I have been reading a lot of posts and learning a lot recently and thanks to everyone who is good enough to contribute, y confidence is growing and already I realize the mistakes I would have made if I had jumped in a month a go. One thing I am still very unsure of though is what is the best tact to achieve your goals. There is a lot of talk about knowing what your plans are and setting things up to help you hit your targets and achieve your plan and how important it is to have a clear plan. I get why you have a plan or you are kinda just hoping you will go in some kind of right general direction but what I don't understand is that now I know my goals, what plan would suit me best to get me where I want to go? I don't know why you would plan for a capital growth over buy and hold etc etc etc. What tact suits what goal?
If I list my goals hopefully someone will be able to give me some idea.
Goals. My short, mid and long term goals are as follows.
Short, I want to learn what makes a successful property investment and have taken a step to buy my first real property investment from scratch within one year and have a property tenanted within that time armed with a good team around me. I would like to also find a mentor in this time to help me through the process. When I say my first real property, I should maybe point out that I have one already but although I had turning it into an IP in mind when I bought it, its primary purpose was a home for my new family. That was ten years ago now and we moved away from it to come to Australia. The house is in the UK. It is now tenanted and has been for a year. Its going well so far but I know that I could have done it better. I am looking to purchase another house for my family now we are living here in Oz and then also buy an IP from scratch deliberately, solely as an IP so that's a different view point altogether and I acknowledge this.
Mid. I want to have a portfolio which produces and income for me that throws off passive income so I can pay off my own home at a rapid rate. I want to be able to relax and know that I have achieved at least that level of a $400k house paid off within ten years. I can overpay with my own money but I would like some assistance from property investing, or any other investing for that matter. I'll be happy with having just 5 or so properties giving say $40 per month net as even just that will make a big difference to the mortgage and help me towards my long term goal.
Long. I want to have paid off the house and set up a portfolio that will provide enough passive income that I can call it a day at work and just run my own small company doing what I love which is playing with my boat. I want to go traveling with my wife and be able to go for an infinite time not governed by money. I want a property in Florida as we love the place and I would like to be able to go live there for six month of the year if we decided to. I am happy for this Florida house to be a rental for holiday makers while we are not there but my wife and I are nuts about Disney, Universal and the whole Florida experience, NASA etc so this is a big goal for me. I met someone who was traveling around in a caravan with his wife at aged 50 odd and he said that all he needs is $3000 a month to carry on dong that forever. That sounds great to me, just traveling around the country or even the world meeting people and seeing everything. So in short I would like financial freedom as my long term goal and I put a timeframe of 20 years on this as I am 35 years old now.
So with all of this in mind, how would create a strategy that works for me Even knowing what I want to achieve doesn't make clear what type of investment would be right for my. I need money to achieve my goals but in what form? Help needed here I think.
Hoping you can offer some guidance
Paul
Before you go ahead and create a strategy I would create clearer goals.
Defining short/mid/long is good but defining them as 1 year, 5 years, 10 years, 20 years goals is better.
Also be more specific
Year 1 – Buy one property in the range of $200,000-$300,000 that delivered $400-$600/week in rental income. I want to buy a property that is livable but has the option to renovate for increased value or increased rental yield.
Year 5 – Own 3 investment properties that generate $500/month in positive cash flow. (buy more than one investment property – link to an article I wrote on this topic which may be of use)
Year 10 – Own 10 investment properties that generate $2,000/month in positive cash flow
Year 20 – Sell off 2 investment properties, paying off my house loan. Have remaining 8 investment properties generate $10,000/month in passive income (rents have gone up in this time and we have paid down some debt).
Ryan McLean | On Property
http://onproperty.com.au
Email MeOn a more practical note:
Consider 95% loans – Stretch your deposit further by purchasing more properties with the one investment. You will likely have to pay Lender's Mortgage Insurance but it will possibly mean you can buy more properties sooner.
Get a good mortgage broker (who is also an investor) – A good broker will not only help you find and get approved for loans but they will help you structure your loans for the best chance of success
Buy under value or add value – You are probably going to need equity to continue expanding your portfolio. So if you buy under value (instant equity) or renovate to gain value you have a better chance of growing your portfolio faster
Positive cash flow – Properties that lose you money are dime a dozen and really easy to find. Spend the time to look for properties that generate a positive or neutral cash for if passive income is important to you.
Ryan McLean | On Property
http://onproperty.com.au
Email MeI have to admit when I bought my first IP I didn't have any goals. I just wanted to own an IP. It was a good buy but I sold it too early (but made a profit). A few years later I was sorry and bought another negatively geared property. It's made money but not heaps. Lesson learnt.
Goals aren't static things so don't stress about getting it exactly right. Nathan Birch's goal was to have 10 properties and to put the rent up on each on $10 a year which in 10 years would give him $50,000 a year to live on. Then he could quit work. Never in his wildest dreams would he have made a goal of being a multi millionaire before he hit 30.
THEN in 2008 I discovered internet forums and like you started reading like crazy. My goal was to buy a property a year for 10 years and wait for them to go up, sell some and retire on rents. But things change quite quickly so be prepared to up your goals. I bought 2 in 2008, 2 in 2009 and then I "went crazy" (according to my husband).
At the end of 2008 I set an equity figure to achieve by January 2015 (giving me 6 years) that at the time I thought was a bit crazy. I've just hit that figure.
At the time I was focused of CG but soon realised that this wasn't necessarily going to let me retire so pretty soon I changed tactic and looked at cash flow. That is what lets you quit your job. I'm pretty reserved and conservative when it comes to my investing (compared to a lot of people I have met) but I am happy with what I have achieved.
Considering in 2007 I thought I would be retiring on the pension.
Go for it!!!!
I am so glad that you don’t have to have your goals year by year to start …
My goal to get the right financial advisor to help us Buy our first house and learn how to do the book work and how it all runs ….
Then we shall set goals on buying more property , I would like to have at least 8 investment for our retirement as this is what I have been told we should need to retire happy.I suppose my end goal is 8 properties but that could change once we start
Cheers
Gayle
Gizzy wrote:I would like to have at least 8 investment for our retirement as this is what I have been told we should need to retire happy.Hi Gayle
Not sure where that figure came from, but the number of properties isn't the model to stick to… try thinking instead in terms of the total net cashflow position. ie Rent minus costs.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Agree with JacM.
I see and hear every day of the week clients who say i need to buy 20 properties to be comfortable yet if they had 6 all paid off (after the accumulation phase) they would be in a far better net position.
Number of properties are all well and good but if they are highly geared means nothing.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Qlds007 wrote:Agree with JacM.I see and hear every day of the week clients who say i need to buy 20 properties to be comfortable yet if they had 6 all paid off (after the accumulation phase) they would be in a far better net position.
Number of properties are all well and good but if they are highly geared means nothing.
Cheers
Yours in Finance
I also agree with Richard and JacM.
When people say 10 properties what do they really mean? You could buy 10 run down properties in the middle of nowhere for $50k each and only invest $500,000.
It also probably isn't going to help you achieve any financial goals you have for yourself.
Understanding financial goals is important. If you want a certain amount per year in passive income you can start looking for properties that will deliver you passive income (or other investments for that matter).
There is always stocks, businesses and other investments that can help you achieve financial goals as well.
If 10 properties is the goal it is going to be pretty difficult to be open to starting a business that will help you achieve financial freedom. Because while the business may spin off income (potentially nearly passive income if you get someone to run it) you won't be thinking like that because it won't be "10 properties".
Ryan McLean | On Property
http://onproperty.com.au
Email Me
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