My Story 10+ Properties by 30 yo

[Michael_X]

Apologies if this has already been answered. How many properties per company and trust for each of your QLD purchases? Trying to decide the best way to go for my future purchases.

Hi Gargamel,

Everyone's situation on trusts is different so best chat to an accountant for specific advice. Paul@PFI has made some good posts on this.

From a land tax perspective. A generic 600 sqm block around Logan has a land value of around ~$150,000. So four of these will reach your personal land tax cap of $600,000.

That's what happened to me and my subsequent purchases have been in trust accounts which has an additional cap of $350,000.

Hope this helps,
Michael

 

[CHAOS]

Hi Michael. Great effort and thank you for sharing. Very motivational.

You have purchased the later properties in trusts. Are these a hybrid type trust? Can you offset against your income?

 

[cadence]

What a great story. Thank you for sharing!
Onwards and upwards

 

[Michael_X]

Hi Michael. Great effort and thank you for sharing. Very motivational.

You have purchased the later properties in trusts. Are these a hybrid type trust? Can you offset against your income?

Hi Chaos,

I purchased these in a discretionary trust (with corporate trustee) setup.

There is a good thread on QLD Land Tax for Trusts which may help - http://somersoft.com/forums/showthread.php?t=94914

In terms of specific advice best speak to an accountant. I asked mine and he recommended me this setup but it could be different for you.

Thanks,
Michael

 

[Success]

Well done Michael !

Question - can I ask what assumptions have you made around interest rates moving forward ?

 

[Michael_X]

Hi Success,

Short term assumption is level or a slight decrease but it's anyone's guess.

In the long term I am sure it will trend upwards, it's at an all time low so it can't stay like this forever.

My strategy around this is focusing on cashflow positive properties and in the future may fix some loans. Also hopefully when rates increase so will the rents.

 

[chunho01]

Extremely inspiring Michael. I'm turning 25 this year, and I felt like I've already hit my first obstacle.

I bought my first IP mid-2014, it's slightly negatively geared because it's a 530sqm house, and I'm already finding it difficult to fund my next purchase by early-2016. My income bracket is below $70k, and I have to pay my rent.

My parents will be migrating here soon, and I want to purchase a PPOR for all of us. But I'm facing this dilemma that even if I can afford a PPOR by early-2016, how can I fund my remaining IPs?

I definitely need to read and gain more knowledge. After reading your post, it confirmed that knowledge is king, not money (well, to a certain extend).

 

[Michael_X]

Extremely inspiring Michael. I'm turning 25 this year, and I felt like I've already hit my first obstacle.

I bought my first IP mid-2014, it's slightly negatively geared because it's a 530sqm house, and I'm already finding it difficult to fund my next purchase by early-2016. My income bracket is below $70k, and I have to pay my rent.

My parents will be migrating here soon, and I want to purchase a PPOR for all of us. But I'm facing this dilemma that even if I can afford a PPOR by early-2016, how can I fund my remaining IPs?

I definitely need to read and gain more knowledge. After reading your post, it confirmed that knowledge is king, not money (well, to a certain extend).

The choice between a PPOR vs IP is a tough one. I delayed purchasing my PPOR as I wanted to focus on my IP acquisition but everyone's situation is different.

My suggestion is to sit down with a broker and map out a scenario for purchasing your PPOR and how this affects your serviceability for future IPs. That will give you a clearer picture of how to move forward.

Good luck!

 

[Colin Rice]

Thanks for your well thought out post. Many will benefit from it.

 

[en_]

Hi Michael,

Great story!

Given your investments in other states, what's the selection criteria used for selecting the builder for renovation?

What type of work is generally included in a successful renovation without over capitalising?

Thanks,
Ethan

 

[Michael_X]

Hi Michael,

Great story!

Given your investments in other states, what's the selection criteria used for selecting the builder for renovation?

What type of work is generally included in a successful renovation without over capitalising?

Thanks,
Ethan

This was the process I used to select my builder

1. Sourced contacts. Used Somersoft, Real Estate Agents and Property Managers for recommendations in the area

2. Traveled up there and met the builders in person.

3. I would take each builder through the renovation and ask them for suggestions on how they would tackle the project. I told them it was a rental and wanted a cost effective reno.

You can learn alot from the way they approach the renovation, if they are the right builder or not.

4. Asked them to provide a written quote

Based on their recommendations and quote, selected a builder. It wasn't always the cheapest.

Someone who has more experience can approach this differently but when I started I was very green so relied more on the builder.

In terms of the works, it's hard to say as it's very project dependent. A good question to ask is 'Will this dollar I spend, increase the rent?'

 

[en_]

Hi Michael,

Appreciate the quick reply.

"In terms of the works, it's hard to say as it's very project dependent. A good question to ask is 'Will this dollar I spend, increase the rent?'"

From your experience, what has this been? i.e is it kitchens? a new bathroom? changing flooring from carpet to tiles etc?

Once you settle for the IP, your costs start ticking. How have you kept the renovation time short and get it ready to rental as soon as possible?

Thanks.
Ethan

 

[Michael_X]

Kitchens, bathrooms, carpet, paint, right flooring for target market.

Pending your market, spending $500 on a stove top would probably the same rent as a $1,000 one - that's more the meaning. Don't overspend.

Try to use the settlement time to your advantage. Get as much planning done prior to settlement so once that happens you are all good to go. I could have planned much better but settled during the Christmas period so that set me back and there were a few unexpected delays, so planning is key.

Throughout the renovation get the PM involved. They may also have excellent suggestions as they know the market well. As it's nearing completion they can start advertising and get a tenant ASAP.

 

[Deltaberry]

Haven't read the whole thing yet but looks like a good read. Thanks for sharing. The goat herders will tell you about how impending crashes are going to wipe you out, so best to stay below radar with them to avoid sour grapes.

 

[Ari_X]

You are a very generous man Michael thanks for replying to so many of us!

Can I ask you for a rough guide as to how much you spent on your renovations as a % of purchase price?

Looking back, I would say

1. Wouldn't have purchased off the plan studio.

2. Spent less on my first renovation. The key question I should have asked myself is 'Will this dollar I spend on renovation increase the rent?' If no, then don't do it

3. Wouldn't have bought in a regional area. It may come good but feel metro areas have more potential for capital growth.

 

[Michael_X]

Can I ask you for a rough guide as to how much you spent on your renovations as a % of purchase price?

I went to see Cheri Barber and she recommended 10%. So I always had that figure in my mind. Soon I realised, if you bought a dump there is no way 10% will work.

For me the renovations as a % of purchase price ranged from 10% to 29%, so really depends on what needs to be done.

I would say use the 10% as a rough guide, not something to strictly adhere to.

 

[danwatto]

Thanks for sharing the details Michael, very interesting!

And thanks again for that hot tip on the woodridge property

Maybe we should start a "Logan Lovers Club" lol

 

[Propertygirl1]

What an inspiring story.

Thank you for sharing Michael.

It seems like one of the keys to success is having good business partners and you have mentioned a few in your posts. I will be sure to look them up when I am ready for the next purchase.

Thanks again.

 

[Catalyst]

Thanks, Michael. Great inspiration! Been nudging my teenage kids towards thinking about properties in their future.

Where did you find the funds for your first IP?

 

[Michael_X]

Where did you find the funds for your first IP?

For the first IP, I was forced into saving. Bought off the plan and had 2 years to complete, so gave me something to aim for. Probably the only good thing from buying off the plan

I wasn't a good saver prior to this so the pressure helped.

For the subsequent purchases, when I realised what saving a dollar could do, it just became habit.