Making the Transition.....

[JoannaK]

Re: Re: Don't just do it !

Originally posted by Aceyducey

What do you define as a full-time investor?

I now work full-time in my investment business - meaning that I don't work full-time in anyone else's business.

My investment business includes property development work (reno end). I am not running a small business in this - I don't do this work for other people, only on my own properties (at this stage).

Agreed 100%. Investing is work. Investing is a business. When you become an investor (which includes developer, renovator, flipper, wrapper), whether it be full time or part time, you are running a business. You must be business minded in all that you do. What AceyDucey does and what I do, and what others do on this forum is the business of investing, whether it be full or part time.

 

[sbe]

Thanks for the replies guys (in the non-gender sense).

In terms of just do it, that's half the reason I even have IP's.

{Sorry, this is going to be longish.....}

Advice for newbies - If I listened to what everyone said, I wouldn't own any. The what if's, how can you afford it, look how much you'd owe etc etc. would drive you nuts.

In the end, we figured the loan was 95% of the value. We kick in and reno a bit (worst house, nice court). At the time, the numbers looked pretty good, and really, it was going to cost us around $20pm to buy a house.

The reno was done by my wife (very hard worker), myself, and a little help from family. We set up TV/Video so that kids could be with us with the electronic baby sitter. I think at the time they were 3,2 and 0.5 years old. Ah the wiggles....

A lot of hard work, and a bit of sacrifice (I don't mind the kids seeing us work - they get to appreciate what's involved in all this), the house was worth $30,000 more than we paid for it (less $10,000 we spent). Strange how it still didn't click yet - DOH!

In summary - very nervous time for us, and a big leap of faith. We were doubling our debt etc, but looking back, best thing I ever did (wish I'd bought more then!!!)

I do have to be mindful of providing for family (Wife, 3 boys currently 9,7 and 5). You also need to take into consideration each person's personality. For some, just do it is exactly what they need. Others need heaps of analysis and planning. I'm probably somewhere in between....

My trouble at the moment is my IP's are neg. geared, so it needs income to feed it. The area I invest in is usually good rental demand and fairly good yield, although down with the boom, currently around 6% gross yield.

Of course, with my normal detailed planning (cough cough), I figured I had some equity, so just settling on another house now (finance just went unconditional, settle 30 days).

I've seen some of the cashflow + IP's - Brenda etc - where do you guys find these ! You inspire and amaze me!

Personally, until I can beat down some of the debt, I can't see how to make the jump - which is why I posed the question. Some of you guys have thinking that's inspiring - JAKK for example. How do you find land for 75K. I did a search (in Vic) - out back of nowhere and that's about it.

I know there's a way, just got to figure it out.....

PS. My bent - I'd love a business (don't know what, but something flexible where I can determine the hours, and get paid lots for doing stuff all), and rennoing properties (maybe develop - would like to do some units). My wife and I love seeing how a dud house can be made nice. Bad habbit - we do that for any house we walk into, including friends! Oh, and taking time off to be with kids, etc.

Thanks for the idea's guys, and keep them coming !

Regards to all,

Simon.

 

[Lissy]

Probably the only down side to quitting your job to go full time investing, is your ability to source loans. It may be a little harder and cost you a little more.
That needs to be factored in!
I'm a full time wrapper, and despite the strong positive cashflow, at the moment it's still my hubby's boring PAYG income that convinces financial institutions to lend me more money for more houses and more positive cashflow.
When that changes and the business cashflow is sufficient to keep securing loans and feeding us, hubby will be out of his job so fast they won't see him for dust...
So that's my plan!

 

[SEASON]

this question about how people make a transition from PAYG (or even from been something like a self-employed consultant) to going BIG................financially independent..............i mean not having to work.

has anyone of you guys ever thought of or actually interviewed successful people one-on-one? if yes, what was your experience?

