I’ve started a new thread in response to Lily House’s request from the ACA thread. Lily’s asked if I’d share my strategy. So here it is: Firstly, a little bit about myself. I’m a newbie to the forum. I’m 33, employed full-time, moved to Melb from Syd 5 and a half years ago to be with my partner. My ambition since being in my early 20’s was to retire early with a portfolio of properties. Whilst I was in my 20’s, dreaming about such a thing, it wasn’t until my 30’s that I really decided to do something about it. So where am I now.
- I have one Melb, South Eastern, 3bdrm property (currently owner-occupied) in the process of being on the rental market.
- Settlement pending on another Melb, South Eastern, 3bdrm property for owner-occupier with my partner. (settlement is 3 days away).
- My partner has an unencumbered, very large block with a 2 bdrm cottage also in the South East of Melb. Parents are living in this one.
Our Aim
- For both of us to be out of the workforce and not rely on employers income. (just like everybody else)
- To be financially free
- To have properties around the world
- To be successful
- To go where-ever we want to go without 2nd thoughts
Our Adventure
Firstly we ‘brainstormed’ for a couple of years what we wanted for our future. I always knew, for me, property was going to be the stepping stone to my financial freedom. My partner was more interested in shares. So we needed to overcome these differences by investigating both areas. Over time, the tables turned, my partner became interested in property and I became interested in shares. So we’ve concluded that both property and shares will play contributing factors to our future success. Because we already have invested interests in property and most of our studying has been in this area, we’ve decided for property to be our vehicle for the time being and will introduce shares later.
Our Strategy
We ‘brainstormed’ again, what how are we going to create our success. There are 5 key points that’s driving our strategy.
- To build our own capital
- To build and invest our superannuation (on our terms)
- To build our positive cash flow (or passive income)
- Not to rely on banks to finance our venture
- Determination
From this brainstorming session, we got all our magazines and cut out pictures that inspired us to be where we want to be and created a collage. This helps us to keep focused. Some pictures are of our mentors are Jan Somers, Robert Kiyosaki and Dolf De Roos.
Our Plan
- We set up our own DIY superfund and rolled over what we could from our Employers fund. This fund is sitting there waiting for us to invest on our terms.
- The current owner-occupied house is on the rental market ready for positive gearing.
I’m not an advocate of negative gearing. Perhaps there might be a need for it during our venture but not right now. I don’t fancy going to my grave with millions of $$ in debt and nor do I agree you can leave the workforce with negatively geared property. During our early days of research, it’s been said you can leave the workforce after 7-10 negatively geared properties. I don’t believe this has been proven. Some of these people own in excess of 10 properties and still working. Why is that? They love to work? I don’t think so. They can’t afford to leave!! How can the loan(s) be serviced?
- The pending settlement for our owner-occupied place will be purely for renovation. Our plan is to buy/renovate and sell with a 3-4 month turnaround. Selling for a profit of course. If we can’t make the profit we’re after, then we don’t sell until we do. One of us will be renovating full-time while the other is working full-time to service the loan.
- With these 3 points working for us at the same time, here’s how it’s planning out:
Starts our positive cash flow from rental property
The renovated property. Using hyperthetical figures.
Property 1: Purchase Price $200K
Purchasing Costs $15K
Renovation Costs$20K
Spent $235K
Sell $290K
Less selling costs $5K
Profit $50K
This profit of $50K can either be capital growth and/or uncontributed funds to the superfund.
Property 2: Same scenario as property 1
Property 3: Same scenario as property 1
This can only be achieved providing none of the variables have changed. But still profit $30-$50K with each renovated property.
- Whilst this may be hard work, we’re building up enough profit and combining that with our superfund, purchasing properties without the finance from the banks.
- Each time a property is sold, return the funds back to super + interest. (At least more than what the banks are giving you and not losing any in shares)
- So what we’ve done is:
1 is out of the workforce
Building our capital
Building our super (dependant on profits and equity purchase more rental properties)
Creating our positive cash flow
And then we won’t have to rely on banks for financing
How long will this take us? We’re not sure as the variables will change. My guesstimation will be 2-3yrs before both of us can be out of the workforce. I’m sure there is going to be holes and gaps in this strategy as we are still fine tuning. As time goes on, things change and so to does the strategy.
