A Collection of Somersoft Forum Stories, Lessons & Updates

Nathan

A 2011 story from Nathan, well deserving of its own thread due to the regularity of updates :D

See source link for the original thread

My Story

Well, lets give this a try..

After hearing a few of my freinds on here talking about my progress and asking to hear a more detail story i thought id spend a bit of time running through my progress to date.

I find it hard talking about myself as i dont want to sound like a w@anker.

For those who dont know me i am 23, live in sydney and have 9 IP's so far.

Why do i like property and what is my purpose? Well I hate working and as a child I was passionate about property. I come from a family who work too hard and are always under constant stress, and dont enjoy life. I set goals when i was younger and did my numbers on what it would take to retire by the age of 30 (realistically) and that is my goal. I use to think business and all different other ideas, but as we can see now the obvious and easiest busines is property. Why? because its a commoditity, it can be leveraged, and everyone needs shelter, + there can be minimal involvement as time goes on.

How do i do it? I use to be the biggest tight ar5e around, and never spent a cent... i saved good money and was blessed that i have a mental toughness to push myself forward. was anything handed too me? NO. I have bought every property as sole owner, never had any inheritances, the only thing i have been given is the freedom to live @ home in our family home with mum till now which she is rebuilding her life and has left me to maintain the home.

Have i sacrificed anything? yes and no, i have always been conservative with doodads in which i buy and do not waste my money. I have always had brand new cars which i have purchased in cash (no personal loans). I worked hard as a child aswell in family business and bought my first brand new car in year 12 cash, and now on to my 7th car. (reason for the cars is they are tax deductable + when you do the sums say you pay $30 for car new has full rego brakes tyres etc... in a year or 2 you need to spend 3k on rego, breaks, tyres, service, etc... i sell and not inccur that cost and buy another new one for lie 7k extra so only paying small premium to get new car). I have sacrificed a lot of time however doing renos and building on properties, and yes i did work two full time jobs one year to get extra $$ (before i decided to borrow for new purchases), i still take holidays every year, still go get pis5ed on weekends with mates (however when i did renos and built properties i didnt have time for that) and enjoy the other things people my age do.

What do i buy? How do i make it happen?
Well i like to buy in boundaries of cities, and the only city i have ventured is Sydney thus far. I use to only want houses with land, but realised strata properties had their good points too... I currently hold 4 houses, 1 duplex, 4 townhouses/units. 8 of these are out in western sydney and 1 is on central coast. What are my requirements for properties? well i buy stuff in which is 20%+ under current market value, with a yield which is close to neutral cashflow. The positives of strata properties is the OSR landtax is lower as it is chopped up between the other owners, they are generally newer and require less work, and genrally can command a better rent.

Do i pay with LOE or cash and how do i fund new purchases? I use cash for everything, i am very uncomfortable with LOE. I am negatived geared now for my properties around $800pw inc all council strats repairs PM fees, everything. I am blessed to have low living expenses, and nowdays a good job which pays good $ $80-100+pa, but bought first house on $30kpa just after my 18th birthday. For my previous purchases i belived pay down debt, and have cash for deposits, if i did that i wouldnt have got to where i am, is just be paying off my first. Now days its a fair bit harder to save for deposits so i buy property under value settle on it, and redraw top its true value with the 20-40k i get out i go and purchase more property so im recycling debt but have a fairly good LVR coz im buying under market value.

Why property/debt? well with a business they are more volitile, especially in today market 95% businesses are in the red and require manual labour. Because the gold standard was removed from the global monetary policy 30 years ago, we see inflation occouring which has always happend before but mainly in the past on a supply and demand basis, not on a currency basis, but over time debt becomes irrelivent thru inflation, and as long as the cashflow is supporting your debt the underlying asset will increase in real dollar terms. lets look @ this scenario... Mum and dad bought our family home 40 years ago for $13k, dad was probably earning $50 a week, bread was 10 cents, interest rates sky high, and petrol 5c a litre, etc... now the property would be worth $500k, wage would be $1000pw, and inerest rates are lower, and bread is worth $4 a loaf, and petrol worth $1.50 a litre. So as long as we have inflation property with debt will outperform in medium-long term. Now the house that was bought in 1970, would rent for $20k+ pa and the purchase price was $13k if that cost nothing to hold then and they bout 10 of them theyd be earning $4k per week, and have the whole portfolio paid off within 6 months. Property without debt doesnt appear as good investment.

Where to? Well i have a plan of being retired by 30, it is a hard goal to track because in last 6 months the world economy has changed forever, 7 years time is a long time. i do have many factors leaning towards me... (rental increases, interest rates falling, property booms heading towards me, and a massive chunk of centro shares, which may turn good by some chance and clear all my property debt) I plan to be holding around 20 properties by the age of 25.

Summing up, my father had massive heart ataack and died when i was 16, he was 62, and busted his ar5e for 40 years + to not enjoy his life as much as he could have. I wish to give myself the freedom of choice for myself and my family and am committed to my plans today. I wish to be so F*ckin bored i have to decide what to do... play on the jetski or g play golf? i wish to be married wih children, and drive the kids to school and pick them up every day, not put them in school care because i gota work 2 jobs to pay my PPOR. I am not after a ferrari with gold chains, but a lifestyle.

What will i do when i reach my goal or along the way? i odnt know i have planned goals, but they dont always plan out to the way they should... but i invisiage the freedom + travel+ nice luxuries i have been saving myself for, always wanted to be an actor, and educator (not the spruiker type).

I know to some this may sound like a pipe dream, its not, im passionate about this, i am doing it, and people can have their opinions about what i do, i will check in with them @ 30 and say hi at their work.

If there is anyother questions you may have feel free to ask im pretty open person. There lots which i cant think of @ present.

Cheers,
Nath.
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Oc1

A 2006 story from OC1

Hi Guys

This is my story to date. I'll keep it short as well (and hopefully not boring).

Aged 27 currently. Finished uni at 22. Spent 3 years working in the Banking & Finance industry. Last couple of years working at a couple of Universities here in Melbourne (part-time 6 months of the year).

I started investing in property when I was 24. I had no money as I spent what I earned so I took out a $10k personal loan to get started.

I purchased my first in Mooroopna and bought a couple more in Bendigo to begin with 3 wraps in regional towns in VIC. I refinanced Bendigo to obtain some more cash and headed up north.

I went and purchased 2 properties in SEQ...Banora Point and Tugun. They have gone a nicely so far and I am planning to develop the Tugun property as its zoned as a duplex site. Both of these see water as it normally attracts a premium.

After that, I thought this property stuff was great fun so I went out to buy some more. Friends thought I was mad and the oldies told me to settle down and not get too far ahead of myself.

Bought a 2 bedder flat along the beach in VIC, did a quick reno (and obtained water views as a result) and increased the equity in the property. All of a sudden I realised the potential of property in terms of obtaining financial freedom. I thought "how long has this been going on for????"

I then took a trip to Europe for a few months and didn;t buy anything for 6 months or so. Once I came back I tossed in the job at the Bank and decided to spend more time purchasing property. The last 18 months have been pretty good to me.

I bought and wrapped another 12-15 more houses in regional towns to increase cashflow. The cashflow helps me support my negatively geared properties. Some of these wraps are now in the process of refinancing.

