Inexperienced 20 Year Old with Dream Scenario. Advice Needed

[KidGeeq]

Long time reader, first time poster. I need your help fellow investors. Below is my life situation.

This is my current situation:

* I'm a 20 year old Uni student on 20k a year, with little expenses (rent and food 500 a month)

* Father is self employed, good income but no real proof of income

* PPOR in Wyndham Vale, VIC valued at 350k, mother covers repayments and expense

* Investment Property at Tarneit, VIC valued at 370k, with around 40k owing.

* 'Redraw' of 150k available

* Savings of 60k


Goals:

* Portfolio of upto 8-10 houses in the next 2-3 years.
* Neutral cash flow or close to it
* Can manage upto 10k repayments annually

So my dad and I are both forward thinking guys but lack both education (Dad) and experience (Myself). The old man has basically given me the task of expanding our portfolio. This is both exciting and overwhelming. I feel that with our current situation it is achievable but I need the help of experienced investors. What would be your plan of attack? Specifically where would you start today? Where would you buy first?, Units?, houses?, students accommodations? Western Suburbs? My mind is all over the place..

If you guys need more info am happy to share.

Thanks a lot guys.

 

[D.T.]

Questions.

How much mortgage on the PPOR? Are the PPOR and IP loans crossed?

Why is dads income not provable? As a self-employed bloke, him being able to provide 2 years of paperwork will open up lots of options.

How long until you finish school? How much do you think you'll earn straight up? Earning lots isnt everything, of course, but gives banks something to lend against which will get you rolling.

You need to figure out where you are before someone can give you directions on where to go

 

[CHAOS]

Hi KidGeeq

Sorry I don't have any answers but your post raised questions...

1.Are you an only child?
2. What are your goals?
3.Do you have other expenses - car, petrol, rego or train tickets, uni fees, books, clothes...
4.You earn 20k - how much do you save? Or how much do you currently have saved?
5.What are your parents retirement goals? How old are they / how long until retirement?
4.It looks like your parents are bringing their equity and life savings to the table - what are / will you bring?
6.'Our' will you purchase the properties with mum 33.3%, dad 33.3% and you 33.3%. Where does mum fit in with these plans? Is she on board with dad giving you the reigns?

 

[DaveM]

Put all the investment cash into a term deposit for 6 months. Spend those 6 months researching and putting together a plan, purchasing structure etc. Then act.

Also paging Rixter to the thread with his goals post

 

[Mr. Fabulous]

If I was you, I'd use some of that 60K to set up an internet business/something that allows you to work remotely and travel. Come back when you're 30 (or never!), have been all over the world and worry about building a portfolio then. Life's too short to play it safe.

 

[ChrisA1]

Put all the investment cash into a term deposit for 6 months. Spend those 6 months researching and putting together a plan, purchasing structure etc. Then act.

Also paging Rixter to the thread with his goals post

Great advice about securing the money away while you work through the fundamentals Unless there's still money owing on the PPOR, where you would 'secure' it there until you worked through the fundamentals).

I would also be interested in reading Rixter's goal post.

 

[The Y-man]

If I was you, I'd use some of that 60K to set up an internet business/something that allows you to work remotely and travel. Come back when you're 30 (or never!), have been all over the world and worry about building a portfolio then. Life's too short to play it safe.

I am suspecting the 60k is not the kids but the dad's - so in that case it's the "retirement nest-egg scenario"


The Y-man

 

[The Y-man]

KidGeeq,

Spend a few hours travelling across town to have a sit down and chat

http://somersoft.com/forums/showthread.php?t=94386


The Y-man

 

[KidGeeq]

Thanks for your input guys, you have given me a lot to consider which is exactly what I needed. The questions you prompted were questions I had not even thought off so thanks.

Just regarding whether it is too 'early' to start, I read in numerous cases of older blokes reflecting and saying they wish they had started earlier, also, guys like Nathan Birch suggest to me that it is better to start while still young and with less commitments.

I will revisit this post soon with some answers and some sort of draft structure for you guys to critique.

Cheerz fellas.

 

[alexlee]

Just regarding whether it is too 'early' to start, I read in numerous cases of older blokes reflecting and saying they wish they had started earlier, also, guys like Nathan Birch suggest to me that it is better to start while still young and with less commitments.

Generally, it's better to start as early as possible. However, the question is whether you should be using your parents' money to do so. Instead, you might wait a few years until you graduate, get a job and do it with your own money and serviceability.

 

[marg4000]

As you and your dad are of different generations, your needs and goals are quite different as far as time for investing goes.

You may have a 35-45 year time frame before retirement and a need to draw down income, but your father clearly has nowhere as long to go and will require replacement income once he retires.
Marg

 

[weg]

Agree with Marg4000 and alexlee.

So what happens later when you want to branch out on your own, or become involved with someone and want to set up another home and your own investments?

What will belong to you and what is father and mothers? Whose name will the property and loans be in, and who pays the repayments?

What is everyone's plan 5 to 10 years from now? Your dad talks of expanding 'our' portfolio, and you talk of your goals.

Be clear on some of these points and and minimize risk for parents (they are near the end of their working lives) and it could work for a while till you get a half decent paying job - 10K spare cash sounds pretty poor to me and may look that way to a bank as well.

 

[WillG]

Just regarding whether it is too 'early' to start, I read in numerous cases of older blokes reflecting and saying they wish they had started earlier, also, guys like Nathan Birch suggest to me that it is better to start while still young and with less commitments.

You have started ... keep on learning, asking questions, working out scenarios

The ownership & structures are important as everybody has already commented. This will impact how much you can borrow

 

[hobo]

This sounds like it has the potential to become really messy. Tread with great care.

 

[Brady]

I nearly entered in a few projects with my parents last year as they were out of my reach to complete on my own. We had a clear strategy on what security was required, what each party had to input and a exit strategy. I would suggest ensuring that you cover all of these before entering into anything with anyone else.

In the end I wasn't successful in the purchases with my parents, crazy auctions... But ended up buying a property on my own, so good result.

Best of luck.

 

[ChrisA1]

This sounds like it has the potential to become really messy. Tread with great care.

Yes, agree, while it would appear at the outset that everyone is helping everyone, this is probably one situation that you need an agreement, signed by both parties detailing what will happen if various situations occur (eg, you get married and want to branch out, one party is no longer able to afford the repayments, one party wants out etc etc). There are times you need to put aside the family relationship and treat it as a business partnership (sounds harsh I realise).