(hopefully you guys see how my post is related to this thread)

 

[JoannaK]

Before I set up my business I asked for and got a meeting with John McGrath. He was basically unemployed with a vision when he started his agency, so he was the best I could think of at the time to get a few pointers.

I picked his brains for about 2 hours, and it was fantastic. He was so genourous about the info he was passing on. I walked away full of energy and enthusiasm and conviction and ideas. He gave me heaps of ideas on how to market myself, and grow the business.

 

[SEASON]

excellent, Joanna!

thanks for sharing your experience

interviewing a few successful people is one of the steps i'd like to take as i'm beginning my journey towards financial independence.

then, once i've done my hard yards and reached my goals (however long it takes), i'd love to be in the position when i'm asked to share my experience with others..............

actually, there are some great posts in the archives here from Joanna, Jakk Thewife and many others about how they made it. Fascinating reading- from real people

 

[Mikhaila]

>>>What do you define as a full-time investor?

In short, it is the nature of the income you have. If you have to work ( for yourself or somebody else) than it is a job/employment. If you choose to work and there is enough passive income to support you than it is full time investing. The work in both cases can be anything. If renovation/development is your cup of tee and you choose to do it – that is fine ! My apologies to all forum renovators if my previous post slightly hurt somebody. By my definition being self-employed, having your own business and still have to work is not quite good enough to call yourself full-time investor. And yes, Aceydusey, it all about the choice. Hope it defines enough what I mean by full-time investor.

DO NOT “JUST DO IT” – I re-read my post and can not find where it “talks down peoples' chances of succeeding”. I feel just the contrary – it should help people to succeed and make a choice – the informative one not a guess. I am passionate about the subject as well. I get concerned when see posts like “So get out there and break free of your comfort zone!” or “Just Do It!” or “NEVER let your children become the reason you're not successful...”. These are powerful, inspirational words but they can hurt far more than suggestion about making analyses and research. In fact, these/similar phrases used in sales scam seminars to push people. I feel it is not right. Especially, if you look at some your own postings it clearly confirms that you did not “just did it”. I repeat – it is unfair on new starters to bombard them with such phrases as it may give false hope.

I am self-employed(not real-estate related business) for the last six years, have two kids( 2 & 4). Invest in property(started in 1997/98) as it looks like the best way to financial independence and ability to have a choice. So far we have 5 properties. It was a time when I seriously traded the share market now I do not trade but invest but with a lot more knowledge behind my belt. Unfortunately, I “just did it” at the beginning and it was not a happy story. I love to be full time investor one day using my definition of the word.

Season, talking about interviews with successful people, there is a book you may like – “Ordinary Millionaires” by Jim McKnight. Wonderful inspirational reading.

 

[kierank]

Re: Re: Re: Don't just do it !

Originally posted by Mikhaila

Hope you never run out of luck.

I never will. I read a book many years ago titled "How To Make Your Own Luck" by Bernard Gittelson. Basically, its mesage was that you make your own good luck - a philosophy I was lived for the last 10-15 years and which I pass onto others.

Originally posted by Mikhaila

If you have tips for next round of power ball please share

IMHO, a person doesn't need luck to play Powerball; they just need to be stupid. I don't play it so I can't give you any tips. Sorry.

KieranK

 

[Mikhaila]

Re: Re: Re: Re: Don't just do it !

Originally posted by kierank

IMHO, a person doesn't need luck to play Powerball; they just need to be stupid. I don't play it so I can't give you any tips. Sorry.
KieranK

It was a joke about the powerball tips unless you did not get it. So there is nothing to be sorry about

As for the philosophy, it sounds good. Hardly believe, though, the book teachers not to do proper analysis and planning. Well anyway, I understand and respect your point of view – “I feel that proper analysis and planning is also overdone”. You know mine as well. It is great to see two different opinions.

Cheers

 

[SEASON]

it's good to see differences in opinions on this forum - after all, it breaks uniformity and promotes healthy growth in us as individuals!