The last 12 months I have been more keen on land. I have 3 developments going on....a 3 unit development, subdiving a block of land into 2 & building 2houses, and splitting another (corner block) for a couple of 2 b/r units.

In the last month, I have purchased 2 houses to wrap, 2 buy & hold's, a block of land and I have have offers on quite a few more (for wraps and duplex sites).

My strategy is to force growth and/or cashflow and not rely on the market to provide this...obviously the growth will come in due course.

I have also built up a share portfoilio for growth (though borrowed funds) which have gone up in value and write covered calls on other shares I own for income. This allows me to support my expenses and reinvest.

Thats about it really....future plans are to do what I am still doing and get to a level of developing done by some of guys here on the forum. You guys are truly inspirational.

Next step is to move out of home.

Cheers

OC1
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Grossreal

An interesting read from 2006 into Grossreal's story (or like may stories here, only a part thereof) that is both interesting and somewhat confusing. Kudo's to GR for using "word" to benefit the readers though

Hi all

I will bite

Just a short story on in the high interest rate era and it problems.

At that time I was a reasonably successful supplier of service to the garage door industry and had 4 guys working with me.

We had a cheap house for the era and was going well then the rates stared rising before long the rates we up around the 13%.

I was ok as I had very good cash flow (and at that time it was cash) and we would be carrying around 10k a week in cash, in his infinite wisdom the prime minister of the time (Mr Hawke) decided to take on the pilots.

This did two things 1 crippled the tourist industry and 2 sent interest rates higher.
Now everymans loss is another mans gain.

I had at this time started a new business ultraclean laundries, its was a group of laundries that specialized on corporate Laundries we had the crest, top of the town, oxford tower and a few government dept inc corrective services among others as our client. what Mr. Hawke did was basically kill this company off, as the hotels had more staff then guests at times.

It took about 4 months for the hotel industry to start to collapse the cost were killing them. (I remember the then informus “it’s the recession we have to have” statement from the then Paul Keating and each time I hear it send shivers down my back. It killed a lot of hotels) so a very sharp pencil came to me with an idea that at the time I thought was stupid but like most stupid things I run with them.

His idea was to go to a liquidator and ask for an option for oxford towers hotel 130 room hotel.
Ferrier and Hodgeson was the liquidator.

We had 3 problems

1. the rooms were 27sq each
2. they had no laundry facilities
3. they had no resale history

So to get around this we did the following

  1. Strata the units thru Sydney council they would do that if we could supply laundry facilities
  2. I set up the first communal coin operated laundry they wanted 60 machines I gave them 10 washers and dyers
  3. We got a group of investors to put up the money to pay for the renovation of all the rooms and the option allowed us to sell and take deposits and at the settlement pay for the hotel at the same time.

We Reno in 2 months we sold all the units within 4 weeks.

The whole hotel industry was in a dizz, the crest was sold to the Koreans for 22 mil the hotels val on the liquidators books was 60 mil the replacement was 45 mil.
The Koreans Renoed and turned into what it is today a Korean bath house with rooms above.

The Top of the Town is a unit development the same as Oxford Towers.
I hedge and even then used a split loan setup but did it myself using two account with the same bank and as I had good cash flow the rates didn’t kill me but a few it did.

I sold and bought in the same era I bought at 45k Granville sold 2 years latter for 95k bought at 85k merrylands ( Jenman Real Estate and my sales person who still is a friend was Neil Jenman and his office had only been going about 6 months) ( bought from a Greek who lived in Greece and the interest rate was at 14% I think, sold for 135k.

At this stage I had a lot of option I could buy for 240k

  1. A brand new binet house in castle hill (bank in possession).
  2. A castle in seven hill ( and a castle it was with draw bridge mote comm. Kitchen the lot. It was a theme restaurant it had about 25 rooms and was on 1 acre of land in the middle of seven hills.)
  3. A 3 storey full brick house in Liverpool and the top floor was over 12 mtrs to the ground so was the largest at that time house in Liverpool 14 car garage massive house( bank in possession)( this property was on the market via the bank at 380k and I had them down to 240k).
  4. And a property in Ashfield going to auction.

I did a job on the Ashfield property got a report and got the valuer, inspector to give me a list of faults and added a few then tried to buy before Auction from the bank.

The bank gave me that they would not accept under 250k.

I then went to auction with my report photo copied in a pack of 10.
Mine auction was 4th on the list and walk around the other before asking if the new anything about this house 4th on the list of auction for that day, that’s about to fall down and why the council hasn’t sent a demolition order I got rid of all 10 copies. the seed was set.

The auctioneer asked for a opening bid no bidders (wonder why with that many defects) so the vendors brother (who at that stage I didn’t know) opened at 220k, I went 221, he 222, I 230, him 234, me 235 and then thru him a 1 dollar coin and told him to give it to the auctioneer and the house is his as I ‘m not going a dollar more.

The Auctioneer said he would need to get directives and I said why he’s stood here either knock it down or I walk and I still have this house now and that was still with rates in the high10%, they were by this stage coming down.

I got out of the Laundry industry but kept the laundry service section and still do have it and because of the success of the property section moved into real estate and have been dabbling in it since then.

The high interest rate era is a killer for a lot of people but it also opens doors that you would never think would have opened.

For me I don’t think we would have 1 br, studio, 27 sq mtr apartments if it was not for this era they are the bread and butter of small investors now,
but were unheard of then.

When you get a pressure cooker and that’s what this era was you have lots of opportunities you must have cash flow to take advantage of them.
And it gives you great power to do some of these neg’s.

I got a great thrill morbid as it may seem to neg nab down from 380k to 240k and then say sorry found something else and not go thru nab for my lend but that’s me.

There is no such thing as the bad old days as you learn to adjust to the state of region you are in.

For me the one thing that I have learnt is that yes there is a silver lining in any time zone you just have to find it.

Business has been going for centuries and it constantly changes you have to change with it or against it.

For me interest rate changes are not that much of an issue you adjust your forecasts to allow for that.

Its focusing on your goal and adjusting you mind set to that goal that’s more my concern.

This is long and have done it in word to help out.

Sorry if any headack’s
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Miakat

Another blast from the past with a post from Miakat in 2002

Hi GoAnna and all,

I was surprised when you said you wanted to here my story...I didn't think you would remember me since I'm rarely posting on the forum these days. But I will be at the Big BBQ, so will catch up.

I'll make my story quick.

I started working at about 12 and learnt from a young age to save, save, save. By 15 I owned my own car and at 16 I started to invest in shares. I still have my first Coles Myers shares and am still enjoying the discount and dividends.

From 16-19 I kept buying small packets of shares as money became available.

At 19 I hooked up with Grant, my current partner. Together we put a plan into place to save heaps and invest in managed funds together. These managed funds grew quicker than we could have expected, so we started to get into direct share purchases as well. In our final year of Uni we travelled Europe, then came back and set up house and bought a new (second hand) car to replace my ageing VW beetle. After Uni, we both got good paying jobs and proceeded to save and invest in managed funds again.

At 23, we bought our home using the FHOG and some of our savings. We left the shares and funds alone. I had so much fun buying our home that I decided I wanted to do it again.

