Long Term Strategy - Critique Please

[stumpie]

Hi Asheam

I am really impressed with your strategy, I like it very much. Good for you

I will add having a positive attitude as an investor is very important, I have noticed over the years people who see their glass half empty struggle to achieve their end goal.

Never underestimate the importance of networking.

Never stop learning, step outside your comfort zone and develop skills that will enable you to make money regardless of what the property cycles are doing.

Keep reading SS posts.

MTR

+++1

well said MTR totally agree.

be humble, always have a mindset that you can learn from someone.
don't ever be greedy.
when you have enough... give back be it money or time or knowledge.

 

[ramblin]

i think the big broad goal of passive income is great but would think stage 1 is probably the best to focus on and then reassess your goals again at 40 with a strategy for the next 20 years
as others mentioned, things do happen in life but also our focus on life changes over time
i had goals i set at 20 which i have no interest in achieving now purely because my life experience along the way reframed how i felt about certain things

i think your attitude is great though and always keep in mind that being flexible to change will keep you in good stead in life. those who cannot accept change, stagnate in all aspects of life

 

[Asheam]

Asheam,
Good to have a written plan and long term goals with the reasons why you are trying to achieve them.
A few comments:

• Buy well.
• Diversify across different states to minimise land tax and tap into different property cycles.
• Think about structures and asset protection earlier than later.
• Look at opportunities to add value (granny flats in NSW has been suggested that will add cash flow and increase your borrowing ability).
• Make sure you always have a buffer or LOC facility in place for downturns or unexpected costs.
• Use different lenders as much as possible - to minimise lender risk, easier to use a revaluation and refinance strategy and minimise LMI costs.
• Choose which lender to use for each property, based on lower servicing criteria first, far more important than interest rate if you want to build a large property portfolio rapidly.
• Always keep in mind - to be able to obtain finance for the next IP, what characteristics does this current IP need.
• Your first CIP does not need to be $1.8m, it can be lower.
• Conserve your own cash/capital as much as possible and use OPM where you can, so have an offset facility somewhere in the mix to park your own funds.

Good luck with the plan and look forward to hearing an update.

Hi Greg

Thanks for the detailed reply

Looking to purchase the first few in WA as there seems to have been decent opportunities in the past year / now. The land tax rates here are pretty generous which is a bonus. After that I'll be aiming to buy in whatever state looks to be starting a growth phase

I have and will discuss the lenders going forward with my broker, will be trying to use the tighter lenders early and then move upwards from there.

I will have to think about what stage to use various structures. Will definitely be using trusts once I can start purchasing some cash flow positive investments.

Cheers

 

[Asheam]

Hi Asheam

I am really impressed with your strategy, I like it very much. Good for you

I will add having a positive attitude as an investor is very important, I have noticed over the years people who see their glass half empty struggle to achieve their end goal.

Never underestimate the importance of networking.

Never stop learning, step outside your comfort zone and develop skills that will enable you to make money regardless of what the property cycles are doing.

Keep reading SS posts.

MTR

Hey MTR

It seems like quite a few people on the forum advocate the benefits of a positive attitude and frame of mind. Maybe they are on to something .

Depending on how I'm going I will be looking at developing in the future, maybe to help get those 10 properties . I'm currently building a house now which is a great learning experience.

I will have to sit down with you and Westminster at some point in the future to pick your brains on developing!

Everyone mentions that you require capital and cash flow in order to start developing; is there a minimum amount of capital that you would need before starting your first development?

Thanks

 

[MTR]

Capital required and cash flow will be dependent on entry level, funding LVR and how many projects you have on the go pa. I prepare a budget per project, pretty basic stuff and I make sure I have a buffer sitting in my offset account just in case. How much I have is dependent on what is happening at the time (buying/selling/holding), sometimes its huge, sometimes its lean

I also look at what I want to achieve over the next 3 years, work through this with my accountant and plan a strategy in terms of saving tax/structure and what I plan t do with my profits. On my agenda will be diversification into another asset class where the returns may be higher.


Have a read posts by Blair and HD-ACE, they both retained a house and built at the rear, this may be a good way to start and build up from here, both from Perth. There are also many other experienced developers such as Sanj who has calved up blocks and sold off, of course make sure you read all of Westminster posts, the woman with nerves of steel
Also, oc1 a developer from Melb, he has a number of detailed projects that you may enjoy reading.

All the best
MTR