Advice to 23yo wanting to build an investment portfolio

Well I was set on not renting ever at the time I purchased and so I thought that the kind of place I would by for purely investment purposes would probably not be the type of property I want to live in when I move out of home in a couple of years.

And the idea of owning two, three, four, more properties?

No i probably wouldn't accept a 4% yeild if I wasn't planning on living there at some point.

You do realise there's a good chance you will never live in this place.

I can afford to hold it! The difference between repayments and rental income is 600 per month so whilst at home im doing it on my ear. I am thinking ahead... would be a great place to retire ;)

It seems like a good place to retire, to a 23 year old? I seriously doubt you'll be able to guess what you want to retire in.

Money, on the other hand, is neutral. If you have money when you retire, you'll be able to buy whatever you want to retire in. Maybe you want something *new* when you retire? Buying a place now, at your age, thinking it's for your retirement, is wishful thinking at best, delusional at worst.

Don't make excuses. Especially not to yourself. What I or anyone else think of your decisions doesn't matter: what matters is that you learn the lessons and do it differently next time.

You're in a great position in terms of age, savings habit and you've already started. You should see good results in a decade or so.
 
And the idea of owning two, three, four, more properties?



You do realise there's a good chance you will never live in this place.



It seems like a good place to retire, to a 23 year old? I seriously doubt you'll be able to guess what you want to retire in.

Money, on the other hand, is neutral. If you have money when you retire, you'll be able to buy whatever you want to retire in. Maybe you want something *new* when you retire? Buying a place now, at your age, thinking it's for your retirement, is wishful thinking at best, delusional at worst.

Don't make excuses. Especially not to yourself. What I or anyone else think of your decisions doesn't matter: what matters is that you learn the lessons and do it differently next time.

You're in a great position in terms of age, savings habit and you've already started. You should see good results in a decade or so.

The idea of owning 2,3 or 4 properties excites me!

I disagree, If I want to live in this place I believe I will be in a position to do so renting out the second bedroom.

About the retiring, It was a joke... but I dont think bayviews, a 20 metre walk from front door to sand whilst being under 20km to the cbd will go out of fashion any time soon and are all big ticks for a lifestyle i'd like to live.
 
if you can get $100,000 deposit and a $400,000 mortgage before getting a full time job, im sure you wont need any advice, just do what you are doing.
 
You have taken the plunge, taken some action, done something!

Whether it turns out to be a stellar or less than stellar investment....time will tell.

I have learnt from my own experience of muddling with property.....given "time", it is quite a friendly investment class.

You don't have to choose a perfect property....just choose something that makes sense.

Good luck with it all

Nath
 
You have taken the plunge, taken some action, done something!

Whether it turns out to be a stellar or less than stellar investment....time will tell.

I have learnt from my own experience of muddling with property.....given "time", it is quite a friendly investment class.

You don't have to choose a perfect property....just choose something that makes sense.

Good luck with it all

Nath

Yeah I think making the first plunge into property is the scariest thought!

A common piece of advice from people i have spoken to is: the right time to buy is whenever you can (eg. don't wait for the "right time" get in as early as you can) and don't sell ever!

Cheers for that mate
 
cmack, your still young with so much potential, I’m 25 and was in the same boat as you couple years ago, living at home, $55k salary and $480k debt, 80% LVR cash deposit and stamps from savings. Property was leased to family bringing in $370 p/w - **** yield but was more land value (800sqm corner block with intention to develop in couple years time). At the time I worried, but took the plunge and glad I did.

Fast forward couple years, I still live at home and found myself a much better earning job close to home. Added another investment to the portfolio that’s positive cashflow and have just had approval to go ahead and develop the first purchase adding two townhouses at rear.

Living at home gives you so much flexibility to do things you otherwise wouldn’t, so make the most of it. As you said, I don’t expect to live at home much longer, it’s just great help when you’re trying to get started.

For now best advice would be continue to educate yourself as much as possible! Save like crazy, focus on positive cashflow property when you think you’re ready to buy again and look for property that you can add value to.