Over the last 18 months we have bought 4 investment properties. The first three are all well and truly positively geared as they are rented to students. They have also seen huge capital gains due to a booming Newcastle market. The latest one was bought as a bit of a fixer, so we will try our hand at a bit of renovation later in the year. We are not buying any more just now. We want to fix some of these places up to improve our equity position even more and ensure we are all cashed up for some bargains in the future.

I'm now 25 and plan to be out of the rat-race after my next promotion in about 3 years. I want to get into business, but my full-time job means I can't do it just now. Grant and I are travelling to Europe again next year, and I hope to continue travelling until I've seen the whole world. That's my dream.

Miakat
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Manny's

Manny's Journey from 2002 is also posted below for posterity

Howdy all,

after reading so many great adventures, I couldn't help myself & decided to give it a go...

Well, I'm also fairly new to IP investing & to be frank about it, I got into it by pure luck. I got married at 1995 (aged 25) & bought our own home, I had a full time job in the IT industry (completed my computing degree end of 1991) & my wife worked casually.

I had bought our home prior to getting married (managed to save up a deposit & bought it aged 23)... Anyhow, you may ask how did u get into IP investing, well this is the lucky part, we were given a block of land by my in-laws around 1997, which we just hung onto for a couple of years & seeing it was a corner we had 2 options;

1. Build a BIG home OR
2. build 2 villa units, & you guessed it, we built the 2 villa units, which provided us a great lesson (dealing with architects, council, finding a builder, going through contracts, paying all sorts of fees to utility services & councils, etc.).

The units were completed mid 2000, but going through this whole exercise I got to realise the huge capital gains we achieved with something so simple (adding all of the expenses, they were cashflow positive from day 1 without considering the depreciation schedules).

Around mid 2000 we purchased a weatherboard home on a decent block size (my whole idea is that land appreciates & if the land permits to whack another villa unit at the back & renovate the front home, I would be way in front). This home has almost doubled in value from the minor renovation I have undergone & is also cashflow positive (good considering it is around 12km out of Melb) & the land in the rear is still there ready for me to develop at a later stage.

A small break was needed here due to quick additions to the family, daughter now being a little over 2.5yrs old & son 15months old, but got back into it early this year.

Purchased another old home, focusing on the land value, huge corner site at a beach-side suburb of Melb which will fit 3 townhouses on, but for now this place is let out (negative cashflow for now), but when the time is right I will look at developing this site (which based on my sums will increase my equity substantially & should be cashflow positive when constructed)...

I'm a bit like some of the other forum members, not in a huge rush & want to see how the market will go with the interest rate increases... My goal is to develop these sites & to get permits (probably do 1 site at a time not to cause too much strain on the cashflow), but with the interest rates not being stable I may stall building to see if any other opportunities do arise, but to summarise my way of doing things are:

  1. Buy well
  2. Don't rush
  3. look beyond the old paint you see
  4. look at the land value & where the easements run (to not interfear with further developments) & see if there is a possibility to further develop
  5. Keep IPs clean & in good shape (don't expect tenants to live somewhere I wouldn't, by that I mean having the home in good condition, ie. paint, gardens, etc.)
  6. Develop or renovate & hold
  7. Go back to basics using the KISS theory, Keep It Simple Stupid
  8. Don't let others with old mentalities influence your decisions, if the figures stack up then go for it
  9. Above all, ensure your partner (wife/husband) understand what you are doing
  10. Have a good group of professionals you can work with, ie. builders, property managers, trades people (although I tend to enjoy doing many of these tasks)
  11. Oh, how can I forget, networking!!! utilising such a great facility we have here & talk to friends that may have similar interests...

(I could add more, but most have been covered by other forum members)...

That is a quick snap-shot of my doings, but as all you guys, wanting to get out of the rat-race once & for all in the not too distant future (probably focusing on IPs)...

Cheers,

Manny.
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DarrenB

A 2002 post by DarrenB and well before my time, as with some of these older posts it would be great to see how things are going now

Its nice to know someone still remembers me!

I started wrapping in mid 2000 and decided do it as a full time business in February of this year.So far I have done 30 plus wraps, that generates 100k plus of passive income.

I've wrapped 35k houses upto 145k. I initially had a 5 year plan that started in 1999 to get out of the rat race. I hoped to achieve it by doing renos and blocks of flats,etc etc. I found with wraps, I could accelerate my goals and did it in less than 2 years.

I tried to build a property portfolio the normal aussie way, starting in 1992 but found out that after 3 melbourne properties that were neg geared, I was having big difficulties convincing lenders that I could afford more.(the old serviceability issue)

Being self employed and not being in a big tax bracket,didnt help either. I realised neg gearing wasnt for me, especially as my melbourne properties were costing me $800 a month to hold and this didnt include normal wear & tear repairs. I love real estate, but I thought there had to be a better way.

I was starting to get sick of my one man band business, when I decided to attend a John Burley intro seminar. Well that $45 investment changed my life. When he started to talk about properties that put cash in my pocket, I was hooked. I spoke to various solicitors, accountants, well meaning friends, who said the same thing "you cant do that here" I was starting to come a bit discouraged at this stage, when my accident I met David Bradley.

With Davids guidance, I did my first wrap and bingo, I now have 30. I should have 50 by early next year.

I hate work and I'm lazy, so passive income from doing a few deals is a great way to earn income that pays the bills and funds more investments.

I hope my story is of some interest out there in forum land.
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Thanks redwing, interesting to read these.

Btw, I'd be interested in hearing your story redwing if you are willing, you're a veteran here now, not sure if it's already been posted somewhere though...
 
Thanks for starting this great thread Redwing! Am enjoying the reading and getting motivated again. Haven't been active in the forum for a while (been busy renovating IPs) but want to start looking at purchasing my next IP, so these stories are quite timely and as you've said Redwing "as with some of these older posts it would be great to see how things are going now".

On New years day at a family gathering I had a long discussion about the wisdom of purchasing property this year. I was told by my nephew (late thirties) who has no IPs, that it was a very bad time to buy as everything was going to collapse in next few months and anyway, how could I be certain that the bottom was reached, Property my go down further...better to leave the money in the bank etc etc.

No amount of facts could sway his opinion that I was doing the wrong thing. In the end we parted on good terms and I said, 'talk to me again about this in 2 years'. Ironically we were partying in his grandfather's house which he bought in 80s, never did it up because although he was a real estate agent he never invested any money just spent it all. Now he's 73 and still working part time, and can't afford to renovate his house.
 
Jakk

From 2003 a great story by the self professed Slum Lord Extraordinaire Jakk, not so sure about the Slum Lord but I agree with the Extraordinaire ;)


Jakk


G'Day all,

Beware: (Long Post....Hans Christian Anderson would be proud)

A story I would like to share..........

around 3 years ago I had a net annual passive income after loan committments of around $35K from property investments and figured twas time to take things a little easier and basically leave the so called "rat race" and do what I wanted to do, when I wanted to do it and not be accountable to anyone else.

I was pretty impressed with myself having achieved this level of "perceived" prosperity in a period of only 7 years and having done this all by myself.

I didn't really talk about it with anyone and I figured I had been really lucky, because as sure as hell I didn't think I was any smarter than anyone else, I just assumed I had been in the right place at the right time and things just happened to me which had turned out for the best.

I also realised that regretfully I had a wife and 3 kids that were a vacuum for money and that my $35K per annum would need to be supplemented somewhat if I were to continue to maintain my mediocre existance. I felt that I should be able to earn at least another $15 to $20K working from home as a Licensed Estate Agent as I had made quite a few contacts during my working life.

