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I’m feeling a bit old at 25.
I bought my first property at 21 and had a tenant for under a year and then did full internal renovation and moved in – my current PPOR. Made over $100k in equity via the reno and natural growth in property at the time.
Bought my second property at 24 – currently rented and undergoing subdivision.
Plan to kick the tenants out at the end of their lease and fully renovate the property and construct on the back.
Don’t have a specific eqity value in mind currently by a certain age. just have a goal to keep on doing what i’m doing because i love property and make money along the way to reture early and comfortably.
The people who I know that are doing it tough are still living in their own place (that thebank owns 95% of), buying new furniture on interest free and considering whether dimmers on their downlights are the right way to go!!!
The interpretation of doing it tough these days has changed.
There are a lot of people living by the pay cheque but there is a big facade that is hiding the truth. When the recession does hit there’s going to be massive problems for a large portion of society.
Here is an article from the Herald Sun on APril 4th which may be of interest to some:
Roxby an Olympic task
From: By Andrew Trounson
April 06, 2006Mini-city … BHP hopes to attract thousands of new workers to Roxby Downs, which lies in the middle of a vast ochre plain. Graphic: Eirik Wallem Fossan BHP Billiton’s proposed $US5 billion ($7 billion) expansion of its Olympic Dam copper and uranium mine in South Australia will be nothing short of a mini-city development.
The population of the mining township of Roxby Downs will more than double, from 4000 today to 9000 by the time the expansion finishes in 2013.
The expansion work will go well beyond the construction of a massive open pit, which at 3km across and at least 350m deep, would be big enough to swallow Adelaide’s central business district some 560km to the south.In addition to expanding Roxby, major new infrastructure will have to be installed, including duplicating the power lines to Port Augusta, installing new road and possibly rail links, and the construction of a $US300 million desalination plant near Whyalla on the coast to supply the expanded mine’s water consumption of up to 100 megalitres a day – the equivalent of about 100 olympic-sized swimming pools – up from 30 megalitres now being used.
The desalination plant will have to be connected to the mine site by a $US400 million pipeline. Much of this infrastructure will be put in place and run by third parties.
But BHP suspects that its biggest challenge will be attracting thousands of new workers to Roxby Downs in the middle of a vast ochre plain with nothing but low scrub breaking the horizon.
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“The significant issue will be the availability of the workforce,” BHP corporate affairs executive Richard Yeeles said yesterday on a media tour of the underground mine and a sprawling chemical plant processing ore into copper, gold and uranium oxide.
Key to attracting workers will be new, attractive residential developments in Roxby Downs which BHP will onsell at cost to new residents.The focus on expanding Roxby, which was established to service the mine in 1988, is good news for the young community and local business.
The average age in Roxby is just 27 and a third of the population is aged under 12.
Of the more than 2500 employees and contractors at Olympic Dam, about 15 per cent commute from Adelaide on a fly-in, fly-out basis, and BHP is determined to keep that down to a minimum.
The company is in the process of releasing and developing 127 new residential blocks of land.
BHP expects to spend $US500 million just studying and firming up the project.
The company doesn’t expect to be in a position to give the go ahead until 2009.
It will then take as much as four years to excavate the massive open pit, down 350m to where the ore lies.
“Nothing has been undertaken on this scale in Australia for quite a while, so (2013) is a reasonable target,” Olympic Dam chief Dean Dalla Valle said.
Do not own property there but have watched the market there for some time.
If only I purchased there when I first started watching. Lately has been more out of interest than anything.
BHP Billiton is about to construct a large amount of houses there to sell to staff at cost as the expansion will more than double the town.
I think it’s currently about 4000 people and expected to grow to 9000 people by 2009.
Biggest mine in the country and owned by the richest company in the country so not a bad town for cashflow and potential growth.
Michael,
Why don’t you start your investing career small with some of your own funds to demonstrate to your dad what is possible in the world of property investment.
Your dad I am guessing would be close to retirement age so he has to think about what risk category he is in in terms of investment. If you lose everythingtomorrow you still have a lot of time left to build yourself up again. If he loses it, he has to live through retirement struggling on government hand outs.
I would recommend you prove what you’re capable of over the next 12 months then return and encourage him to come down the same path but not with teh full $1m, maybe just with $200k fo it to start.
Property does not guarantee that you will make money.