Mikhaela, i'll take a note of that book, thanks

anyone esle wants to comment on the topic of transition?

 

[sbe]

Definitions aside, some of the issues I see are:

* Money for living (need to eat, drive etc)
* Ability to get finance
* Ability to fund work
* Having appropriate deposits available
* Getting things balanced so the IP's dont require my money in.

My thoughts were if I have a sum of money, I could use part of that to live off, part to fund deposits / purchases and works, perhaps using some of Jakk's examples for development etc.

I think at the moment, the best I could arrange would be around $120,000 (pulled from equity, and would max out borrowings from Banks for quite a while).

So, if you had $120,000, a young family and debt to feed, what idea's can we come up with? Our cash burn rate is probably around $45,000-$50,000 after tax PA.

Any other issues I haven't thought of?

Thanks to all.

Simon

 

[ani]

Simon

Can you do what you do now part time or on a consultancy basis?
Say 2 days a week - Just do enough to pay for food and day to day expenses and keep your 120k intact for property stuff.

I have gone back to doing a bit of bookkeeping from home for clients. Also phone coaching an accounting programme which I can do from anywhere. I can basically do it as and when it suits me as long as I get the BAS' in Leaves me mostly free to go and look at places, do renos etc.

[Note to Nat - you could look at doing the same as me - there is a severe shortage of good bookkeepers - I turn down work all the time]

Think about what you currently do and see if there is any facet of it that would work in this way.

Cheers
ani

 

[natmarie73]

Thanks ani,

Yes, it is something I would definately look at doing. I have not started my accountancy degree yet but as I get more knowledgeable I will look at every opportunity that comes my way and would help me become self employed.

Perhaps you could send me some more information!

Nat

 

[WillG]

Hi sbe,

I see 'money for living' as the trickiest one to realise.

Do you currently have enough passive income from your IP's to live from ?

Agree with ani. Why go 'cold turkey' ? Work your way into it by going part time or take half a year without pay to see if it will work. You will probably have enough time to manage/maintain your IP's and prepare the large majority of your tax returns to reduce expenses.

Cheers

 

[ani]

Nat

PM on way

 

[natmarie73]

Thank you so much ani!

 

[sbe]

I was thinking of dropping off days from work. For a while I was working 5 days in 4 (Ie same hours as a normal week, longer days, take Wednesday off) that was pretty good.

Gave me one day off and same income.

Only trouble is, that can be cancelled due to workload (like until July at this point!).

That is certainly one of the idea's I've been thinking about for a while. Slowly dropping off one day, then another until maybe 2 days per week.

To answer to other question, my IP's are Neg Geared, so cashflow is negative - nothing to live off...

 

[WillG]

After reading a post on 'paying interest in advance' ... Would paying all or a proportion of next years interest in advance be a possibility. It may give you a great tax return this year and some good passive income for next financial year.

 

[SEASON]

sbe,

i know of someone who borrowed to cover his family's living expences.

he found a passive investor with money to finance him and did 2-3 large property trading deals splitting profit 50/50.

i'd probably do this if i had enough experience

cheers

 

[Splinter Wood]

Hi Sbe,

I think there are many people in your situation where you would like to leave the 'work force' and do your own thing.

What I notice though, is you don't appear to have a real 'plan' - just a shopping list of 'needs'.

Firstly, money and being wealthy will not make you happy - in fact probably the opposite is more common.

Secondly, I would strongly suggest you do some serious planning re your life by:

1. Establishing your Values and
2. Set you Life Goals.

(then get off your ass and DO IT)

I think you may need some help with this as it is not an easy task. Read some books, maybe do a course, and become familiar with the process, realizing that most people (over 95%) do not bother with this process - hence they all work for someone else !

Once you establish your true VALUES, you can then go about setting your REAL GOALS - and amazingly all those questions you asked at the begininng will be answered - and will also have a different meaning.

Good Luck

SW

PS: The harder I work - the luckier I get !