All Topics / Help Needed! / Buying 5 Investment properties

Viewing 17 posts - 1 through 17 (of 17 total)
  • Profile photo of Joey Jo-Jo Junior ShabadooJoey Jo-Jo Junior Shabadoo
    Member
    @joey-jo-jo-junior-shabadoo
    Join Date: 2013
    Post Count: 2

    Hi everyone, long time reader first time user,

    so im 29 years old, got a bit of a hefty deposit from saving like crazy since I was young,

    my goal for 2014 is 2-3 investment properties for long term growth

    and 2015 2-3

    or  even 2014 for 5 properties (depending on luck and confidence etc etc)

    Whats my biggest hurdle? would it be deposit, serviceability or finding the right one?

    I read API magazine last month I think, and it had that big article on a young guy who bought 10 investment properties in one year on a salary of $40k or something!!!

    that surely has to be some kind of record!?!?!?!

    I emailed the magazine and the guy replied that if you focus on the fundamentals, then 5 is no problems, surely it cant be that easy?

    I would like to do 1/3 of that , and was wondering if Im being realistic

    thanks in advance everyone

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi and welcome aboard

    Purchasing multiple IPs in a short period of time is possible – I've had quite a few clients do it.

    Two things that help a lot are access to a large chunk of equity/cash and good borrowing capacity.

    Without sounding biased – a good finance person will also be a handy person to have on board. They'll structure your finances correctly and select the right lender at the right time which can assist with avoiding a hit to the borrowing capacity wall too early.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of mbuildingmbuilding
    Participant
    @mbuilding
    Join Date: 2012
    Post Count: 28

    Joey,

    Good on you for saving big deposit!

    I am 29 years old too and aware of how hard it is to save large sum of money.

    it is shouldn't be so much about how many properties you can buy, it should be how many quality Investment property you can buy and your strategy in the game.

    Since last December, we bought 4 properties (all development sites) and building 1 duplex in western Sydney.

    I think investing in property (especially, in stage of aggressive buying spree) is like going to war, you need to have good team on board to make it thru.

    you will need

    champion Mortgage broker (Jamie already replied to your, post, and we have some really gem broker on forum too)
    clear strategy (buy n hold, Buy and develop, land banking, reno or combinations)
    appropriate Legal Structure
    ability to find "RIGHT" properties along the way.

    I hope this helps. if you need any further help, feel free to PM me.

    Good luck!

    Profile photo of jmsracheljmsrachel
    Participant
    @jmsrachel
    Join Date: 2012
    Post Count: 711

    I second Jamie as well. He’s a gun and you’ll need the right people around you if you plan to purchase multiple properties in a short period of time.

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    Hi Joey,

    Welcome :-)

    Quite often the biggest hurdle is a mental hurdle. Knowing “academically” that something is the right path, and actually doing it are two different things.

    A big thing is being able to block out the negative chatter from folks who have not done their homework on the topic of property, and trusting the research you have done. It takes a while to realize it is often better not to discuss your property adventures with people who are not on the same path. Small amounts of negative and uneducated chatter can be quite damaging in that it can make you question what you’re doing. Best to surround yourself with those in the know, and choose different conversation topics for those who are not.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of Ryan McLeanRyan McLean
    Participant
    @ryan-mclean
    Join Date: 2010
    Post Count: 547

    Hey Joey,

    I just want to say that 5 properties is a good goal. But a better goal is to understand why you want those 5 properties and what your short, mid and long term goals are.

    Just "buying 5 properties" won't make you financially free just as "starting 5 businesses" isn't a guaranteed way to be financially successful.

    Know exactly what you goals are helps you to look for properties that meet your EXACT goals and financial requirements.

    Do you want to buy the 5 properties and have them negatively geared for 10 years and then sell them to access capital gains? This means you will be working your ass off for 10 more years for the hopes of a big payout.

    Do you want positive cash flow straight away so your passive income goes up (maybe you achieve $500/month or more in passive income). Then you could take an extra couple of days of unpaid leave each month without noticing the strain to your cashflow.

    Maybe you want a balance of negatively geared and positively geared.

    Do you want to do work for renovations. If so what return are you hoping to get.

    It sounds like a lot of work when all you want to do is "buy 5 properties" or "make money" or be "financially free".

    But if you don't know where you are going is really hard to work out how to get there

    Ryan McLean | On Property
    http://onproperty.com.au
    Email Me

    Profile photo of Hari YellinaHari Yellina
    Participant
    @yellina
    Join Date: 2007
    Post Count: 101

    Dear Joey, 

    I am Hari Yellina, keen property investor. I am putting my 2 cents worth. Because, I have achieved more than 5 Properties and in my double digits at the moment. 

    When I started first it was exiciting. 

    1) I have attended lot of seminars, listened to every one of them, Bought lot of books and actually read them. 