I now found that I had heaps of time on my hands and started spending some (a great deal actually) time on the internet.

Property was my great fascination and using that great search engine "GOOGLE" I would spend hours, days, weeks on there trying to uncover property related web sites.

I remember like it was yesterday the day I came across the Creative Real Estate Investing website, and I recall doing an all nighter reading every post on there. ( actually didn't go to bed that night at all, kids got up and I made out that I had got up an hour earlier, told the wife I fell asleep at computer).

The site was by a bloke called Andrew Gray I think and there was reference to the "somerset" forum.

Well that became an obsession, to find this "somerset forum"

Didn't take much, I found it, but it was deserted, it had been replaced by a newer one, not this current one, the one before this one, still I read the posts and figured it had been frequented by Aussie investors.......I was one step away from property heaven.

Found the newer forum, (the one before this one), and starting reading all the posts, didn't actually register for ages, (months), just kept reading the posts.

I was amazed at how many like minded people there was and how they seemed to be such a close knit group, I actually read that others had done what I had done and some so much better and smarter than me.

I figured "this is great" I can read what they have done, learn and also do what they are doing and they will never know.

This was a turning point in my investing career, I now, no longer felt that I had done so well, I felt that I should have done better.

Just reading what like minded people had achieved spurred me on, I was no longer Robinson Curusoe, there was others, average people, who were living off property investment income.

Yes I had read Jan Somers books and others as well, but when you read a book written by someone, there is no interraction, who knows if they exist or not, but these people on the forum were real people, they were in Australia and they were alive and posting everyday.

I registered so that I could post and hoped that if i did eventually post they would show mercy and not try to belittle me by making me out to be a novice and not worthy of being part of their close knit online community.

Then I took it one step further, I logged into the chat room.......
Immediately I was pounced upon by Asy, probing questions from her had me quivering at my keyboard but the worst was yet to come. The next morning I logged into the chat room again, this time TW was on and she also did the questioning thing.

I wrote earlier in this post that finding this forum spurred me on, you better believe it. I recall telling TW that I owned 17 properties back then, the number is now over 50.

my net worth has nearly quadrupled, ( a property boom like we've had has also helped somewhat..), I no longer need to supplement my investment property income from other sources if I don't choose to, I had real funding problems back then, I have learnt other ways to fund property purchases and development.

No one single post or one single poster made this change in me,
but a combination of reading postings from like minded people with a desire to better themselves through property investment and also the questions that are answered from learned people that probably dont apply to my situation today but may apply "one day."

There is such a diverse mix of people on this forum, and lessons can be learnt from others activities and mistakes continually.

Yes, being around or involved with like minded people has definately made a huge difference to me and also provided the stimulus to keep moving forward in the face of adversity.

hows that saying go?............."You can't Soar with the Eagles when you surround yourself with Turkeys"

regards
__________________
Jakk the Slum Lord
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alwayscurious

A great 2005 post from alwayscurious

Right. Having just come off the Australian / Age/ SMH newspaper sites, I find myself feeling blue..

IN the midst of newspaper stories about housing doom & gloom and plunging house prices & can't feel my legs it's so bad & shonky dealers & crashes & naughty people doing bad things & sob sob..

Here's a chance to do like many others have done and share some positive stories, keep morale up about why we do what we do:

Disclaimer:

Read the market - do what is appropriate for your situation. Take action, but take wisdom first.
Don't be guided just by feelings but by research & wise advisors.

My story:

1995. Broke. in high school.
1996. Broke in uni with shocker of bomb of car. working several jobs.
1997 In debt -$4k for a car and stony broke at uni. working several jobs.

1998 Got married, Still in Uni - paid off car debt, saved $5K. (wow, what a kick up the pants getting married was!!)

Got 'lucky' by working hard at uni & getting a fun, wellpaying overseas job in 1999.

2000 onwards Invested in managed fund share portfolio . (1999 was just fun! no savings to speak of there..

Saved up cash deposit on first home by working overseas.
July 2001 Came home right smack bang near the start of Property Boom 2001.

Oct 2001 Bought newish small house in Brisbane. $150K put down 27K deposit.

Spent a bit of time & money - repaint, new curtain, aircon, insulation, patio, paint fences & gardening.

June 2003 Bought 1st IP in (bit slow to wake up to what was happening around me!!)
Bought 157K, was rented 170/w.

Read Reno Kings free tips off website and API I could get hands on.

Re-tenanted at $210, then rent shot up to $245 (fenced, painted)

Oct 2003 Bought 2nd IP in - North QLD. $67K
Dumpy Unit. limped along at $135, then $130 with lots of maintenance and long untenanted stretches.
OOPS!! This cost us badly per week.

July 2004 Sold Shares to stop the bleeding (was margin loaned as well) cover weekly losses & have holding costs

Oct 2004 Sold 1st Home $280k and Bought much bigger, rundown house in same street for $298 (1st house too small)

Feb 2005 Sold 2nd IP ("dog") after Renovation - Valued at $85K before Reno, sold for $117K after 10 days.

Mar 2005 Bought Reno Kings book. Stories are so cool. Want to do it all over again.

Aug 2005 Current position.

1 house that we can stay in for a v long time (comfy, big, practical & convenient)
with similar mortgage to when we 1st bought in 2001. (principle and interest)

Setup LOC for investing against this.

Setup 2nd LOC for doing up own home. (non deductible expenses..)

1 neutral geared IP (1st one) with same amount owing as when purchased in 2003 (interest only)


Next Steps From here:

Continue 'fixing up' our big, comfy, house to add value & make comfortable: ongoing

Set up Trust (HDT with Corporate Trustee) Done
Invest in Share portfolio (small amount) Soon.
and use this portfolio to park savings in, along with current ING account

Research for reno-able, rentable unit/small house within driving distance: ongoing

Buy within trust using current LOC on house to 'loan' to trust, : soon
allowing me to negative gear effectivley

Renovate as soon as 1st tenancy expires if tenanted,
or straight away if untenanted.

Re-finance to cover renovation & loan costs.
Re-tenant immediately.

Take 'profit' (difference between refinance and original) out and do it again.

Renovation Tips learned & used:

  1. repaint ceilings, walls - use spraygun if you are keen, or just roller if you aren't as comfortable. Use semigloss acrylic (satin finish) Repaint doors in 1/2 strength wallpaint (gloss enamel).
  2. have electrician replace all light switches and GPO's (buy them yourself, but get sparko to fit them)
  3. replace light fittings with nicer ones that fit to the bayonet (DIY)
  4. High ceilings? Use chinamans hat - white on inside, stainless on out, hanging on string - looks funky & cool.
  5. repaint / regrout showers. New shower rose (head). New Taps.
  6. resurface bath / shower basin if old with White Knight Tub & Tile
  7. new bathroom vanity
  8. New Toilet cistern & seat
  9. Paint doors & new shiny brass number for front door.
  10. security doors from bunnings (only $90 or so)
  11. plastic wood blinds from Supacheap Amart
  12. Aircon in QLD - fit right into window - can be installed cheap by glaziers. (get sparky to run new socket if needed, we put mine in ceiling)
  13. Repaint or re-cupboard kitchen cupboards
  14. New tap handles
  15. New carpet & Lino
  16. New door handles throughout
  17. Everything that wasn't painted or carpeted over!
  18. New doors are cheap if yours have holes, else patch them.

