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My journey so far

Discussion in 'Investor Psychology' started by Omnidragon, 17th Nov, 2015.

  1. Omnidragon

    Omnidragon Well-Known Member

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    A few have asked me what my story was and how I got onto property. Thought it might be interesting to share a bit of my property/general investing journey.

    My folks are a first generation migrant family and have been small business operators for as long as I've known (at some point probably reaching medium sized businesses). At various times they've invested in properties - albeit they are late comers and probably didn't really start investing until their early/mid 50s. Before that they made some small investments here and there - maybe a flat here or a unit there, but always sold out quite early and never held these things for more than 5 years+.

    So I had basically grown up in a business and investment environment. Parents weren't strict with money, and never really taught me about managing money or investing, but I probably picked up bits and pieces of mindset along the way and shaped it to my own needs. Dad's view was actually quite different from the way he lived life. Despite having made his living off business and investing, he always advocated studying well and getting a good job . Mum's view was simply do what you enjoy and if that's travelling, then you should go do it.

    For me, I did the whole "study, work when I have spare time and get a good job out of uni" routine. Started a few small business ideas (tutoring, programming) while at uni and dabbled in a bit of share investing as the mining boom kicked off in 2004/5 - got a little lucky and left uni with a small capital base (probably $100k or so). At 22, I got into what was a relatively well-paid job in my first year out. So in that sense, my journey is hardly that inspirational as I had a decent income and some capital. But I worked very hard for that income - probably a function of the industry and its people. Hardly left work before 12am each day.

    When I got into my job, I was pretty sold on the whole do this for 10 years, get promoted mentality. I knew I was getting myself into 80 hour work weeks, but I thought what the heck, if I don't do it now when am I going to do it. But after a year or so in the job, I just absolutely hated it. Hated going in at 8am, having a 15 minute lunch and working til 1am Mon-Sat, and eating dinner at my desk at 8:30pm. And this was very day. I eventually left my job a bit into 23, pretty lost on what I was going to do. I went into another industry (I had a double degree from uni), and did not enjoy it. Did 4 months of that and left. Eventually found another well-paid gig (for a 23 year old anyway) in the same sector I started out in, but by that point I was quite jaded by the industry. This I think was a tad after GFC (which I was lucky to come out unscathed of, as I had sold my shares in early 2008 to avoid conflicts with my job).

    With a bit of capital and a bit of income to support borrowing, I started thinking about what I was going to do and that's how I ventured into my first property plays, since I figured out I had no interest in working til 2am everynight so I can make a million bucks at 40. I remember at the time one of my best mate's dad (who is a successful subdivider in the state) told me property markets were going to fall through the floor because of GFC and I was pretty scared about it. Took me around 6-8 months looking for my first place, no thanks to that advice. Eventually I found a house in a very blue chip suburb in Melbourne (called Hawthorn) that was being sold by a church group for I think $900k. It was a pretty big house (some 700sqm), in a good spot (2-3 small blocks away from a train station and uni), but I remember at the time thinking how expensive that was. Eventually I convinced myself to buy it - negotiated the price etc and the church agreed to sell it to me for some 850k or so. A week later, the head guy in the church changed his mind and wanted to test the market at an auction. Then baam! It went for $1.5m at auction. I thought to myself, wow I could've almost bought that place for $850k privately and probably took it to auction myself and made $600k tax free like that in a few weeks. This was early 2009. I quickly realised these blue chip eastern suburbs have run/are going to run, so I quickly went to the inner city area to look for places. 2 weeks after missing this Hawthorn place, I snapped up a double storey house in an inner city area for much less and added to the portfolio again shortly.Then of course came the 2009-10 Melbourne boom. Since then I got addicted, and basically averaged around 1.5 properties a year. Made some capital growth here and there (including that first place) between 2009-2012.

    Then came the slump of course in 2012. I remember at the time some people (who knew I was holding a few places by now) telling me I should get out of the market, because it was going to fall on its knees as mining boom was ending and Australia was going blow up (all doom and gloom theory). Of course, they were right that property prices were weak at the time and there were places everywhere in Melbourne transacting for a bit - sometimes a lot - less than what they would've sold for in 2010/2011. This was luckily countered by some good wins on shares at the time as there was a mining/mining services prolonged 24 month dead cat bounce. Being reckless, rather than listening to my friends, I went out and geared up even more, did some even bigger buys buys with refinanced equity and some saved up salary (at that point I had a pretty high savings rate of some 80-90%). I started stepping out of my comfort zone and was doing buys so big I wouldn't even have considered only 6 months earlier. But then again, I thought what the heck, yields made sense and if things were really as bad as what everyone says, wouldn't rates come down? Probably because of luck more than anything else, things played out this way as we now know, except that the 2013/15 boom happened a lot faster than I expected.

