Introduction - young investor just starting out :)

Hey Somersoft :)

Dinamo here. Thought I would finally introduce myself as I've been reading the forums for a while, but I think it's time I started posting!

  • 21 years old, graduated from uni last year, now work full time earning 60K per year
  • living with parents in Sydney, no expenses, no debts, not much savings (10K)
  • parents will be my guarantors using our PPOR
  • have been to a broker and have a pre-approval of 500K with ING
  • main goal: to be financially free by 30 & also help my parents with investing so they can retire comfortably
  • have started reading property books, still need to set my goals and work out my exact strategy
  • aim to get my first property by the end of January
  • strategy at the moment is to focus on CG, buy undervalued property in capital cities, close to CBD with value-add potential
  • use an offset account and pay IO, once equity is enough to discharge parents off the loan, keen to buy another as quickly as possible
  • looking at Brisbane currently, a bit nervous as it's my first property and don't know the area at all
  • do not want to get caught up in analysis-paralysis, need to take action
  • would like to form a team around me who have walked the walked

I'm really excited to start my journey and I'm so glad I've found this community!

Cheers,
Dinamo
 
I'd advise a strategy of generating equity without having to rely on capital growth, then you'll be golden.

Any capital growth in the meantime will be a bonus, but I don't think you should rely on it in your plans.

Work Hard !
 
Welcome Dinamo. :)

Wasn't that long ago when I had very similar goals.

Good luck, keep learning and it'll pan out well for you. Being on SS is a great start. :)

Cheers,
Redom
 
Hello there, well done on committing yourself to a great cause and journey.

Is there any particular reason why you've chosen to focus on Brisbane? Lot's of little submarkets around Greater Brisbane doing different things. Got a budget/price limit? With a bit more savings, you'll be able to purchase in some parts of Brisbane (Logan/Ipswich, etc.).
 
I wouldn't say that your goal unobtainable, but given you relatively low income and lack of equity, it will be quite hard to achieve in nine years.
Plus, you'll probably move out, get a car and a partner in that time.
Maybe revise it a bit (move it to 35?) and then overachieve if you get to your goal early. That way, you won't lose motivation because your trajectory isn't quite where you want it to be.

Either way, kudos to you for making a plan so early and taking action to get there.
 
I'd advise a strategy of generating equity without having to rely on capital growth, then you'll be golden.

Any capital growth in the meantime will be a bonus, but I don't think you should rely on it in your plans.

Work Hard !

Thanks Ace! When you say generating equity, I think of buying undervalued properties and adding value through renovations. Is this what you meant and if not, do you have an example?

Hello there, well done on committing yourself to a great cause and journey.

Is there any particular reason why you've chosen to focus on Brisbane? Lot's of little submarkets around Greater Brisbane doing different things. Got a budget/price limit? With a bit more savings, you'll be able to purchase in some parts of Brisbane (Logan/Ipswich, etc.).

Thanks norwoodman. I don't have much savings but I have a 500k pre-approval using my parents as guarantors, so I think Brisbane (10-15kms from CBD) would be a good starting point. My reasons: Brisbane is affordable, rental yields better than other capitals, no oversupply and a lots of developments happening with no signs of demand declining. I'm predicting prices will rise within the next 2 years which means I can revalue and get my second IP quickly.


I wouldn't say that your goal unobtainable, but given you relatively low income and lack of equity, it will be quite hard to achieve in nine years.
Plus, you'll probably move out, get a car and a partner in that time.
Maybe revise it a bit (move it to 35?) and then overachieve if you get to your goal early. That way, you won't lose motivation because your trajectory isn't quite where you want it to be.

Either way, kudos to you for making a plan so early and taking action to get there.

You're right, I'm aiming high! My income should go up nicely once I finish the graduate program, but 35 definitely does sound more realistic. Thanks mate!

Welcome Dinamo. :)

Wasn't that long ago when I had very similar goals.

Good luck, keep learning and it'll pan out well for you. Being on SS is a great start. :)

Cheers,
Redom

Wished I had that mindset at a tender age of 21.

Congratulations on starting so young.

Thanks guys!
 
I wouldn't say that your goal unobtainable, but given you relatively low income and lack of equity, it will be quite hard to achieve in nine years.
Plus, you'll probably move out, get a car and a partner in that time.
Maybe revise it a bit (move it to 35?) and then overachieve if you get to your goal early. That way, you won't lose motivation because your trajectory isn't quite where you want it to be.

Either way, kudos to you for making a plan so early and taking action to get there.

Good post.

It certainly would be hard to achieve based on his current position, but 9 years is a long time and what's hard now will be easy in 9 years if experience is gained in that time.

Passively investing in resi property is not going to cut it, ignore what all the magazine stories say. This is a very slow way to wealth depending on your cashflow, and you're at the mercy of the market.

