Seems to me there are many different ways to get ahead with R/E and oftentimes people don`t seem to look at the big picture and get a little lost and confused.
I have been through some great debates over buy and hold vs renovating etc etc, in a nutshell, my own goals do not include owning multiple rental properties, using options or seeking out foreclosures but by renovations getting to a point where I own one or two outright very long term CF+ cheapies, which I can pretty much forget about, renovating others to sell along the way, in the meantime of course working toward owning outright my ppor which will give me substantial amount of equity in anyones language, I`m not too far away, just wondering if anyones plans differ from the usual.
Just because one method is “a sure way to financial freedom” doesn`t make it the best path for all.
What I am hoping for is real stories, not pie in the sky, what do you want?, and how are you achieving it, what precautions you are taking along the way but most of all any stories of good fortune/pure luck and how it came about.[:o)]I also think there are many ways to get ahead. I believe setting a goal is the first thing and working out some strategies which is what we did.
On another post today I mentioned a not so good investment and a couple of lousy financial planners. Three years ago we had our own acreage property and the above investment, were told we couldn’t do anything and should be bankrupt which made us even more determined. What we want is to have that financial security for retirement in a few years (a word only as we will keep investing for as long as we can). We are achieving that by a mixture of good rental properties, including houses we have renovated, units we have bought for rental, and for renovation and resale, plus an off the plan, delayed settlement unit which should be good as it is in an excellent position. There is considerable equity in the houses, about $320,000, should we need/want to sell for any reason and in 12 months we have gained about $125,000 equity in the units. That is in 2 years. So the goal is always there, but along the way, ideas may change to suit the situation. It is just so interesting and opportunities some up regularly.
Anna
how close are you to getting to where you want to be markpatric? Considering the length of time you’ve been investing you must want a pretty expensive PPOR
cheers
rMy theory – for my situation. I am on a reasonable income (graduated uni with 15 yrs experience). I could get a higher income elsewhere but with a young family I have balance between hours and income.
Buy properties in high growth areas. Yes, near beach, 10-20 kms from cbd in cities etc.
Yes, they may be or probably are negative geared. You want growth. And yes, you need a job to support this. Buy traditional homes or units. Not inner city stuff.
Once the first goes up in value – use the equity to buy next property, then the next etc.
Sure – buy a property in a rural area that is positive geared – just see what growth, if any, you get and see if the management hassles are worth it. For mine, its not worth my time and the management hassles of having rural properties, even if they are positive geared. As stated, I have a young family and full time job, so I am time poor.
What if your just bought a PPOR? How do you start buying a negative geared investment property? Just pump what you can into your PPOR. Don’t worry too much about paying the PPOR off. Buy an investment property (when you can affford it and use interest only on a fixed 5 year term) in a growth area and before you know it the equity you have in the investment property will more than cover your existing mortgage on your PPOR. Buy properties at about the $250k to $350k.
Then eventually get a portfolio of about $1m. If property goes up at an average rate of 8% a year, then you will make $80k a year capital gain for just managing your properties. This is a heap better than looking at shares, managed funds etc. Don’t even look at them. Feather your own nest not brokers and financial advisors.
That’s what I am doing. I am not there yet, but I have started (I started slowly about 5 yrs ago) and that’s my medium term aim. Sure its not easy to start now. You may have missed the boat, but there will be another boat. Save cash to pay off your PPOR. But buy a property in a growth area. This means in a major city.
This does not work for all – but it will work for most people as they have an income.
Then as you near retirement, you can reassess your property portfolio and look for some positive geared properties.
Originally posted by richmond:how close are you to getting to where you want to be markpatric? Considering the length of time you’ve been investing you must want a pretty expensive PPOR
cheers
rI have been investing a fair while but I spent a lot of money along the way, and made business mistakes early on, but my ppor should be worth between $500,000 and $600,000, it would take a little luck but I could almost own it by christmas. (touch wood)
Once I hit that point I will be in a good position to do renos fulltime, but probably only three a yr.
That`s my short term goal.
But once I`m there I`ll take a big deep breathe and probably take a break from R/E for a while.
Today actually was a big step toward this goal, by chance I ran into a excavator operator who was in the area and all of a sudden he is currently doing the driveway and right up high on my acreage where there are some magnificent veiws, and it`s being done so cheap I still can`t believe it. He got to about half way in a day, it`s transformed the block like I never thought possible!.[:o)][:o)]good luck with it mark
Just my thoughts:
I bought properties just over one year ago, after trying hard to get a home loan. It took the only bank manager who actually listened and gave me credit, to get me on the path. About 10 others couldnt give me any hope. I pay usual rates of standard loans, no sharks here.
My properties now over two year span(includes my home) has equity around 400k. I was “lucky”.
My shares give me my income boost, around 6k a year. I earn slightly under average income, and I hate my job, but I see it as a stepping stone to provide me with income for….well I wont pinch that book title.