Renting is not a bad thing, Invest in areas where the sums stack up, you can always rent for cheaper in desirable suburbs that are hard to get into instead of taking out a mortgage.

Good Luck
Sam
 
if you can get $100,000 deposit and a $400,000 mortgage before getting a full time job, im sure you wont need any advice, just do what you are doing.

I second this.

However, I must say that I am curious on how the bank views your serviceability as you mentioned that you are yet to have a job (getting a job in the coming weeks @ 50k pa)

I'm also 23 and took the plunge into my first IP this year however in order to get a 435k loan I needed to tick the boxes with a 80k pa job (335k loan) and guarantor/family pledge (100k loan). I went this lending route as I wanted to keep a large sum of my tax paid cash saved in offset, so all up I only spent ~25k on the IP which yields 9.75% which I feel pretty good about :D

Similar to your situation, I plan to get my parents off the loan through refinancing on capital gains on the IP.

In regards to moving out, again similar to you I was eager to move out of home asap and saw my IP as an ideal PPOR adding the element of emotion to it. So what I did to get that 'move out' phase out of me was to claim the FHOG and renovate/live in it for 6 months to experience what that 'independence' and financial struggle was before moving back home. Aaron_C thinks otherwise on me moving back home however :p

Don't rule out renting, cashflow wise it is much more beneficial - sacrifices need to be made before living in a PPOR from my point of view
 
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cmack, your still young with so much potential, I’m 25 and was in the same boat as you couple years ago, living at home, $55k salary and $480k debt, 80% LVR cash deposit and stamps from savings. Property was leased to family bringing in $370 p/w - **** yield but was more land value (800sqm corner block with intention to develop in couple years time). At the time I worried, but took the plunge and glad I did.

Fast forward couple years, I still live at home and found myself a much better earning job close to home. Added another investment to the portfolio that’s positive cashflow and have just had approval to go ahead and develop the first purchase adding two townhouses at rear.

Living at home gives you so much flexibility to do things you otherwise wouldn’t, so make the most of it. As you said, I don’t expect to live at home much longer, it’s just great help when you’re trying to get started.

For now best advice would be continue to educate yourself as much as possible! Save like crazy, focus on positive cashflow property when you think you’re ready to buy again and look for property that you can add value to.

Renting is not a bad thing, Invest in areas where the sums stack up, you can always rent for cheaper in desirable suburbs that are hard to get into instead of taking out a mortgage.

Good Luck
Sam

Hey sam,
Thanks for the post, for sharing your very similar story and for the great tips!
Where do you plan on living when you do move out? Any desire to live in any of your properties? Best of luck with your developments!!!
 
I second this.

However, I must say that I am curious on how the bank views your serviceability as you mentioned that you are yet to have a job (getting a job in the coming weeks @ 50k pa)

I'm also 23 and took the plunge into my first IP this year however in order to get a 435k loan I needed to tick the boxes with a 80k pa job (335k loan) and guarantor/family pledge (100k loan). I went this lending route as I wanted to keep a large sum of my tax paid cash saved in offset, so all up I only spent ~25k on the IP which yields 9.75% which I feel pretty good about :D

Similar to your situation, I plan to get my parents off the loan through refinancing on capital gains on the IP.

In regards to moving out, again similar to you I was eager to move out of home asap and saw my IP as an ideal PPOR adding the element of emotion to it. So what I did to get that 'move out' phase out of me was to claim the FHOG and renovate/live in it for 6 months to experience what that 'independence' and financial struggle was before moving back home. Aaron_C thinks otherwise on me moving back home however :p

Don't rule out renting, cashflow wise it is much more beneficial - sacrifices need to be made before living in a PPOR from my point of view

Hey 7smurfs!

The bank views my serviceability as both myself and mum's income plus rental income. Even though mum hasn't paid a cent.

Thats a great yield! what suburb is your property in?

I did think about living in it for 6 months and doing a similar thing, but at the time i was writing a thesis and in no way could afford to live there haha

What is your plan moving forward?
 