Reasons for doing what I do:

To be in a position always to give & provide for others & our needs as we see fit.
To provide a heritage & inheritance for my family:
a great life, education on wealth, generosity
To have choice later over whether I stay working
or move on - to not be trapped.
To keep from getting bored!

What's your story?

Any constructive pointers?
Source

And a 2006 update

We were able to purchase a first home in Oct 2001, in a OK, working class suburb, tiny 3 bedder, single lock up. Married but no kids yet.
Purchase price $150K. Happy as pigs in mud!!

Was reading on how to pay off my mortgage as that was the biggest financial goal (isn't it the great australian dream?), & sweating on it of an evening.

Read Your Mortgage & How to pay it off in 5 years, by someone who did it in 3 by Anita Bell.

Agreed with some principles but not all, and it got me thinking & talking to people

18 months later still in same house. one child on the way!

Someone recommended reading Jan Somer's book, and I started and finished it in one afternoon.

Talked to someone who was already doing all this: they gave me mortgage broker & solicitor contacts.. Went and saw them immediately.

A few weeks later - was putting offers on properties but getting out priced quickly in our suburb. started looking to the South side of brisbane.

Our baby was born which put a stop to things for a few weeks....

a few weeks later - after personally spending the whole day viewing properties, and weeks prior investigating:

We were signing a contract on our first rental property, in Loganholme, under-rented and under valued. Baby was about 6 weeks old, so Mrs A/c had to feed him in the back of the car. I won't be getting away with making her go through that again! Next property is more up to me what and where, just discuss with her, but no dragging around town please!

Purchase price $157K, rent $170.

Changed the property manager and the rent went up immediately to $210.

Since then bought a renovator Unit and sold it 15 months later for good percentage profit, and bought a new bigger family sized PPOR 150meters away from the first!

renovated and sold original PPOR (too small for growing family)

So we are now in the position to buy and hold our next IP, having seen equity grow, adding value by adding a 4th bedroom to our current own PPOR and reading LOTS more books *(currently reading Michael Yardneys - v good by the way! )

There's lots more pieces to this story but that's where we are at now - along with another child, bigger car etc etc.

Third child planned, also next IP planned shortly. (This year!)

All this was done on one wage with a full time job. - so it can be done.
There's plenty of other's who have gone higher, faster though, and with less to start from.

Just a note - the original rental property we still have. One lease has finished and the rental manager has put the rent up $15 per week and it is now $265 per week! wow.
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Dos

And another motivational story from 2006; this one from Dos

Hi there,

Some great stories!! I thought it an idea to add our situation as I know from having read stories over the years that these types of stories can be inspiration enough to admit to oneself that yeah, I can do this!!

Wife and I purchased then PPOR for $150k in 2002. Big money back then for a couple of 21 and 22 year olds!!

Lived there for almost 2 years and at this point my step father gave me Jan Somers' book to have a look at. The value of the place we were in had gone up so we started looking for something bigger with a view to renting out the one we were in. So found a lovely place, big house big yard but knew it would be out of our league!! Went to the auction with no intention to buy and it started REALLY low. So we bid and kept bidding and and when we picked it up for $40k less than what we thought it would go for, we had a new PPOR. Paid $291k in late 2003.

So I got the bug and went looking!! Managed to find a little GOLD mine at a Qld Uni town and purchased about 6 months later for $140k, acheiving $200 a week in rent.

So situation now is:

PPOR - Value: $380k, owing: $297k
IP 1 - Value: $305k, owing: $126k
IP 2 - Value: $160k, owing: $137k

Very keen to get the next but unfortunately work has been hectic and I really haven't had time to organise some things. Need to commit more time to this though as it is our future!! Missed a couple of opportunities so really need to get on top of things again!!

Dos.
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Belu

Here's a 2008 story from another one of the valued Somersoft Community, this one is from Belu

Nice numbers!

I am 22 (which is more Gen X isnt it? Thought Gen Y ended in about 1980-81 so 27-28 year olds.

Anyway…

I just bought my first IP, settle on it on Sept 23rd.

$185k - 2 bedroom flat in Glenroy off the main road and walking to shops and station.

Plan is to build cash up over the next year for another purchase, have just changed jobs into something which is more enjoyable and better paying so just waiting for time to roll on.

So, plan is 1 more in 12 months time and another a year after that. Both should be from cash buffers and I may be able to get a 4th at the same time as the third with equity from this (bought at $185k where market value is probably around $200-210k).

So I will keep hanging around, posting and do a quick paint job on IP#1 and start planning for the next three by the time I am 25 hopefully

Cheers

Ben
Well I left highschool and started a cadetship at KPMG 1st year of uni.

It was tough, earning $21k a year is only about $350/week so not much to play with!

After the first year i had spent a bit, had no savings and $1.5k on the CC.

In the second year I started a business, and turned around my finances and paid off the CC, paid a couple extra thousand to uni studies and saved $2k (about a $5k or 25% gross turn around).

Then for the next two years up until 6 months ago I was at uni, working about 8 weeks a year at KPMG and running my business (for the experience, not the money). It also let me realise auditing wasnt for me.

So 6 months ago I went back to KPMG, have saved enough from working etc for the first deposit + paying KPMG back $10k for assistance whilst I was at uni. Aim to be saving $1200/week and by the time I get my tax back at the end of the FY09 I should have about $30k ready to go for IP2, then rinse and repeat.

Ideally my goal is to get to $2M in property @ a high LVR. a 4.5% spread on the $2M is $90k neg geared which is worse case senario that I want to get to. I figure if I can get to $2M by the time I am 30 and only have natural growth I can retire by the time I am 45. BUT I plan to now buy land in key areas of melb (meaning houses on land content) and try to develop to build the equity.

So, it is all a bit away - I am back to the shadows to pop in with comments here and at MIG as I have been for the last three-ish years
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Shadow

And a 2007 contribution from Shadow that surely requires an update

Hi Alex... wife & I both work in the IT industry, and we have no consumer debt, no 'doodads', and no kids (yet). So, including the negative gearing benefits, and rental income, we can service about $2M... I don't think that is incredibly high, probably higher than average, but there are others on this forum who manage much higher debt (judging by other threads I've read).

No investments yet! Bought PPOR two years ago, and only then started to read about investing. Before that, I thought paying off the PPOR as fast as possible, and then living on income and saving for retirement was the way to go... brought up to believe all debt was bad etc.

Picked up a copy of API magazine by chance a couple of years ago, which got me thinking about investing, then read one of Peter Spann's books, after that I was hooked. Read many investment books for the next year or so, Rich Dad Poor Dad, Richest Man in Babylon, Somers, Yardney etc... and realised there was a better way to get ahead.

So the new plan is to invest in high growth properties, and take on as much debt as possible! Then diversify into shares later (haven't studied that area in enough depth yet).

That's my story so far! Will buy first IP in the next few months, then keep buying as many as possible for the next 5 years...

Cheers,

Shadow.
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Dazz

And another one of my favourites from the forum, a contribution from Dazz.

As with many others it's not the whole story.... but well worth the read.

My property journey to freedom took 5,175 days.

