is there such a thing as too YOUNG ???
- Thread starter Clarence130279
- Start date
My son dropped out of school at sixteen to become a computer nerd and has been working full-time for two years as a computer technician. I suck 20% out of his pay packet every fortnight, he lives at home and spends the rest on whatever - mostly computer bits and fish and chips from what I can gather!!! Initially, he asked if he could use the money for this or that (NO!), can I buy a car with it? (NO - not an asset). After a year he asked how much was in it? I told him and he smiled and said, "I didn't even miss it". Now he hounds me to make sure I have taken the money out each fortnight so he doesn't accidentally spend it.
The carrot - finanical independence by the time he is 35 (almost in the mortuary I know) but he likes the idea of fiddling on computers all day and being independently wealthy. Anyway, he's saved $7000 and I would be hopeful that he will have his first IP by the time he's twenty.
My 14 year old daughter just got her first job as a check-out chick at K-Mart. 20% came straight out of pay packet 1. She's on her way. She does show more interest in actually looking at properties with me and finding out how it is all done, so I suspect she will end up doing better than my son.
In the end, I do think it is just dogged determination to put the money in without fail and treat it as sacroscant. I always liked Jan's story of the forklift driver who had multiple properties, was very wealthy and had never earned more than the basic wage all his life but he loved being a forklift driver and invested what he had religiously.
Good luck to all - whatever age you start.
The carrot - finanical independence by the time he is 35 (almost in the mortuary I know) but he likes the idea of fiddling on computers all day and being independently wealthy. Anyway, he's saved $7000 and I would be hopeful that he will have his first IP by the time he's twenty.
My 14 year old daughter just got her first job as a check-out chick at K-Mart. 20% came straight out of pay packet 1. She's on her way. She does show more interest in actually looking at properties with me and finding out how it is all done, so I suspect she will end up doing better than my son.
In the end, I do think it is just dogged determination to put the money in without fail and treat it as sacroscant. I always liked Jan's story of the forklift driver who had multiple properties, was very wealthy and had never earned more than the basic wage all his life but he loved being a forklift driver and invested what he had religiously.
Good luck to all - whatever age you start.
I think this is the way most kids want to get their money:
http://www.ucomics.com/calvinandhobbes/1991/11/29/
http://www.ucomics.com/calvinandhobbes/1991/11/29/
I bought my 1st house at 18 with a boyfriend - when I left him I took half of the equity to buy my 1st refurb that I lived in for a bit - I then refurbed and rented it out in my early 20s
Up until I was about 25 I did a few part refurbs and put in a few bathrooms & kitchens etc. I then had to start getting people in to do refurbs after a back injury. I made a video on one of my refurbs early this year for a laugh.
I am now 29 - still young - and have bought about 9.5 million ££ worth of new property with my kiwi hubby - mostly on joint Ventures in the UK.
Age is only a barrier if you let it be one.
Up until I was about 25 I did a few part refurbs and put in a few bathrooms & kitchens etc. I then had to start getting people in to do refurbs after a back injury. I made a video on one of my refurbs early this year for a laugh.
I am now 29 - still young - and have bought about 9.5 million ££ worth of new property with my kiwi hubby - mostly on joint Ventures in the UK.
Age is only a barrier if you let it be one.
Hi,
I bought a brand new car for $30k when I was 25.
I brought a brand new townhouse for $167k when I was 28.
I'm now 32, car now insured for $8k, property for $270k.
How I wish I used that $30 for a couple of properties when I was 25.
I still have that same car, still works, just not as shiny.
Looking back I wish I had three new properties and one old car.
23 isnt too young, the biggest problem is mindset, which you seem to have solved. Next is finance. Speak to a broker about your serviciability (borrowing capacity), at your age the only other problem is usually a deposit.
If you intend to "borrow" funds from family, speak to a solicitor/accountant.
It might be a good idea to draft the "lent funds" in black&white as a loan. Maybe a 2nd mortgage, or unsecured note.
For a number of reasons;
1) It sets out clearly who owes what.
2) It sets out clearly that this is your property, and that your obligations to family are financial (no emotional blackmail).
3) The practice you get with managing contracted funds, wont hurt later when you use other peoples money.
Just a thought...
Michael G
I bought a brand new car for $30k when I was 25.
I brought a brand new townhouse for $167k when I was 28.
I'm now 32, car now insured for $8k, property for $270k.
How I wish I used that $30 for a couple of properties when I was 25.
I still have that same car, still works, just not as shiny.
Looking back I wish I had three new properties and one old car.
23 isnt too young, the biggest problem is mindset, which you seem to have solved. Next is finance. Speak to a broker about your serviciability (borrowing capacity), at your age the only other problem is usually a deposit.
If you intend to "borrow" funds from family, speak to a solicitor/accountant.
