Financially free at 32 – My 10 year property journey

How are things going @Jack Chen, lics still ticking along? Any changes or upcoming changes to investment strategy in regards to franking credits such as tilting to some etfs?

Cheers!

 

Bill shorten should be taking you on his road trips instead of attacking people like you .Schools need to be inviting people like you ,to inspire other kids on the benefits of FIRE

 

At what point in your journey did you start to debt recycle?

 

Congrats Jack, an inspiring journey. Thanks for sharing your story.

 

awesome story jack

 

I have total equity of a round $1.3 million ,inclues 2 IP plus my PPOR. I am 58 years old with 2 kids aged 9 and 5 (only) ,that is another storey. Only debt $230K on one IP.I plan to retire in 5 years . And invest the sale of of 1 IP into super and draw a Allocated pension. if you were in my situation what would you do to get a passive income and minimise tax ?

 

Gone very quiet. I suspect he is at work , busy making money to pay for the significant holding cost shortfalls as loans from 2013 and 2014 have reverted to P&I . It’s great he had a go and bought 10 properties - it’s better than great actually. It’s genuinely fantastic , and is certainly the foundation for achieving financial independence at a later stage , but just buying 10 properties and getting some equity isn’t where the game of financially free is played and won. It’s just the start of the game, really. Paying them off either completely or enough that you have sufficient income to pay for your lifestyle without needing to work , even under P&I terms, or selling them and reinvesting money elsewhere to generate enough to live on is where the game can truly be claimed to be won. Until you have done that you are still at the mercy of holding costs , regulators , lender policies etc - and probably can’t genuinely step away from work , meaning you can’t really claim to be financially free .

It’s a nice headline , and a clever way to promote a mortgage start up , but it’s not really accurate I suspect . Over the years we have seen all kinds of young guns receive media coverage , but none of them are here anymore . They all had the same thing in common - large portfolios built quickly , that were extremely exposed to the APRA changes . Journalists talk them up and most here drink the kool aid , but I’m betting most came under extreme pressure when IO loans expired . Building the portfolio is relatively easy. Holding it is harder and equity won’t pay the mortgages . You would think people would have learned these things by now ...

 

I would look into debt recycling and/or gearing strategies, an IO loan and an allocation to unlisted property, but please DYOR because a lot of asset classes have performed very well, so valuations are high by historical standards. I personally don't have an issue with some conservative leverage into quality assets that produce a positive carry (yes they exist).

 

Spoke to Jack recently.

Since this post, his had a baby boy and loves being a stay at home Dad whilst running his Mortgage Broking business. The family also spends a good chunk of the time travelling and spending more time with their parents in Taiwan.

I suspect that's why he doesn't frequent PropertyChat as much as he use to.

Cheers,
Michael

 

I thought there are many ways to invest into RE, and here on the PC forum I would thought we would support and respect others journey who share what they did instead of assuming we know what they really did?
I too built large portfolio quickly, then just kept adding BUT I am a passive investor and do have other incomes and investments outside of RE too.
I don't understand how you can conclude what you said? Do you know the number of Australians who own 10 IPs or more, I do, it is 2107. Let me repeat 2107 out of about 25,000,000.
Just because one invests into RE doesn't necessarily mean that's all we do, there can be people passively investing or actively engaged in RE, yet derive income elsewhere hold other investments and do other things too.
In addition, I for one have not been asked to convert any of my IPs to P&I to date yet!

 

Ok ...lets go there MWI:

1. How do you know there are only 2107 people with more than 10 properties?

2. Without taking away from Jack's achievement which is significant at a young age...it is good to get Euro's view also. I don't always agree with him by the way.......frankly I am sick of all the BS promotion by people with 3 seconds experience as BAs and Mortgage Broking. They seem to have all these followers who seem to follow pied pipers. So a bit of balance maybe nice...however....you do have a point...Euro was a bit harsh thought maybe he did not mean it that way...'ang un guv have I actually defended Euro!

3. Respect..... the definition is "a feeling of deep admiration for someone or something elicited by their abilities, qualities, or achievements". Note the highlighted words. Unfortunately, in this age of Instagram...Facebook...etc....there seems to such shameless self promotion...that respect seems to be manufactured.

Oh...please more quotes from motivational people like John Rolm...that is getting old.