5,175 days of juggling two jobs - the standard job and the 'build a property portfolio' job.

Each day a step towards a passive retirement from any form of paid work.

As the portfolio got bigger, the job became harder as I continually had to feign interest. Wearing the hat of 6 or 7 CEO's in the morning, and then taking them all off and walking into an office and being a numpty where I had no financial authority and not invited to any decision making meetings was difficult to swallow. I didn't like wearing the worker hat.

I struggled alot with the duplicity and having to "not tell the truth". When sitting around at the meeting table on a Monday morning, 5 or 10 minutes before it starts and your boss leans over and asks : "So what did you get up to on the weekend ?? We went down to the wineries and had a fabulous time" Leaning back to him and saying "I spent the entire weekend closing a deal to buy a huge inner city factory on a few acres so I can eventually get the hell out of here" doesn't go down so well, so you end up looking like a wet soppy blanket and saying something like "bit of gardening, had a BBQ with the rellies over"

Anyway, that pathway with the 5,175 stepping stones has been trod. I'm at the end of the track, and looking around at all of the lovely tracks stretched out before me. They all look great. I reckon I might hang around here for a while before striding off along one of them.

It's quite sad to look back down the track, as I have alot of fantastic memories striding down the track, but it is extremely daunting when you attain your major life goal. Financial freedom is quite onerous when you have it in your hands.

Some observations that I made along the track, for those that are treading it still, or are about to start. Note well....many people are doing the exact opposite to what I did and are doing extremely well, so discard what doesn't suit you ;

  • Priortites need to change as life's big moments come along - marriage, kids etc.
  • Your CV at work becomes less and less important. Courses done, degrees attained, titles on business cards - they all fade away.
  • Things ramp up - don't get despondent in the first couple of years. It gets parabolic in the middle years and hyperbolic in the latter years. I found years 13 and 14 were far more productive than years 1 through 12 combined. Compounding really does kick in.
  • You need to change your thinking.....what worked early on doesn't cut the mustard anymore.
  • Contracts become central to everything - get to be excellent with them - nothing happens without them. Don't delegate your contractual knowledge to lawyers / PMs / REA's. Know the law that governs your business.
  • Negotiate hard. 1 hour of tough negotiations can be worth 2 years of working hard.
  • Forget these jobs that you love but don't pay anything - go for the job and industry that pays the most. If you get your act together, it won't be for long. The sacrifices made were well and truly worth it.
  • Don't get divorced
.

That'll do for now. This Saturday arvo feels quite normal, but I reckon Monday morning it's gonna hit home that I am not going to work.

The first thing I need to work out now in my 30's is when people ask me "so what do you do for a living". I don't want to say a rent collector, but that is what I have become.
Source

We had a bit of a bad trot with a residential house we bought in Rivervale, about 4km from the Perth CBD back in '97.

Thought we had got a bargain, a nice 3x1 fibro tile house on 683sqm of dirt, with a fantastic rear yard. Looking back, I think we got swayed too much by the yard's presentation, and with my wife being from outback Queensland, she was highly influenced by the pawpaw and mango and fig trees growing healthily out the back. Lawn looked a treat and everything seemed OK.

We checked the title out, and saw that the same family had owned it for 15 or so years, with one change 3 years prior, and that was when the husband and wife divorced. The husband had kept the house and the wife moved on, so he was living there alone, and obviously been "tinkering" on the inside for quite a while.

Asking price was 129K, and we put an offer in of 120K. He came down to 127K, and then we upped our offer to 122K. To be pedantic, he came back with 122.5K, which we were very happy with as he'd moved heaps. We signed the dotted line and thought we'd got a bargain.

Just at this point we shifted over to the Middle East to work and left the property in the hands of no less than 3 'reputable' PM's. Four months later one of them finally notified to say they had found some great tenants, 3 young lads and everything was great.

Tenants moved in, rent payments immediately stopped and parties immediately started. We had neighbours complaining to all and sundry about parties going on 'til 4 in the morning, drug deals happenign left right and centre....you get the impression - party central.

We kept getting reports from the PM saying everything was just great, at $20 per month postage and petties on the accounts, as an example. Tenants were looking after the place and the gardens were a treat.

We'd also ticked a little box or two on the management form saying the PM was authorised to take out CR / WR / LT / Ins / Maintenance / PM Fees etc out of the rent and to credit our bank with the surplus. After a year of leasing out, we hadn't received a penny.

Came back to Australia, and the wife and I decided on our first afternoon back to drive past the place and have a look at "our lovely house". We sat outside in the car on the opposite side of the street and the wife instantly burst into tears. I got a tad miffed.

Where our front lawn had been, 3 dead cars were upturned, with their bare axles exposed. You couldn't see the front door for garbage and car parts piled high. The garage was far worse.

Despite a "no pets" policy on the PM form, they had two adult bull terriers in the backyard, and they'd just had a litter of 6 puppies, with full reign throughout the house. There was a further 4 cars in the backyard in varying stages of being torn apart. They were operating the place as a "chop shop", buying wrecks for $ 50, doing them up and selling them for $ 500 to their druggy mates.

All of the fruit trees out the back were dead, having been smashed into by what only could have been a demolition derby conducted in the backyard with the wrecks.

Next day I called a meeting with the PM and her principal, and we met on the kerb outside the front, with a report they had faxed me 8 days earlier stating they'd just performed an inspection (which they charged us $ 60 for) and everything was just as we had left it. Their only comments were "I'm speechless" and a shrug of the shoulders and "What can I say ??"

They reminded us it was our property not theirs, and if we read the agreement closely, it clearly stated that the Owner held the Agent harmless and not liable for any risks associated with the property.

So, after I ran them both off, and quickly physically evicted the 3 hopeless druggies (no Mr Nice guy - trot off to the tribunal for me) I set about, with alot of generous help from the entire extended family refurbishing the place.

Spent 3 hours digging with a shovel just to get to the front foor so I could open it up, 17 trailer loads of their garbage to the tip, both dad and I got rashes under the arms cafter carrying out the flea infested carpets where the dogs had had their puppy litter on the floor of the main bedroom.

My wife was out the front 2 days into the clean up, when a young 15 yr old girl came up and asked if this was the place where she could score a foil. My wife said "A what ?" To which the girl said "Don't worry" and turned around and left quickly.

The next day I was out the front with a wheelbarrow and a big V8 pulled up, with two big heavy looking characters emerged. Instantly twigged they were the suppliers looking for their money as well. They asked where my tenant was. I said "I don't know, he took off and owes me $ 800, if you see him tell him I'm looking for him." They said with a deep low voice "If we catch him first, we'll snap his spine."

So, 3 months of intensive full time renovations, $ 25K worth of capital expense to rectify white ant damage the previous vendor had covered up with masking tape and repainted over (white ant inspector employed didn't find a thing....and his certificate with all of the legal get out clauses was only partially valid for 24 hours after the inspection, thereafter the entire certificate was worthless).

Got the place up to scratch again, re-advertised it, got lots of "ooh, this is lovely", picked out the best of a bad bunch and proceeded to tell them that this was our house and they were to treat it with respect. Signed up the "nice" couple who proceeded to also stop paying rent, and decided just for giggles to trash it again.

We got despondent, gave up on the area and it sowed the seeds for literally giving up on residential tenants altogether.