Being actively aggressive will get the dollars, fast!!!
Property should only be part of your plan, not your only plan.
 
If you live in Sydney you will find it a lot easier to do stuff yourself if you invest within 2 hours of Sydney.

I accept your reasoning with Brisbane and that is OK if it is a set and forget, long term play but if you intend to renovate/refurbish then Brisbane is a long way from Sydney.

I realise that tradesmen should do a professional job and be reliable and clean up after themself and liaise with tenant and your PM should be proactive and all sorts of good things SHOULD happen but in reality they don't !!

There are many markets in and around Sydney, Wollongong, Central Coast, Blue Mountains, Hunter Valley, Newcastle all at different stages, much easier for you to get involved and use all that dynamic energy to either increase equity or save money :)
 
Good post.

It certainly would be hard to achieve based on his current position, but 9 years is a long time and what's hard now will be easy in 9 years if experience is gained in that time.

Aint that the truth..

From my observations over the past 15 years, most people over estimate what they can achieve in 1 year & underestimate what can be achieved over 10.

Property should only be part of your plan, not your only plan.

Ace, can you elaborate and provide examples?
 
Welcome Dinamo

If I could start again and was in your shoes, below are my comments what i would do:

Hey Somersoft :)

  • 21 years old, graduated from uni last year, now work full time earning 60K per year
    What industry? Some industries salary increases rapidly after graduate job for example Medical, IT, and some increases slowly for example Accounting, HR. After you get your first IP, increasing your earning power should be a major focus.
  • living with parents in Sydney, no expenses, no debts, not much savings (10K)
    Good :) Stay with your parents and when you buy a car always do it with cash/cheque, never finance.
  • parents will be my guarantors using our PPOR
    Good way to get started earlier
  • have been to a broker and have a pre-approval of 500K with ING
    Lots of options for that budget in growth suburbs in Brisbane
  • main goal: to be financially free by 30 & also help my parents with investing so they can retire comfortably
    OK to aim high, someone smart once said it's better to aim high and fall short than to aim short and just meet your goal.
  • have started reading property books, still need to set my goals and work out my exact strategy
    It's OK to buy your first IP and then learn from there, you need to start somewhere, just don't pay too much and make sure you know the true value using things like RP Data, Pricefinder, comparable sales on RE.com etc
  • aim to get my first property by the end of January
    Don't rush, spend alot of time at open houses and learn the market until you see one you can get as a bargain (low asking price or very motivated seller)
  • strategy at the moment is to focus on CG, buy undervalued property in capital cities, close to CBD with value-add potential
    CG is best when starting for sure, as lack of equity will hold back your first 2-3 properties
  • use an offset account and pay IO, once equity is enough to discharge parents off the loan, keen to buy another as quickly as possible
    To discharge your parents off the loan, you'll need to pay the money into the loan itself and probably re-write the loan, but that's OK can deal with it when it comes. In the meantime, offset is good to hold money there for emergencies.
  • looking at Brisbane currently, a bit nervous as it's my first property and don't know the area at all
    Did 4 Saturdays from Sydney easily and you can too, flight is only about an hour and checkin is easy for domestic:
    -Book all your opens on the Wed-Thu for the Sat
    -Fly up 8am Sat morning
    -$60 rental car
    -Fly back 6pm Sat night
    -Using cheap flights and no accommodation needed, it's < $200 per saturday and you can fit about 10 opens in one Saturday. Make sure you take a GPS though!
  • do not want to get caught up in analysis-paralysis, need to take action
  • would like to form a team around me who have walked the walked

A good PM is Lu Bracher from Property Management HQ in Brisbane. 0425 225 678. She does a few Somersoft's IPs. You can also ask her opinions on growth suburbs.

Also you can do free council search for any issues with a particular property before looking using BCC site: http://cityplan2014maps.brisbane.qld.gov.au/CityPlan/
Use the map contents->overlays to find the potential issues at an address.
Watch out for flood risk areas..

Do your other due diligence, full building and pest inspection and use a GOOD solicitor because QLD has more risk to the buyer than some other states.
 
If you live in Sydney you will find it a lot easier to do stuff yourself if you invest within 2 hours of Sydney.

I accept your reasoning with Brisbane and that is OK if it is a set and forget, long term play but if you intend to renovate/refurbish then Brisbane is a long way from Sydney.

I realise that tradesmen should do a professional job and be reliable and clean up after themself and liaise with tenant and your PM should be proactive and all sorts of good things SHOULD happen but in reality they don't !!

There are many markets in and around Sydney, Wollongong, Central Coast, Blue Mountains, Hunter Valley, Newcastle all at different stages, much easier for you to get involved and use all that dynamic energy to either increase equity or save money :)

I agree with Macca if renovation is a major part of your strategy.

