a book about how ordinary people have become millionares through property investment and each chapter is dedicated to someone's story. Each story uses a different strategy but they all end up at the same place...financially free

I found chapter 4 Jesse's story fascinating, it talked about a guy that bought houses off the department of housing in Elizabeth SA for 25k and rented them for $60 per week, rents then rose to $95.00 and he had bought a stack of them , paid them of in cash after a number of years. It was an amazing story.

One night whilst searching for deals on the web I came across a house for 63k in geraldton WA (brick and tile, about 20 years old fully renovated) I rang the agent (this was Jan 2004) and he told me that there was nothing wrong with the house that it was the cheapest brick house in town but that it was in the worst street in town , there was a family fueding there. He said that he couldn't guarantee that I would get a good tenant but that in 12 months the area would improve as the dept of housing sold off houses in the street. He offered me another home he had for sale that was also renovated but fibro at the same price but in a better part of town so I bought that one along with 4 others in the 70,000 range, rents were 125 - 150 per week.

Having another chat with the agent about the house in the bad street I told him that I knew I would kick myself in 12 months if I didn't buy it now so I asked him to send me a contract and asked if the vendor (it was the dept of housing) would allow me to have a 6 month settlement. Somehow they just signed my offer without paying much attention to the settlment date and by the time they had it was too late it was all signed. I have an excellent tenant there and the value has increased to around the 115k mark if not more. (a fibro has just sold for 120k in that street, so I am being conservative)

The department has sold off the houses and the fueding family no longer lives there.

Anyway I purchased a total of 14 houses in geraldton, mainly off the department of housing at giveaway prices. I don't think I would have quite picked up on the opportunity if I had not read Jesse's story.

I have recently purchased a duplex pair in Cairns for 200k , a house in tassie, a house in goulburn , a house in kalgoorlie (all under the 100k) all in 2005

What has worked for me
  1. Buying affordable houses in coastal areas with affordable rentals
  2. Buying houses below market value off the dept of housing
  3. Buying houses instead of units (land appreciates,, buildings depreciate)
  4. Not listening to people that are negative
  5. Following my gut instinct
  6. Learning from other investors
  7. Dedicating time to finding good deals
  8. Buying whenever I can afford to buy
  9. Managing cashflow and understanding impact of every new purchase to my portfolio.
  10. Adding to my portfolio whenever I could afford to
  11. Reading lots of books , attending seminars
  12. Having a good relationship with lenders and not to give up if a bank says no , just try another one, a broker , you can find a way....

Have I made mistakes sure...read my post about being out of rent for 32 weeks..(mainly becuase I don't have time to check my statements)

What the future holds for me, I guess it's a bit like my original plan wait for prices to double and then sell down to pay down the debt and then live off the rents. In the meantime I'll add good deals to my portfolio. How long will that take not sure, maybe 5 , 10 years whenever the next cycle comes along.

Well that's it folks. Hope you enjoyed my story


A 2008 (short version) post by HandyAndy888

Hello all..Same here, on the cusp of Gen X/Y depending on definition at 28 years old.

My (shortened version) story:

Bought my first PPOR back in 2004, AFTER the 2003 Brisbane boom. However, I never thought of that house as a PPOR but as an IP, since, as many of you who know the Logan area, I did not want to live in Kingston for the rest of my life. Now, it could have ended then and there, make repayments for 30 years and bingo, I'm done. I still remember thinking that the $300/week repayments were going to be tricky to make (LOL/ROFLMTO).

ANYWAY, job got repetitive and boring, so moved out west and it was the best decision I've made. Prescribing to my self belief that renting is crap, I elected to get out of govy housing and bought a dog box, which (apparently luckily) doubled in price in 2 years (Miles, QLD). At a similar time, I liked Tassie, having never been there, but I wanted land so I bought 28 Acres near New Norfolk 30min from Hobart, which, in about 2 years funnily enough LUCKY is another word that was used) has almost doubled too.

Finally I purchased a block of land with a personal loan (didn't want to refinance again) near Stanthorpe. This block has doubled in 1 year (did I mention I was Lucky???).

