Baker finally learns how to get his dough right.

Hello I’m John

I’m a 42 year old Baker on a low to medium income and Married with two teenage kids.
A couple of months ago I just purchased my 7th. Property.
Some readers on the forum have ask me how did I get to where I am now . Well here is my story and I’ll try and keep it short.

When I was a single fella back in 1983 I bought a block of land in Rosebud Victoria for $8,000. Twelve months later I sold that block for $13,500 and bought a real nice car. This was my first mistake. I kept that Falcon for about fifteen years and sold it to the wreckers for $450 bucks.
The reason why I’m telling you this is because when I got rid of my , my old block of land was worth about $90,000. So if I had of kept my land I would have $90k instead of $450, I still shake my head to this day.

My wife and I move to Daisy Hill in Queensland in 1987 and bought a block of land and build a nice house on it for a total cost of $53,000.
In Five years the house had more than doubled, and in 1992 we sold it for $118,000,
We then bought another block and built a house for a total cost of $140,000. We had a mortgage back then for $80,000.
For the next ten years nothing much changed. We had our kids starting school, our cars were always breaking down, lots of bills , I worked 6 days a week and if Sundays were offered I’d work them too. We were pretty much just making ends meat. I can remember reading my first finance book around about then which mentioned the ten rules family’s should never break, and the one that I remember the clearest was don’t buy to big of a house.
I occasionally started to read more finance stuff, shares, property, investments.
In 1999 we had to borrow some money for a better car so the bank had our house revalued. Which came in at $280,000.

I continued to read more, I got books from the library , second hand shops and even found stuff on video. By this time it was early 2003 and the property boom was all the talk. I kept reading the papers every week and noticed that some properties had increased by $10 s of thousands. I concentrated on the bottom quarter of the market particularly townhouses. It came clear to me that if I didn’t get one soon I would probably end up paying to much.

I decided to refinance our mortgage to a LOC and take out another LOC to the value of $100,000.
I quit my current job and looked for something that would give me more free time. What I did was very risky but I was sick of the way our lives were going. My wife had a part time job then which helped pay the bills. I found lots of properties that fit my criteria, but by the time I could look at them they were sold. Fortunately an agent rang me about a low set villa in Loganlea asking price $78,000. I offered $75,000 cash and the deal was done. After settlement I got a tenant in there that was happy to pay $145 a week and the same tenant is still there today now paying $160 a week.

I read that some investors get nervous around this time, but I was the happiest I had been in years. I didn’t do much over the next few months until I read an advertisement about a town house for sale, just for fun my father and I went and had a look. Well we were impressed, so I made an offer for $107,000 subject to financé and building .I Gave all my figures and the contract to the bank and it was approved a couple of days later. While doing the final inspection before hand over, I noticed that there was a new for sale sign out the front of the complex. I made some inquiries and this one was even cheaper, so I offered $103,500. The next day the agent rings me to tell me it has been accepted. I was absolutely amazed when the bank just added this new one onto the previous one which had only just settled.
I well and truly had the bug by this stage, I kept on reading anything I could get my hands on, and talked to any body that would listen. In march 2004 my wife and I where out shopping when we walk past an agents window and noticed another townhouse for sale for $110,000. We made an appointment to inspect it the next day. We ended up purchasing it for $108,000, but the bank had to revalue our house again. This time the value was $380,000, that’s up $100,000 more on the valuation of $280,000 so the loan was approved. I’m currently getting $180 a week for this new one, and all our other three investments are also positive cash flow.

I continued to look for properties just for fun. But in September 2004 I seen an add for a duplex for $142,000 I went and had a look and took my property manager with me. We both agreed it was a beauty and would rent out very easily . So I made an offer of $134,000 and it to was accepted. Contracts were drawn up, but the bank that had been so kind to me refused my application and I thought that was it. The next day I remembered reading not to be discouraged by the banks and to treat them like shoe shops, so I did . I still had my first property that I paid cash for and it was unencumbered and was now worth $110,000 up $35,000. So with this in my hand I went to a mortgage broker who told me almost straight away this should be easy, and two weeks later the property went unconditional. The new bank not only gave me finance for the new property but also a LOC for $55,000 because I was giving them two properties. I continued to keep an eye on the market when I found a three bedroom house for $175,000, I made an offer for $168,000 and contracts were drawn up for my sixth investment property. I used mortgage insurance with this one so that I wouldn’t have to use to much of my $55,000.

My investment portfolio is still at it’s infant stage but here is a tally of the figures.

Value…$854,000
Loan….$744,000
Rent………1,075.wkly.

My tips: The best time to buy, is as soon as you can afford too.
Keep a close watch on your equity and use that for your next deposit.
Don’t be afraid to use mortgage insurance, you may be able to buy that extra property.
I buy 10 to 12 year old properties that need painting, carpet, and may be a little paveing.

I Hope you enjoyed my story .Please feel free to talk to me as I have lots of other stuff that I haven’t mentioned.

Thanks John.