10 IPs by 25 - My Investing Journey

Terry_w · 14th Aug, 2017

Hi JM. I think selling can be a good idea but don't assume you can borrow the same amount again without checking with Rolf.

If you could it would be great as you will have a heap of cash as well.

And very well done too that is a great achievement.

aussieB · 15th Aug, 2017

@Jmillar Awesome stuff. Well done. You have a great head on your shoulders and a great mindset. You will do very well. Cheers.

Westminster · 16th Aug, 2017

I agree that you are probably in the right position to sell those Sydney units as they are currently good but if Sydney is near the peak then it's not a bad idea to cash in and roll that money onto something that has a lot more future potential. You've logically weighed up the opportunity cost that they are costing you and I think you've come to the right solution.

It is true that selling them doesn't equal the ability to borrow that money again but sometimes selling and sitting on the profits in a term deposit is better than not selling and watching the market go sideways or down.
The next stage of expansion for your journey will be harder and slow down a bit as it's not just about cash flow but finding the right properties that meet your value add plans.

JKWS · 16th Aug, 2017

Great story and no doubt exciting future! Thanks for sharing.

AP121 · 16th Aug, 2017

Jmillar said: ↑

Hi guys,

I'm a very private person which is why I've always been hesitant to share my story - I prefer to fly under the radar - my friends, girlfriend and most of my family don't know what I own. However I always get requests to do this on this forum, so I thought I might as well share some tips from my journey. I don't want to be on any magazines, I don't even want my real name to be known - I just hope my story can inspire younger people to keep working hard to achieve their goals. (also I'm in need of a bit of motivation at the moment so thought this was a good way for me to reflect and get some of my motivation back)

Background
Since I was about 10 years old, I used to buy and sell things for cash. Back then it was pet fish, and then I moved onto mobile phones, computer parts, motorbikes, basically anything I could make some quick cash on!

I started working in family businesses when I was 13 and since then I haven't stopped working. I didn't come from a wealthy family, my parents made me pay for my own expenses when I was a young age. I hated it at the time, but in hindsight it has taught me a lot.

When I finished school, I didn't know what I wanted to do but I've always loved business, so I started a business degree at university. For the first 2 years of uni I was there full time (3 days) and working 4 days. In my 3rd year I decided to get into the property industry as I have always loved property, so I started working in the property industry 3 days, studying 2 days and working elsewhere 2 days.

Property Investing Journey
In late 2012 (age 20) I decided I wanted to invest in property. I started reading books, magazines, researching online and joined the Somersoft forum. I probably spent 3 hours a day researching, for about 12 months before I did anything. In the background I was also saving as much money as I could.

I saw the Sydney property market starting to take off, so my first IPs were 2 units in Western Sydney at the end of 2013, when I was 21. I only just had enough to buy these at 90% LVR. Everyone told me I was stupid, that I should have bought at <80%, but I knew the market was moving up quickly and I'd rather benefit from the growth of 2 properties rather than 1.

I then bought 2 villas in the Logan area in 2014 as the market was taking off, using the equity from my first 2 IPs. I exchanged on these before my 22nd birthday. I bought them off-market, paying about $15k less than they were worth (each).

I didn't buy anything for 2 more years as I didn't have the serviceability or equity/cash to do so. So I was working hard at work, and saving hard.

In 2016 I bought 5 properties using equity in my first 4 IPs, as well as savings. By this time I was earning $200k+ so my serviceability and savings had improved immensely. The 5 IPs were:
+ 3bdr house in Ipswich area on 1,200sqm (bought $30k below market value through a buyer's agent, sub dividable)
+ 3bdr house in Logan area on 700sqm+ (spent $10k on it and reval'd for $70k more within 6 months, can add GF)
+ 3bdr house in Logan on 700sqm (bought $20k BMV, can add GF)
+ 3bdr house in Ipswich area for $230k (through a buyer's agent, cashflow neutral and can build 3 townhouses there in the future)
+ 3bdr house in Logan area on 700sqm+ (bought off-market $20k BMV, can add GF)

This year, I bought another one:
+ 3bdr house in Logan area, corner block of 1,150sqm (was planning on subdividing off 450sqm and building dual key, and then further developing the 700sqm corner block into a dual occ later on, but subdivision costs have blown out so I will sit on it for a year or so)

This last purchase brought me to 10 IPs before my 25th birthday (my goal was 10 before 26).