As finances grew (from salary increases), we decided to bite the bullet and buy our most expensive place ever (in fact, it was more expensive than all our other mortgages together) in Ferny Hills in North Brisbane. So far so good, holding it's value well in a downward market.

At the end of last year was a big change for us, we moved again, so made the decision, as I think at a very "lucky" time, to sell both the Kingston and Miles properties. This paid off the Tassie land mortgage and the Stanthorpe land as well, AND a bit of cash left over.

How did all this happen I hear you ask? The four secrets to Gen Y investing:

1. There are A LOT of Gen Y individuals. There is no way I could have done this if I didn't have my lovely wife (then g/f) to invest with. So I put my success down to having two incomes.

2. Bought - I didn't sit on my hands, I acted...A lot of Gen Ys as I see it, do not prioritise buying. They actually do not care about owning a house/unit/whatever and hence it never happens. They may say they do, but they don't...it's priority Number 15.

3. I got the ball rolling by buying in a shitty suburb. I didn't give a rats **** about how crappy it was or how people hated it. If I had done it sooner (ie. 1999 when I was looking at units as a 20 year old) I could have bought one for $15,000, now about $220,000. In a crap suburb!!!!

4. Of course go and live your life, but do it financially sensibly. My wife and I have mobiles, but we're on $10 plans and use it when we needs to. We don't have pay TV, we have the best broadband, but not with Telstra and we try to think/budget our money with all we do. I've had to sell my motorbike to buy a house, so don't forget there will be sacrifices. The money that bike sale has created, has bought back the bike 10 times over (and yes, I did buy another Ducati ) .

Phew..short version over...


And another investors story from 2008, this one by Meatgroup

I dont know if I qualify, I'm 30 so I'm on the cusp .....

Had a great upbringing, scored a scholarship to a nice private school and did really well at school. I went to uni, and finished a degree .....only just .... before I went off the rails and decided to live a life of drugs.... I was a loser. I was an embarrassment to everything my parents had instilled in me and I was going nowhere fast. I realised I was on dangerous path so on my 23rd birthday, I asked my parents to buy me a bus ticket to sydney. I had absolutely nothing to my name.

1 week after my 23rd birthday I hoped on that bus with a $79 suit, a bag full of clothes and a resume and sat there for the night looking out the window wondering wtf I was doing.

I was lucky enough that an old school mate who had done well for herself let me sleep on her loungeroom floor for a couple of weeks while I found my feet in Sydney .... pretty awe-inspiring place for a young lad. Within 2 weeks I had a job and started to try and rebuild my life.

No, it didn't mean I walked into property riches within months.... i wasn't in that mindset for another few years. What I did do was get myself out of the lifestyle I had been leading. I left all those "friends" behind and found new people to associate with - that was really hard. I concentrated on building up my earning capacity. I had the degree but I needed some experience.

In 2001 I met my future wife. We married in 2006. We are expecting our first child in 10 weeks. How lucky am I. I am rich already... way beyond the bricks and mortar.

But I like bricks and mortar too.... We bought our first investment property in 2006. Block of land for $85k - valued last year at $115k owe $80k

We bought our second IP in 2007. Bought in Seven Hills (inner south), Brisbane for $445k. Valued at $530k. owe $415k.

We are on the right path. Hardly comparable to some of the amazing things people do on here but doing ok ... I look back and think how life could have been if I didn't make the changes. It scares me.


Please find below a great story from 2007 by Darren1968 on his PPoR with photo links included

A pictorial history of the changes I did to my PPOR

Hi all,

As I'm rather bored this evening I thought I would create a post covering the improvements I have done to my PPOR. The subsequent increase in value has now placed me in a position to release the equity and purchase my first IP. It's pretty long but it has heaps of pics.

I bought this property as it is extremely close to work which was my main requirement.

It is also very well situated between the two major roads heading north out of Adelaide. (Main North road and Port Wakefield Road) and I also have two major shopping centres about 5 minutes in each direction.

It was also cheap being in the Northern suburbs of Adelaide which suited my budget at the time.

The first thing I did was to rip down the rickety shade cloth structure which completely surrounded the house and built a 100sqm veranda on the back of the house which also wrapped around the side and created a further two undercover parking spaces.

