My Story 10+ Properties by 30 yo

Hi Michael,

Your story is truly inspiring...!! Can't thank you enough for being kind enough to share your experience with us..

Just bought PROR (my first home though this is more of an investment than PROR) and looking forward for IPs in near future.. I've got few questions and though you might be the best person to ask,

1) Don't currently have enough income to afford multiple IPs but just wondering whether I'll be able to secure an IP based on future rental income of that IP? (Deposit can be shown using my PROR's equity at least up to 80k I suppose).

2) Also, just wondering whether are you able to rely completely upon rental income or do you have to work as an employee in the mean time in order to qualify for many no of mortgages? (Do bank consider rental income to be reliable as a fixed term job salary?)

3) If the IP I'm looking at is a sub division of my own PROR then will that be considered an IP at all? Do I get to choose that to be IP or does bank has the right to do whatever they think is applicable? Also would sub dividing my own PROR be easier when it comes to qualifying for second mortgage? (again based on future rental income..)

Thanks heaps..
 
Michael first of well done! Doing this at 30 yrs of age is very good.

As for serviceability...don't worry...you should be able to buy again within 36 month. Why ...because I think you should make 100-150k per property for the last 6 you bought in greater Brissie...that works about capital gains anywhere from 600k to 900k within 3 years!

I too am buying in Brissie...and am starting to ramp there....to add to my portfolio which is now over 23 places around the country. I still have not hit serviceability issues yet...the rent roll is now hitting over 400k pa...plus a very good income.

I have 4 in Brissie (2 near Redcliffe and 2 Annerley/Moorooka). I am looking to get another 8 in the next couple of years. I like Brisbane...but also potential longer term opportunities in Canberra and Melbourne. Sydney should be cracker around 2019....I am betting on a massive correction....




I am pretty close to hitting the wall, might have one more purchase left.

After that, I will sit tight for a few years and focus on starting a business around mortgage broking Pending how this goes that will allow me to move onto the next phase.

This could be property developing or like some other experienced investors have done, diversify into shares.
 
Hi Michael,
Your story is truly inspiring...!! Can't thank you enough for being kind enough to share your experience with us..

Just bought PROR (my first home though this is more of an investment than PROR) and looking forward for IPs in near future.. I've got few questions and though you might be the best person to ask,

1) Don't currently have enough income to afford multiple IPs but just wondering whether I'll be able to secure an IP based on future rental income of that IP? (Deposit can be shown using my PROR's equity at least up to 80k I suppose).

2) Also, just wondering whether are you able to rely completely upon rental income or do you have to work as an employee in the mean time in order to qualify for many no of mortgages? (Do bank consider rental income to be reliable as a fixed term job salary?)

3) If the IP I'm looking at is a sub division of my own PROR then will that be considered an IP at all? Do I get to choose that to be IP or does bank has the right to do whatever they think is applicable? Also would sub dividing my own PROR be easier when it comes to qualifying for second mortgage? (again based on future rental income..)

Congrats on the PPOR and welcome to the world of investing :)

On the questions:

1. If there is equity in your PPOR, this can be drawn down and used as deposit for future IPs. When the serviceability is calculated it does take into account the future rent of the property.

2. To borrow from banks you will need to show a form of reliant income. Banks do take into account rental income but in most circumstances you will need a salary. For exact numbers on your situation, suggest you speak to a broker, they will be able to map this out for you.

3. The lending part can work, IP for subdivision but another question is the tax treatment of what you are trying to do. I would suggest speaking to an accountant on what's tax deductible and what's not.

Hope this helps.
 
I too am buying in Brissie...and am starting to ramp there....to add to my portfolio which is now over 23 places around the country. I still have not hit serviceability issues yet...the rent roll is now hitting over 400k pa...plus a very good income.

Wow 23! That's amazing :)

Definitely something to aim towards one day. Always inspiring to hear what others have achieved.

Agree it's a great time to buy in Brisbane. Over the past 8 months I have seen some decent growth in the Logan area and believe the best is still ahead of us.

In terms of future purchases, the plan is to leave my day job in the near future and become a mortgage broker. Hopefully after a few years will be in a position to buy again with some decent equity in store.

Exciting times!
 
Great story Michael! Congrats on your success!

I'm actually curious about your serviceability - I've only acquired 2 properties however live in one as a PPOR for the past 3 years. This has restricted my cashflow heavily... and I am considering moving back home with my parents (still fairly young @26yo) although going backwards in lifestyle is a big sacrifice in my opinion.

Were you living in your own PPOR or living with your parents during this time of acquisition?
 
I'm actually curious about your serviceability - I've only acquired 2 properties however live in one as a PPOR for the past 3 years. This has restricted my cashflow heavily... and I am considering moving back home with my parents (still fairly young @26yo) although going backwards in lifestyle is a big sacrifice in my opinion.

Were you living in your own PPOR or living with your parents during this time of acquisition?

Hi 7smurfs,

Congrats on two properties at age 26yo, that's impressive at a young age!

