Financially free at 32 – My 10 year property journey

Just using CommSec at the moment. Signed up when they had the 10 free trades deal or whatever it was at the time.

Given I trade very infrequently I couldn't be bothered switching to low-cost options such as CMC markets.

 

Well done - congratulations on your achievements

 

Thanks @Phil_22 for the kind words.

I wouldn't say that I sacrificed anything, but definitely did ALOT to maximise savings and directing about 70% of our combined incomes towards paying down PPOR debt and investing. Here's a few examples of things I did:

• Lived at home with parents until I got married (partner was the same)
• Rentvested for about 3 years after getting married
  
• Bought a reliable Japanese car second hand and have had it for over 7 years now
• Bought a modest old house for our PPOR and have been slowly renovating it to suit our tastes
• Always shopped around for the best deals. e.g. electricity providers, mobile providers, insurances etc.
• Buy pretty much everything online from overseas: mobile phones, books, clothes, brita water filters, ink cartridges etc. I pretty much avoid buying from local retailers due to the huge markups here in Australia (apologies if this offends anyone)

Yes we celebrate all the time! Everytime we hit a financial milestone we'll celebrate by going out for a nice dinner. Makes all the sacrifices worth it!

We also travel at least 2 times a year and recently took about 7 months off work to focus on study and travel.

 

Don't borrow to your limit. The lack of a decent buffer to cover the mortgage (int only) payments while trying to sell the finished development was our undoing.

 

Awesome work jack, thank you for sharing your story ! What are the key factors you look for in the suburb and property type when you choose your i/p's ?

 

Well done Jack!
Great timing (a bit of luck there too, but u gotta be in the game to get the luck) focus and discipline.

 

Thanks @Piston_Broke! You've got to be in it to win it!

I do feel that I'm lucky in the sense that I was able to invest in Sydney prior to the boom and that Sydney is my local market. Had Sydney already boomed and I was forced to go inter-state for the first purchase, looking back at my mindset at the time, I'm not necessarily sure if I'd be able to overcome that barrier due to fear.

 

Thanks @NGK86!

In terms of suburb selection, I tend to focus on the fundamentals:

• Proximity to shops/transport/schools etc.
• Proximity to jobs - CBD, satellite CBDs etc.
• Demographic profile
• Vacancy rates
• Yields
• Infrastructure spending

I then try to purchase properties that are under the median value, which I can add value to through cosmetic renovations. I tend to focus on low maintenance properties where possible, i.e. lowset brick and tile in order to reduce headaches going forward. Set and forget style investments.

 

Investing of course, not the lottery.
I do like reading these stories as around that period so many younger people around were saying RE is dead and I was like the ole dinosaur who should sell out "while i still had the chance" every time I'd say "it looks kinda cheap atm".
Now I hear the same people are complaining about how bad it is and that they will never own a home. And now I'm the ole grumpy "told ya so!" dinosaur to them lol.

 

Thanks for sharing, a lot of valuable information in here.

Are you able to elaborate a bit on the LoD side of things? Is the aim to have a fairly large dividend payment so that you are able to sustain the entire non-dividend payment period (eg. 6 months?) without other sources of income if the plan was to retire "today"?

 

Very inspirational story, well done!

Yes it was partly "luck" that property prices boomed, but you stuck to your guns and invested during a time when most cowered. No risk no reward!

 

Lol so true. I'm still saying this even in the Sydney market. As an example, 2 bedder units in Homebush walking distance to train station, 25mins to Town Hall and Paramatta, for under $650k is still a bargain in my view. Insanely cheap in the context of (landlocked) international cities.

 

Hi @diagnostic Yes you're absolutely right, bi-annual dividend payments to fund retirement. Can definitely make it work with some budgeting. However, I'm quite conservative so I'd want enough of a buffer in place so I would need a fully paid off PPOR and at least 2 years living expenses sitting in offsets. This is assuming I wanted to fully retire and never work again.