Our Ultimate Plan
To be sitting anywhere in the world whilst without a worry, trading shares (pulling money out of the share market) and investing in properties. Hmmmmm!!!
Just changed the subject name so that those searching can find it - Les
- I have one Melb, South Eastern, 3bdrm property (currently owner-occupied) in the process of being on the rental market.
- Settlement pending on another Melb, South Eastern, 3bdrm property for owner-occupier with my partner. (settlement is 3 days away).
- My partner has an unencumbered, very large block with a 2 bdrm cottage also in the South East of Melb. Parents are living in this one.
Our Aim
- For both of us to be out of the workforce and not rely on employers income. (just like everybody else)
- To be financially free
- To have properties around the world
- To be successful
- To go where-ever we want to go without 2nd thoughts
Our Adventure
Firstly we ‘brainstormed’ for a couple of years what we wanted for our future. I always knew, for me, property was going to be the stepping stone to my financial freedom. My partner was more interested in shares. So we needed to overcome these differences by investigating both areas. Over time, the tables turned, my partner became interested in property and I became interested in shares. So we’ve concluded that both property and shares will play contributing factors to our future success. Because we already have invested interests in property and most of our studying has been in this area, we’ve decided for property to be our vehicle for the time being and will introduce shares later.
Our Strategy
We ‘brainstormed’ again, what how are we going to create our success. There are 5 key points that’s driving our strategy.
- To build our own capital
- To build and invest our superannuation (on our terms)
- To build our positive cash flow (or passive income)
- Not to rely on banks to finance our venture
- Determination
From this brainstorming session, we got all our magazines and cut out pictures that inspired us to be where we want to be and created a collage. This helps us to keep focused. Some pictures are of our mentors are Jan Somers, Robert Kiyosaki and Dolf De Roos.
Our Plan
- We set up our own DIY superfund and rolled over what we could from our Employers fund. This fund is sitting there waiting for us to invest on our terms.
- The current owner-occupied house is on the rental market ready for positive gearing.
I’m not an advocate of negative gearing. Perhaps there might be a need for it during our venture but not right now. I don’t fancy going to my grave with millions of $$ in debt and nor do I agree you can leave the workforce with negatively geared property. During our early days of research, it’s been said you can leave the workforce after 7-10 negatively geared properties. I don’t believe this has been proven. Some of these people own in excess of 10 properties and still working. Why is that? They love to work? I don’t think so. They can’t afford to leave!! How can the loan(s) be serviced?
- The pending settlement for our owner-occupied place will be purely for renovation. Our plan is to buy/renovate and sell with a 3-4 month turnaround. Selling for a profit of course. If we can’t make the profit we’re after, then we don’t sell until we do. One of us will be renovating full-time while the other is working full-time to service the loan.
- With these 3 points working for us at the same time, here’s how it’s planning out:
Starts our positive cash flow from rental property
The renovated property. Using hyperthetical figures.
Property 1: Purchase Price $200K
Purchasing Costs $15K
Renovation Costs$20K
Spent $235K
Sell $290K
Less selling costs $5K
Profit $50K
This profit of $50K can either be capital growth and/or uncontributed funds to the superfund.
Property 2: Same scenario as property 1
Property 3: Same scenario as property 1
This can only be achieved providing none of the variables have changed. But still profit $30-$50K with each renovated property.
- Whilst this may be hard work, we’re building up enough profit and combining that with our superfund, purchasing properties without the finance from the banks.
- Each time a property is sold, return the funds back to super + interest. (At least more than what the banks are giving you and not losing any in shares)
- So what we’ve done is:
1 is out of the workforce
Building our capital
Building our super (dependant on profits and equity purchase more rental properties)
Creating our positive cash flow
And then we won’t have to rely on banks for financing
How long will this take us? We’re not sure as the variables will change. My guesstimation will be 2-3yrs before both of us can be out of the workforce. I’m sure there is going to be holes and gaps in this strategy as we are still fine tuning. As time goes on, things change and so to does the strategy.
Our Ultimate Plan
To be sitting anywhere in the world whilst without a worry, trading shares (pulling money out of the share market) and investing in properties. Hmmmmm!!!
Just changed the subject name so that those searching can find it - Les
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