Hi Pasha,

Just a few quick words of advice from someone who started investing around the same age as you:

– If you end up purchasing more than one investment (my preference if at all possible), make sure they are different types of property. For instance, buy a two bedroom unit with a strong yield, and perhaps a 3 or 4 BR house with maybe a slightly lower yield but a large land content. There are several benefits with differentiating your portfolio from an early stage.

-Push yourself to the limits of what you can afford (without going overboard), and stay at home with mum and dad as long as possible (I stayed until nearly 24). When you do finally move out, IT IS OKAY TO RENT. Your parents and most friends will tell you that rent money is dead money, but it frees up your cash flow. A close friend of mine is 26 and she has around $1.1mil of equity in various properties throughout Victoria, but no home of her own! Do you think she cares? I would refer you to the section in Steve's book about "Lifestyle assets versus Investment assets" if you have it*

-If you are disciplined enough (and I stress IF), then borrow on a Variable Rate basis with an Interest Only loan that has an offset account attached. There are several good reasons for this which you can research further through the forums using the search function. If you decide that you need the security of a fixed rate loan, then borrow a PORTION of the loan as fixed, not all of it. The reason for this is that fixed rate home loans can not have an offset account, which will provide complications if you ever decide to move into one of the properties, and then want to change it back to a PPOR later.

– Lastly, in regards to climbingjac's point above, some tenants are just plain bad! You have to be aware that from time to time you will get a dodgy tenant who will have no respect for your place, and may decide to stop paying rent – Be prepared for this by using conservative rental figures in your calculations – ie: when working out yields, perhaps base rental on 48 or 50 weeks of the year rather than 52. Another thing to consider is Landlord's insurance which you can research on the net.

I could probably go on for another hour, but it's probably better for me to answer any other queries you have as they arise.

The advice above is more direct than what I would normally give, which I have some very good reasons for, but don't take my word as gospel – Interpret what I have said and feel free to challenge me on it. (I am sure others will! )

After all, that's how you learn!

Regards,
YI.

Is it possible to have trusts with lives longer than 80 years?

I think Ed Chan talks about their "Property Investment Trust" having a longer life, but is it possible to prepare this type of trust anywhere?

Hi Vitaliano,

PPOR means Principal Place of Residence. ie: The home where you live.

CF+ means cash flow positive. ie: a property which has a surplus of total income over total expenses.

Hope this helps.

Regards,
YI.

Mike,

I just turned 26 and I purchased my first property at 22 – I now have 3 properties and about 100k in shares.

I think the common theme coming through from everyone elses comments is that you hopefully won't need to sell any investment properties in 4 years to purchase a house.

The next thing I would say is that whilst you need to plan for the future, don't be set on purchasing your PPOR at 25 – I own a PPOR which is geared to about 50%, however this has slowed my investing plans. I have plenty of equity available in my properties, but paying off your own, non-deductible mortgage makes it harder to acquire more IP's because your home makes no income!

The last piece of advice I would give you is to purchase a 2 bedroom place rather than a 1BR. I know how expensive property will be in Carlton, but the 2BR opens you up to such a wider rental market, and gives you some more options with future improvements.

I was/am lucky enough to have a pretty good mentor at your age, and consequently I am now in a strong position financially for my age. Feel free to post more questions in the forums and I will try to assist, or send me a private message if you would like me to go into more detail about any posts I make.

Cheers,
YI