For me it's not, I buy and hold and only tweak things a bit.

But you have to weight up the benefit of being close and renovating, vs the fact Sydney is at the top of a market boom at the moment, and not knowing the direction it will take next.
 
Welcome Dinamo

If I could start again and was in your shoes, below are my comments what i would do:

Wow mate, golden advice, thank you! That Saturday plan sounds awesome. Career-wise I am in a corporate environment doing IT/business, on a really good path, so salary is expected to rise substantially.

I agree with Macca if renovation is a major part of your strategy.

For me it's not, I buy and hold and only tweak things a bit.

But you have to weight up the benefit of being close and renovating, vs the fact Sydney is at the top of a market boom at the moment, and not knowing the direction it will take next.

I think I probably used the wrong word - I like how you put it Dan, 'tweak things a bit'. I'll hold off on the major renovations until Sydney is looking better.

This has got me thinking. Dan, when you say tweak things, does this usually cost < 10% of the purchase price? Just wondering what level of TLC needed on the property would be optimal for growth - without major renovations and 'easy wins' which I could achieve interstate.

All of these posts are helping already!
 
Hi Dinamo,

Read some of the reno threads on SS, it is amazing the changes that can be done with a clean up, a coat of paint etc little things that are cheap and easy to do but increase the rent and appeal of the place.

A nice clean house with a tenant in place is a pleasure to own IMO :)
 
Property should only be part of your plan, not your only plan.

Ace, can you elaborate and provide examples?

I can only speak from personal experience and offer my opinions.
When I started I was focussing so much on property, thinking it was the only chance I had to make it financially in a relatively short time.
Soon enough I realised I'd have to increase cashflow to be able to invest more aggressively into property, as I was on quite a low income at the time, so property investing had to be put on hold for a while.
Then I got a bit side tracked when a small biz I started with intentions to make a couple hundred bucks a week on the side, started making 5k a week in a very short time.
Even though property investing was my main driver and motivator, I was not actively investing at the time while I was building up a cashflow machine.
Long story short, we've accumulated 10+ mil of property in the past 5 years.

If my sole plan was simply to save, buy property, value add, reval, wait, save, buy, reval, wait, etc, etc, while on average incomes, we would only have a fraction of our current portfolio.

All I can say for those wanting to speed up the process is to consider starting up a small side biz outside of your regular occupation. Sooner or later you may hit something that works which you can grow over time and eventually replace you full time working income. After that, the sky's the limit.
Even if the small side biz doesn't make big cash, every little bit helps with serviceability which in turn helps the compounding effect on its way.
 
Yep Very well done at your age. I only switched my head on when I hit about 27. What I have acheived in the past 5 yrs is unthinkable at your age it all seemed like a dream I didn't think would ever happen. It would have been so much easier if I started at your age but I was to much into partying and cars which I lost a heap of money to. Watched my lilttle smartarse brother come along who has similar goals to yourself. He now owns 7 units in great areas which he picked up for next to nothing going back a couple of years now. He is earning less than me and has plans to retire when he is 35yrs old. I think he goes off some property line thing 9 properties by 29 or something like that.
 
I can only speak from personal experience and offer my opinions.
When I started I was focussing so much on property, thinking it was the only chance I had to make it financially in a relatively short time.
Soon enough I realised I'd have to increase cashflow to be able to invest more aggressively into property, as I was on quite a low income at the time, so property investing had to be put on hold for a while.
Then I got a bit side tracked when a small biz I started with intentions to make a couple hundred bucks a week on the side, started making 5k a week in a very short time.
Even though property investing was my main driver and motivator, I was not actively investing at the time while I was building up a cashflow machine.
Long story short, we've accumulated 10+ mil of property in the past 5 years.

If my sole plan was simply to save, buy property, value add, reval, wait, save, buy, reval, wait, etc, etc, while on average incomes, we would only have a fraction of our current portfolio.

All I can say for those wanting to speed up the process is to consider starting up a small side biz outside of your regular occupation. Sooner or later you may hit something that works which you can grow over time and eventually replace you full time working income. After that, the sky's the limit.
Even if the small side biz doesn't make big cash, every little bit helps with serviceability which in turn helps the compounding effect on its way.

Great work ACE.. truly inspirational.

What business did you hit the $5k /w with?
 
Great work ACE.. truly inspirational.

What business did you hit the $5k /w with?

Thanks Rix,

Wasn't even a "real" business at the time.
Simply imported a container of home grade pub sized pool tables from China and they just sold themselves online, eBay, Trading post, etc...

Cost 12k for the container of product and it was all the money I had, did not have a lot of cash to throw around at the time.
Started off from home utilising a single garage for storage and started making about 5k profit after a few weeks, so immediately quit my job as a full time builders labourer.

Never looked back from then.
 
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