Starting 0 to 30k to 140k in 15 months

Discussion in 'Investment Strategy' started by ashish1137, 11th Jul, 2017.

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  1. ashish1137

    ashish1137 Well-Known Member

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    Migrating to Australia in Nov 2014, I entered with a dream to make it big. What I learnt is that, this is a steady progress. You achieve what you achieve in the mid-way but goals should always be long-term. I was always keen on researching for things before buying. This was when I could not afford much and hence, wanted to find the best value for money. In order to achieve that, I ended up gaining knowledge in the field/ domain. Starting with your first mobile, then second or third and still continuing to figure out the best suited to my needs rather than with numerous features in the market. Starting with my first car and moving on to second and finally third in Australia. Set criteria, conditions, list objective and then start research and narrow down on the options one by one. The principal holds good in each area of our life and you get a lot of people who can assist you in the way. However, the final choice and responsibility is always yours.

    I started investing in property in 2005 with support of my parents and the investments turned out to be too good to believe. The interest developed from the first investment and I was a keen learner and good with numbers since beginning. I learnt the ways, prices, tracking prices from memory. There were not much of statistics back in my country so everything was based on memory and your own observation. However, few of my investments and parents’ investments gave ample lessons and I could use them in my life.

    After coming to Australia, I started looking for an investment during mid-2015. I figured out that Sydney was too expensive and there was a recent growth spurt, so started looking for other alternatives. This was all before I started learning the fundamentals here. Luckily, tumbled upon a professional investor and mentor. It is easy to follow the footprints of someone who has proved their worth, while following the principles that they preach than someone who does not puts their money where their mouth is. From there, I learnt on how to find the information, this wonderful blog, how to use the statistics, how does properties work here, cycles, states, suburbs, markets, markets within markets, magazines, being ahead of the curve, mortgage, principles and what not. I learnt on how the numbers worked, deposits, LMI, Redraw, valuations, PPOR, IO, PI, etcetera. I have spent a lot of time reading books, posts, blogs and books. I have sometimes argued with some well-known members just for the sake of learning. Finally, there comes a time when you have to decide and put all your theories to test. Then you keep on questioning yourself. Has it worked?

    ==============================================
    Numbers on property start here
    ==============================================
    I am here to inform that it really worked. Going against the notions of many, this purchase was about 65 K’s. from the Melbourne CBD. The first property (technically second purchase) of mine which is almost ready and occupancy certificate about to be applied. The purchase and the numbers are listed below and I hope it helps everyone to know that they can follow their goals and I am sure it will work out well for everyone if they are backed by sound knowledge and support.

    The corner block (232 sq mt) booked around March 2016 for 105k (I upgraded from 197 to 232 in just 5k dollars) and 3 bed, 2 bath, 1 garage custom build (14.5 sq) on the land. The total cost of the land and the build is about 280k. The land was titled around October 2016 and build started in Jan 2017. The house is almost ready to be occupied and I recently got the rental and property appraisal. To my amazement, the rental appraisal came around 385 per week and appraisal around 390k+. I cant help myself in quoting that the agent advised to keep it for a year more for further better returns. My target while purchasing property were simple and as other investors target:
    · Minimum 5% rental yield.
    · 10-15% immediate growth.
    · Well below median.
    · Property targeted at the lower end of the market.
    · Property near to all amenities.
    · Best suited product on the land or the market or both.
    · Near to the station and other infrastructure.
    ====================================================
    Numbers on property end here
    ====================================================

    /**
    Note
    : There are a lot of other expenses like interests, stamps, LMI, water/ electricity bills, miscellaneous expenses. I should also highlight that this is not liquid cash rather value in terms of current cost of the property. This valuation has been done from one of the Property Agency so bank valuation may differ. However, the point that I am highlighting here is: “It is never late. You just need to change your way of achieving the objectives”. This is being preached by most of the investors and everyone is following a different strategy. In this case, I moved to a different state and out skirts and targeted property at lower end of market. Even adding all costs, they should not go beyond 12-15k. I know there will be a lot of critics and appreciators. However, without going into too much details on the purchase and suburbs, I am happy to answer any question that any one of you might have.
    **/

    I know that I still have a lot to learn and I do not say that I am an expert. There are countless factors namely; time, cycle, luck, deposit, mortgage approvals, availability of resources at every stage of your journey. However, most of them worked in my favour and my first property in Australia has turned out to be my second-best investment. Hence, the title from 0 to 30k (which took me some time to gather) to 130k (including increased valuations and deposit).

    Lastly, I would apologize for such a long post. Through this post, I would also like to thank some of the members from whom I have learnt a lot. Primarily @sash , @melbournian , @Cactus , @MTR , @Leo2413 , other moderators and a lot of other members who have contributed to my knowledge so far. I still have a lot to do and learn and have put breaks on investing to concentrate on my job. However, I will keep on posting numbers as and when anything else is ready.


    Thanks and Regards
    An investor (upgraded from a newbie)
     
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  2. ashish1137

    ashish1137 Well-Known Member

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  3. VanillaSlice

    VanillaSlice Well-Known Member

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    Hello Ashish,

    That's a great achievement & well done! which builder did you use ? Was the building experience good & stress free for you ?
     
  4. melbournian

    melbournian Well-Known Member

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    @ashish1137 congrats - you were right to choose a H&L in Melbourne (stick to real fundamentals)
     
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  5. VanillaSlice

    VanillaSlice Well-Known Member

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    Hi @melbournian,

    Did you do any H&L packages in the western area in the last cycle ? I noticed sometimes after 2009 (can't remember what year exactly) there was a glut of new houses in Tarneit listed for sale in the mid-high $200k range and rental yield was quite low....