It might be a good idea to draft the "lent funds" in black&white as a loan. Maybe a 2nd mortgage, or unsecured note.
For a number of reasons;
1) It sets out clearly who owes what.
2) It sets out clearly that this is your property, and that your obligations to family are financial (no emotional blackmail).
3) The practice you get with managing contracted funds, wont hurt later when you use other peoples money.
Just a thought...
Michael G
Female Investor
post is long
I am a 26 y/o female who first started getting into IP about 2 years ago. I went to all the usually "get rick" seminars and thought why not? I am so thankful that I had, although I never continued with any seminars, the first introductory ones got me onto Jan Somers and then 20,000 hours of reading later here I am.
I am going to settle on my first IP in the next two weeks. I plan to renovate the house and rent it out to my uncle who has been looking for somewhere to rent with a big garage. Lucky for me he's also a builder, so I can renovate the place pretty much anytime while he's renting it out, and get a bit of help from him.
One year ago I did buy an OTP townhouse 15km in the CBD, however that settles in 3 years, and originally I was going to wait for it to settle and then rent it out. However three years is such a long time to be sitting around, so I decided that to buy an IP in which I could rent out immediately rather than wait like OTPs. I think that was my first lesson - don't just buy everything just b/c everyone else is doing it. Think about what my goals are first, my first goal, get started on something small to rent out and learn how to manage that one IP.
At this current moment I don't have a plan to buy xx IPs, as I am still a fairly new *conservative* investor. With these two properties I am starting to get "sleep at night factor" feelings already, but when I have these feelings I just log onto the forum and ready everyones posts and I feel much more confident that I can do this!
I still want to live my life as well, I don't want to be solely focused on building wealth, I still want all the things other young females want clothes, holidays, car, beautiful house etc. I just have to learn to balance when I want these things and are these things important to me now?
Some of my friends think I am missing out, that I am wasting my young adult life working, buying houses and getting myself into debt. They say now is the age I should travel and work overseas and just have fun, but at the moment I feel more excited about accumulating properties than travelling the world. Other friends also want an IP, but their goal is to just get tax benefits, they do not educate themselves on what, how and why's of IP, but they know they should be buying one b/c of their tax bracket. I think to myself they don't love property, they just love the money.
I know that I don't want to do this just because I want to be wealthly one day. But rather that I will have the choice to do what I want out of life, and also because I love property! Throughout my life my parents have always brought unrenovated houses, renovated them and then sold them one year later for a profit. I should be a pro at designing kitchens now!
I wish I did start earlier than 24, especially when I had my first job at University when I was 20. I have wasted a lot of money in my life, but hopefully I am a little on the way to making some money... and that I can make a positive influence on my 13 year old brother.
post is long
I am a 26 y/o female who first started getting into IP about 2 years ago. I went to all the usually "get rick" seminars and thought why not? I am so thankful that I had, although I never continued with any seminars, the first introductory ones got me onto Jan Somers and then 20,000 hours of reading later here I am.
I am going to settle on my first IP in the next two weeks. I plan to renovate the house and rent it out to my uncle who has been looking for somewhere to rent with a big garage. Lucky for me he's also a builder, so I can renovate the place pretty much anytime while he's renting it out, and get a bit of help from him.
One year ago I did buy an OTP townhouse 15km in the CBD, however that settles in 3 years, and originally I was going to wait for it to settle and then rent it out. However three years is such a long time to be sitting around, so I decided that to buy an IP in which I could rent out immediately rather than wait like OTPs. I think that was my first lesson - don't just buy everything just b/c everyone else is doing it. Think about what my goals are first, my first goal, get started on something small to rent out and learn how to manage that one IP.
At this current moment I don't have a plan to buy xx IPs, as I am still a fairly new *conservative* investor. With these two properties I am starting to get "sleep at night factor" feelings already, but when I have these feelings I just log onto the forum and ready everyones posts and I feel much more confident that I can do this!
I still want to live my life as well, I don't want to be solely focused on building wealth, I still want all the things other young females want clothes, holidays, car, beautiful house etc. I just have to learn to balance when I want these things and are these things important to me now?
Some of my friends think I am missing out, that I am wasting my young adult life working, buying houses and getting myself into debt. They say now is the age I should travel and work overseas and just have fun, but at the moment I feel more excited about accumulating properties than travelling the world. Other friends also want an IP, but their goal is to just get tax benefits, they do not educate themselves on what, how and why's of IP, but they know they should be buying one b/c of their tax bracket. I think to myself they don't love property, they just love the money.
I know that I don't want to do this just because I want to be wealthly one day. But rather that I will have the choice to do what I want out of life, and also because I love property! Throughout my life my parents have always brought unrenovated houses, renovated them and then sold them one year later for a profit. I should be a pro at designing kitchens now!