Put the place up for sale, and the next door neighbours sneakily fooled us via a "undisclosed nominee" offer to our agent via a 3rd agent after initally inspecting the place on the first home open as a normal buyer. We got taken for about 8K worth of losses on the sale price because of that tactic, and when confronted, our REA who was supposed to be looking out for our interests also shrugged his shoulders and said "What can I say ??"

All up, our impression of our experience with this house was ;

Pumped in lots of heavy physical work
Pumped in lots of time
Pumped in lots of money
Received lots of headaches
Received zero financial benefit

Gave the whole thing up as a bad joke, and invested our money in Big 4 Bank shares and haven't looked back. I think CBA were at about $ 14 a share, and WBC were at about $ 8 a share. Cap gains and divs have been a joy ever since....with no headaches and no time and no ongoing costs involved
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Geoffw

I'm not sure if there's a more detailed story for Geoffw within the forum, as i've read bits n pieces over the years (who can forget the flock of bats) :D

My apology for the short response intially. I'm in a better position to respond properly now.

For them to call me a "property millionaire" is quite an exaggeration. If I sold up everything, I'd have about $500K now.

But I am happy with what I've been able to do in a few years.

  1. I bought my first IP in 1997 (DHA), never expecting to buy another. A plodder.
  2. Went to Peter Spann seminar. Got turned onto property.
  3. Second IP, a unit in Brisbane. A plodder, but (just) paying for itself.
  4. As a result of an investment (from 1997) in tea trees, I found myself owing ATO $53K- with the prospect of two more years' investments in other projects costing me similar amount. Borrowed against PPOR to help- also pulled kids out of private schools, stopped all sorts of expenditure anything much above survival level.
  5. 2002. Surprised to find that the DHA property & ppor had given me a little equity. Bought a property in inner north CBR- 3 cottages. Fair cashflow(9%) and good growth prospects.
  6. ATO settlement. Still had to pay another $6K- but no more prospect of another $100K to pay.
  7. More growth on the plodder & PPOR. Enough to buy flock of bats in Queanbeyan. Cashflow prospects only (9%, but after there had been some rises in the market).
  8. Today, no more growth on the plodder or Brisbane. A little on PPOR. But the inner north prop is worth $375K (bought $275K). The flock has increased 25% after 8 months- conservatively. By building carports ($10K) and strata titles ($10K) the value would increase $100K.

Bottom line.

I've survived some bad stuff.

I've got a few properties.
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Sash

Another great and more recent portfolio update (2011) from sash

IP portfolio that performs regardless of market movements!

Hi All,

With all the doom and gloom around, I thought I would share a way to structure your portfolio which will perform whether the market is falling/flat or booming!

As I have said previously, this is part of my risk mitigation strategy of buying properties with balanced growth and cash flow and tightening expenses.

My portfolio has grow from about $1m to about $5m in about 6 years based on this strategy.

The premise of this strategy is based on the following:

  1. Buy in 5 major cities or larger regional (i.e. over 100k in the greater catchment) metropolitan areas
  2. Buy with minimum of 7% yield with a view of increasing this to 9-10% in 2-3 years
  3. Buy in areas with infrastructure improvements within 3-5 years
  4. Diversify your portfolio around the country - to reduce risk as well as
  5. reduce any land tax liabilities
  6. Balance between gorwth and CF - this the only optimum way to continue to grow your portfolio and your wealth in my opinion without significant risk

Having said that..some of your investments may not always getting growth or cashflow. Unfortunately, this is happening across 2 properties in Qld and 1 in Melbourne (though the CG has been fantastic). But this only represents less than 20% of my portfolio...but my overall portfolio is still CF.

So now down to the nitty gritty of my portfolio:

  1. My existing portfolio is geared at an LVR of 37% (would like this to be 34%) this is despite me acquiring 3 properties this year for about 800k
  2. The overall portfolio is returning 5.1%
  3. The CF+ position once fully let (have 2 vacant due to reno) is around 3k per month
  4. Equity has grown 420% over 6 years

My portfolio is structured in way it will perform whether the market is falling/flat (as it is now) or booming!

How is this possible? Well easy to see property performs in a booming market...so no explanation required. As for falling/stable market...see below...

I believe my portfolio will still perform in falling/flat market as rents and interests drop.

My current IR repayments are about 126k per year. The rents have been stable or slightly dropping in the last year.

Given that IR are about to drop (fixed rates have already dropped)...if my rates drop to an average of 6%....I will say about 30k in interest repayments. Further more I have started increasing rents by 5% which will bring about 7k in additional rent.

So my 36k positve income will become 72k per annum if additional rent and interest reductions are included. If I take 4k for additional increase in costs I am at 68k ...not bad!

Welcome any comments about my assumptions. This theory was tested in the GFC and is now on track to perform in the way....
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Miw

Following on from the above 2011 post was an update from MIW

My strategy was different but gained equity of $2.3M over ten years (started in Year 2000 and last property added in 2008 - so 8 years or so).

I would just like to do some calculations for myself to see whether a combination of these strategies would work. What I mean by that is perhaps like in Monopoly where you buy few affordable houses first and then you convert them to a hotel (say after 4 houses you buy a 1 that's more expensive). What's your opinion?

I am about your age, hold about $8M portfolio, all 13 houses, with 27% LVR, under 3 entities (Joint names with hubby, Trust, Super), pay combined $3K in land tax, and have only 3.5% yield.

  1. I am just wondering how that would compare if I sat on these figures and say your figures for the next 1 or 2 cycles as I never plan to sell (or would I have to continue to buy?) At such low LVR all properties maintain themselves and 9 were built, 3 were a year old so I had great depreciations too.....and still have on the buildings (total of 40 years, right?)
  2. I have $1M sitting in cash in Superfund, generating $70K gross rental (from 3 properties), contributions $50K each year ($25K each max. allowed), $170K gold/silver investment, small share portfolio at the moment, IPO $120K, IPO land development $50K. How would you invest $1M of that Super money?

Since most Super products require about 30% deposit, how many properties would you buy. I have about 15 years to retirement and hubby 9 years....
Your opinion is greatly appreciated....
And thanks for sharing your inspirational story I will save it.....


Thank you for your reply. Yes, I have $6m equity, but $3.7m was made in various ways:

  • Sold first PPOR made equity (had 14 houses previously)
  • Major renovation for new PPOR so added equity there
  • Bought/sold land made equity
  • Bought shares under various entities and sold most at 30 times profit made heaps there.... and paid lots of tax there....
  • Bought various businesses and sold them made equity there
  • Invested money made into property via 50% deposits on 2 IPs, then 20% on the next 7 IPs. PPOR house and 3 Super houses all paid off. So only 9 properties (7 in Joint Names, 2 in Trust) have loans.

In addition, have all that other extra investments in Super as mentioned before.

I did not mean too expensive, say double the price for the strategy. Eg, if you buy at $350k then max would be $700k (not higher than that) but with a potential for 10-12% average capital growth. Also, you can guess, I never plan to sell (30 years down kids would hopefully redevelop if needed to).

I have total control over my Super and since I programmed all those fees into Managed Funds while working for an insurance company many years ago, I refused to hand it over to someone else. While most people are in worse Super situation now, and perhaps since 1987, I have realised 2000% profit.... So my point being, that I like total control of it so I will not invest into Managed Funds.