    I'm looking into doing H&L in melb now as well but a bit worried about the potential supply and reduction in demand once the population boom tapers off....You sound very familiar with the Melb markets, what are your thoughts on the remaining potential growth in the surrounding areas ?
     
  6. melbournian

    melbournian Well-Known Member

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    @VanillaSlice - I did a few H&L in the western suburbs of Pt Cook. at the time I did ard 13/14 - really pt cook did not move my ips were starting with a number "3" and no movement. Now it has gone from a "4" to a "5" and edging towards a "6" When I went to the estates back then I could demand a big discount with bunnings and woolworths vouchers and. With Melbourne population booms and changing demographics.- estates now are selling very quickly - why not investors but new OO - who want new houses for having a family and also affordability if you compared to Sydney. some ppl will say a lot of investors are looking into a certain suburb but more investors mean more rental. Where else in pt cook - there are home owners (I sold one of the ip) - 10 offers and a few contract of sales signed up and on the table (I have sold ips in the past) and was very surprised as in the past it wasn't like this. sold within 2 weeks. These were FHB not investors. There are ppl lining up with their dogs in torquoy for crying out loud nowadays. New infrastructure such as schools, small shopping plazas helped fuel the growth. Tarneit has a very big indian demographic - and they will play a role in the prices and demand. When I went to Werribee one stage it sold out and similar with a townhouse development in pt cook which I went to look. you would have to research the best areas and take time to see what suits you.


    upload_2017-7-12_10-46-10.png

    back then when I bought still lots of empty plots

    upload_2017-7-12_10-48-31.png
     
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  7. Cactus

    Cactus Well-Known Member

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    @ashish1137 now I know your lying you can't make money from H&L only established markets make money, you must have had insider knowledge, show me the suburb stats.

    Seriously, well done. This must have beenPakenham. I think there is still some time to do this in the west Rockbank and Werribee or Wyndham Vale. But we are probably getting to the end of this cycle.
     
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  8. ashish1137

    ashish1137 Well-Known Member

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    HI Slice,

    Thank you. I used a close friend of mine and he gave a competitive price which was a slightly cheaper than the market but mostly in line.
    The experience has been good so far. However, I am using another reputed builder and already got into two major fights over price and the build has not even started yet. I have found smaller builders are far better to deal with than reputed builders.


    Regards
     
  9. ashish1137

    ashish1137 Well-Known Member

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    Thank you. This is in Armstrong Creek region.
    55 min drive to Melbourne CBD, 50 min by train, 10 minutes drive to the ring road, major university, major hospital, station, nearly 7 beach locations, 5 min walk to two big oval grounds, park, club and shopping center. I dint know what else could have I looked for and immediately thought on investing.
    Considering my first experience, I think I came to good people to learn. :)
    and yes, you are right, if I would have waited for statistics, I would have definitely missed the boat.
     
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  10. ashish1137

    ashish1137 Well-Known Member

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    Thank you. I would like to do the same in future as you are doing . Build a couple and sell keeping one (provided there is still room in future) :)
     
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  11. ashish1137

    ashish1137 Well-Known Member

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    Updates on my 2nd purchase

    This purchase was done in Lara: 375 sq mt rectangular block bought for 160k with 212k spent on a fully complete 23 square build with 4 bed, 2 bath, 2 garage and an alfresco with 40 mm stone benchtops, 900 mm appliances, low line striata tiles, wooden laminate all around the house, evaporative airconditioning and including fencing and land scaping to the house.

    All up, I spent 372k for the property which is currently rented at 450 a week and will order valuation as I think it should come at 490k+.
    I got 60k equity out of the first one and planning to buy further. Again a big thanks to everyone for support.

    Stay tuned for my upcoming purchases which I will post once build is complete in next 6 months. :)

    Summary
    =========

    With both my purchases so far, I have spent 650k in total with 10% deposit. Current speculated value is nearly 880k to 900k fetching 840 a week in rent. Leaving me in good position so far. I can borrow further easily to 800k so will be good to see how the tightening of lending impacts down the line.

    Regards
    Ashish
     
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  12. Layla

    Layla Member

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    What a great thread to read. Nice work and lots to learn here for a newbie like me!!
     
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  13. Wukong

    Wukong Well-Known Member

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    Very nice! Keep sharing please
     
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  14. Peppas

    Peppas Well-Known Member

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    Very nice work @ashish1137. Was nice to meet you at the wenty meet-up a few weeks ago too. Is your next buy going to be another H&L do you think?
     
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  15. ashish1137

    ashish1137 Well-Known Member

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    Already bought land in two places. Will settle and build.
    Post here when build is complete. I am a bit vary of buying anything in any market for now. Will wait to see where the tide rises next. :)
     
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  16. hieund85

    hieund85 Well-Known Member

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    Congratulation on your achievement so far. May I know when did you buy the land in Lara?
     
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  17. ashish1137

    ashish1137 Well-Known Member

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    Hi @hieund85

    I think I purchased land in Lara around end of 2015/ beginning of 2016. The settlement was pretty delayed.


    Regards
    Ashish
     
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  18. hieund85

    hieund85 Well-Known Member

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    You got in at excellent time. The land price in Lara now is crazy.
     
  19. ashish1137

    ashish1137 Well-Known Member

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    Last i saw were 210k for 375 to 400 sq mt. Still reasonable as compared to the neighboring suburbs and suburb standard.

    Regards
     
  20. hieund85

    hieund85 Well-Known Member

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    It is no longer $210k. More like $240k-$250k now for a regular shaped block. It was $215k-$225k about 3 months ago.