 

Great job Jack Cat Café Chen. Must admit I'm a little envious but EXTREMELY inspired. Enjoy your success pal

 

Thanks @Jack Chen - makes sense, I was actually contemplating this the other day and for diversification purposes I think I would have at least one or two reasonable IP's still for rental income, paid off PPOR and the rest like you say in dividends. Market fluctuation in shares is my only "concern" so to speak so still having some IP's would help in this regard. Either way, you have done well so look forward to seeing how your portfolio progresses and which path you take.

 

Actually I've grown attached to my Sydney properties. It would pain me greatly if I were to offload them.

It helps to focus more on the dividend income stream. Some of the LICs were able to maintain their dividend payments despite the huge drop in capital values during the GFC.

Where are you at in your journey?

 

Here's a link to the podcast interview and transcript featuring @Jack Chen

The investment strategy that could allow this 32-year-old to retire TODAY

 

Hi @Jack Chen,

Thanks for sharing your story. I listened to you on 'The Smart Property Investment' podcast and then looked you up this forum.

Your story sounds like I am reading about my own journey (Except totally different numbers), which could be due to the location variance (Sydney v Hobart).

I also started my journey after reading 'Rich Dad, Poor Dad', which flicked the light switch. Although I don't endorse Robert Kiyosaki and his investing mantra anymore (Read JT Reed on Rich Dad, Poor Dad and other gurus), I do believe the book does help people get an understanding of Wealth.

I now, like you are consumed with Financial Freed/Personal Finance blogs and podcasts (MMM, Get Rich Slowly, Early Retirement Extreme etc.) I not listen to 'Radical Personal Finance' with Joshua Sheats, which has some great info and intriguing interviews.

My story is similar to yours. I started investing in 2009. My strategy has involved flipping, cosmetic upgrades, small res developments and holding some IP'S. I am now at the point where I think how can I generate more of a passive income, without dealing with paper work, maintenance and all the other active tasks involved with holding properties. My wife and I currently rent (inner city) and have a two year old son. She works part-time in order to spend more time with our son during the first five years of development etc.

So I have liquidated some of our IP'S as we are at the peak of the market in Hobart and I want to cash in at the top and invest in Dividend Shares etc and also look at investing in property in another market, such as Perth as it has bottomed and may offer some good buying opportunities, that over the next five years could see some good growth, once the market enters recovery mode. And the growth in Hobart once this boom ends over the next ten years will probably struggle to outperform inflation.

Our burrowing capacity will not allow us to buy in Sydney or Melbourne at this point, so Perth or Brisbane it is, once I find suitable Buyer's Agent and a new Investment Savvy Broker.

What are your current long-term views around Dividend Shares. Are you planning on liquidating at some point and just holding a diversified share portfolio and living of the dividends. What type of mix will you be using (ETF'S, LIC'S and Stock's as you currently have?) How do you choose which dividend companies to invest in? Do you do research or do you just invest in the Blue Chip Dividend Stocks of the ASX (Telstra, Commbank, BHB etc?) or long-term are you thinking a mix of Dividend ETF'S, Bond ETF'S and Cash for diversification etc. similar to MMM and other Personal Finance Bloogers who are financially Free? Or will you always hold property and shares and ETF'S?

The more I think about it, I tend to lean towards using property as an active strategy to build wealth (Buy and Hold, Renovate, Cosmetic Makeovers etc), then liquidate and invest in a Balanced ETF portfolio for income. I think investing in individual companies could offer better returns, but I am not sure if I am competent enough for that and ETF's seem like a safer option and a more passive option, as investing in companies requires regular research, monitoring etc.

Love your knowledge and aptitude towards investing and using different vehicles.

Look forward to hearing more.

Thanks

 

Is it really 25 minutes to Townhall from there? (I'm talking not changing to a Strathfield express train). My understanding is that Homebush station trains are basically inner west all stops to the city....

 

@Jack Chen what LIC's do you use?

In LIC do you mean someone like the motley fool etc? I have not really learnt much about LIC's would love to hear how they compare to ETF's and direct shares.

Thanks