if we can do it, anyone can
Hi Jingo,
Most of our property is in Mackay.
We came from a very average background. My parents are still renting, because they thought it was all too hard, and his parents had the "we will work until retirement and own our own home" mentallity.
We bought the first one in 1977,for $26K after having been given a loan from a relative for $2000, for the deposit. The condition was that we would pay it back when we sold the house, and we did.
My husband was in the midst of an apprenticeship, 20 years old, and I was just out of school, planning on going to uni, but I didn't.
We weren't nerds or hermits , just 2 regular kids, who liked to party, go out, and do stuff.We bought the house as a house and land deal, and negotiated a lot of deductions so that we could complete a lot of things ourselves.
It was a great reason to stay home, and not waste money going out, and at that age just having your own space was fantastic.Plus the friends just came to our house.There weren't many times that we had nothing to do, and if we needed any extra money, we would complete private jobs under the house at night.If you have a trade, there is always a way to make extra money!
That is why I like to tell parents, unless your kids are super smart or have a lifelong desire to become a professional, get them into a trade! The uni can always come afterwards.If you start young enough, the ability for investing comes around a heck of a lot quicker with a trade under your belt.There is no surer way to make money on property by being able to do the majority of work yourself, or know others you "hang" with,who will help you out.
It also opens up the way to get your own business, and in the next decade, you probably wont ever be out of work.
All our other properties are also in Mackay.We like to buy 2 blocks of land close to each other, if not next to each other, so we can set " the standard" for the block. It has worked so far.We get a builder to complete the house upto a certain point and then we finish it.We prefer the Mt Pleasant, Greenfield, Glenella and Northern Beaches areas of Mackay, and East Mackay, and the Marina, although others have been very lucky in many other well positioned suburbs. Buy close to the beach and you virtually cant go wrong.
Over 30 years we have seen areas flourish and be classed as " well to do" and then crumble after 10 years.These areas have kept their values over the years.
We operate under a partnership, which owns all the properties , and a company which runs our business. The company and business provides us with a wage,and tops up any shortfalls in the partnership, by means of bonus.The company is only a small, family run operation.
Over the last few years I have become concerned about not having a trust, and have actually set one up, but is is dormant.
We have operated in this structure for 25 years, and have no problems, touch wood.As long as you pay your insurances, comply with all the safety issues, and are a little bit business savvy, I don't think the hype about trusts is warranted.
We rode out the reccession and the interest rate rises, simply because we started when the rates were at 17%. It was all we knew.Our money was allocated to meet that level.If it is all you know, you dont stress about it.
I must point out though, we are only as wealthy as we are due to the fact that we did a lot of the hard yards ourselves.
In 1993 we decided to build our own factory on some land that became available.We knew of a derelict old shed on a farm nearby , which was big enough to work with, and we, along with our 15 year old son and 4 of his mates, pulled down the shed, transported it, and rebuilt it ourselves. The land cost $55K, the shed $15K. It is now valued at $600k.
In 1996 we saw an add in the paper for a 1500 sqm block of land-divorce sale- and I pounced on that. It cost $40K. We subdivided that and built two houses on it, for $160k and $130K . Now valued at $900K
We bought a block of land at an exclusive suburb in 1998,for $180K with the view of subdividing it, and building 2 properties.That was the only scary investment, as the interest was huge for those days. But we owned our house, so it was just as if we had a mortgage. It took 9 years to get the subdivision through! Never give up! We built a home on the front block over a period of 10 years, whilst living in our other PPR, which we owned outright, and which had been built with the proceeds of the PPr which we paid out at the age of 30.
In 2004 we decided to stretch out a little and were at the Gold Coast on hollidays. We went out for an icecream and came back with a contract on a unit in Q1. Not the best investment by a long shot, but it is holding it's own in our portfolio.We also bought a unit in the Emporium in Brisbane, which has been fantastic.
However, none of the investments have done as well as our properties at home, simply because we can't value add, do the maintenance, and the control is out of our hands. You can't put a price on local knowledge.
Land tax is becoming an issue, but the plan is to hold for a few more years, and then get rid of the majority, pay out the IO loans and hold on to 6 or so for income.The rents will be aound $3000 per week, and if we rent out our shed, it could be an other $2000 per week.There will be no more loans, we will own the properties outright and still have our mansion at the beach.
All our toys are paid for, we will still have a share portfolio lurking in the background somewhere, and a super payout to keep us going for a while longer.We do not want to rely on any pensions or government handouts when we are old, although selling everything one day, gifting the money into the trust( after Cap gains, which should be minimal if we sell one at a time over a few years) and then still crying poor may seem an option, if the current government pisses us of too much.The Labour government makes things a hell of a lot harder for investors!!
I started buying shares in 1997, just because I thought it was the thing to. I did a bit of a study on them, but no major things. Over the years I have just bought some shares with spare cash, and haven't realy looked at them again, only so now and then. They are valued at $200K.I haven't sold any during this time.
I usually only take out IO loans, and fix for 3 years. I figure that 3 years is a good time, as it will take that long to either go up or down significantly. Some of the loans have been converted to P & I over time, which is not a great investment strategy, but more for my own comfort zone level.If I had to start today, i would go IO for all, even the PPR, fix for 3 and change the PPR to P&I pnly when I could afford the extra payments. Much better, in my opinion to use the equity whilst you are still building a portfolio. You can alway sell the other IP's later and pay out lump sums on your PPR.
Basically, looking back, I can say that if any extra income was needed, we just worked the business a little harder.But I guess the best advise i can give is to not fret about the interest rates to much. Just always think you can do it, because if you realy want to, you can, despite your circumstance.8.9% is a hell of a lot better then 17%.
And soyabean....... we are assett rich with high cashflow because we run a business based on a trade where there is skills shortage. Get your trade and get to work man. You will do just fine.