Young investors

[knightm]

I feel its also very risky for people to over-leverage themselves during a peak of a cycle.

What are your thoughts on it? Is it better to wait until the timing is right, you're financially secure and wiser? Alternatively, do we get in there as early as possible regardless of what the market is doing?

My thoughts are its great to start young but agree buying at peak is suicide. The thing to remember is that peaks in the market happen geographically. This means when one market is topping another is just getting started. That is the key when you are young and have only limited capital to get going.

 

[Michael_X]

What are your thoughts on it? Is it better to wait until the timing is right, you're financially secure and wiser? Alternatively, do we get in there as early as possible regardless of what the market is doing?

When I speak to more experienced investors who have been in the game for a few cycles. There are usually two things they say:

1. I wish I started earlier or bought more at the start
2. I wish I didn't sell some of those properties

Agree it's not the best going in at the peak, but are you only looking at Sydney? Plenty of markets to choose from in Australia.

Thanks,
Michael

 

[Big Will]

Congrats Big Will awesome story! would love to hear where you are at on your property jounrney?

Plans have change slightly from 18 but for the better.

Now married (2.5 years) have a 7 month old (today) little girl. I could go buy another property today but with starting a family and changing incomes down to one (temp, mat leave). I didn't want to take the risk.

However in the next couple of years (probably when second child is 1-2 yrs old) we would then be ready.

Either buy an older place and reno it (wife is an interior designer by trade and her family are all tradies and have built houses).

So at the moment my journey is on hold as I am a fan of risk but wouldn't want to over commit to much during the early family stages.

My mentor (father) he has retired and owns about a dozen properties include a block of units (4 or 5 in the complex) and the offsets are all full. He now spends his time doing vol charity work (Angel Flight, Leukemia Foundation) as a driver and was a driver at the G20 and Asia Cup. He has also demolished the family home (it wasn't great before, brown bricks, retaining walls falling down, had updated the bathroom about 10-15 years before so was dated) and spent about 1.1M building a new one (1.4M if including landscaping)

I hope to instill the same values my father gave me to my children of work hard now and be wise with your money and it will save you a lot of time and money in the future.

Attached some photos

 

[tomlemke]

Plans have change slightly from 18 but for the better.

Now married (2.5 years) have a 7 month old (today) little girl. I could go buy another property today but with starting a family and changing incomes down to one (temp, mat leave). I didn't want to take the risk.

However in the next couple of years (probably when second child is 1-2 yrs old) we would then be ready.

Either buy an older place and reno it (wife is an interior designer by trade and her family are all tradies and have built houses).

So at the moment my journey is on hold as I am a fan of risk but wouldn't want to over commit to much during the early family stages.

My mentor (father) he has retired and owns about a dozen properties include a block of units (4 or 5 in the complex) and the offsets are all full. He now spends his time doing vol charity work (Angel Flight, Leukemia Foundation) as a driver and was a driver at the G20 and Asia Cup. He has also demolished the family home (it wasn't great before, brown bricks, retaining walls falling down, had updated the bathroom about 10-15 years before so was dated) and spent about 1.1M building a new one (1.4M if including landscaping)

I hope to instill the same values my father gave me to my children of work hard now and be wise with your money and it will save you a lot of time and money in the future.

Attached some photos

Congrats on your daughter , my partner would properly
wish i had patiences like you.
I'am trying to do as much leveraging as possible so in a few years
time i can sit back and enjoy!
I spent every cent i earned until i was 18, had a run in with the law
and decided i needed to turn my life around.
I saved 46k over the next two years and got my first place at
20 : ) and have tried to buy one place every year since.

 

[sumterrence]

I suppose I'm not that young compare to some of the investors but would also like to share my not so exciting life story

I came from a normal family which my mum own her own house so we don't really need to struggle for repayments or rent which helps me with my money saving.

I've always been a car enthusiast and in my late 19s I spent all my money on cars by modifying and going to track days etc.

My mum always tell me not to waste money on these stuffs and should save my money. My mentality back than was I'm only earning roughly $200-$300 per week from my part time Woollies job so there is really no point for me to save because I know once I start working fulltime I will earn at least double or triple of that amount. (I thought )

It's not until one day I realize my study is going nowhere and I'm starting to panic and worry about the future, long story short, after careful mind fights I decided to quit uni as I don't see much point wasting my time and money anymore.

Basically starting from that day onwards I started looking for jobs and also sold my than money sucking sports car.

My first investment was to use the money that I got from the sale of my car to put into the shares market, that didn't turn out too well but I've learnt valuable lessons which I think it was well worth it.

