Hi from Melbourne

Hi everyone. I have been a lurker for a very long time, from way back during the Somersoft Forum days.

I have been focusing a lot on work and family over the last 5 years, however am getting to the end of my journey and am looking at finalising my exit strategy. before that though I thought I'd give a bit more information about me and my property journey seeing that there are so many generous people on this forum who contribute an awesome amount of information, knowledge and experience.

I’m in my late 40’s and live with my wife and two children. I’ve had many jobs throughout my life including unloading trucks at the local chocolate factory, stacking shelves in supermarkets, worked in construction paving driveways and laying concrete, putting up timber frames and digging a lot of holes.

I then spent time working in a building design office, advertising agency and numerous IT companies.

Throughout all of this time I have been investing in property (buy and hold) and also developing property. On a few occasions I have sold what I built however I have preferred to keep the properties and use them to invest in the next development (I’ll go through the development process in another post).

I’m still working as an employee as I enjoy what I do and I get paid well for what I do. It also affords me the flexibility to run my property development business on the side. The intent is to slowly reduce my hours working for a ‘Boss’, and spend more time with my family and doing other things including more travelling.

The Early year

I was born in Australia to immigrant parents. My parents were not financially literate, they were very frugal and made do with the little they had. As unskilled workers with poor English speaking skills options were very limited. In saying this, we never went without the important things such as shelter, clothing and food.

To be honest, I can’t recall when I first became interested in property and investing. I know that I have been reading property and business books since I was in my late teens and attended a lot of seminars starting in my 20’s. In fact I think it started when my brother introduced me to Amway. We attended the meetings, bought the tapes and the monthly books. The first book was Feel the Fear but Do It Anyway by Susan Jeffers. I still have it somewhere in my library.

It was interesting to attend the Amway meetings and have people up on stage talking about how they don’t sell soap, how to be your own best customer and convince others to do the same, oh and don’t forget to buy a book and a tape on the way out. It wasn’t long before I asked how I can sell the tapes and the books as that is where the real money is made. The room went silent and the presenters made up some poor excuse. It was fair to say that I was never invited back and that was the end of a very, very short lived Amway career.

From here I started to attend more seminars and events about Multi-Level Marketing, Share Market investing, property investing and horse racing software (I attended this one under false pretenses). Boy, were there some scam artists out there. I like to think I have a pretty good bulls*%t detector and there were many events I went to where the hairs on my neck were raised. It just didn’t smell right, and they wanted $9,000 for a training course, but if you bought it on the night you can buy it for a super low price of $5,000 with a very convenient payment plan!

Property 1
This property was purchased for $92,000 at auction in 1993. I remember this clearly because I made an off market offer for $96,000 but the Agent advised the seller not to accept and wait for the auction. Once I was the successful bidder the Agent approached me and asked me not to tell the seller that it was me that offered more prior to auction.

I had managed to save for a deposit so after all expenses my total loan was around $70,000.

There wasn’t too much to do to the property other than give the roof a paint which I did over a weekend. It rented out within a week for about $130 a week if I recall.

At this point I just focused on paying down the loan and working as much as I could. I sold this property 2 years later for $136,000 because I was getting married and we wanted to buy our own home.

Property 2
This was a beautiful period home that my then wife and I purchased for $235,000 in 1996. We kept on seeing it in the paper and were always curious about it because it was in a nice suburb. After a few weeks of seeing it advertised we finally decided to go and have a look. We were the only people there viewing the property and we immediately fell in love with it. It was advertised at $255,000 however after some negotiation we were able to purchase it for $235,000.

It was a great home and to this day I don’t understand why it didn’t sell for a higher price.

Part of the reason we liked the property was that we both had busy jobs and the house had already been renovated, so the kitchen and bathroom were new (well, almost new) which saved us a lot of time as we didn’t have to live with the inconvenience of renovations and were able to enjoy the property immediately.

The only work that we did was paint the walls and polish the floorboards.

A few years later we moved across country for work and this property became a rental property. It was eventually sold in 2004 for $635,000.

Property 3
This was my first development site. I purchased the property with approval for 3 x 3 story townhouses however I know that I could re-arrange the design and fit 4 x 2 story townhouses. This property was purchased in 1998 for $110,000. There was no rental income with this property as it was an old house that had been used by a printer and was in a pretty bad state and couldn’t be rented out. It took around 2 months to have the new plans approved and during this time a developer purchased the property next door and approached me wanting to buy my property.

The reason he wanted to purchase my property is because I also had a side lane which is the reason I could re-design the plans to accommodate the four town houses. This was achieved by slightly reducing the width of the allotment to allow a bit more width to the lane and also provide a central driveway off the lane. This central access was the critical component because if the developer next door had access from the lane he was able to build an additional 3 townhouses on his site.

Over the next few months while plans and finance were being finalised I was constantly receiving calls from the developer asking if I would like to sell. After about a month of this constant badgering I got fed up and said that if he wanted the property then it would cost him $330,000 thinking that the high price would put him off. There was a short silence and then “OK, no problem”. I essentially made a large percentage of my profit without having to build which amazed me at the time.

