All Topics / Help Needed! / Whats the best method to own 3 properties debt free ASAP , details below (long)

Viewing 20 posts - 1 through 20 (of 21 total)
  • Profile photo of RetireyoungfreeRetireyoungfree
    Participant
    @retireyoungfree
    Join Date: 2016
    Post Count: 16

    Hi im 21 years old and live in sydney , now im asking this question to see what kind of answers I get , I would like to own 3 properties out right clear and free asap so I can quit my job and live off the income .
    Now I want to know what the best strategy/method would be to get them in a manner thats best money wise and time wise , remember I want them ASAP.
    Okay so im looking at buying these 3 properties in brisbine in the 300k – 360k mark, to keep things simple lets say all of them are 300k , also im in a position where I dont have many expenses and I can save up 55k a year easy, thats with the one job I have and im actually thinking of getting another job which would enable me to save up more but for now lets say 55k a year I can save up .
    So 3 300k properties and Im saving up 55k a year .
    Now about the method im not sure weather I should first put deposits on one by one and then pay them off one by one , or pay them off all at the same time in a selected time frame etc like 10 year pni mortgage for all of them, also im not sure if I should get them in Principle and inrest or interest only , for example maybe I first get them io after I get 3 I switch one of them to pni then pay it off and on to the next and so on , orrr im not sure if I should acquire like 7-10 propertys io and wait for them to grow in capital and sell most of them to pay the 3 off , I really dont know which would be the best way for me to get to my goal ASAP thats why im asking because I know there is heaps of professionals weather your an accountant , mortgage broker or someone thats been in the game for years .
    Bonus info : im not interested in working till im 50 -60 I wanna stop working asap .
    I know theres models for wealth but they r long term , im not interested in them untill I quit my job and have my 3 properties Ill look into that sorta stuff because at least then I wont be working and ill be happy to aquire alot of propertie then because I am a really ambitious guy I just hate working thats all I feel like its a waste of life .
    More info : will 3 properties be enough when I get a family , children etc , probably not and thats when ill look to having 4 to 5 propertys outright but as for NOW I want the 3 debt free ASAP .
    So please tell me your thoughts on this your ideas your advice etc
    tell me what u think will be the best methods THANKS !
    ps im going to use a buyers agent to get these properties so thats an extra cost , thank you, ussaly ba chare around 6500 , 9800

    Also my end goal would be 5 propertys debt free I would be really happy about that.

    Opps forgot to mention! I got 83k cash saved up to start off weather it will be for 1 deposit or 2 .
    Cheers !!
    Thanks to any1 that reads and helps !!

    Profile photo of Modernity InvestingModernity Investing
    Participant
    @mark-coburn
    Join Date: 2006
    Post Count: 181

    Huge,
    Good for you. I like the way you are aiming for a real goal.
    The number one thing to help you get to your goal is buying well, and then buying as often as you can.
    You need to buy primarily for capital growth, but at todays interest rates every property you buy should be at least cashflow neutral, if not positively geared.
    Your biggest challenge will getting access to debt, so work hard at keeping your taxable income as high as you can.

    Modernity Investing
    Email Me

    Profile photo of fxdaemonfxdaemon
    Participant
    @fxdaemon
    Join Date: 2013
    Post Count: 114

    I agree with the comment of buying as often as you can.
    The strategy will not be too different from people buying IP to pay off PPOR sooner.

    Think of it this way the simplified process:
    If you need to buy N IP to pay off 1 PPOR
    Then you will need to buy N x N IP to pay off the original N IP

    It then comes down to DSR .. which is almost the one single biggest obstacle for most people.
    BTW this approach has less to do with property than it has with correct financial structuring that you will need to seek prof advice
    from expert.

    • This reply was modified 7 years, 10 months ago by Profile photo of fxdaemon fxdaemon.
    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    It may not be a good idea to pay the loans down but instead go IO and store the cash in the offsets. This can allow for quicker retirement.

    And to get 3 fully paid off (or fully offset by cash) you might buy 6 and sell 3 as this may get you there quicker than working and paying down the loans. Capital gains are taxed at half the rate of wages and the tax can be minimised and maybe even eliminated with careful planning.

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

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of BarlowBarlow
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    @barlow606
    Join Date: 2015
    Post Count: 35

    Hi mate,
    if I had your cashflow, age and drive I would honestly sign up for Steves property apprentiship and learn from the professionals…just attended the millionaire mega conference and the things I learnt just in 3 days opened my eyes to how much there is to learn to be able to invest professionally not speculatively and how easy it would be to make costly mistakes without educating myself properly… Either way good on you for setting your goals and taking actions to achieve them already.

    Profile photo of RetireyoungfreeRetireyoungfree
    Participant
    @retireyoungfree
    Join Date: 2016
    Post Count: 16

    @barlow
    Hi barlow do u know whats in steves property appreciship , like what he talks about etc ? Also im in a position where im not even to sure how to find a good property thats why im going to use a buyers agent , so I wouldn’t wanna buy his program if I cant use the info.

    @mark coburn
    Hi mark when u say I should buy as often as I can do you mean I should acclimate as much properties as I can ? And would that be in an io loan or pni ?

    Also u mentioned how at todays intrest rates everything I buy would be neutral or +cf r we talking about io loans or long pni longs example 30years .