The reason this was the first job I tackled was to provide shelter for my dog and also to provide shelter for some of my cars and equipment.

Unfortunately to do this I had to cut down 4 fantastic fruit trees which was a shame but they were poorly positioned and had to go. Luckily I was able to retain the peacherine tree right down the back corner of the yard.

Below are the pics showing the original structure, the new verandah and the pile of rubbish created in the process


Then I got stuck in and built the shed. As a collector of 1960’s and 1970’s Aussie Muscle Cars I really wanted somewhere to work on and restore them. I couldn’t fit in my dream shed but this one will do for now. With the shed, the verandah and the small garage under the main roof I can store 5 cars under cover and out of view of the street. Unfortunately I have 7 cars!!

I initially though of taking the wheels off and just leaving them on the front lawn as they do in many of the northern suburbs (probably some of your tenants) but I have more pride in my home and respect for my neighbours than that.

First I had to clear a spot for the garage and this was no mean feat.
The previous owner (who built the property) was relocating to Brisbane and left plenty of rubbish around for me to sort out!!!

A lot of time was also spent trying to figure out the level for the floor of the shed as I wanted it to be flush with the planned paving under the verandah. This obviously affected the whole construction of the shed with regards to the height of the walls etc.

This involved planning the fall of the paving from the house and I must have got it right as it worked out perfectly. (I was actually never confident I had got it right until I laid the pavers!!)


Now that I had somewhere secure to store my cars and equipment I decided to get stuck in to the front yard. When I bought the property the front garden looked like the previous owner had walked through a nursery and literally selected one of each plant. It was a shocker.

Even the real estate agent described it as ‘busy’
Some of the plants were very nice though and I was able to get the neighbours to dig them out for me in return for getting to keep the plants. :)

I then had to level the area. This created a lot of left over soil so I heaped it at one end of the garden and made a feature mound out of it. I only used plastic garden edging as the finances at that time didn’t stretch to the stone border that I wanted. Hopefully I’ll get around to that soon.

I installed pop up sprinklers for the lawn and a dripper system for the garden bed.

I planted a seed lawn which actually worked really well. However, a year or so later it became infested with lawn beetle which completely killed it off. By this time I had installed roll out turf in the back yard so over a space of a few months I transplanted cuttings to the front lawn and these have now spread and covered it completely.

Here’s a few pics detailing the front garden makeover.


From there I moved on to the backyard. I had five weeks annual leave and spent most of it working harder in my own yard than I ever would at work. (I hope my boss doesn’t read this!!)

I ordered the pavers (130sqm) and had them delivered. This was 7 pallet loads. Luckily the forklift was able to fit under the verandah and place them out the back for me.

I got someone in with a bobcat to dig up all the old concrete which was extremely poorly done by the previous owner. The bobcat also ripped up all the old lawn/weeds and roughly leveled the yard for me.

I got the same guy to deliver the road base material to create the solid base for the paving as well as a few tones of paving sand.

Then it was time to start paving. Over 1300 of the bloody things. I got it done in 5 days and this included Christmas day. I wore out 5 pairs of gloves and was so sore that I couldn’t stand up straight for two weeks!! It looks bloody good though. I must also admit that I have never done any of this type of work before so I learnt a lot of very valuable skills.


Once the paving was done and the edges secured with mortar I got stuck in to the lawn. I got a few tonnes of sandy loam delivered and levelled it out.
I also installed pop up sprinklers for the lawn

The lawn is a sterile kikuyu and I have been extremely happy with it although it needs a bit of work to keep on top of during the warmer months. It’s very hard wearing though yet soft under foot.


I also got busy and erected a garden shed (can’t have those garden tools cluttering up my car shed now can I?) and also painted the rear fence to tidy it up a bit.

Next was to create a garden area out the back. I was originally going to use fancy stone walls but in the end decided to use treated pine sleepers to keep the cost down.

I did use some stone wall in one section for a bit of a feature though. The wall is not finished yet as I need to get one of the bricks cut in half so I can stagger the two layers and then I can rebuild it and actually glue/mortar them in place.

I also cleaned up the area down the side of the house which had more of that dodgy concrete. I had a few large concrete pavers laying around so I used them and a bit of gravel to tidy it up.