I have one child, who gave me grey hairs and cost me a fortune, but I love her dearly. She now has two children, so this nanny has enough to provide for myself and my family down the track. They are independant.
My will is up to date. Is yours? Very important.
I have trauma protection and a good death benefit to clear all debt should anything happen.
I didnt bother with income protection, I have enough leave to carry me and as far as I am concerned, I’d rather leave my job….anyway income protection only covers 75% of income and cost sooo much. Even if it might have some tax benefits.
My super ( I hate being forced into this when I can well manage my own funds BETTER) is worthless as I started in employment late. ( I used to be self employed and never beleived in super, but I did in other things)
My shares are ok, but I am in that for the long haul and I guess I am for the properties too. Maybe my grandkids will love me for it! lol
I dont have a partner, but I reckon if someone shared my beliefs and visions, there would be no end to possibilities (beside the usual…hehmmn!)
With not having a partner I feel a little restrained, because I only have $X disposable income and I am limited to what I can do on my own. Now I love tools (dont give me fashion magazines!) and the idea of renovating, but it is so much more fun when you have someone to share: the work load, the ideas, the fun etc…the goals..
However I have a sense of achievement. I worked hard actually to get where I am and no advice on how to do it. Risk takers are those who will make money. property and shares are a risk.
I believe however shares have a greater return.
I would love to buy and renovate.
I believe in a balanced portfolio and shares and properties are NOT the only means.
I would hold core properties and core shares, trading in others as I saw fit to make a quick quid.
Financial advisers….they arent all bad. But I decided to study it just so I would be more aware adn I am half way through the course for Dip in financial planning services…if I finish!
Cheers
Elves
Hi MarkPatric,
Good reflection question. I have spent hours analysing material and have settled on a strategy. In Australia, it would be mainly “buy & hold”. I will also run a business with a real estate theme and combine the two. No shares – been there and no desire to return…it is possible to diversify within real estate – many forget. I don’t think Warren Buffett buys property does he?
Targets – with no target, one will always overshoot if there is vision to guide *hehe*
I have a vision to set me for life which I have yet to achieve. It’s exciting times. I have no monetary targets (can’t find a big enough number) and no retirement plans (apart from keep doing the things I love till the day I die).My dad helped me secure an investment property 10 years ago while I was still in uni. I am here 3 more property transactions later, all different and invaluable – from here I will fly because my mind is working exponentially but still forever learning new things.
Only slice of luck so far is that first ever property. Ugly duckling in the worst suburb of Perth, 12km from CBD. Endured breakins from house being situated next to public laneway. First 7 years it barely tracked inflation, but in 10 years it has nearly tripled without additions or renovations. The reason – mainly an “Urban Renewal Program” then general property boom. Oh…and the laneway was closed off years ago, and I was the only interested buyer of 150sqm of land for $750 ($5 per sqm)…
Scarecrow7
One of my favourite part of the day is reading through these forums.Lots of different strategies are being used to achieve the same result ie financial security, different journeys to the same destination.Like most Melbourne property owners our PPOR has more than doubled in value over thae last few years which has give us great equity to purchase investment properties. We have gone down the same road as described by Yack. In the last few years we have bought new townhouses and units in small developments in good locations within 5 km of Brisbane CBD and on a $1 000 000 portfolio have built up over $350 000 in equity. First couple of properties are cashflow positive, last couple are cashflow neutral. In our situation with both working full time and running a small business it was easier to target a large city which hadn’t reached its potential.We are now adding some variety to our portfolio with our next purchases in select areas on the Tweed coast. For us this is a more viable strategy, with a strong focus on capital growth rather than positive cashflow in smaller towns.
But to each his own, and to be doing someting is beteer than procrastinating and doing nothing at all.
Happy Investing!!These replies are great, thanks!, and Elves I can really relate to yours.
I have run my own business for well over 10 yrs and had huge problems getting loans during one period, it seemed impossible.
The loans I did get were drawn out battles, most I nearly quit on but thankfully didn`t, that is my strongest peice of advise, if you can`t get a loan from one bank you must find someone who will and don`t get too downhearted!.
It can be very fickle and specialised, you need to know who to talk to about what type of loan.
The most important step in PI is when the penny drops and you know you can do all this too if you don`t quit.
My ex was a complete R/E dummy, I convinced her as a first home buyer, to get the grant and buy a place, having big problems securing a loan, she wanted to throw in the towl many times, but I wouldn`t let her, she would now have equity in the range of $200,000!, it is very difficult and stressful in the face of advercity and rejections (glum R/E agents, even well meaning friends) to keep pushing on in getting that first home loan, it can be like a war, and many times I got loans at the very last option, after months of extending settlement dates, funnily enough some of the most difficult turned out the best investments.
I look back now and wonder where I`d be if I listened to others and quit.
It`s a fine line, that why when I hear others say how easy it is I can`t help but question thier motives.
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