What's your story

In Nov 2012 I had a 1 bed apartment (PPOR) in Marrickville with a 15 year fixed rate loan at 8.09% (who fixes for 15 years?! Horrid!). Picked it up for a bit over $300k 25 months earlier.

In 2013 I broke my fixed rate loan, copped a big break fee (not to mention all the extra interest I'd paid) then went hunting for IPs:

Sept 2013 - $460,100 - 2 bed apartment in Marrickville
May 2014 - $500,000 - 2 bed apartment in Marrickville
Aug 2015 - $612,000 - 3 bed house on corner block (LMR2 zoning) in Moorooka

Decent start but APRA killed me, so focus is now on growing my business to bulldoze a way through the tighter lending policies.

 

Yes, we talked to two accountants but since it's owned by a company the tax will be 30%, don't think there is much we can do but even if it's 25% it's still a large amount.

Not sure about the active asset test but I thought if the site is not for carrying on a business, it won't pass the test.

 

@FireDragon It would be great to follow along with the process/progress of your project - would you consider starting a dedicated thread for updates / lessons learned along the way...? I'm sure there would be many of us who would be very interested.

 

Very interesting thread MTR, 3 years is really ideal as lot of changes has happen. Bottom of the market and then it took off and nowAPRA tightening. As for me
1. bought my first PPOR Jan 2013 Mel
2. bought my first IP July 2015 Mel

 

I will try to put up something when I get a chance. At the moment, in addition to my normal 8 hours daily job, I need to be the baby sitter for my 5 months old and a 5 years old children at night.

I am doing all these development CC work during weekends and late at night. Fortunately my architect, solicitors and other consultants are happy to have meeting after business hours and during lunch times. My workload is just getting crazy at the moment and got 2 flu in the past 3 months. My weight was average around 61Kg but now is around 58Kg.

 

@FireDragon Sounds hectic! But I will keep an eye out for your thread, whenever you do find time.

For me/us:

Last purchase was early 2012, so just outside the 3-year period for this thread... since then, have been on a Pay Down Some Debt path, as well as having made further business investments.

Next will be a PPoR purchase, sometime in the next year or so.

 

@Handyandy, wow what an amazing story! Inspirational

 

Can't believe she is already 6 months old, slowly getting our sleep back which is nice. Getting close to 10kgs mark, steady growth

 

Nice.
I like Melb very much.

 

Me too.....but WILL like Sydney or Perth much more shortly...

 

How did you go with rental pricing in the current climate?

 

Things were pretty tough on the home and work front around 12/13 so we sold 3 Sydney properties and bought a cheap PPR so I didnt have to find a new job. Missed out on around 400k in CG I reckon but our PPR has increased in value by around the same amount (although we did spend 100k on renos) so we still ended up ok.
Our other Sydney properties have increased by around 200k each in that 3 year period.

 

So you are still in front. great

 

"What's your story?"

Oh my... Well, we started out a few months ago with @Michael_X as our broker, based upon recommendations from @Beanie Girl and @MsAli...

Since then my wife has been diagnosed with Brain cancer - yep low grade meningiomia. In the meantime we've re-financed with Michael (& @Rolf Latham) to unlock some equity in our PPOR. When we set out on this journey we never thought we would encounter such a genuine person as Michael. I fully expected a competent, intelligent person but to also encounter a thoughtful person is such a refreshing breath of fresh air - and a special person... @Beanie Girl is someone that @Michael_X has said is very giving and I can definitely second that. An odd message out of the blue just to see how you are going is simply... priceless. I never expected a forum to be so giving.

So I guess my wife and I are probably up there in terms of the hard knocks starting out with investing, but we're ready to roll with the punches and persevere as this is something we truly believe in. Resilience is something that defines successful people, and the last month's event have also helped us to appreciate what's really important in life. Thanks Somersoft and PropertyChat.

 

Hi Firedragon. Congratulations on your vision and enterprise in progressing this development. It just strikes me as being a little odd that you are about to embark on a $40m+ project and yet you're running round like a mad thing stressing out on your 9-5 day job! Surely you must be an equity partner in that particular business, else it makes no sense. Hope you at least cut back to part-time when the whips start cracking on your construction.

The other thing that strikes me is that your decision to develop rather than sell seems very tax driven.(Not that there's anything wrong with that). But it might still be worth you visiting a third accountant for some further advice:- Have you considered that instead of selling the property itself you could sell the shares in the company itself as a means of getting access to the 50% general capital gains tax discount if those shares are owned by individuals or a trust. That may save a bunch of GST as well (input taxed transaction).
And if you hang on for another couple of years the personal tax rates might be a fair bit kinder than they are today.
Not to be taken as personal advice - just sayin' is all.
Anyway best of luck with whichever way you go. The fox.

 

Thanks for sharing.
I wish you both all the best


MTR

 

Thanks for the advice. Yes, it's pretty stressful at the moment. This company is a family business and I am one of the shareholders. I probably underestimated the workload for this development and the time it takes to look after the kids. Hopefully it will get better when the baby turns one year old. I am going to hire a project manager during the construction so hopefully I can still manage it. I am a manager in an IT company during day time so I probably can't do part time as I need to look after my department. I forgot to mention that my brother is a structural engineer. He lives in overseas but he can probably provide some advice in case I need assistance.

We have actually considered selling the company instead of selling the property but even with the 50% discount it's still going to be huge amount (and it probably more difficult than selling the site) so we believe it is still better develop the site.

My Mazda 626 was broken down yesterday, making me more stressful...

 

Sorry to hear this, hope she is ok. Things like this really make you appreciate what is important in life. Money is nice, but people are irreplaceable.

 

I have been thinking of writing a more detailed update since the last post on Somersoft but in the mean time, here is a short summary.

June 2013 - Joined Somersoft, met some amazing people and was inspired to seriously pursue property investing. At the time had 2 units in Sydney, one OTP which performed very poorly and I didn't even know how equity worked.

August 2013 - Bought IP3 through a BA, it turned out to be a poor performer. Learnt alot from the experience and made the decision to find properties myself moving forward.

October 2013 - Bought IP4&5 in Newcastle, did cosmetic renovations and got very good revaluations. Showed me the importance of valuation shopping and buying well.

2014 - Bought IP6-9 in Brisbane. Extracted equity from renovations to fund these purchases. Bought using 88% lend and targeting 7%+ yield.

2015 - Bought IP10-14 in Brisbane. Equity and savings ran out at IP12. Formed SMSF with parents to Purchase IP13&14.

July 2015 - Quit work with passive income ~$40,000 and started my own mortgage broking company. Moved up to the Gold Coast to be closer to my mentor @Rolf Latham and it's even better than I could have imagined.

If it wasn't for Somersoft, PropertyChat and the people I met through the forum - I could have never achieved this. For this, I am forever grateful to this community.

Cheers,
Michael

 

I had been toying with the idea of buying an investment property for the last 2 years but being from Sydney the prices had moved beyond my reach. Started reading Somersoft just as it was closing down. I remember reading @Michael_X post on his journey and it was very inspiring for me to read. It gave me the motivation and kick up the backside to explore areas outside Sydney. I recently traveled up to Brisbane and purchased a property which settles next week. Whilst I have never met or spoken to Michael_X I am grateful he shared his journey on Somersoft as it has helped me greatly.