This was meant to be a temporary fix to clean that area up prior to the valuation and I was eventually planning to carry on the paving down that side. Once I finished the job though I decided I liked the way it looked so I will leave it like that. I am concerned that I forgot to place weed mat under the gravel though. That will probably come back to haunt me!!

I also installed some bamboo screening on the fence as the cream coloured fence made it unbearably bright when sitting out the back. It was also causing the plants to burn very badly. The screening has helped soften the look of the fence and the plants are now thriving


That’s it for now. I still have to install a gate down the side of the house and replace the metal gates on the driveway side with an electric panel lift door (I don’t have the height available for a roller door)

All up I have spent $20,000 and last month the property was valued at $50,000 more than I paid for it. This is in Elizabeth South which has one of Adelaides lowest median house prices and very slow growth.

I paid $165,000 for the property 3 years ago which was probably about $10,000 above market value. I was aware of this and made an offer above asking price (amidst fierce competition) to secure the property as it was in the perfect location for me. I have probably saved that $10,000 in fuel costs as work is now an 8 minute drive as opposed to a 40 minute drive each way from my previous rental accommodation.

The house was cheap which means a low mortgage and I now have equity available to take my first steps in to the world of property investing.

Once I have my first investment property up and running I intend to refurbish the inside of my house. It is 17 years old and is looking a little dated although is still perfectly respectable and functional.

I don’t intend to move from this place until I have the available finances to build my dream property so I will definitely get the benefit from the outlay.

I am also hoping that once the interior is modernized that I will once again be able to have it revalued (along with the IP) and have enough equity to purchase my second IP.

That’s the plan anyway.

I don't have a lot of pics of my cars as they are all restoration projects and not really worth photographing at the moment but I did come up with a few which inadvertantly featured the cars.

The red GTS is currently undergoing a complete restoration and every step of the way is being documented.


The current list includes

1969 HT Monaro coupe
1972 HQ SS
1973 HQ GTS Monaro (sedan)
1973 HQ GTS Monaro (parts car)
1974 Ford XB Coupe
1974 Ford XB Coupe (parts car)

There is also a pic of my 1975 HJ GTS Monaro (the blue one) which I have now sold. I built that car from a bare shell over a three year period.
It was highly modified but now I am into original style restorations.

My dream property will have a separate shed for storing the cars and also another for 'works in progress'.


Starter's story from a 2010 post

Not sure what all the whinging is about, I'm a gen y and have had no problem getting into the market. It's all about taking small steps, you can't jump to your ideal house straight on your grad salarly. Also if you can't afford it, team up with someone, buy it with your significant other, sibling, parents etc.

My story:

Melbournian, started my grad job in March 09 on an average grad wage. Travelled frequently while at uni so my savings weren't huge, about 6k worth of shares and 10k worth of cash. Was living with my parents at the time, and being good with my money/savings was able to put away 70% of my take home wage. My gf was still at uni in her final year, she was lucky enough to be on a scholarship was had a bit of savings.

Did lots of research, was flexible on suburbs as long as they had shown good growth previously. Didn't follow the trend or panicked when prices were skyrocketing. Managed to buy a 2 bedder in Prahran for 350k (by our valuation it was worth 380k, but the place wasn't in pristine condition and advertised poorly). Put some floorboards in, got it revalued early this year at 420k.

Used the equity and then saved some more to buy our first IP (my gf now also working fulltime), a 2 bed house also in Prahran. We also did months of research before we bought. We found this place that seemed to have slipped through the cracks, also advertised poorly and had been on the market for a while (only 1 photo up on Domain and no floorplan, vendor wanted to save costs). From original asking price of 720k in May, we bought it for 660k with 90 days settlement (could have been even cheaper but there was another buyer who stumbled across it at the same time we did). It'll be negatively gear initially (as most Melbourne properties in the inner east/south east are), but we've left a good buffer so servicing is not an issue.

Lots of people at work, some earning lots more money than me are so surprised that we've managed to buy two properties and they are still renting. The difference is that they've just sat back and dismissed property as too expensive now, whereas we've spent every moment of our time doing research/DD and have actually taken active steps to get into property.