Transitioning

[cornflower]

Hi Folks..

I have to admit that I'm getting really tired of programming, and there is so much I want to do with my properties, but I lack the time.

Eventually I'd like to move into investing full time, but I'm not sure how to approach this.

I can imagine that it would be much easier if I was self employed, just do less and less (trade) and more and more investing / renovating. It's hard to think about how to get out of a full time position (I'm a manager so part time work is a little out of the question at this point.)

So if there is anyone out there who has quit a full time job to invest/renovate, I have a few questions for you!

How did you go about sourcing OPM when on paper, you are unemployed? I know my OK salary makes a big difference in my servicability etc.

Did you have to draw down equity to pay the bills? What happens when the market isn't rising quickly? (Like now.)

Did you have any other sources of passive income (shares, managed funds etc)?

How large was your property portfolio when you took "the leap"?

4 weeks a year just aint long enough

Cornflower

 

[Glenn]

Hi Cornflower,

Have you considered staying in IT but moving to a shiftwork position?

When I worked shiftwork a few years ago, usually 8pm-4am the amount of time that I had to do stuff during the day was fantastic!

It's hard for some people to get used to the change, but consider this....you don't travel through peak hour traffic, you don't fight the hoards to do your shopping on thur/fri night or saturday morning, you can go to the bank when they are open, go to the gym when you want, catch the sunshine when it is out and spend a couple of hours each day looking for and maintaining/improving your props.

Glenn

 

[cornflower]

Hi Glenn,

If I was 15 years younger and had the energy to stay up all night, that would be a marvelous suggestion! Whenever did you sleep?! That's amazing.

Unfortunately I'm a software development manager - we need to be around during the day because that's when most staff want to work (We don't do support on 24/7 systems, luckily!) it's also when the meetings with the clients we do the work are on, so I don't think shift work would work for me. With the way the IT indurstry is at the moment, (particularly web development, my area of expertise) jobs are few and far between, and if you have a job you hang onto it for dear life.

I guess that's one of the things that scares me about leaving my job to do reno's/property etc. full time. I would have trouble getting work again if it didn't work out the way I expected.

While all the time that paint can and brush are calling my name...

Cheers

Cornflower

 

[Glenn]

Hi Cornflower,

I used to sleep from 4:30 am - 12:00pm...really well too, no parties to keep me up, just take the phone off the hook and close the blinds!

Your situation must be a difficult one for you...give up part of the income to give yourself more time to do the things you want or keep going and be short of time.

Could you leverage you IT knowledge by going to a network support or admin position? Say work from 3pm - 11pm? The income would be enough to pay bills and still allow you to get to bed and be up by 7am with 8 hours free to work starts again!

Glenn

 

[bundy1964]

I think for full time investing you join me in low/no docs land for loans. After 2 years loans would be easier.

I also have a back up in shares, ( mis ) managed investments, cash and some super

I was property less when I had to finish work and 5 years away from my first IP. My chances of finding paid work are close to zero and even offers of charity work are now refused due to insurance, so I have to do it the hard way. I spent my time learning what I could before I went and made my choice of investment future.

I have undergeared my investments compared to someone who can - gear and for my own SANF I would like to reduce debt every 2 years, unless a good deal does come up

bundy

 

[Sim]

There is of course a balance required - just remember that in the early days of your investing, your job is your best friend.

If you earn decent money in a good job, banks will throw money at you and will let you carry large amounts of debt - and if you choose, you can negative gear to get some tax benefits too. Use the income to the fullest.

At the same time, if you can afford to live off of savings for a while (ie. minimise your expenses) - and have a good relationship with a mortgage broker who can help you navigate the maze of no-docs or low-docs loans, then you may well do better on your own trying to make money from your investments.

 

[investor]

Originally posted by Glenn

When I worked shiftwork a few years ago, usually 8pm-4am the amount of time that I had to do stuff during the day was fantastic!

Hi everybody

That's not easy to do Glenn especially if you have a wife and kids.

I guess the safest way to retire and work on property full time is when you have cash in the bank, shares or a property portfolio either fully paid off or with enough equity to give you a yearly after tax return equal to your yearly after tax salary. You can then retire and wait for the bargains to come along and do your renos. If you take a while to find the right reno it doesn't matter because you are getting the same income as when you were working.

I know some that have left work without any income security and have done well with renos but I also know others who have failed and returned back to work.

Regards

Investor

PS. There is no easy way to leave work with no other passive income without taking RISKS.

 

[Zach]

Hi Cornflower,

Yes I agree with you and I'm in a similar boat. I'm also in the IT industry and also a programmer too - not a manager though, so money not as good. I am constantly on the lookout for new opportunities to get out of this rut and work for myself as my current position is not stable - as you know the IT industry at the moment is not the best - but it pays the mortgage so far....

Sorry I don't have the answers to your questions yet but i'm just agreeing with you that its difficult and sooner or later we'll just have to take the plunge.

Hope things work out!

- Zach

 

[cornflower]

There is of course a balance required - just remember that in the early days of your investing, your job is your best friend.

Yes Sim, it's still very early days. I don't seem myself leaving my job for a while at least, but I do want to work out an "exit strategy" so that I can do that in the shortest period of time.