I know it would have been tempting to go out and spend the profits however I’m quite disciplined when it comes to money and I rolled this profit into two other properties. One was a great investment and the other was very average.

Property 4
I purchased a townhouse off the plan for $215,000 in 1999. It was close to completion and within three months it was ready for hand over and rented.

There was nothing spectacular about this property other than (I thought) it was in a great location and would rent easily. It did rent easily however the capital growth was very uninspiring.

This property was sold about five years later for $235,000 which wasn’t great but at least we didn’t lose and it free up funds for another development.

Property 5
This property was a block of four x 2 bedroom apartments on a corner allotment in a really nice suburb. It was purchased for $420,000 in 1999.

What made this property unique was that the apartments were managed as short term rentals by a Managing Agent. In fact, I was receiving a 9% yield on this property as it was the managing agent’s responsibility to ensure the apartments were let. Furthermore, the Managing Agent was responsible for maintenance. It was more like a commercial lease but with residential property.

I still received the agreed monthly rent regardless if they were able to rent out the apartments or not.

I really loved this property, it provided great cash flow and had great capital growth.

It was eventually sold for $820,000 five years later as part of the divorce settlement. Shame really, but at least I took the profits and put it into another development.

Property 6
This was a large development site of 1025 square metres in a gorgeous historical area. This property was purchased at auction for $417,000 in 2000 and was rented for 12 months while we organised plans and approvals.

It was the last crappy little post war home in the area surrounded by beautiful 100 year old homes so the local council were very happy for it to be knocked down and redeveloped. It had a rear lane so there was no need to put a garage or driveway at the front allowing for a lovely designed pair of homes to be built.

The local council requirement was that each subdivided allotment needed to be a minimum of 550 square metres, however with a bit of negotiation and working with the council to ensure the design suited the street-scape we were able to get approval for 2 x 4 bedroom homes on two individual allotments.

Although I was able to get finance for the property and the build, I decided to sell one of the homes off-plan. This helped reduce my risk and allowed me to allocate funds to other projects. It was sold for $687,000 with $225,000 being for the land and the balance of $462,000 as progress payments throughout the build.

I still own the other home and is currently valued at around $1,300,000 generating a yield of 6.4% on original purchase value of $548,000 (I took the profits of the sale of one of the homes and used it to reduce the loan).

At this stage I am considering selling this property to try to realise some gains, however all market indicators are showing that this area is due for another growth phase. It’s been a bit flat over the last few years, so I’ll probably hold onto it and see what the market does in the next 12 months.

Properties 7 & 8
Around 2002 we also purchased two off-plan properties as part of a buy and hold strategy. Although there has been some capital growth the cash-flow generated is quite good. Purchase price for these properties were $195,000 each and were achieving around 11% yield prior to taking out some equity to put into other developments.

Currently they are returning a yield of 7.2% and are estimated to be worth $400,000 each.

Property 9
In late 2003 we relocated across country for work and I immediately started to look around for new development opportunities and came across a deceased estate which we were able to purchase off-market for $400,000. The sale completed in 2004. We rented this property for 12 months while we were getting approvals and organising finance.

We built a ground level 3 bedroom home at the rear and a two storey 3 bedroom home at the front of the allotment with a common driveway down the side. Construction costs came in at $525,000 for both homes, and valuation of the properties upon completion were $540,000 and $680,000.

I still own the ground level home as is valued at around $1,000,000 now, maybe a bit more, and my ex-wife still owns the one at the front which she got to keep as part of the settlement. I would estimate the front property to worth around $1.2-$1.3 million.

I drew some equity out of this property to put into my next development.

Property 10
I purchased this property in 2008 for $620,000 and rented the property for 12 months while plans were approved and construction finance was organised. Construction costs came it at $580,000 for both with a completed valuation of $780,000 each.

These properties are still in my portfolio and have achieved excellent growth and are now valued at around $1.2 million each.

Property 11
In late 2009 I met my now awesome wife and in 2010 we purchased a home to live in. This was an off- plan purchase for $850,000. We lived here for almost 4 years before work took me to an overseas posting at which point we rented this property as a fully furnished executive home. Yield at the moment is around 7% and its value is now estimated at $1.05 million.

Property 12
This property was my wife’s previous home and was purchased in 2005 for around $380,000 and is currently valued at $680,000.

Where to from here? We're finalising our exit plan, along with me working until I'm 60 (I still like what I do and get paid for it pretty well), however if we can bring this forward we will.

In summary, at this stage our portfolio is valued at $7.2M. Our LVR is 50% and we are focussing on paying down our loans while we finalise our exit plan.

So, that's my story. Happy to answer any questions, however if any sensitive questions please PM me.

 

What an epic journey, congratulations!

 

WOW, is all I can say. You my friend are an inspiration.

Congratulations on all your success. You've done the hard yards, so I say definitely bring the retirement forward.

Then sit back, relax and enjoy.

 

Congratulations, well done there.