    This year I hit the big 3 and with the benefit of the equity behind me, now have enough to live a modestly comfortable lifestyle, and have for some time replaced and surpassed my work income even if I simply cash out and collect share dividends or interest from the bank. Of course, this isn't my goal/intention and there are still a number of things I want to try to do.

    If you've gotten this far, thanks for reading. I used to be a lot more active in SS, but must admit have not been so here as other things in life (and websites) have taken over recently. Will hopefully come back in due time and update.
     
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  2. MRO

    MRO Well-Known Member

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    Do you mind letting us know how many properties you have acquired? Did you sell/develop any along the way or was it a pure buy and hold strategy?
     
  3. Xenia

    Xenia Adelaide Property Manager Business Member

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    That all sounds so famiar lol
     
  4. mrdobalina

    mrdobalina Well-Known Member

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    Sounds like your first job working til midnight every night was either investment banking or management consulting.
     
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  5. Omnidragon

    Omnidragon Well-Known Member

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    Barely broke into double digits. For what that's worth tho, certainly a believer of quality over quantity.

    Yes have sold recently. Might sell 1-2 more. Never developed. Numbers never quite made sense on existing land, as it comes out marginally better than selling for all the risk and effort. And have never bought to develop.

    Yes right industry. Gruelsome places good eye opener and maybe training ground but that's kind of it.
     
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  6. mrdobalina

    mrdobalina Well-Known Member

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    I know what you mean. You either become a lifer, or it completely burns you out.
     
  7. MTR

    MTR Well-Known Member Premium Member

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    Fantastic, I have always enjoyed your posts, very interesting and informative

    Congratulations on financial freedom and so young.

    Please keep posting on PC we need this:)

    MTR
     
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  8. Starlite

    Starlite Well-Known Member

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    Well done Omnidragon!

    Very inspirational.. :)
    How much yield were you getting from the blue chips areas in your initial stages?
    Weren't they highly negative? Most of the blue chips areas have good growth but not enough rent to support the mortgage..
     
  9. Michael_X

    Michael_X Mortgage Broker Business Member

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    Enjoyed your post Omnidragon, thanks for sharing!

    We had similar experience with corporate jobs. I guess when the want is strong enough, one will eventually find a way.

    Cheers,
    Michael
     
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  10. sash

    sash Well-Known Member

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    Congrats....

    @Omnidragon did you have the handle Deltaberry on SS??
     
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  11. Biz

    Biz Well-Known Member

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    Noticed a few people with good corporate jobs paying big money seem to be over it at a very young age. Is it that bad? I have no concept of that world but it always struck me as high flying and interesting so hard to grasp how people get over it.
     
  12. MTR

    MTR Well-Known Member Premium Member

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    I know a couple that fit this, boundless energy, never sleep, sometimes they are wasted in the corporate world and have ability to make far more money starting business and calling the shots.
     
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  13. mrdobalina

    mrdobalina Well-Known Member

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    It's over rated. The politics of the rat race wears you down pretty quickly.

    Interestingly, most of these people don't have much investments. The higher salaries just go to creating a higher cost facade.
     
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  14. sash

    sash Well-Known Member

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    Absolutely correct......most have huge egos...the politics are hilarious...and finding someone with a backbone.......who will make a decision few and far between.

    Still nice place to earn some coin to increase portfolio.....
     
  15. Omnidragon

    Omnidragon Well-Known Member

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    Yea so I had to be quite selective. Also had a good buffer under the salary. Don't forget some of my early buys wouldn't have that low a yield, it was easily into the 6 yields. Certainly not the 7 plus yields some only target here but I think we all have quite different investment styles.
     
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  16. Omnidragon

    Omnidragon Well-Known Member

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    I've hid him in the basement now. He's now a stock picker
     
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  17. Omnidragon

    Omnidragon Well-Known Member

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    No it's not that bad. Some people thrive in this environment. I was OK at it. Didn't get huge bucks but got paid alright and didn't work very hard by the end. I'm not sure if it's high flying. All depends who is looking at it.

    I mean there are guys making say a hungy grand a year and feeling great about themselves. There are guys making a million bucks and quit their jobs because they find it too slow. I'm probably in the middle. I don't feel great about what I do, nor do I loathe it, nor am I making a hungy or a million. I think depending on your personality there is a time and place for this stuff but at some point you just ask do you want to do this for another 10 years and does it get me where I want to go. And the answer was probably it didn't.
     
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  18. sash

    sash Well-Known Member

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    ...and Omni seems so much more modest...and very zen!.....bring back the Delta!:p

    On a more serious note where about in Melbourne did you buy?

    I am headed to Melbourne to pick up a few more lower end...love those.....
     
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  19. ashish1137

    ashish1137 Well-Known Member

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    I am eager to look at the responses.
     
  20. trinity168

    trinity168 Well-Known Member

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    Congratulations Deltaberry! Is my understanding correct that you had 1 or 2 property booms, plus stock market plays has set you up for d-day of early retirement?

    Thanks.