i'd also like to thank Mike for the very rapid turn around. From report request to it arriving in my inbox was done within 10 minutes. I was a bit sceptical at first about getting something for nothing…but it looks ridgy didge.

phil

You know that old fable about the ant and the grasshopper? The ant working hard gathering for a cold winter and the grasshopper playing all day and is left with nothing.

I was a grasshopper for the first 40 years of my life and came from an immediate family of grasshoppers, however my extended family has some cunning investors amongst them.

My father was in banking his whole life, (which bank) and my mum was a paymistress at several local factories (both retired). In all our time growing up I can't recall a single lesson being given in financial affairs. Occasionally my mum would offer some tidbit of advice. So I grew up in a state of ignorant bliss when it came to money and boy did it come round and bite me on the bum several times. I've only recently learnt that mum and dad are pretty crap with money too – they hide it well.

When I left school at the age of 16 in 1980 I started working in the Film Industry. All very glamorous so I thought but most of the people I worked with didn't know a bloody thing about money either (except how to spend it). To make matters worse I was freelancing. I'd only work about 8 months of the year and got paid quite well. Now in those days the banks looked at anyone who didn't have ongoing full time employment like a leper. I actually had to get my father to go guarantor so that I could get a cheque account to pay bills. I had to jump through so many hoops just to get a credit card, which didn't happen till I was 25.

So I earnt a lot and spent a fortune. I shudder now sometimes when I think of the money I used to earn and have nothing to show for it. During this time I watched my best friend buy his first house in the western suburbs of Sydney. We were both 20 at the time and it seemed like such a grown up thing to do. He even moved back in with his parents to save dough. Wasn't I the fool when he grew his portfolio into 4 houses within 4 years.

To cut to the chase of this thread, I continued to live from week to week for many more years until 1999. The penny dropped when I realised that I'd be living in rental accomodation for the rest of my life unless i started taking control of my finances. I just couldn't go on being 18 years old forever and a day. One morning at work  I happened to have a quick meeting with Phil Ruthven (from IBISworld – a social/financial forecaster) and I got a quick introduction into financial salvation. Phil basically said, it's not too late and get off your backside and take an interest in your future. The idea was to still rent and set aside a certain amount of each paycheck to invest in managed funds, which started to do.

Then I met my wife to be and I cashed in my shares so that we could buy our PPoR in 2002. Feeling rather pleased that I'd gotten on the property ride at last, I sat on my laurels for a few years. In 2006 my brother wanted me to show him round some suburbs of Brisbane (where I'd lived for 5 years) as he was keen to buy an IP. He flicked me a copy of API and I've never looked back from there. I devoured as much information as I could get my hands on and started asking lots of questions. I have several friends and relatives who've made some smart moves in property and I've singled them all out for mentoring.

At the age of 45 I'm a bit of a late starter but my goals and dreams are realistic (not aiming to be a multi millionaire) and the hard yards required to make investing work are all ahead of me but I'm ready and prepared for the challenge. Best part, I take an active and keen interest as to where my money's going and how it's working for me. I can't wait till my kids are old enough so that I can pass on as much as I've learnt to them so that they never have to walk around in a state of ignorant bliss. 

Oh and just for a bit of trivia, the house in Brisbane my brother was interested in back in March 2006 was located in Woodridge and was priced at $164k. Being a novice and and a tosser I told him "who'd want to live here, it's the pits, you're asking for nothing but trouble". He didn't buy it in the end and he keeps reminding me every week that most houses in Woodridge go for over $270k now. Yep, still making mistakes but learning every day.

Milly has beaten me to the punch but I whole heartedly agree with her. It is so easy to become overwhelmed with all of the information on hand in regards to Property Investing.

I think most of us would like that first step to be devoid of as many mistakes as possible and so the more we research the more we learn of the many many different ways of investing in property and achieving our goals. Trouble is, often the advice can be conflicting and you can stand on the edge of the cliff just waiting for conditions to be perfect. That's where I am at the moment. Standing on a cliff, waiting for all conditions to be just so. I could be up here a long time…but I'm determined to jump early in 08.

Of the three people I personally know who have invested in property, not one of them has been to a seminar. None have read any book on PI and only one has ever picked up a copy of API. They've all just jumped and learnt on the job. Yes they've made mistakes, yes they've done it tough at times but all are in a much better position now than they were before embarking on their investing.

Phil

Thanks Richard & Marc,

you’ve both shed some clear light on my confusion.

However there are still one or two foggy points but I’ll keep researching and re-reading your posts.

Richard, unfortunately whilst my PPoR is showing growth of 7.5%pa, rent in my area still won’t cover my mortgage at this stage. Will have a shortfall of at least $100pw.

Am also needing to upgrade my PPoR as it’s quite small and with a growing family it’s almost time to move. Renting would put me in a larger house, in the same area and free up capital to aggresively start a portfolio. Equity gained would continue to be used to keep the portfolio growing.

Cheers

Phil

OK, I’m officially confused!

I know this question comes up every couple of days on the Forum like LA Aussie says, but it must be a sticking point with many new investors which is why I’m asking the question again.

Am looking to get started with IP’s and having been diligently researching and educating myself for the past 10 months whilst getting my financial affairs sorted.

Upon reading Steve’s latest book, which was quite revealing, I became interested in his “sell you PPOR to finance IP” strategy.

This strategy would be to sell my house, realising a profit of $100K after selling costs. Then, use this lump sum in financing an IP deal.

So, doesn’t this mean that if i buy a $250K IP and use $60K for deposit and legals, then I’m only looking at covering a $190K loan?

And aren’t the odds more in my favour of working a +CF deal this way?

Am I missing an important piece of the puzzle here?

If I were to re-finance current loan and access the equity available, wouldn’t I still be paying interest on a 100% loan?

Of course the goal of the whole operation would be to purchase a new and improved PPOR in say 3 – 5 years, whilst still growing the IP portfolio.

Good news, the wife is willing to look at renting again for the short term!

Thanks to all who contribute in this forum. It’s probably one of the most valuable tools I have in my arsenal.

I’ve stood by over the last 20 years and have watched friends work hard and prosper extremely well from investing in property. This was even in the dark old days of 17% interest!

A close friend in Brisbane has just totally turned her life around in 7 years by buying/subdividing/renovating whilst being a single mum. It can be done!

mymatephil