Help with Financial Strategy

[DexV2]

Hi everyone, I was hoping to get some advice on how I should go about investing in property full time.

Here is my situation at the moment, I'm currently 21 and will be graduating from university next year. I have a father who is willing to support my endeavors and as a plus grow his property portfolio. As of now I aim to take a year off after university to jump in and learn, manage some properties for that period. I aim to eventually buy my own property and grow my portfolio, I aim to invest in cash flow positive properties and use that as an income to take out loans in the future(?)

My dilemma is this. My dad is retired so he doesn't earn an income and as I am not working I too won't have an income. What are some options I have in order to be able to eventually take out a loan?

My thoughts are:
1) Go work? Haha
2) Buy into a business?
3) I have registered a property project management company, which I could try to get more clients outside my family?

I've been trying to research and read up, however I feel my situation/choice isn't your typical scenario. Would love anyone's input!

Cheers,
Dex.

 

[Terry_w]

1. Would work.
2. wouldn't work for 2 years
3. wouldn't work for 2 years. Is this company licensed?

Another way would be to find someone who qualifies for finance and enter into a joint purchase or a trust type arrangement.

 

[Ace in the Hole]

First and foremost, I'd say you should get some real life experience up your sleeve.
Possibly start with a few renos to get experience while making some sweat equity.

Why do you want to invest in property full time anyway?

If you were to go this path, I'd assume you would structure yourself as a developer and keep some of what you develop, most likely the equivalent to your profits after all costs.

Just over 10 years ago when I started out I wanted to do property full time by renovating, revaluing and going again, but I had no cash flow to get anywhere and you're too reliant on the market in general.
Now I'm a passive developer and accumulated 10 mil+ of properties in the past 5 years.

To do this you need cash flow.
Work hardest on increasing your cash flow.
Business is the best way.
Earn the experience, don't go the hand out route or for true satisfaction and significance.

 

[DexV2]

3. wouldn't work for 2 years. Is this company licensed?

Another way would be to find someone who qualifies for finance and enter into a joint purchase or a trust type arrangement.

No the company is not licensed to do so but would work towards that if I was to choose that path.

First and foremost, I'd say you should get some real life experience up your sleeve.
Possibly start with a few renos to get experience while making some sweat equity.

Why do you want to invest in property full time anyway?

If you were to go this path, I'd assume you would structure yourself as a developer and keep some of what you develop, most likely the equivalent to your profits after all costs.

Just over 10 years ago when I started out I wanted to do property full time by renovating, revaluing and going again, but I had no cash flow to get anywhere and you're too reliant on the market in general.
Now I'm a passive developer and accumulated 10 mil+ of properties in the past 5 years.

To do this you need cash flow.
Work hardest on increasing your cash flow.
Business is the best way.
Earn the experience, don't go the hand out route or for true satisfaction and significance.

I am definitely wanting some real life experience (I'm assuming experience on property investment in general). My dad had bought a property for me to subdivide and renovated, hope to get that all done by the first half of next year and earn some sweat/sweet? equity.

Personally I see property as a way for me to achieve financial freedom, to choose to work on my own terms and at the same time doing something I am passionate about. The plan would be through developing.

What if equity isn't a problem? The cash flow is.
How does one prove to the bank that they can service a loan despite working full time in property? How to people continue to take out loans to keep investing after quitting their full time job?

What do you mean by don't go the hand out route or for true satisfaction and significance?

 

[tobe]

you prove to the bank you can afford a loan by supplying payslips or 2 years self employed financials.

How about getting some experience in the industry by taking a job in the field. property manager, estate agent, buyers advocate, broker, etc. while you are learning you might also get a paycheck enough to qualify for a loan. You might even also have time to continue to work on your own business part time and after hours.

You'll know when you can stop working for someone else, your accountant will let ask you why you are still bothering to work PAYG.

 

[Jamie M]

How about getting some experience in the industry by taking a job in the field. property manager, estate agent, buyers advocate, broker, etc. while you are learning you might also get a paycheck enough to qualify for a loan. You might even also have time to continue to work on your own business part time and after hours.

This is a sensible approach.

It would be extremely difficult (not impossible) to build a successful business with a lack of prior experience.

If you could gain this initially from working for the man - you may also be able to qualify for a loan as it's much easier when you're salary is derived from PAYG income over self employed. So you could possibly being purchasing property.

Once you've got some experience under the belt - you could then looking at establishing your own company.

Cheers

Jamie

 

[DexV2]

Looks like the moment I need to work to increase cash flow. Since I'm studying a Master of Pharmacy, wouldn't it be hard to get into the industry without prior education (typical employment expectation and all)?

 

[MTR]

Dex
there is a lo doc product on the market with RAMS but you will still need to meet certain criteria, accountant signing off on your salary there will be other requirements.
There are also other strategies if equity is not an issue you can also dip in more money in the deal, not ideal but just as a way of moving forward if necessary.
But like most have mentioned get some experience under your belt and just keep working it.

MTR

 

[DexV2]

there is a lo doc product on the market with RAMS but you will still need to meet certain criteria, accountant signing off on your salary there will be other requirements.

Thanks Marisa! I haven't really explored which products are available, but maybe I should. I thought if I didn't have to work as a pharmacist full time and concentrate more in the building industry then that would be better. So my worry is if I could get in.

 

[Jamie M]

I thought if I didn't have to work as a pharmacist full time

You might be able to get 90% no LMI deals

Cheers

Jamie

 

[Terry_w]

How does one prove to the bank that they can service a loan despite working full time in property?

You can't demonstrate that because you wouldn't be able to service a loan. You need income to service a loan and a start up business wouldn't generate income for a few years.

Maybe you could set up your service company (builder/agent/renovation company etc) and do work for other family members for a few years and then you may be able to show a profit to a lender.

BTW if you are starting up a business you are generally going to have a large outleigh for tools and equipment which is going to cost you a lot up front and/or in depreciation meaning showing lower profits for years to come.

 

[DexV2]

1 step back for 2 steps forward!
I would basically have no expenses, since I still live with my parents and have no debt to pay. So I'll be able to save everything I earn!

 

[Frontier]

If you studied pharmacy, work in pharmacy. Don't lose what you've worked for. Do the property part-time for the first few years. Continue study of property fundamentals and buying and owning will build your knowledge. Maybe a valuation/building course in a few years to extend and formalise your knowledge.