Fast forward to today, I'm working in a position which is inline with my career progression within the banking industry and I'm currently sitting on 5 properties which I only started in Aug 2013 and I just passed my 26th Birthday last month.

P.S. forgot to add I also started with $30k cash and basically slowly building my portfolio base on equities from each property I bought next.

 

[schmik]

When I speak to more experienced investors who have been in the game for a few cycles. There are usually two things they say:

1. I wish I started earlier or bought more at the start
2. I wish I didn't sell some of those properties

Agree it's not the best going in at the peak, but are you only looking at Sydney? Plenty of markets to choose from in Australia.

Thanks,
Michael

Hi Michael,

I am looking in Sydney, as I live here and generally feel more comfortable using my first investment in a market that I have a better understanding of.

However, I have been looking in Brisbane and value, potential growth and yield-wise, I believe it seems to have the goods over Sydney in all these regards. Especially with the amount I am looking to invest (350k).

 

[BayView]

But as a few of the comments suggest (90% of them are pure rubbish), I feel its also very risky for people to over-leverage themselves during a peak of a cycle.

40 years ago, 60 years ago, 100 years ago, most folks had no idea what an IP was, or an IO loan was, or depreciation etc...

They got a job, saved up 20% cash deposit plus purchase costs (because they Bank wouldn't lend them any money until they had that and a job to prove serviceability) and then took out a P&I loan for 25 years...based on only 35% maximum of income towards loan repayments.

The reasons why this system was set up (and still is are) are to minimise the event of folks not being able to service their loan, and to protect both them and the Bank in the event of a forced sale; the mortgagee would still get their debt cleared after a sale.

They didn't time the market, they bought when they could.

Has worked fine for many decades.

 

[Redom]

I suppose I'm not that young compare to some of the investors but would also like to share my not so exciting life story

I came from a normal family which my mum own her own house so we don't really need to struggle for repayments or rent which helps me with my money saving.

I've always been a car enthusiast and in my late 19s I spent all my money on cars by modifying and going to track days etc.

My mum always tell me not to waste money on these stuffs and should save my money. My mentality back than was I'm only earning roughly $200-$300 per week from my part time Woollies job so there is really no point for me to save because I know once I start working fulltime I will earn at least double or triple of that amount. (I thought )

It's not until one day I realize my study is going nowhere and I'm starting to panic and worry about the future, long story short, after careful mind fights I decided to quit uni as I don't see much point wasting my time and money anymore.

Basically starting from that day onwards I started looking for jobs and also sold my than money sucking sports car.

My first investment was to use the money that I got from the sale of my car to put into the shares market, that didn't turn out too well but I've learnt valuable lessons which I think it was well worth it.

Fast forward to today, I'm working in a position which is inline with my career progression within the banking industry and I'm currently sitting on 5 properties which I only started in Aug 2013 and I just passed my 26th Birthday last month.

P.S. forgot to add I also started with $30k cash and basically slowly building my portfolio base on equities from each property I bought next.

Fantastic work mate, thanks for sharing. Very fast progression.

 

[Deltaberry]

Peak or not peak not important. All about good cashflow, buying well and understanding the outlook. You need to buy properties with a Warren Buffett approach and be prepared to hold it for 10 years.

Eg I settled an inner city house few months ago.

Price: 795k
Rent: 55k net
Depreciation: 15k pa
Victorian exterior but fully refurbished inside with modern bathroom, hydronic heating etc

Ticks the cashflow and tax impact box.

Tree lined wide street with side and middle nature strips
Deadend for cars so quiet
5 minute walk to Melb Uni and Hospital
Government building subway 10 minutes away which will become the heart of Melb
15 minute walk into CBD
Significant development from residential high rises to Cancer Institute to Royal Melb refurbishment

Ticks the capital growth box

I normally don't buy this type of house but it was just too good to miss. The type of house and street that comes on once every 4-5 years only.

Point of story is
A) there are always opportunities in all sorts of markets. To grasp them you need to know your market back to front
B) inner city also has cashflow if you cared to look
C) yes the government does spend more money on established parts of the city. Let's not be under any illusions about that

Am I worried about interest rate rises? Well with a 20% down payment rates would have to rise to 8.6% for me to break even. Theoretically speaking by the time this happens the excess rent would've gone to pay down the debt a bit. So interest rates would need to be at 11% for me to break even.

 

[Deltaberry]

I was at drinks last night with a colleague's mates. Property came up as a topic since we all work in finance. This young guy around 30 (well older than me) told me he's waiting for the market to tank so he can swoop in. I sort of laughed it off.

Fact that so many people think like that means the market isn't crashing any time soon.