    2) Like few of the authors like Steve Mcknight and Michael Yardney and countless others. They all have a point and they all make us rich. 

    It not how many we got. It about the quality of the product. Buying in capital is what made me very happy. In the process of buying properties, I have made few mistakes. I bought a property in Shepparton, thinking it was very cheap and will grow in price. It has been stagnant there for quite a while. All the properties I bought in Capital cities has grown in price and always tenanted. 

    Dont buy a commercial property if you are a beginner, You will be feeding just the property managers. 

    I have started to purchase with very less income and being self employed. Please post if you need more answers. Good luck for your investing. 

    Please do read some of books by steve mcknight and Michael Yardney. Magazines don't tell you the real truth. Magazines, likes your stories. Real Estate Authors write with lot of experience. 

    Thank you

    Hari Yellina 

    http://www.australianexporter.com.au

    Hari Yellina
    Email Me

    Keep Investing - Grow while Resting.

    Profile photo of Joey Jo-Jo Junior ShabadooJoey Jo-Jo Junior Shabadoo
    Member
    @joey-jo-jo-junior-shabadoo
    Join Date: 2013
    Post Count: 2

    thanks everyone,

    have read heaps of books, have attended those free seminars but not gone ahead, no intention to

    time for me to venture out and put my knowledge to practice,

    definitely wont be going over $250k per purchase, no units or apartments, student accomodation,

    im thinking of going down the reno way like the guy on the magazine, from what ive read its the easiest method but hardest physically/mentally  to create equity

    ill give the brokers on here and on my contact list a call,

    and I worked out that even after taking out management, insurance, landlords, water, rates etc. if I buy well and renovate, all of the properties will be positive or neutral cashflow wise

    Profile photo of Hari YellinaHari Yellina
    Participant
    @yellina
    Join Date: 2007
    Post Count: 101

    Dear Joey, 

    You have set a path what you want to buy, how you want to buy. You sound very confident. This is want you will be needing in any investment. 

    Please do go ahead and stick to your guns. Do you have any experience in renovations. 

    Thank you

    Hari Yellina. 

    Hari Yellina
    Email Me

    Keep Investing - Grow while Resting.

    Profile photo of wilko1wilko1
    Participant
    @wilko1
    Join Date: 2010
    Post Count: 510

    Books on property are like books on learning how to ride. Useless except for a overall generic overview of property. Books and articles and magazines can give you ideas though on what property's have the potential to make money. You'll learn more from your first couple of property purchases then what you think you learnt in those books. 

    – Buy properties that fit into your plan. 

    – don't trade one job for another, renovating can be especially taxing if you are in their making "sweat equity" the rewards can be good if you have the dedication to it. And that means going out to work after you finish your job, everyday Of the week and on weekends and. everyday until it is finished. Delays from not performing if renovating yourself directly relate to your profit. And it's a double edged sword. If you take a extra day to finish. That's a extra day of

    mortgage and another lost day of rent. Sometimes a partner can help you stay on track and motivate you when you don't want to do anything. 

    – you may benefit in consolidating ie selling a property after the first couple of renovations to release equity.

    – depending on your deposit amount you could consider a small development. Ie a corner house with land at the rear. A hammerhead type situation. A block that fronts two street frontages from streets at both it's front and rear setbacks. The reason why you would benefit more from

    a small development of a straight renovation. Is that your are not attempting to make 50k-100k in just a straight renovation. Which in this day and age. Is gonna be difficult

    on a property under 250k. However there are many more opportunities to make 50-100k in a development. Where the renovation isn't the driver between adding the value and it's actually the subdivison. Whilst you still might renovate the existing home

    just so that it maintains as much of its value as possible after losing the land component. 

    It also lets you do the development In stages if you are cash poor. And is a greater leverage on time. Ie all up you could spend 50-100 hours organising a land division and build of a new home. Your hourly rate for your return is a lot higher then trading your time for money. 

    There is no right and wrong way. Most likely you need to just Start and you figure out what method will work for you but it's only after you purchase a couple properties you decide what you like the most. But it might not be the most profitable way to make a living or become wealthy.

    I like renovating the most. But I stopped doing it because property development is a HUGE leverage on other people's time and the profits are bigger and there are step ups you can take almost for the rest of your life. By step ups I mean You can start with small developments and progress to medium sized and then large size, it's a bit difficult to do that with renovations. Like the most expensive house is most likely 1-2 million Unrenovated. Which puts a cap on your upper level of money that you can earn. It's very easy to coordinate multiple developments at once. You should practice developing a skill set that will enable you to step back and observe a managing type role over a labourer role. 

    But it as I said. Starting anywhere is more important then anything. Overcoming that first mental hurdle and procrastinating/scared step is sometimes the hardest. 

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    I've seen a lot of people fall down because they deviate from their plan. Don't lend anyone money! I can't believe how many people have lend large sums of money and can't get it back!