What Next?
I've more or less hit my serviceability limit due to the recent APRA changes, which has shaken me up a bit because I'm used to just being able to buy whenever I find a good deal!

I met with a few mentors for advice (property guys with huge portfolios, who have been doing this for years) and as a result, I've decided to sell my 2 Sydney properties. I never thought I would sell, but I'm at a point where I need to take a step back in order to take 2 steps forward. I assessed all my properties based on their likelihood of further growth in the short term, costs to hold and ability to add value, and the 2 Sydney properties ended up being the first 2 on the chopping block. I'm in the process of selling them now.

The next 2 on the chopping block are my 2 Logan villas because I can't add value to them, but I think they will have more growth in the short term, and they don't cost me much to hold, so I'll hold onto them unless I have to cull them. The remaining 6 properties have ability to add value, and will continue to have growth in the short and long term, so these will stay in my 'long term core portfolio'.

I'm now looking at opportunities to buy, add value and flip properties. I need to do this in order to make profits to add value to properties in my 'core portfolio', and to add more quality long-term high-performing properties into my 'core portfolio'.

Finding deals at the moment where I can buy well, add value and flip will be incredibly difficult in the markets that I know (Logan, Ipswich, Western Sydney) so I'm going to start getting to know other markets such as Adelaide and Perth. I have come to terms with the fact that I need to be patient (which is hard for me) and that I may have to sit on my hands for months, or even a year+ before the market is conducive of desperate vendors where I can buy below market value.

Tips
- Have a good team around you. Without my mortgage broker (Rolf Latham - absolute genius) and buyer's agent in particular I wouldn't have achieved what I have
- I prefer to buy in the low end of the market. It's easier to buy well (ie buying 10% below market value is easily achievable when you're spending $250k), yields are generally a lot better, they perform well when the market is strong (due to high yields, affordable) and when the market ***** itself they don't get hit as badly as markets with high price points
- Work hard, and don't expect it to come easy. I studied/worked 7 days a week, and researched every night, for over a year before I did anything
- Don't expect to be gifted a silver spoon - I asked a lot of questions, picked a lot of brains for advice, but at the end of the day you need to roll up your sleeves, get your hands dirty and invest a lot of your own time/energy in order to achieve your goals
- There are always challenges, and there are always opportunities. You just need to be creative and keep looking for them

This is all I can think of for now.

I'm certainly not here to brag - I'd prefer that no one knows my story (hence why i use an alias name), but thought I would put this up here so that when people ask for my story I can just send them this link. If you have questions, feel free to ask, but don't expect me to hand you a silver spoon and do it all for you - it's a lot more rewarding when you do it yourself.

Best of luck
John
Click to expand...

Great Stuff bud. Thanks for sharing

einentiva · 9th Sep, 2017

awsome stuff!

Rolf Latham · 9th Sep, 2017

Westminster said: ↑

It is true that selling them doesn't equal the ability to borrow that money again but sometimes selling and sitting on the profits in a term deposit is better than not selling and watching the market go sideways or down.
.
Click to expand...

with th right lenders, we have been doing many a sell, port and reuse the loans.........

so it is possible and possibly profitable to do

Many brokers/banks dont like it because it doesnt produce new income for a middling amount of work, but propely expected it can work a treat fore using existing loans and in some cases, extending tax deductability on debts where say a PPOR has been sold.

ta

rolf

RetireRich101 · 9th Sep, 2017

Rolf Latham said: ↑

with th right lenders, we have been doing many a sell, port and reuse the loans.........

so it is possible and possibly profitable to do

Many brokers/banks dont like it because it doesnt produce new income for a middling amount of work, but propely expected it can work a treat fore using existing loans and in some cases, extending tax deductability on debts where say a PPOR has been sold.

ta

rolf
Click to expand...

Interesting.....not sure why bank doesn't like port and reuse of loan?

Understanding the fiddling of paperwork Involved for the port but if Joe is unable to port the loan amount then it may be gone forever. Thanking apra Joe may not get a new loan.

I would think Broker don't like them because they only get the kickback/trailing commission and not new commission?

skater · 10th Sep, 2017

RetireRich101 said: ↑

Interesting.....not sure why bank doesn't like port and reuse of loan?