I did something similar. Moved into my first purchase to get the first home owner's grant and 12 months later moved back to my parents with my tail between my legs - I was flat broke. Eating out each night and paying a mortgage doesn't help.

Left home again at 26yo, this time round I rented frugally and managed my cashflow better. Still renting to this day with no PPOR, share with university students to keep the costs down.

After speaking to other successful investors one common theme has been the willingness to forego some current lifestyle choices for future benefits. You can't have your cake and eat it too, although I would love to! As you read the forums, you can see plenty of investors enjoying the fruits of their earlier sacrifices.

Do you want to achieve your goal in 5, 10, 20 years time? If 20 years can take it much easier than say 5 years.

Hope this helps,
Michael
 
Hi Michael

Yes agree with you Brisbane is certainly seeming some healthy growth.

I was lucky enough to be able to retire from the full time work force at the age of 40 owning 41 properties in Brisbane and SE Qld having no debt on any of them. Gross rents in excess of 810K.

I recently sold one of our blocks of 18 units which we purchased in 2002 for nearly 4 times what we paid for them and we are re-cycling the cash into a variety of other developments.

Not a lover of Logan as i prefer Inner West Taringa, Indooroopilly, Toowong, St Lucia but we are looking a variety of other suburbs for our developments.

I am a firm believer of paying down IP debt assuming you have no PPOR loan so are you are not relying on capital growth alone.
 
I was lucky enough to be able to retire from the full time work force at the age of 40 owning 41 properties in Brisbane and SE Qld having no debt on any of them. Gross rents in excess of 810K.

Holy smokes - that's mind boggling!

I would love one day to achieve the success you have. Just shows what's possible through property investing, thanks for sharing :)
 
Hi Michael

Yes agree with you Brisbane is certainly seeming some healthy growth.

I was lucky enough to be able to retire from the full time work force at the age of 40 owning 41 properties in Brisbane and SE Qld having no debt on any of them. Gross rents in excess of 810K.

I recently sold one of our blocks of 18 units which we purchased in 2002 for nearly 4 times what we paid for them and we are re-cycling the cash into a variety of other developments.

Not a lover of Logan as i prefer Inner West Taringa, Indooroopilly, Toowong, St Lucia but we are looking a variety of other suburbs for our developments.

I am a firm believer of paying down IP debt assuming you have no PPOR loan so are you are not relying on capital growth alone.

Wow Richard! How did you achieve that with no debt? Significant development I am guessing?
 
Hi Michael

Yes agree with you Brisbane is certainly seeming some healthy growth.

I was lucky enough to be able to retire from the full time work force at the age of 40 owning 41 properties in Brisbane and SE Qld having no debt on any of them. Gross rents in excess of 810K.

I recently sold one of our blocks of 18 units which we purchased in 2002 for nearly 4 times what we paid for them and we are re-cycling the cash into a variety of other developments.

Not a lover of Logan as i prefer Inner West Taringa, Indooroopilly, Toowong, St Lucia but we are looking a variety of other suburbs for our developments.

I am a firm believer of paying down IP debt assuming you have no PPOR loan so are you are not relying on capital growth alone.

Magnificent! Would you be kind enough to share your investing journey? Many people (myself included) would love to learn from a successful investor like yourself.
 
Hi 7smurfs,

Congrats on two properties at age 26yo, that's impressive at a young age!

I did something similar. Moved into my first purchase to get the first home owner's grant and 12 months later moved back to my parents with my tail between my legs - I was flat broke. Eating out each night and paying a mortgage doesn't help.

Left home again at 26yo, this time round I rented frugally and managed my cashflow better. Still renting to this day with no PPOR, share with university students to keep the costs down.

After speaking to other successful investors one common theme has been the willingness to forego some current lifestyle choices for future benefits. You can't have your cake and eat it too, although I would love to! As you read the forums, you can see plenty of investors enjoying the fruits of their earlier sacrifices.

Do you want to achieve your goal in 5, 10, 20 years time? If 20 years can take it much easier than say 5 years.

Hope this helps,
Michael

Thanks for your insight Michael. Will look at moving back in with the folks temporarily and look at renting to achieve a better cashflow.

You are definitely right about eating out everyday and then some more on luxury items/bills taking a massive hit to my savings!

Renting seems like the better way to achieve cashflow due to the tax deductibility with having an IP
 
The question I have is did you do an equity pull after every one of your purchases in Logan? Or did you do one 'lump equity pull' and purchase all 6 from there?

If the former, did you gain any instant equity from properties you had immediately just purchased? The reason for my question is that we did an equity pull in January on two properties and is those funds to purchase the third. Now we want to buy again but only have 20,000 left in our offset from equity. So we are debating whether to see if there is anyEquity gained in the past three months in the two existing properties and any from the new property. All of them are cash flow positive with approximately $40- $80 per week positive each.