 

Sash,
I don't believe I need to justify myself but I will make your early morning I hope?
1. Custodian webinar listened to it recently have a photo of it on my phone, said:
"2107 Australians have 10 or more properties"
"TOP .00008%ers"
Can copy it for you if you require it further?
I am sure you can obtain this from ABS and acquire such information too or from ATO...?
2. I don't disagree with other views I never have but how can you or he or I know what Jack's true situation is? No one lives with anyone 24/7, wouldn't you agree with that? These are assumptions only or opinions, so if Euro mentioned he assumes Jack is one of those....etc... I would not disagree, but being I don't know what you wish to call it 'cocky' 'funny' 'disrespectful', well mocking someone's journey IMHO it just not plain nice. And I hope we all can be nice.
3. Yes agree with social media or interaction and even self promotion but I cannot assume that all respect seems to be manufactured I believe there are still people around with good and honest values, otherwise we would live in a very sad sad world.
Sorry Sash but I couldn't resist:
Oh...please more 'BS'...that is getting old.
You see to you JR is getting old to me he will never age and will stay in my life forever! I think I read somewhere we can all chose what we read and also what we reply.
Goodnight.

 

Wonderful news about their newborn.... that's going to mean their expenses have increased and he's definitely not stepping away from work

 

Because this isn't my first rodeo. At the time he acquired most his properties, he was working PAYG and borrowed under pre APRA conditions. WE all know that regulations have since changed for assessment rates and living expenses, and that investors carrying large numbers of IO loans were particularly affected. And he was in the middle of commencing a new business , meaning he was changing from PAYG to self employed.... this is especially key in understanding why I have concluded he would have likely faced at least some forced P&I migration. It is very unlikely that having just become self employed, he would have been able to produce the relevant financials to refinance/extend IO at the time of many of his IO loans rolling out - especially under the IO quotas that were in effect at the time, when even deals that passed servicing were routinely declined . And his frugal living expenses would have been ignored at most lenders because of the introduction of HEMS. And those lenders that he could go to with generous calculators have exposure limits . So at every level its likely he faced road blocks to refinancing IO terms, and hugely challenging issues in avoiding at least some P&I migration..... which means it's highly likely his repayments increased substantially... which means the premise of being financially free becomes challenged....

I was very complimentary of his efforts ... but the thread is titled "financially free" not "on my way to being financially free" and implies his efforts have allowed him to reach financial independence at 32. I believe that's unlikely to be true. That's all. Besides the fact he was launching a new business ...otherwise known as working... which would indicate he still needs income from employment - the P&I issue noted above also led me to conclude it was unlikely to be true. I went on to point out that like other celebrated young guns of the past, all anyone seems to focus on is the accumulation, and no consideration is ever given to the holding costs that follow accumulation. But lets be real - no one really goes out and gobbles up 8,9,10 properties and suddenly voila! job done. Not unless they are cash buyers, anyway. `There are the realities of holding periods that follow accumulation phases.... and they shouldnt be ignored in these conversations.

Amazingly, for a sophisticated bunch, PC members are sometimes very generous in overlooking little things like this.... otherwise known as "details" .... in order to drink celebratory kool aid. So again I say- buying a large portfolio pre APRA was a great effort, a wonderful effort, an amazing effort .... but it just isn't quite as simple as "that’s it - job done" . By all means, stand up and applaud the accumulation efforts, because they are really impressive , but let's at least be realistic about what it takes to be really financially free.

 

I don't think I was harsh at all... I was quite complimentary of the accumulation phase

But I was realistic about whether accumulation alone equated to financial freedom...

 

@euro73 I tend to agree with you on this as I've seen people who brought a ton of properties and took a punt when the lending was easy. I knew a couple who got wiped out during GFC.

In the last 15 years, people did well by being bold and leveraging up. A large portfolio on IO would generate cashflow positive.

The trap that I've seen is any combination of carry cost increase, vacancy, repair or interest increase can quickly wipe out the "financial freedom". If there is a credit squeeze in the market like GFC again (unlikely as it may), its the guys with big leveraged portfolios that will get wiped out.

Not to take away from others hard work, it's the story selling of living care free on property investment alone (no inheritance or equity injection by parents) by early 30s..... the numbers never stack up.

Now, if you told that story and included a six digit broker trail per annum then that's different.

TB

 

OK, tym razem pozwolę ci to uciec.
Szacunek. Ali G w domu!

(Hope I got the language correct?)

 

On this I 100% agree.... if people don't have a lot of cash or manage this it will indeed wipe them out.

I hold a lot cash even then ...I am now reducing some of my portfolio for cost/maintenance reasons. At the same time I am building lower maintenance properties in their place..but that is only 1 for every 2-3 I sell.

 

I'd agree - in your early 30s you've got a lot of living ahead and no idea what is in store for you.
Those next 20 years (and more) can be a lot more expensive than you think.

 

Click bait title, but hey at least its a start..... now the hard work begins

holding through various cycles, policy changes, government changes, interest rate rises, softening of economy etc etc etc...... sure we can add more to this

now during this period ..... dont get divorced, get sick or lose your job

sorry just being fascious (sp?????)