Understanding the fiddling of paperwork Involved for the port but if Joe is unable to port the loan amount then it may be gone forever. Thanking apra Joe may not get a new loan.

I would think Broker don't like them because they only get the kickback/trailing commission and not new commission?
Click to expand...

Clearly some banks are happy with this arrangement. We've got one that we're selling at the moment. There's not a heap owing on it, but we're also buying something else that is much cheaper. We have the cash for the buy, and were happy to use it, but thanks to Rolf, we're in the middle of porting the loan to the new property.

RetireRich101 · 10th Sep, 2017

skater said: ↑

Clearly some banks are happy with this arrangement. We've got one that we're selling at the moment. There's not a heap owing on it, but we're also buying something else that is much cheaper. We have the cash for the buy, and were happy to use it, but thanks to Rolf, we're in the middle of porting the loan to the new property.
Click to expand...

Nice.. same day settlement for sell and replacement property? Let us know how you go.

VanillaSlice · 10th Sep, 2017

Hi Skater,

which state is your most recent purchase ? (and area, only if you don't mind sharing)

skater said: ↑

Clearly some banks are happy with this arrangement. We've got one that we're selling at the moment. There's not a heap owing on it, but we're also buying something else that is much cheaper. We have the cash for the buy, and were happy to use it, but thanks to Rolf, we're in the middle of porting the loan to the new property.
Click to expand...

skater · 11th Sep, 2017

RetireRich101 said: ↑

Nice.. same day settlement for sell and replacement property? Let us know how you go.
Click to expand...

No, the purchase comes first, by a long mile, but I've got some empty loans that are secured by the old property.

skater · 11th Sep, 2017

VanillaSlice said: ↑

Hi Skater,

which state is your most recent purchase ? (and area, only if you don't mind sharing)
Click to expand...

QLD

Kokee · 11th Sep, 2017

Great Stuff and best of luck for future plans.

How do you buy a property below market value?

the world is your oyster · 12th Sep, 2017

Awesome achievement

Seby643 · 17th Jan, 2018

@Jmillar Did you have a cash buffer for each property in case one became untenanted or needed minor or major repairs.
And if you did have a cash buffer per property how much was it?

mickyyyy · 17th Jan, 2018

@Jmillar Nice job and well deserved buddy! I also worked 7 days a week to create a portfolio and now similar to you develop to produce equity.

Karina · 18th Jan, 2018

what an outstanding achievement for someone of your age.

congratulations.

I actually think its wise to cash in on the gains of your sydney property.

Coota9 · 18th Jan, 2018

@Jmillar

Fantastic achievement

sash · 21st Jan, 2018

Congrats John....

You mentioned mentors...did they recommend so much concentration in one area? - ie. Logan..Ipswich.....

Jmillar said: ↑

Hi guys,

I'm a very private person which is why I've always been hesitant to share my story - I prefer to fly under the radar - my friends, girlfriend and most of my family don't know what I own. However I always get requests to do this on this forum, so I thought I might as well share some tips from my journey. I don't want to be on any magazines, I don't even want my real name to be known - I just hope my story can inspire younger people to keep working hard to achieve their goals. (also I'm in need of a bit of motivation at the moment so thought this was a good way for me to reflect and get some of my motivation back)

Background
Since I was about 10 years old, I used to buy and sell things for cash. Back then it was pet fish, and then I moved onto mobile phones, computer parts, motorbikes, basically anything I could make some quick cash on!

I started working in family businesses when I was 13 and since then I haven't stopped working. I didn't come from a wealthy family, my parents made me pay for my own expenses when I was a young age. I hated it at the time, but in hindsight it has taught me a lot.

When I finished school, I didn't know what I wanted to do but I've always loved business, so I started a business degree at university. For the first 2 years of uni I was there full time (3 days) and working 4 days. In my 3rd year I decided to get into the property industry as I have always loved property, so I started working in the property industry 3 days, studying 2 days and working elsewhere 2 days.

Property Investing Journey
In late 2012 (age 20) I decided I wanted to invest in property. I started reading books, magazines, researching online and joined the Somersoft forum. I probably spent 3 hours a day researching, for about 12 months before I did anything. In the background I was also saving as much money as I could.