We don't want to bother Rolf :) if there is no chance but again if there is , it is inspiring to try. Thanks again for sharing your story. It is very inspirational to see what you have achieved. And I am very impressed at her you have answered every single question that people have asked you that is very respectful and generous.

One more question is do you keep a percentage buffer in your offset? Or a lump sum, for example $10,000? No need to answer if this is personal I am just interested in how you are managing risk.
 
The question I have is did you do an equity pull after every one of your purchases in Logan? Or did you do one 'lump equity pull' and purchase all 6 from there?

If the former, did you gain any instant equity from properties you had immediately just purchased? The reason for my question is that we did an equity pull in January on two properties and is those funds to purchase the third. Now we want to buy again but only have 20,000 left in our offset from equity. So we are debating whether to see if there is anyEquity gained in the past three months in the two existing properties and any from the new property. All of them are cash flow positive with approximately $40- $80 per week positive each.

We don't want to bother Rolf :) if there is no chance but again if there is , it is inspiring to try. Thanks again for sharing your story. It is very inspirational to see what you have achieved. And I am very impressed at her you have answered every single question that people have asked you that is very respectful and generous.

One more question is do you keep a percentage buffer in your offset? Or a lump sum, for example $10,000? No need to answer if this is personal I am just interested in how you are managing risk.

I did several pulls in order to fund my purchases in Logan.

One reason why I was able to accumulate quickly were the 3 renovations which allowed me to recycle the equity and go again. 3-6 months after each renovation I had the funds ready in my offset account.

On top of that, Sydney had a great two years. So I managed to pull twice from my Macquarie Park apartment. The purchase price was $420,000 (2010), revalued once for $470,000 (2013) and then again late in 2014 for $605,000. Epping I managed to get a decent equity pull too.

So combined it allowed me to purchase those properties.

3 months might be too soon to dip again, all depends on the last valuation and what the recent comparables are but unless you have improved the property it may be difficult to get significant gains.

In the mean time, could improve that buffer and wait for mother time to do it's magic.

I personally have around $20-30k buffer at the moment. would prefer more though, especially needing to transition away from work to my own business.

Hope this helps,
Michael
 
Great, inspirational story Michael and thanks for sharing.

Had a few questions re: your Macq Park purchase. Warning: multiple, self serving and irritating queries forthcoming.

- How are you getting an above avg rental on that property - did you say you were furnishing it and renting out to uni students?
- If so, how do you find the vacancy periods eg do they up stumps in early Dec, leaving you with a vacant property till late Jan or so?
- What's the diff in rent going furnished vs unfurnished?
- Is it an older style 2 bed unit or something else?
- Do you think the furnished scenario only works because its close to a uni ie do you think it would work as well for a centrally located apartment, but not next to a uni for example...I don't know, say a place like Homebush as a pure hypothetical.

Sorry again in advance for the barrage of questions.
 
I did several pulls in order to fund my purchases in Logan.

One reason why I was able to accumulate quickly were the 3 renovations which allowed me to recycle the equity and go again. 3-6 months after each renovation I had the funds ready in my offset account.

On top of that, Sydney had a great two years. So I managed to pull twice from my Macquarie Park apartment. The purchase price was $420,000 (2010), revalued once for $470,000 (2013) and then again late in 2014 for $605,000. Epping I managed to get a decent equity pull too.

So combined it allowed me to purchase those properties.

3 months might be too soon to dip again, all depends on the last valuation and what the recent comparables are but unless you have improved the property it may be difficult to get significant gains.

In the mean time, could improve that buffer and wait for mother time to do it's magic.

I personally have around $20-30k buffer at the moment. would prefer more though, especially needing to transition away from work to my own business.

Hope this helps,
Michael
Thanks Michael. That is impressive equity again at McQuarrie Park! I also agree that three months is probably not much time. We were hoping to get about $14,000 from each property but not thinking that it will happen just now, better to increase equity by putting cash into the offset. Thanks again.
 
Great, inspirational story Michael and thanks for sharing.

Had a few questions re: your Macq Park purchase. Warning: multiple, self serving and irritating queries forthcoming.

- How are you getting an above avg rental on that property - did you say you were furnishing it and renting out to uni students?
- If so, how do you find the vacancy periods eg do they up stumps in early Dec, leaving you with a vacant property till late Jan or so?
- What's the diff in rent going furnished vs unfurnished?
- Is it an older style 2 bed unit or something else?
- Do you think the furnished scenario only works because its close to a uni ie do you think it would work as well for a centrally located apartment, but not next to a uni for example...I don't know, say a place like Homebush as a pure hypothetical.

Sorry again in advance for the barrage of questions.

Yes, vacancy is always an issue - particularly over the Christmas break. That's something you need to keep in mind for student rentals.

Most students are simply looking for a ready made place to stay so furnished rooms are much easier to lease out and you can ask for higher rent. Internet access is also essential.

Yes, it is a older style unit.

I guess it depends on your target market. I still get lots of professionals querying on the apartments so I guess furnished apartments will still work for them.

Thanks,
Michael
 
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