Introduction - young investor just starting out :)
- Thread starter Dinamo
- Start date
I agree with most people.
For the first 12-24 months, CG is the most important, especially if your first buy will deplete most of your cash. An extra $10-15k cashflow per annum isn't going to help you get your second property. The ability to refinance $120k is.
However, after a few properties, cashflow becomes important again. Because there's no point holding 4 properties that have gained $200k in equity, but you're not selling, and in the meantime is costing you $30k of cashflow per annum to hold. It'll hit your finances, your lifestyle, and ability to move forward.
Once you sort the cashflow out again, you want to go for capital growth again. Because if you increase my cashflow from say passive income of $100k to $120k per annum, it makes marginal difference. But the ability to buy a property that can grow $1-2m in 12 months is going to make a difference.
2cents
For the first 12-24 months, CG is the most important, especially if your first buy will deplete most of your cash. An extra $10-15k cashflow per annum isn't going to help you get your second property. The ability to refinance $120k is.
However, after a few properties, cashflow becomes important again. Because there's no point holding 4 properties that have gained $200k in equity, but you're not selling, and in the meantime is costing you $30k of cashflow per annum to hold. It'll hit your finances, your lifestyle, and ability to move forward.
Once you sort the cashflow out again, you want to go for capital growth again. Because if you increase my cashflow from say passive income of $100k to $120k per annum, it makes marginal difference. But the ability to buy a property that can grow $1-2m in 12 months is going to make a difference.
2cents
Firstly Congratulations on your plans, it's a truly exciting time and the more you learn the more fun it gets 
Just one thing I noticed from your original post, I'm not sure which broker you used for your pre approval, but I'm assuming it wasn't a SS broker?
ING are not usually a first choice for investors in my experience so it may pay to make sure your broker is fully aware of your future investment plans and can put you with lenders that will allow the flexibility you need in the future, rather than focusing on just this first purchase.
Just one thing I noticed from your original post, I'm not sure which broker you used for your pre approval, but I'm assuming it wasn't a SS broker?
ING are not usually a first choice for investors in my experience so it may pay to make sure your broker is fully aware of your future investment plans and can put you with lenders that will allow the flexibility you need in the future, rather than focusing on just this first purchase.
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
Hey Dinamo,
Your goal is a lofty one to achieve in 9 years, but I think completely attainable, if you make your goal an obsession, day and night, doing WHATEVER it takes to make it happen and your gonna have to develop an unbreakable mindset. Your off to a great start mate. Learn as much as you can from books, cds forums etc. Also I would be looking to increase your income mate. Second job, 3rd job. It will have a massive impact on how fast you can grow your asset base in the first few years. Also develop your mindset from Jim Rohn, Les Brown material.
Good luck!
Leo
This is actually fantastic. Well done Ace.
Great start Dinamo.
Wasn't that long ago that i was in the same position, starting out with my first graduate role in a similar industry.
Its amazing how far you can go in a short time frame by setting goals and working out a plan to achieve them.
I'm all for having big goals, having big dreams and a vision for what you'd like your life to be. I wouldn't tone your goals down, i'd just crystallise how to achieve them over time - it's definitely achievable.
Realistically, property (passively) will only get you so far. To achieve financial freedom, over time, you'll need to:
1. Accelerate your income. The usual salaried PAYG field is a great start, but given the way income rises in PAYG, its quite unlikely to get you to financial freedom so quickly. Even if you do great and hit a double your income in 5 r so years, its likely to limit your acceleration.
2. Be creative in accelerating your income: Ace in the Hole provided a great example. You could get a second job...but again, realistically you can only add marginally by doing so. Starting successful businesses will get you there quicker.
3. Translate that income into good investments. SS is the place to be learn. Investments that let you create wealth are a great way to accelerate.
4. Have a little bit of luck (or avoid bad luck!). It helps!
Leo talked about some really important 'personal' skills you'll need to achieve your goals. Life will naturally present hurdles/barriers that will test your resolve/focus. Build yourself up and you'll go from strength to strength.
Goodluck mate!
Wasn't that long ago that i was in the same position, starting out with my first graduate role in a similar industry.
Its amazing how far you can go in a short time frame by setting goals and working out a plan to achieve them.
I'm all for having big goals, having big dreams and a vision for what you'd like your life to be. I wouldn't tone your goals down, i'd just crystallise how to achieve them over time - it's definitely achievable.
Realistically, property (passively) will only get you so far. To achieve financial freedom, over time, you'll need to:
1. Accelerate your income. The usual salaried PAYG field is a great start, but given the way income rises in PAYG, its quite unlikely to get you to financial freedom so quickly. Even if you do great and hit a double your income in 5 r so years, its likely to limit your acceleration.
2. Be creative in accelerating your income: Ace in the Hole provided a great example. You could get a second job...but again, realistically you can only add marginally by doing so. Starting successful businesses will get you there quicker.
3. Translate that income into good investments. SS is the place to be learn. Investments that let you create wealth are a great way to accelerate.
4. Have a little bit of luck (or avoid bad luck!). It helps!
Leo talked about some really important 'personal' skills you'll need to achieve your goals. Life will naturally present hurdles/barriers that will test your resolve/focus. Build yourself up and you'll go from strength to strength.
Goodluck mate!
While not a finance thread OP - another suggestion that may help you accelerate your progress and could be better suited is:
1) Get your parents to draw out 20% equity from their property (or more if you'd like to be very aggressive)
2) Gift it to you (set up a private contract so that you can pay the interest, if need be).
3) Purchase at 90% LMI using 10% deposits. This way you'll get two properties, instead of one. Doubling your asset base and making your money go much further for you.
This method also avoids cross securitising your parents and your assets.
It does add risk to them, but the benefits are worth exploring.
Just something to think about. If you haven't already, ask your broker about it.
Cheers,
Redom
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