The current "plan" runs something like this:

Buy properties such that I am neutrally or slightly negatively geared. This way I won't hit a servicability ceiling with my debts.

Do this by buying a mixture of capital growth properties and regional properties that have reasonable rental returns.

Keep going until I have enough such that I could sell a couple of the capital growth properties and the capital growth would pay off the regionals, and do a reno or 2. And when the amount of rent I would get from the paid-out regionals would be enough to live on.

Then quit work and do the reno's.

One of the things that really scares me at the moment is that I realise I've had it very *easy* over the last 5 years I have been investing. Basically anything bought 5 years ago has done well! Things are going to be alot tougher in the next 5 years, and I know I don't have the experience of trying to make a buck in property in this "new environment".

There is no easy way to leave work with no other passive income without taking RISKS.

Exactly investor, which is why I'm trying to get it right the first time around It will always be a risk, but if I do enuf DD I should be able to keep the risks down to an acceptable level.

I need more experience doing reno's. I've done one and learnt some very good leassons from that. But I really do need to get my hands a bit dirtier

I don't think watching those auction makeover programs on TV are much help

I think for full time investing you join me in low/no docs land for loans.

As soon as I can, Bundy. I can almost hear Rolf saying Oh no here comes that crazy blonde chick again

Thanks everyone for your input

CF

 

[D.T.]

I really like quite a few of the comments in this thread, too many for me to quote them all. It gives me inspiration to think that the leap is possible at a fairly young age.

How many years has it taken you / the ppl you know to go from nothing to being able to 'transition'?

 

[brains]

Cornflower,

Being self employed does not necessarily give you more free time, probably less.

You will still hit a "servicability ceiling" even if you positively gear, the banks will say you are too rent reliant.

I think you are going about it the wrong way. You should concentrate on buying as many pos. (or at least neutral) geared property in high growth areas with low maintenance requirements
as you can.

Keep working at your J.O.B. while these properties gain in value and/or rent return.

Keep adding the same type of properties to your portfolio if possible. At a time when you have the cashflow/equity from these properties to enable you to leave your employment, do so.

If you dont have the time/money to buy and do renos because you are restricted by your employment, than look for another strategy for now that will enable you to follow this strategy later.

Be flexible in your thinking and be prepared to change your strategy.

NB: I have no interest in renos, as being a tradesman for 20 years
(last 5 years off the tools to grow & run the company) im over getting my hands dirty or job satisfaction from manual labor, even tho i have enough time/money to do a reno a month.

 

[Sim]

Originally posted by dtraeger2k
It gives me inspiration to think that the leap is possible at a fairly young age.

It is actually easier to "transition" when you are younger !

Have you ever played Cashflow 101 ? Do you notice how easy it is for the lower paying careers to get out of the rat-race ? Why is this ? Simply because they have lower expenses and debts.

Being able to survive without a regular income involves making sure you have enough alternative income sources to be able to cover your living (and investing) expenses. The theory is that when you are younger you wont have anywhere near as many expenses (just try quitting work when you have 3 young kids !!!) - and you can afford to take more risks.

If you want an example of how to do this - just have a chat one day to The_Wife (aka TW, aka Nivia, aka Freestyler head honcho) - maybe even go to one of the upcoming Freestyler panel events where Nivia will be attending and ask her directly !

I think the story goes something like... TW bought her first property at around 18 (because she just wanted to own a house, not because she thought of investing), did it up (because it was a dump, not because she wanted to reno/sell) - got offered a lot of money for it - which opened her eyes to the possibilities, so she sold and used that money to buy more property.

One of the worst things you can do is to get a good paying job !!! Because you will become addicted to the income and lifestyle, and that makes it difficult to make any sort of quick move into a full time investing role.

 

[D.T.]

Hehe, I almost forgot about this thread.

Cornflower: Did you make the leap yet, what is your progress?

Sim: Thanks for your response, I am only 20 and theres quite a bit of time for me to get where I want to be. I get fully fired up at times when I think about whats possible. However, I feel like I'm confronted with more options than I can deal with lol. (-ve gear vs +ve gear, I/O vs P+I, Yield vs CG, 100+ suburbs, price ranges, LVR levels, the list goes on and on and on).

In the beginning I tried reading books, I've now read everybook in my local library's R/E shelf. I've tried a talking to a couple of Advisors about this and I really believe they dont get either where I am now and/or where I want to be in 10 years (carribean ), where do I find good ones?. In essence, I have a fairly clearly defined goal just dont really know which road to take. I've recently met a few other like similar aged investors, perhaps we can fuel each others thoughts.

-Dave
In need of a 'road map'

 

[geoffw]

Dave,

If you're looking for a road map, Steve Navra's course is a very good place to start. Hey, you've had the offer of a free course- go for it! (http://www.somersoft.com/forums/showthread.php?s=&threadid=6459 - including Steve's comment on "Geoff and other internationally based smartasses"- he should now I'm a local smartass ).

He does say that he can get anyone financially independent in ten years, which is precisely your timeframe.

 

[D.T.]

Thanks for the tip there GeoffW, I already saw it tho - especially since I was the one that started the thread. I msg'd him privately and he gave me his contact number which I will ring Monday. (its sunday today).