Hey 7smurfs!

The bank views my serviceability as both myself and mum's income plus rental income. Even though mum hasn't paid a cent.

Thats a great yield! what suburb is your property in?

I did think about living in it for 6 months and doing a similar thing, but at the time i was writing a thesis and in no way could afford to live there haha

What is your plan moving forward?

Ah that makes sense. I wasn't aware that could be done. Good job nevertheless! Having lived in the bayside area, I can say that beach rd is probably the most desirable 'by the bay' land anyone could want in Melboure.

I purchased the IP in Armadale, approx 6km from CBD.

Moving forward, my focus and strategy is on investments of inner city apartments with a strict criteria; if 1BR - needs to be 50sqm+ or 2BR - 70sqm+, car parking, less than 12 similar apartments on the land / 3 story max, less than 1km from train station etc

Ideally there would be something unique about the apartment that would set itself apart from the others, such as with the Armadale apartment; has 2 carparks.

I'm currently looking at St Kilda East as a buy and sit investment in hope of future gentrification and Prahran as a more bluechip outlook.

Still haven't changed my mind :)

We'll see about that!!! :)
 
Ah that makes sense. I wasn't aware that could be done. Good job nevertheless! Having lived in the bayside area, I can say that beach rd is probably the most desirable 'by the bay' land anyone could want in Melboure.

I purchased the IP in Armadale, approx 6km from CBD.

Moving forward, my focus and strategy is on investments of inner city apartments with a strict criteria; if 1BR - needs to be 50sqm+ or 2BR - 70sqm+, car parking, less than 12 similar apartments on the land / 3 story max, less than 1km from train station etc

Ideally there would be something unique about the apartment that would set itself apart from the others, such as with the Armadale apartment; has 2 carparks.

I'm currently looking at St Kilda East as a buy and sit investment in hope of future gentrification and Prahran as a more bluechip outlook.

Armadale is a great area!
You sound very focused and with a logical selection criteria, best of luck with it mate!
 
In regards to my next purchase (whenever that may be) does anyone know whether i could claim the FHOG?

Aaron C you seem very knowledgeable so I hope you see this...

As most of you would now know, my situation is 1 IP tenants in common with mother (she has a PPOR). I have never lived in the IP. I have read somewhere that if i purchased a 2nd property before living in the IP then technically this is my first home... sounds too good to be true though

Loving all your stories and advice guys. Cmack
 
Hey cmack,

I brought my first property at 22. I was similar to you when I first started looking in that I was looking for somewhere I wanted to live, rather than thinking purely about an investment. After struggling to find a house I wanted to live in, in a suburb I liked I stumbled upon somersoft. After evaluating my goals I decided to base my search on purely an "investment" property and on something that would be close to neutral cash flow as well as a good outlook for capital gains.

I ended up buying a townhouse close to the city, public transport, the bech and n a highly desirable suburb. I purchased the property for $340,000 with a $312,000 loan I think it was and had to lie to the bank to get the loan. I new I was purchasing a little under market value so I told the bank it was my uncles property and he had had an offer for $385,000 through an agent but would sell it to me for $340,000 privately.

I was on $55,000 at the time and needed a $385,000 valuation to get a loan of $312,000. Your savings are indeed impressive but based on how I went with the bank I can't see how you're going to get approval for this loan let alone service it.

One I brought my property I lived in it for 12 months, renting out a room so I could receive the first home owners grant then rented it out cash flow neautralish for 2 years. I have since spent $15,000 on a renovation and recently sold it for $465,000.

I had a horrible time servicing my loan on $55,000. I wasn't able to go out with friends and do things I wanted to do. The bank was very irresponsible giving me the loan, it was something like 70% of my wage at 1 stage. If I were you I would wait a bit to make your next purchase, wait until you're earning more money, save some more money and re-evaluate your goals. IMO you haven't done enough research on the type or property you should buy and you don't have a clear goal.

Sorry the post is a bit all over the shop, I'm tired hah!
 
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