I saw the Sydney property market starting to take off, so my first IPs were 2 units in Western Sydney at the end of 2013, when I was 21. I only just had enough to buy these at 90% LVR. Everyone told me I was stupid, that I should have bought at <80%, but I knew the market was moving up quickly and I'd rather benefit from the growth of 2 properties rather than 1.

I then bought 2 villas in the Logan area in 2014 as the market was taking off, using the equity from my first 2 IPs. I exchanged on these before my 22nd birthday. I bought them off-market, paying about $15k less than they were worth (each).

I didn't buy anything for 2 more years as I didn't have the serviceability or equity/cash to do so. So I was working hard at work, and saving hard.

In 2016 I bought 5 properties using equity in my first 4 IPs, as well as savings. By this time I was earning $200k+ so my serviceability and savings had improved immensely. The 5 IPs were:
+ 3bdr house in Ipswich area on 1,200sqm (bought $30k below market value through a buyer's agent, sub dividable)
+ 3bdr house in Logan area on 700sqm+ (spent $10k on it and reval'd for $70k more within 6 months, can add GF)
+ 3bdr house in Logan on 700sqm (bought $20k BMV, can add GF)
+ 3bdr house in Ipswich area for $230k (through a buyer's agent, cashflow neutral and can build 3 townhouses there in the future)
+ 3bdr house in Logan area on 700sqm+ (bought off-market $20k BMV, can add GF)

This year, I bought another one:
+ 3bdr house in Logan area, corner block of 1,150sqm (was planning on subdividing off 450sqm and building dual key, and then further developing the 700sqm corner block into a dual occ later on, but subdivision costs have blown out so I will sit on it for a year or so)

This last purchase brought me to 10 IPs before my 25th birthday (my goal was 10 before 26).

What Next?
I've more or less hit my serviceability limit due to the recent APRA changes, which has shaken me up a bit because I'm used to just being able to buy whenever I find a good deal!

I met with a few mentors for advice (property guys with huge portfolios, who have been doing this for years) and as a result, I've decided to sell my 2 Sydney properties. I never thought I would sell, but I'm at a point where I need to take a step back in order to take 2 steps forward. I assessed all my properties based on their likelihood of further growth in the short term, costs to hold and ability to add value, and the 2 Sydney properties ended up being the first 2 on the chopping block. I'm in the process of selling them now.

The next 2 on the chopping block are my 2 Logan villas because I can't add value to them, but I think they will have more growth in the short term, and they don't cost me much to hold, so I'll hold onto them unless I have to cull them. The remaining 6 properties have ability to add value, and will continue to have growth in the short and long term, so these will stay in my 'long term core portfolio'.

I'm now looking at opportunities to buy, add value and flip properties. I need to do this in order to make profits to add value to properties in my 'core portfolio', and to add more quality long-term high-performing properties into my 'core portfolio'.

Finding deals at the moment where I can buy well, add value and flip will be incredibly difficult in the markets that I know (Logan, Ipswich, Western Sydney) so I'm going to start getting to know other markets such as Adelaide and Perth. I have come to terms with the fact that I need to be patient (which is hard for me) and that I may have to sit on my hands for months, or even a year+ before the market is conducive of desperate vendors where I can buy below market value.

Tips
- Have a good team around you. Without my mortgage broker (Rolf Latham - absolute genius) and buyer's agent in particular I wouldn't have achieved what I have
- I prefer to buy in the low end of the market. It's easier to buy well (ie buying 10% below market value is easily achievable when you're spending $250k), yields are generally a lot better, they perform well when the market is strong (due to high yields, affordable) and when the market ***** itself they don't get hit as badly as markets with high price points
- Work hard, and don't expect it to come easy. I studied/worked 7 days a week, and researched every night, for over a year before I did anything
- Don't expect to be gifted a silver spoon - I asked a lot of questions, picked a lot of brains for advice, but at the end of the day you need to roll up your sleeves, get your hands dirty and invest a lot of your own time/energy in order to achieve your goals
- There are always challenges, and there are always opportunities. You just need to be creative and keep looking for them

This is all I can think of for now.

I'm certainly not here to brag - I'd prefer that no one knows my story (hence why i use an alias name), but thought I would put this up here so that when people ask for my story I can just send them this link. If you have questions, feel free to ask, but don't expect me to hand you a silver spoon and do it all for you - it's a lot more rewarding when you do it yourself.

Best of luck
John
Click to expand...

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10 IPs by 25 - My Investing Journey

Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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