    Don't get side tracked into some sort of buisness scheme – most fail.

    Don't get side tracked into shares if that is not your area and not in your plan

    etc

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Hi Joey

    Firstly welcome to the forum and i hope you enjoy your time with us.

    Sure subject to serviceability and the ability to come up with suitable deposits you can certainly buy 20 properties or more in a year (Trust me i have done it) but the number of properties is not the main aim as the quality and net equity is more important..

    We focus on working with clients who want to build a long term rental stream to replace their PAYG income and not clients who randomly want to acquire multiple properties for the sake of it.

    Stick with your fundamentals and use experts in their fields to get ahead.

    Preferably someone who has been there and done it rather than someone who has to make money selling you some product or coourse.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of CatalystCatalyst
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    @catalyst
    Join Date: 2008
    Post Count: 1,404

    Hi Joey I think you are on the right track.

    Buying an undervalued house and doing a reno to increase equity is actually quite easy (just watch the Block LOL)

    But therein lies the basic downfall. On the current influx of reno shows it looks like you can renovate a bathroom (for example) in a day. These shows are far from reality.

    I have seen some horrendous renos and also some really nice ones all of which have lost money.

    Basic downfalls- paying too much (houses in need of a reno are in demand = paying to much).

                          – underestimating the time and money to renovate.

                          – not matching the reno with what the clientel wants.

                          – over estimating your skills and doing things you shouldn't, resulting in a crap reno.

                          – overestimating the end valuation.

    We have made some great equity gains using this strategy and all properties have been CF neutral to positive from day 1. This gives you the opportunity to buy again as you are in a better position than before you bought. The banks love that.

    You don't need a big income with that strategy because each purchase puts you ahead. That was our strategy- To be in a better position after each purchase. When looking for properties they had to fulfill that basic need. We were in a hurry to retire and didn't have time to wait around for 10 years for CG so we made the CG ourselves.

    Profile photo of Hari YellinaHari Yellina
    Participant
    @yellina
    Join Date: 2007
    Post Count: 101

    Dear Joey,

    be careful with renovations. Recently, I have done a renovations on old property I have. It took me 3 months to complete. Going was good. Painter delayed work by 2 months.

    sometimes, good trades people are busy. It can take more time than expected. And you have to factor I your salary and interest rate as we'll.

    first some half decent property and rent it out. So you have time to concentrate on new one..

    thank you

    hari yellina

    Hari Yellina
    Email Me

    Keep Investing - Grow while Resting.

    Profile photo of opinderopinder
    Participant
    @opinder
    Join Date: 2012
    Post Count: 61

    Dear Joey…Yes you can do that Just work thru slow and steady and you can reach the destination.

    Try to find a property thru which you can add some value by doing cosmetic renovation i.e paint, carpeting etc..

    I agree with what TerryW has said…Good Luck!!!

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    An alternative is to look at positive cash flow properties.

    I have had 2 enquiries today's from purchasers who are looking for investors to buy a property and wrap to them using Vendor Finance Terms.

    They have a deposit which will be paid over to the Investor on executing the purchase contract and expect to pay at least 2 percent above the standard bank rate.

    Using a combination of strategies can be more profitable than solely just buying a buy and hold property.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of BoughtWithEquityBoughtWithEquity
    Participant
    @boughtwithequity
    Join Date: 2013
    Post Count: 68

    Joey, you're being offered a ton of good advice here.  It's great to have goals…truly is….but why 5 properties…….why not 20….why not just ONE!  Better yet, partner with an experienced investor in your area as cheap labor.  Like everything else in life, you will learn by doing and there is no better way to do so than on someone else's dime.  If you can swallow this, assemble a good team of lender, agent, contractor and insurance agent and plan for just one property.  Decide whether you will keep it as a rental or flip it..  Selling it off will free up cash for the next deal.  There are more failures than successes in real estate investing….the losers limp to the sidelines and you never hear from them. I once had a lawyer friend who decide to become an investor.  He bought 5 properties through a wholesaler who also did the remodel work.  The work all had tobe redone, the properties were over appraised and the rents never created positive cashflow…..all ended up in foreclosure.   Every month  in the states, I buy properties from once bright-eyed first time investors who got in over their heads.  I'm a 4th generation investor/contractor with over 2,000 slips in my 26 years at this.  I love investing and rehabbing properties and am pretty good at it…..but even I lost a ton in 2010 & 2011.  Alligning yourself with good people and gaining real experience is key.  If you were in the states, I would encourage you to find a flip with very light cosmetic rehab – paint, flooring & fixtures.  Something to get your feet wet.  I salute your confidence and pray that you avoid Little big Horn….Custard was very confident as well….at least for a bit.  As you find properties, try to bounce them off the gang around here.  all the best!  Andy

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