My question is how many properties would you buy via Super with borrowed funds if you were in my situation?

$1m own Super money and $1m borrowed, so I can structure the Super properties to be neutral or slightly positive so they can pay each other off, especially when I have 3 IPs generating $70k gross rental already. I would then pay less tax and have a total of $10m in property in a portfolio with $3m debt and some IPs being paid off over next, say 10 years. Would you do that?

How many would you buy for $2m in your Super (I would rather go for CG than yield as the structure works differently there - 15% tax on contributions and tax but none on CG unless you sell then about 10%). So in 10 years let's say $50k contributions x 10 years would pay down $500k of loan and rents from 7 Super IPs but equity may double to $4m? I'm thinking of buying around 4 properties (Max $500k each) around Sydney, Brisbane and Perth.

First sentence is right so is the second but for 12 IPs (1 is a PPOR house). Marginal tax rate is different as we are self-employed (can vary).

I do not plan to sell, perhaps in Super down the track or just to live off equity.

Assume $10m will grow to $20m (or even $15m only) with $2m loan (since $1m would be paid off in Super like I mentioned above) then that's LVR of 10% (or 13.3%). Surely, banks may be giving us equity to draw down to live on. So even if I drew down $200k but portfolio grew by only 5% (that's $1m or $750K a year).

Gee, so I could draw down even $400k a year, am I correct? Other option would be to sell PPOR and downsize as median price for the suburb I live in is about $1.7 now... Actually if I sold PPOR now I would pay off all my loans, but I do like where I live....
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Ace in the Hole

Another Somersoft story from 2011, this one from Ace in the Hole

Here's my story if it helps.

I'm 36 now and was basically a builders labourer for about 10 years.
Studied a little bit of residential building construction in TAFE to get my license, but dropped out.

Started with my own PPOR renovation, pretty much a 90% complete rebuild.
Then built a duplex a couple years ago.
Now building a 5 and 6 townhouse development, looking to keep all as investments.

I strongly believe it helps a lot if you have practical experience and ability to design and problem solve.
Also have desire to create and build structural things, and work with all sorts of wonderful materials.

If you're wanting to do it because you have passion for it, then you should find the drive to continue in good and bad times.

If you're doing it for the money, maybe consider other ventures you have more experience in and passion for first.
It can be done, but will take time and it's more risky, especially at your age and a lower income.

Good Luck.
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Robert

Once again from the depths of the SS vault of 2002, Robert's Story

Okie dokie...

It's my turn I guess. Thanks to those that have asked.

It's a matter of where to start for me. I left school at the end of grade 10, and when I was 15, cause I wanted to get out into the world of "work". I had a few goals for my working career of which I achieved all of them by the dates I wanted to. But how things have changed since those days.

I had a very nasty spending habit during my youth, I was always in debt, be it credit card, personal loans, car loans etc etc. All bad debt, ouch. But I always earn lots of money, it was simply the more I earned the more I spent. How the banks loved me, whenever they offered an increase in my credit card limit I accepted gleefully.

In 1992, when I was 19 I put an offer in for my first property (as I was able to finally save a few dollars) in Madjimba Beach (spelling??) on the Sunshine Coast. I was going to purchase this property in partnership with a relative and I was to live in one room and rent the other one out to help pay the mortgage. Unfortunately the deal fell though due to a CRA report on the relatives side, so we couldn't get a loan.

After this occurred I fell back into my spending ways for a few more years, I was single and enjoyed my life. As a chef I travelled and worked in many places, starting from Brisbane, Townsville, Ayres Rock Resort, Sunshine Coast, Day Dream Island, Airlie Beach, Sydney then back to Brisbane the the UK and a cruise boat that sailed from Amsterdam down the Rhine River onto the Danube River and I got off in Budapest.

It was when I returned to Brisbane I meet up with my beautiful partner, some of you know here as Tracey, others as Ms Flip (she is giggling over my shoulder as I type this, hehe). This was mid 1996 when we met, 6 months later we decided we were going to the UK to backpack and travel for a few years.

We saved the dollars, I got my British passport and we were off by March 1997. Did a few years travelling and living in London. In a two year period we visited over 30 countries and learn how to negotiate after travelling through Turkey, Egypt, India and then South East Asia. The best experience from the two years of travel was standing on Anzac Cove for dawn service on the 25th of April 1998.

Whilst in London, I realised that property was still a great way to invest. This was before the massive prices rises in the London property market that has occurred since. Our landlord held in his portfolio over 200 properties. He had his own tradesmen that he employed and had standard colours, carpets and fittings that are in every property they control. I learn quickly that if you are going to do it seriously you need set standards throughout your properties. This makes maintenance so much easier. I was very close to buying a property in Walthamstow of London for 45 000 STG and rented for 180STG per week, my dilemma though was if I was going to buy this property (which meant I was going to stay and live in the UK permanently) I was going to loose Tracey, who had to return to Australia as her work visa was only for 2 years. Yes I could have married Tracey but yeah, these things happen and I returned home with Tracey.

May of 1999 we return from living and travelling everywhere with $3000 in the pocket. We landed at 6am at Sydney airport and had a place to live by 10am that morning. Bought a bomb of a car to get around that weekend and started looking for jobs that Monday. We both landed very good paying jobs within weeks and had all this extra money just sitting there.

By December 1999 we had contracted our first property plus had purchased into numerous Blue Chip shares. This was our start.

The next property was early 2000, and we haven't looked back since with regular purchases. Our first one was negatively geared, we didn't know of any other way to invest then (isn't naivety bliss). But the rest of our properties have been neutral to positively geared since then, I not an advocate of negative gearing, as some would know via my posts.

We met Nivia, via the Somersoft forum way back in late 1999 when I first started posting on this forum. Nivia organised a Cashflow Game day in Canberra that a lot of us older posters that also attended would remember. These would be Gee Cee, Les and numerous others.

This first get together formed some very great friendships and I found a mentor (and it wasn't the forum). The forum opened my eyes to what you really could do with property investing.

These days, we are selling out of our trading properties and cashing up, and that first property is just about gone too (should settle on that in a few weeks time). I still keep a very close eye on the property markets that I invest in, but, have now stretched myself into other ventures. I now am continually creating business plans and ventures for future investing. Yes I am still in the Rat Race, but when you have a job like mine it makes it just a bit harder to leave the rat race (not every job can you get over 4 hours sleep at and get paid for it, shhh don't tell my boss). Though I am looking down the barrel of getting out of it as I type this post.

What does the future hold for me, well, the sky is not the limit, my limit is somewhere beyond that. I'll be looking at more business orientated investments and property will become my basis. When I say this I say it as meaning I will always hold property it will simply be like my "managed funds". A nice secure investment that keeps churning an income into my pocket. My properties will keep me from going bust if any of the other ventures go belly up. In essence property will be my foundation of which I will build upon.

So, though it's a damned long post there is so much more I could have put into it. You'll also notice I didn't use figures etc. Sorry, but I do hold some things as being private, hope you understand.

Cheers,
Robert
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Thanks for bringing all them together, there are a lot of stories hidden inside this forum. Over the years there have been many threads asking how people got started, how people have progress, you tend to forget the sprecifics and who posted what.

Good to have a reminder.

Cheers
Graeme
 
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