A Collection of Somersoft Forum Stories, Lessons & Updates

younguns

younguns 2011 summary post

Growing a large portfolio, planning to retire and reducing debt

Hello fellow investors I hope this is the right place for this post.

My husband and I are 28 and 30 and have some big goals and until recently thought we were well on our way to achieving them until we met with our accountant who bought us crashing back down to earth and made us question our approach.

We really need some advice to get us back on track. Any help would be greatly appreciated

My husband is self employed and works fly-in fly-out in WA and earns an excellent income $350K approx. But it comes at a cost which is being away from our young family! Our plan was to aggressively grow our portfolio for the next 5 years (purchasing at least 1 if not two properties each year) and then plan for him to move back to Perth and work half the year, focussing the other half on doing some small developments etc (he has his builder's licence). Our ultimate goal is to be financially free by the time he is 40 (in just 9 years).

Our accountant raised some concerns with this plan particularly around being able to reduce our debt so that we are no longer reliant on such a large income and can ultimately 'retire'. We still have so much to learn and are having trouble understanding how we can continue to grow a large portfolio, service this portfolio and ultimately access our money to live the lifestyle we want WITHOUT having to sell?

Summary

PPOR (soon to be IP no.3) purchased 2008 - Western Australia 3 x 1 - purchase price $490K - current value $520K - estimated rent per week $400

IP no 1 - Melbourne 2 x 1 apartment purchased 2008 - purchase price $320K- current value $410K - rent $320 per week

IP no 2 - Melbourne 2 x 1 townhouse purchased 2009 - purchase price $465K - current value $560K - rent $430 per week

New PPOR (to settle Sept 2011) - Western Australia 5 x 2 - purchase price $700K, renovation budget $90K, conservative value on completion $850K

It is really important to us that we can see where we are going to help get through being apart so much. Our goal is to be in our 'dream house' by the beach worth approx $2 mil in 5 years time and to have enough income (approx $200K per annum) to live after servicing our portfolio.

Sorry for being longwinded and thanks in advance for your help
Source
 
Pete

Pete's 2008 update

April 2001 I settled IP #1. Bought PPOR only months earlier. 2 days before New Year, 2001.

Perth market was moving quickly and I was learning all I could. Reading heaps of books and chomping at the bit. Realised I could buy again. Settled that in July 2001. Bought two more in 2002. A few more in the following years. Perth prices going ballistic. Over 30% per annum for a while. Even when the media was saying the boom must have been finished, prices went up 36% the next year! (And I hadn't stopped.)

Following the basic strategy of re-valuing and buying more property there was a million equity after 3 years. (And the older model Ferrari was bought then, for those who remember.) Another million after 4 years. A third million after 5 years - 2006. Growth has slowed since then and I am in a consolidation phase. (And pursuing other interests too. This month I go to Europe for a holiday.) Owe lots of money but the larger portfolio value means it is a simple matter of time before there is a good jump in equity. (And latest REIWA figures show good growth still in suburbs I've invested in.)

Have large buffer of borrowed money (that is spare or unused loans). So sleep well at night and although could buy a few more houses anytime, prefer to keep the big buffer. I can go and lie on the beach for a 5 years and it will all pay for itself the whole time if I choose to - I don't use the equity for this though, I prefer to service the loans. A serious investor might tell me I have wasted equity but I'm very happy with position. (In my ignorance, granted.)

Five million equity in 10 years from starting looks easy from here.

Learn heaps and go for it. I like that comment about the best investment is in yourself.

I haven't done any renovations or developments. Nothing off the plan. Just average houses in average suburbs - except with better than average growth. Property managers look after the houses. I just manage the cashflow. I used to be on an average salary, now I'm a different person and a well paid consultant/contractor.

Best wishes to all.
__________________
Pete
Source
 
Cad

Another story from 2003, this one from Cad

So 8 IP’s in 9 yrs... but this year isn’t over yet & I intend to purchase another by years end.

OK here goes,
IP 1, 2 & 4 all new homes, these properties are in central Victoria a small country town, people mainly commute to Melbourne CBD for work so rental market is constant. (Home Town)

We lived & worked in the far NW of WA for quite a few years, so we bought in that area
IP 3 New home off the plan,
IP 5 old ex mining Co house,
IP 6& 7 Relocatable mine sit home that we did major renovation to
IP 8 An old house that we did a make over on

This location has a very volatile rental market, based on the mining industry with a boom, bust economy or high risk, high return, at the end of the day you have to know your market.

We bought in the bust of the cycle & every one thought we were crazy, but we where confident we could make it work for us & the proof is in the pudding.

IPPurch Cost... Rent... Value. Current Rent.

  1. 1995 $100k $165pw $165K SOLD
  2. 1997 $110k $185pw $200K $195pw
  3. 1998 $255k $300pw $325K $450pw
  4. 1999 $110k $210pw $190K $220pw
  5. 2000 $190k $280pw $225K $350pw
  6. 2001 $190k $450pw $235K $500pw
  7. 2001 $190k $400pw $235K $500pw
  8. 2001 $165k $300pw $185K $350pw


We are currently building a house in Perth to sell, in an attempt to generate cash flow.

I must say that the accumulating of property is the easy bit; the hard part is taking the first step, but if you buy right…..research, research, and research, It’s hard to go wrong & you’ll never look back. I only wish we had started earlier.

The difficult part for us was being able to arm ourselves with the right information,
you know… on Banks, Accountants, and Real Estate Agents, Tax, Legal Issues, even insurance companies, or the right structures to implement i.e. Trusts, Company?
It really is a mine field out there, that’s where the mistakes are made & the live & learn thing comes into play. I hate learning the hard way as it’s usually a costly exercise.

We bank NAB; & we have a Trust structure in place.
I keep very good records of all our financial transactions on MYOB accounting software.
I research the markets on a weekly basis to know the market so I can make an informed decision on our next purchase.
Any way I could just go on & on because it’s my passion.
Sorry… I hope this helps

Regards Cad.
I have a friendly real estate agent that has a data supplier that provides them with all properties that are advertised for sale in the newspaper.
I have a particular area that I research & an amount that I am prepared to spend so the agent can enter this info & email every thing that fits that criteria, you can even say how many bedrooms, bath rooms you want or even if you want a development block etc..And you only receive information that fits your criteria. This certainly cuts down all those long hours searching through newspapers.
If you find something that interests you, it is possible here in WA to purchase VG information i.e.: view titles, name of owners & how much they paid for the particular property.
This information can be invaluable when negotiating.
Source
 
Thx so much for these stories..... Inspiring
Agreed, I had some down time available, hence the searchinga and the theread here. Now it's back to all hands on deck, so if anyone knows of a good motivational story, or a story that contains lessons learnt within the forum that may be of benefit to the SS community - feel free to post here, or PM me the link ;)
 
As part of the process of resurrecting the interviews, I have moved this thread to this forum, so that we don't lose the great effort Redwing has gone to in collating these tales.

The Y-man
 
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