How hard was it for you..??

My path wasn't particularly 'hard' as I am the typical investor who didn't know what they were doing. I made it unnecessarily hard for myself.

The lack of planning from ALL aspects probably made it hard. My errors have been buffered by the Sydney boom.

2010 - First IP: easy acquisition from all aspects. REA accepted my offer immediately and got the property as a FHOG and no stamp duty.
2011 - second IP: Also not difficult apart from the REA being a bit annoying.
2012 - 3rd IP was a fluke. Drove past it as I was going shopping and the sister pointed out the 'for sale' sign. Low balled an offer and the agent accepted it a week later.

Lack of planning really showed on the 3rd IP: I forgot about the stamp duty. My solicitor called me a few days before settlement asking if could bring the cheque in the next day! I didn't have $35k in my bank at the time. There was a freak out for a short period. My tax return just so happened to come in that day and saved me.

Now I always include 5% of the property cost as part of my buying calculations. Basic principles but without a mentor or education it's easy to make these errors.

Made the same mistake for IP 4. Slow learner.

Started thinking like a real investor from IP 5 onwards!

Mind you, all these properties were via CBA directly with the lender as P&I. I had no idea what I was doing.
Figured out interest only by IP4 when I started reading property magazines and became familiar with SS.

Got a broker and moved all loans to interest only with other lenders.

Fast forward: $1mil equity + with LVR 65-70% and looking at getting 10IPs by end of 2017.

Long term goal: $10mil equity within the next 10 years. The difficulty and challenge is what makes it exciting.

 

Whichever path you take...its pretty much the case that doing something is always better than doing nothing - major catastrophes and overreaches aside

 

You would think that until you meet people/investors who keep losing money I know quite a few and keep repeating it.

MTR

 

@MTR
Does $1m in equity (paper gain) count? Or are you referring to those who have realised $1m?

 

I was referring to $1M realised, $1M equity is less as you would need to factor in deductions ie selling costs, cgt etc.

But be interesting in anyone who is moving towards achieving this

 

Good quote I reckon.....

Many love to shout out loud how many properties they have bought but it doesn't take brains to buy....selling is the test and most come unstuck.

I think it was Jenman who said that.........

Anyone with $1M realised is at least the real deal......nearly anyone can 'control' $1M of property these days......just go to a property seminar if you don't believe me

 

ah.. I don't really get this....does that mean that all the good deals I bought... didn't require any brains..

and if I decide to sell after buying well etc.. then that's when I will run into the most difficult part ....

I don't really get that quote to be honest unless I'm not interpreting it right...

 

decibels of disenchanting discourse continue to dampen the day ....

 

Not at all Leo.....think you may have applied your own personal slant on this. By all accounts you are a successful investor so don't think this would apply to you at all.

The point is that anybody can go and buy $1M+ worth of property.....even me. It doesn't mean they paid FMV or got a good deal, doesn't mean they bought in a sensible area with good capital growth, good yield and upside potential......doesn't mean they have any real idea about real estate investing whatsoever. It simply means that if you have enough initial capital, you can be a property millionaire 'equity wise'. Surely Moranbah is a classic example of this?

Becoming a property millionaire 'realised' is a whole different ball game and that's where the education and intellect comes in......selling assets to realise those gains when the time is right. Sure, sometimes luck is a huge player in any financial market but those who know their stuff (as you do Leo) get this right more often than not. Smart investors would also more than likely purchase at the right time and at FMV based on good fundamental research.

The point is anyone with enough start up capital can be property millionaires on paper but 'realising' is a whole different ball game.

You sound like you definitely know how to play the game well

For example, if someone had say $600K in the bank but had never bought a property, they would not be seen as overly successful. Yet, if they went and purchased $2M+ worth of property with an LVR of around 70%, they could be seen as a success story and shout it from the rooftops, even though they could potentially purchase complete dud properties.

I just think the 'equity' when leverage is involved is not as reliable an indicator with respect to success as is actual 'realised gains and cashflow'.

 

First million..............Simple but not easy.

Now...............still simple and now easy and being in Paradise most enjoyable thank you.

Time for a coffee

 

Ohh gotcha buddy. When you expand it and explain it then it makes sense to me. Its just from that quote alone I couldn't really get what you were saying.

 

No worries Leo.....my post was just meant in reply to the 'equity' vs 'realised' question that was raised.

My post was not meant to dampen the success stories in here....there are some really good ones which I quite like.....including yours @euro73

I just don't get some of the tall stories.....particularly those listed in property magazines and hyped as seminar success stories....where once the leverage has been taken into account, not to mention any CG and selling costs...it really doesn't necessarily appear to be....and the location is a huge factor as we all know.

 

All good @Gurtofen

 

This resonates with me. My fathers words exactly.

 

My father used to tell me..."if you can't make money in Australia, your an idiot boy".

He was really tough on me. He was right.

 

Whilst I don't disagree it's hard to make money without equity. But if you sacrifice and have a decent job it's not hard to save up $20-50k. I am 13 months in to a 24 month plan starting with $50k equity and have amassed $400k equity and by month 20 (4months early) should hit my target of $1M. I note this will be part realised tax paid and part property equity unrealised no tax paid. But I don't see the point in realising it and paying tax as the goal will be to pay down the IPs and LOR eventually.

 

That is truly a fantastic result in a short period of time and just starting out. ..

Really amazing. You must be quite focused and partly obsessed to have done this well this quick and starting with 50k i reckon.

 

Obsessed yes. And you have to remember I've been managing developments for years so experienced on a bigger scale with other people's money.

In a way the plan has been 10 year plan just didn't take the first steps. Was stuck in the live life phase and whinge about how hard it is to invest. I managed to travel every year and drive a nice car though lol. Anyway nothing like having a couple of kids and dropping a salary to focus your wealth creation goals. I sold my PPoR realised my $50k, and jumped into a couple of JVs with business partners. I'm currently constructing my first two IPs on lots I kept in a development and a 4 unit development site that I will be selling (well two sold OTP already).

 

Equity, or total portfolio value?

 

equity. Total portfolio would be $3m