For those that have left the orkforce to invest full time, have you wilingly left and earned less for the first few years? That’s what scares me the most – that I will leave nad not be able to get the income level I get now.
We are planning on my husband leaving the workforce to invest and renovate and over a number of years build that up until I can leave too.
In what way would a cash offer entice a vendor.
I have put an offer in and removed any finance caluse knowing because i know the fiannce will be available to me. This is as good as a cash offer.
I can’t see why a cash offer would win a vendor over if there was a bidder offering substantially more. I know as a vendor I don’t care if the offer is cash or fiancned as long as I get my money!
wow, this is exactly the sort of thing we are working towards.
at present we’re doing a subdivision and building and will then follow that with a renovation on a currently tenanted property while we are in the process of another subdivision.
because we don’t have the equity position yet (ages 24 and 25 with mortgage still to pay on PPOR) we want to do these projects until we’ve build up 500-750 in free equity for deposits on some bigger deals.
we’re thinking of a 2-3 unit development or buying 2-3 villa block for reno next to add some value.
all takes time though. I’m amazed at the timelines you can complete these in. It’s great.
$120-200 to fill out the form sounds a bit rich. The form is relatively sraightforward and any investor can fill in their details and send it to the tax office and reap the benefits.
I would guess the form takes about 30 minutes to complete max.
Interesting reading.
I must admit that this is definitely a strategy that I have thought about though not what I ended up doing. We bought about 10km fruther from the city than we would have liked to have lived because it was $100k cheaper.
Negatives – more travel to the city, further to go out and visit friends and family
Positives – you can paint a wall electric blue if you choose, you can decorate to yoru own tastes and know nobody is going to kick you out when your lease is up and you don’t have agents checking out your living arrangement twice a year. And the most positive of all is you can renovate while you’re living their and create value.
It is something I’ve considered doing a number of times but I’ve figured that now i’m out in suburbia it is a great house with everything how I want it and I’ve added enough value that if I wanted to sell up and move back in I could. Instead I invested in property number 2 and 3 with the money.
I think young people learn the most by doing some hard yards to get to where they want to get to. It’s great to move into your own place and have an incentive to do it up and save to move somewhere else that you want to live.
Though I do see the tax benefits – that was my main motivator of thinking about this strategy.
ring some electricians and explain the situation to them.
If you cant’ get the certification insurance won’t cover you in the event of a fault occuring.
Does this mean you will have to change your name to ‘stuck-at-one with one on the way’??
I don’t understand why anybody would purchase a property if they could only afford the minimum repayments. Borrowing a little less and putting the difference into repaying additional capital would see them quids & years ahead in next to no time. Plug a couple of example figures into an online mortgage calculator and the point will become very clear.Often lower income people are at their limits when they purchase property and can only make minimum payments. Think about people who have finished school or just scraped together a deposit and are getting into property. Most first home owners are in this situation.
I remember when i bought my first house and although we were able to pay more than minimum it wasn’t that much more. But, income goes up every year and we now earn a lot more and can make much bigger payments. But, if we had waited to get into the market until our income went up and we could afford more, we wouldn’t have the capital gains that we do.
There are positive to scraping your money together and making minimum payments. Over time your payments will become larger and larger and your mortgage will start to shrink.
If you’re happy to work for $20 a day cash and know how to paint I think you would find endless hours of work. Get a job wokring late nights in the supermarket or something. Work Saturday nights overnight stocking shelves, get a job working in a distribution centre, anything. There is opportunity to work amny hours even when stufying full-time. Just depends what your priorities are. If it’s property investing, and it sounds like you’ve been thinking about it a lot, then spending nights working would probably be a priority over going out. There’s still opportunity for going out at other times of the week anyway.
I think there’s a more important question within this though. Why are you studying arts and education. You have thought about working in the R/E industry and you’re really into property investing and would also like to do photography or become an author. An arts degree and education degree are going to be useless if you actually go down the path you are talking about. So, if I was you, I would be asking myself if I really want to spend years at uni doing courses that will be of no use or relevance to my long term goals.
Once you’ve got that figured out you’ll be in a better space. Way too many people spend their time going to uni just because that’s what people that finish high school do. They get to the end of it and realise they don’t even know why they just did that course.