I wish I did start earlier than 24, especially when I had my first job at University when I was 20. I have wasted a lot of money in my life, but hopefully I am a little on the way to making some money... and that I can make a positive influence on my 13 year old brother.
Tell me about it Aceyducey
Come to think of, I was pretty brave buying that OTP. But if I didn't do it I wouldn't have learnt anything! Just hoping it will be a financially rewarding lesson!
Come to think of, I was pretty brave buying that OTP. But if I didn't do it I wouldn't have learnt anything! Just hoping it will be a financially rewarding lesson!
ldiep,
Do not worry about your OTP purchase - 3 years is a very long time which should smooth out any possible price declines. I use deposit bonds instead of cash deposits for OTPs. This way you have your deposit money working twice: use it to buy another IP, and borrow it back against increased value of this IP when it is time to settle on the OTP purchase.
Some real life (Sydney) examples I know about:
1. A unit bought OTP in May 2001 for $285K, completion Nov 2001, sold March 2002 for $330K with tenants paying $320/w, very good depreciation, current value $355K.
2. A unit bought OTP in Feb 2002 for $383K, completion Jan 2003. Current bank valuation $400K, in todays market can be sold for $415. Deposit bond cost $750.
This units were bought by inexperienced investors just slightly below prices originally quoted by the agent.
Lotana
Do not worry about your OTP purchase - 3 years is a very long time which should smooth out any possible price declines. I use deposit bonds instead of cash deposits for OTPs. This way you have your deposit money working twice: use it to buy another IP, and borrow it back against increased value of this IP when it is time to settle on the OTP purchase.
Some real life (Sydney) examples I know about:
1. A unit bought OTP in May 2001 for $285K, completion Nov 2001, sold March 2002 for $330K with tenants paying $320/w, very good depreciation, current value $355K.
2. A unit bought OTP in Feb 2002 for $383K, completion Jan 2003. Current bank valuation $400K, in todays market can be sold for $415. Deposit bond cost $750.
This units were bought by inexperienced investors just slightly below prices originally quoted by the agent.
Lotana
B
brains
Guest
Lotana,
Thats not too hard to do in a rising, heated Sydney market of the last couple of years. You try to do it in the next few years and you could probably reverse the figures. OTP apartments are very risky at the moment, i wouldnt touch them.
btw....i thought you were of the female gender as well, as Jas stated, names ending in "a" usually denote female and names ending in "o" usually denote male.
eg: Mario & Maria
This probably only applies to names from latin extraction, im not sure.
Thats not too hard to do in a rising, heated Sydney market of the last couple of years. You try to do it in the next few years and you could probably reverse the figures. OTP apartments are very risky at the moment, i wouldnt touch them.
btw....i thought you were of the female gender as well, as Jas stated, names ending in "a" usually denote female and names ending in "o" usually denote male.
eg: Mario & Maria
This probably only applies to names from latin extraction, im not sure.
Hi Lotana,
I actually did use deposit bonds for the OTP townhouse, and I suppose I do have a some hope it will increase in the next three years, as I know it's a good buy - three bedroom townhouse with garage and within 15km of the CDB.
It's just the fear of the unknown. It's my first OTP and I keep thinking what ifs:
1. the market will bust and OTP values will decrease
2. I paid too much for the OTP even when I thought it was 20% below market valuation
3. Someone in the estate also wanted to sell their three bedroom townhouse (one 2 other 3 br townhouses in estate of about 20) and they were advertising lower than what I brought mine for.
4. Finally, the worse of all what if I couldnt' sell it at all?
Sometimes I think of those people who have brought about 5 OTPs, and I wonder how they can sleep at night!
I actually did use deposit bonds for the OTP townhouse, and I suppose I do have a some hope it will increase in the next three years, as I know it's a good buy - three bedroom townhouse with garage and within 15km of the CDB.
It's just the fear of the unknown. It's my first OTP and I keep thinking what ifs:
1. the market will bust and OTP values will decrease
2. I paid too much for the OTP even when I thought it was 20% below market valuation
3. Someone in the estate also wanted to sell their three bedroom townhouse (one 2 other 3 br townhouses in estate of about 20) and they were advertising lower than what I brought mine for.
4. Finally, the worse of all what if I couldnt' sell it at all?
Sometimes I think of those people who have brought about 5 OTPs, and I wonder how they can sleep at night!
Hi ldiep,
I currently have 2 open OTP units completing next year and the year after and I don't loose sleep over it. When I took a decision, I estimated the long term risk as medium and decided that it matches my investor's profile. I know I will not loose slip if I had to pay more than the market value on completion. It will heal itself in the long run. If your investment horizon is short ( < 5 years ) or you can't tolerate paper loss, or you can't afford extended vacancy - then you won't enjoy OTP investment at all.
