Learn from my mistakes- follow me through the purchase of my second IP

Its another justification for people to make themselves feel better . They don't want to admit that they haven't put in any real time or effort to understand the game. The information investors have is available to anyone, anytime. We buy Rpdata...they buy their next upgraded car.

 

Time covers up a lot of "mistakes" in property.. There is realistically a 30+ year trend in Australia now where if you bought within 25-30k of one of the big 3 east coast cities (and a lot of the other cities, as long as they aren't single industry towns) & sat on it for >10 years, you've made money.

Whether or not you could have made more elsewhere, or whether or not it was actually a matter of being a savvy investor or a gambler who took on a tonne of debt & rode the wave or inflated the debt away, is another question.

Decide where you think the market is going and think long and hard about the risks of your planned strategy.

If it pays off, come back in 10 years and brag about your wins.

If it doesn't pay off, do another "learn from my mistakes" thread, this time with long enough time frame between purchase and post date to actually know if it was a mistake or not.

 

Leo2413, you are so right, about what every person will do with their money! Perhaps you heard recently they did an experiment or a survey, where they asked 5,000 adults to write down in one minutes what they would do if they just received $10 million.
Now ask yourself, what would you do, in just one minute, I actually started thinking I would borrow another 50% and invest say 80% of it, that was my very first thought!
So when I listened further I found out that only 7 adults out of 5,000, wrote they would invest portion of that money, ALL the other responses where LIFESTYLE responses, such as buying a house, going on a holiday, buying expensive cars, jewellery, giving some to family or kids, etc..... Basically, 99.86% of people would chose to spend the money on LIFESTYLE decisions or habits, only 0.14% really would invest most of it..... Hence.....great lesson, what most of us don't realise it is our attitude towards the money or our habits that really require rethinking!
I don't know about you but I was always told, if you don't value little money you will not know how to value large sums of money, by my family, hence it sort of stuck with me! Now I did practice frugally this concept of delayed gratification but spouse has changed me over the years to enjoy part of the nest egg we grew. However, that's where most don't realise that it is now those golden gooses who lay the eggs for me to spend, so passive income that now can provide for those luxuries, not the ordinary earned income from a job or being self-employed.
I think that's what most people don't understand is that Rich people save their money (and invest) and spend what's left whereas the poor spend first and try to save what is left. No disrespect for people just to differentiate to make the point of difference....

 

Great thread, thanks for sharing.

I will only add.....not to worry too much about the product but more about market conditions where you are buying. Focus on strong markets and the trend will work in your favour.

Good luck...... bad luck.... I believe you make your own luck



MTR

 

Hey Nick,

Feels like you're being hard on yourself, we've all been there and made a mistake or 2, seems like you're doing well.. A few things, comments and suggestions:

# 50K passive income by 2028, do you feel you're aiming high enough? How many properties will you need for this, what's the strategy around the how and what's your why? I've gotta work on the questions I've asked myself and my goal is a lot higher and only a year later than yours :O ha

# What's the purpose behind getting a 20% deposit? While taking on more debt isn't for everyone and depending on where you're looking, you're looking at saving at least 100 - 120K to do that, 10% I can appreciate although 20% you're likely to see capital growth outstrip how fast you can save depending on income, area selected etc.. Sure you avoid LMI at 80% LVR although LMI is the cost of doing business

Interested to read the rest of the thread and good on you for putting yourself out there!

 

Long time no post. But I'm back after an extended break. Thanks everyone for the lively chat. Absolutely loving the feedback.

A quick update in the last few months. I got married/went on a honeymoon/ went to disneyland/travelled back to my home town over Christmas.

ALOT has happened in that time as far as my goals and priorities, with the help of people on this forum and others, my wife and I have decided our next purchase will be our PPOR- this makes the most sense for us right now.

This purchase will become our 'capital growth' property as well as our home, and one we intend to do renovations on to create equity quickly, Ie we will NOT be buying new or off the plan. Would love to hear from anyone that has used equity from their PPOR to help build a portfolio.

We love Queenslander houses and will be targeting middle/inner ring suburbs of Brisbane that have good fundamentals for CG. We want a combination of land size, Queenslander style house and renovation/value add. If you see anything you think might interest me feel free to PM. Even though I'm scouring realestate.com on a daily basis.

This strategy will allow us to concentrate on acquiring CF+ IPs to balance the portfolio over the next few years while we are still unencumbered e.g. no 'bad debt' and no dependants.

While we were back home we made an offer on a property North of Brisbane CBD, which was unfortunately rejected after some negotiation. In my opinion the vendor was asking far too much. Any advice on negotiation would be greatly appreciated- I'm trying to figure out if a different approach may have worked better so I know this for next time. We did communicate our settlement terms were flexible. But it seemed money was the biggest driver for the vendor.

Our initial offer was about 100k under the advertised price. When we made our first offer we spoke to the agent and sent a list of 3 recent comparable sales in the area which ranged from 650-680k. FYI we didn't have pre approval before making an offer.

Our final offer was 680k which IMO was a fair price for the property and this was rejected because the vendor wanted to achieve at least low 700s. There is potential for the vendor to come back to us and re-negotiate at a later point in time.

An update on my unit in Brisbane
Recently revalued @450k - drop of about 30-40k in value in the last 12months. Not unexpected with the saturation of units in inner city Brisbane, and on the positive side I'm very glad we took equity out while we had the chance. Its much better in my hands than the banks IMO.

I also rang the bank and asked for a discount on my current rate which was reduced slightly. But that one phone call saved me roughly $500 a year.

Hope you all had a great Christmas and New Years. Happy investing.

 

Re: missing out. Vendors have different motivations. Some might need to sell urgently. Others are happy to wait for an offer meeting their expectations. Sounds like you met the latter. They may come back to you later or they may not. I'd say probably not unless they are desperate or their circumstances change.

 

I thought about your post a lot, and I will try to answer your questions.

I've moved away from the passive income goal for now and am focused on purchasing a PPOR. In the next few years I intend to get my portfolio to neutral and then reassess. How many properties will this take? I have no idea.

When I initially posted about having a 20% deposit it was for a combination of reasons the main one being safety. The bigger the deposit the better the long term CF. And also the saving on LMI.

But you've certainly made me reconsider. If the fundamentals are right, the property stakes up and the CF is moving me towards neutral I would be willing to borrow 100% if the bank will let me.

 

Thanks for the detailed response and consideration there Nick!
Ultimately you've got to do what is right for yourself.
Borrowing 100% (without a guarantor in place) especially for Investment purposes isn't going to happen in today's lending environment, you're likely to get 90% depending on where you buy.. All the best and keep us all posted

 

I am waiting for your next post Nick. Thanks for sharing.