By the way, I’m not bagging university because I think it is a great education path and I’ve done a degree myself, but make sure your decision is right. Treat it as an investment. After all, it is years of your life that you have to dedicate to it and uni course fees cost a bomb.
why don’t you go back to work? what’s so bad about working anyway? Tasmania is a great place to work – the hours don’t seem to be long in most companies and you can still do all the things you are doing to houses in your spare time if you are committed to it.
there are a lot of people on these forums who are starting out in the investment ‘escape the ratrace’ career but sometimes you have to wonder what’s the point when you can achieve the same outcome by working and having a great life. I fully support retirment at an early age, but i won’t be quitting my job for a very long time because it achieves a strong cashflow position – you did mention that the banks don’t really want to talk to you. With a decent job they will give you almost anything you ask for.
to acheive my income via positive geared properties would require me to have built up something like 40 properties. managing those would be more than a full time job! and i would have no annual leave, no sick leave, no time to my friends and family becasue i would always be on call to an emergency. where’s the logic in ‘escaping the rat race’ in that? so what if i have a manager to answer to? doing what you’re doing doesn’t give you a manager, but you’re still having to answer to tenants and banks and so on. that still requires you to use relationship management skills just like a manager.
i love property investing and renovating and it is a key priority for me however it is on the side of my full time career. it has created equity for me, and will create long term prosperity for me to retire earlier than most, but there is also a lot of value in a full time job. you get training that is useable across your property investing career, you get promotions and payrises as well as other benefits.
in a job if you work hard your earning potential is limited only by yourself – think about the ceo’s out there earning $1, 2 or $10m a year, there are no limits. a lot of people are aiming to escape the ratrace and that’s including me but escaping the ratrace can mean working in a fulfilling job for an employer and having investment on the side meaning you’re not part of the ratrace becasue you have enough overall income to acehive and do the things that you aspire to.
i think you need to sit down and rethink why you really don’t want to go back to a job. at the moment you’re saying property is only going to provide approx $70k a year in income with a lot of effort and risk. if you can earn more than that in a secure job then I think you’re answer is an easy one. You can more than likely keep the $70k coming in on the side via weekend or late nights renovating.
i don’t think you will find a house for around teh $200k mark in those areas.
maybe if you’re looking for a 1 BR apartment you might be able to get something for that budget.
are you looking for capital growth, rental return, renovation job??
if you can do the subdivision i would guess when you do the numbers the profit on the two units would be better.
also consider, doing the subdivision and then selling the land off to a builder and retaining the front to have a low-cost solution which takes the stress out of the game for you. You will probably find that this will achieve the best equity position in the shortest time if that’s what you are looking for.
what a great time for you to ask this question.
we just layed lino in our kitchen and dining area at our investment property on the weekend.
there is a video you can buy for under $7 on “how to lay lino” which gives you the lowdown. i don’t need it anymore so if you want it I can probably give it to you if you’re in melbourne.
We ended up spending slightly more money and bought the vinyl tiles with adhesive back so you lay them as tiles and just stick them on the floor. Obviosuly all the edge tiles have to be cut, but it came up very good. We choose a wood-look floor and it’s great. i took some pics on my digital so if you PM me I can send you some if you want to see it.
they recommend you put a primer down and then just stick them on. Full instructions were in the box.
the floor cost us under $200 total laid. we could’ve done it a bit cheaper with standard lino and bought an adhesive but in the interest of time we spent a bit more and got it done to have the house ready for tenants. time is money!
was that the book where the woman talked about buying a whole cow and then having a butcher cut it up for you and sticking it in a freezer to eat for the rest of your life? if so, then I think the woman paid it off becuase property cost a lot less when she bought the property she was talking about.
Your combined total income is $69k in current dollars. After tax let’s say it goes down to $52k in cash that you receive. so, if you had no living expenses and pouredevery dollar into the mortgage the best outcome would be to pay the mortgage off in say 6 years or so (remembering that you have to pay some interest on the money hence why 6 years). Reality is though that you do have to pay living expenses and so on. on the other hand, your total family income should hopefully rise each year and so will the cost of living to an extent.
Instead of having a number like 10 years or less to pay it off, sit down and do a detailed budget. both of you should track what you spend for a month down to the dollar. with a budget, you will then be clear on how much you can contribute to the mortgage. If you set up minimum payments in line with this, you will be more likely to keep to the budget.
An offset account can also help to combat some of the interest payments if you have spare cash around, though you tend to pay a slightly higher interest rate for the privelage.