To estimate worthiness of a particular OTP investment I use the following mechanism.
Step 1.
Set time horizon. Say 5 years from the exchange.
Step 2.
Estimate probabilities for market growth rates over this period (your view of the future market):
-10 to -5% 0.04
-5 to 0% 0.06
0 to 5% 0.1
5 to 10% 0.12
10 to 15% 0.14
15 to 20% 0.14
20 to 25% 0.14
25 to 30% 0.1
30 to 40% 0.08
40 rto 45% 0.04
45 to 50% 0.02
over 50% 0.02
Make sure the sum is 1.0.
Step 3.
Multiply the middle of each interval (or 50% for the last one) by its probability and add the products together. The result is your "epected" return rate. You can also estimate volatility, but let's just keep the things simple.
For the example above the expected return over 5 years is 17.7%.
Cheers,
Lotana
I currently have 2 open OTP units completing next year and the year after and I don't loose sleep over it. When I took a decision, I estimated the long term risk as medium and decided that it matches my investor's profile. I know I will not loose slip if I had to pay more than the market value on completion. It will heal itself in the long run. If your investment horizon is short ( < 5 years ) or you can't tolerate paper loss, or you can't afford extended vacancy - then you won't enjoy OTP investment at all.
To estimate worthiness of a particular OTP investment I use the following mechanism.
Step 1.
Set time horizon. Say 5 years from the exchange.
Step 2.
Estimate probabilities for market growth rates over this period (your view of the future market):
-10 to -5% 0.04
-5 to 0% 0.06
0 to 5% 0.1
5 to 10% 0.12
10 to 15% 0.14
15 to 20% 0.14
20 to 25% 0.14
25 to 30% 0.1
30 to 40% 0.08
40 rto 45% 0.04
45 to 50% 0.02
over 50% 0.02
Make sure the sum is 1.0.
Step 3.
Multiply the middle of each interval (or 50% for the last one) by its probability and add the products together. The result is your "epected" return rate. You can also estimate volatility, but let's just keep the things simple.
For the example above the expected return over 5 years is 17.7%.
Cheers,
Lotana
Me too!!
G,day
Ive always wanted my own pad since a teen. Its only now (27) That ive racked up enough courage, cash (measly 4k), and financial knowledge to finally buy somethin!! ..yup, im in the proccess of purchasing my first property.
Think.....qlndr, 2bdrm, hiset, nth qld tropics, etc. etc. oh and plenty of room for added value. Yeeha!!
G,day
Ive always wanted my own pad since a teen. Its only now (27) That ive racked up enough courage, cash (measly 4k), and financial knowledge to finally buy somethin!! ..yup, im in the proccess of purchasing my first property.
Think.....qlndr, 2bdrm, hiset, nth qld tropics, etc. etc. oh and plenty of room for added value. Yeeha!!
Hi all
Its great to see so many young people interested in IP’s.
I started in property when i was 19 and as they say, "the first one's the hardest"
Well it wasn't that hard really, once you have a system in place you might not even realise.
My advice to all you young guns is to invest wisely, don't over commit yourselves as you all have to live a little, always ask for independent advise from friends family and especially this forum.
And remember it’s a long term thing.
Cheers,
Serge
Its great to see so many young people interested in IP’s.
I started in property when i was 19 and as they say, "the first one's the hardest"
Well it wasn't that hard really, once you have a system in place you might not even realise.
My advice to all you young guns is to invest wisely, don't over commit yourselves as you all have to live a little, always ask for independent advise from friends family and especially this forum.
And remember it’s a long term thing.
Cheers,
Serge
I'm 21, just got my first ip in the eastern surburbs of melbourne for 285k. I have taken advantage of being able to live at home with my parents.
But most importantly I have and continue to enjoy my responsibilty free youth, have travelled to europe twice, a few interstate trips, skipped many uni lectures. However I have suffered by working call centre jobs to paid for investing and lifestyle.
Costa
But most importantly I have and continue to enjoy my responsibilty free youth, have travelled to europe twice, a few interstate trips, skipped many uni lectures. However I have suffered by working call centre jobs to paid for investing and lifestyle.
Costa
Having a $285K property and, presumably, a similar sized mortgage does not equate with responsibility free in my opinion
Invest at any age, but be an informed investor! Most of my clients are investors that have been almost destroyed by being i'll informed and listening to "Guru's". Look at the ASIC site and learn all you can, seek out those that will caution you rather than those that urge you not to miss out. listen to the media and do yuor due dillegance on all your potential investments. Finaly I can't state strongly enough to beware of "seminars", question everything, unfortunately the truth is used to hide the real scam or agenda.Live long and Prosper
Remember "Chance Favours The Prepared Mind"
As stated in Under Siege 2 (the movie), I believe? But who originated that comment?