    @fxdaemon
    Hi what does DRS mean ?

    Profile photo of BarlowBarlow
    Participant
    @barlow606
    Join Date: 2015
    Post Count: 35

    I haven’t done it so can’t speak from experience but from what I understand from the seminars and speaking to people is that it covers everything to do with property investing and teachers you all usable information on how to make those decisions you are unsure about. Also it’s not just a matter of be given reading material and off you go you also get mentoring from @jason_staggers and Steve Mcknight himself when time allows.

    Even if you are going to use a buyers agent (which nothing wrong with) you are still then making decisions based purely on another persons opinion. I know myself that I would prefer to at least have the knowledge myself to at least be able to do my own research into the opinions of others to know if they are legit or full of shit with their suggestions.

    Either way mate no right or wrong all I am saying is that if I was in your position I would learn what I can from the pros. Unfortunately funds don’t allow me the apprentiship just yet but it is w new small goal of mine to free up some spare money to invest in my education before I make and decisions that could possibly make me or cost me $100k

    Enjoy the journey mate

    Profile photo of fxdaemonfxdaemon
    Participant
    @fxdaemon
    Join Date: 2013
    Post Count: 114

    @fxdaemonHi what does DRS mean ?

    I mean Debt Servicing Ratio (DSR), ie how well you can service the debt payment, which hinges on your cash flow a lot.
    Every lender has different calculator, so may be good to approach a reputable broker to assess your position to set expectation to
    begin with and understand what product best suits you.

    Profile photo of RetireyoungfreeRetireyoungfree
    Participant
    @retireyoungfree
    Join Date: 2016
    Post Count: 16

    @barlow
    Yeah thats true u cant make costly mistakes ill look into it , also your right about the buyers agents I do have my suspensions about them obviously they would have a hidden agenda to what adivce they r telling me I reckon , and I would love to know how to get them my self but im not too confident with that at this stage ill get better in time.
    Enjoy your journey too!

    @fxdaemon
    Thanks for telling me what it meant and yeah I know right especially if they r all io loans and nothing is literally paid off the loans!
    Do u have a good strategy that u use ?

    ellejay
    Participant
    @ellejay
    Join Date: 2016
    Post Count: 4

    First thought is why put all your eggs in one basket and buy 3 in Brisbane. There’s been a lot of hype about Brisbane. Not saying it wasn’t/isn’t a good idea to buy there but with so many investors jumping in there could be a risk of softening rent and/or increased vacancies. Just sayin’ a couple of these issues will slow you down. Keep an open mind..

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    If you want to pay 3 properties off quickly why not buy 6. Wait for some growth and then sell 3 and use the proceeds to pay off the other 3. Live in one that you intend to sell and sell this CGT free for some extra benefits.

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

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,416

    Hi RY&F,
    Good on you for asking such a good question. As several have said, education is the key. See, whether you use a BA or not, a MB or not, buy in Bne, Syd, Mel, or country Aus (or not) are all just tiny parts of one huge subject.

    I would love to know how to get them myself but I’m not too confident with that at this stage – I’ll get better in time.

    One bloke I heard of asked a couple “If someone can take you through the A to Z of how to make $100k on one property purchase, what would you be prepared to pay them for that knowledge?” The husband of the couple said “Hmm, I dunno – maybe $20k!” The wife said “I’d be prepared to pay them $100k – because then I could go out and do it myself, over and over!”

    What you choose for an answer is almost immaterial – but what the wife said held a nugget of gold.

    so I wouldn’t wanna buy his program if I cant use the info.

    Fair enough too. Nothing wrong with some healthy caution. The best way to get an idea of how this all works is to talk to others. On here, face-to-face at Investor meetings (usually monthly in major centres), reading the stories of “those who already succeeded at this”, learning from your “team” (your MB, your accountant, lawyer, RE agent, etc)

    Read what others thought of the Apprentice program shoe-horned into a 5 Day Boot Camp – here:-
    https://www.propertyinvesting.com/topic/5016755-the-verdict-on-steve-mcknights-5-day-bootcamp/

    The networking was an oft-mentioned positive for attendees:-
    “Leaders attract people who resonate with them. Steve is generous, courageous and authentic, so you get to spend five days with 70 other people who are also generous, courageous and authentic.”

    And the revelations were manifold:-
    “For years my wife begged me to meet Steve McKnight and be part of his training and Apprenticeship program. But I thought I knew it all. In fact, little did I know! If only I had listened to my wife, we would be Job free, Debt free, & Financially free today.”

    RY&F – you are in the right place – make the best use you can of it. Your future self will thank you.

    Benny

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,416

    Hi RY&F (again…)
    I had responded after a cursory glance with my post above. But, on then re-reading your original post, I wanted to help with a couple of extra thoughts:-

    More info : will 3 properties be enough when I get a family , children etc , probably not and thats when ill look to having 4 to 5 propertys outright

    Good comment, and it makes sense to me….

    but as for NOW I want the 3 debt free ASAP .

    But that comment might indeed SLOW you down.

    At its simplest, just the fact that you will be paying off deductible debt while still accumulating properties will have you paying extra Tax. Wait until you are in the Consolidation phase before paying down too much.

    You have an extra $55k per year that can help – that is huge. Use that to add value (renovate? develop?) and/or hold spare $ in an Offset account. Use large chunks to buy properties “for cash” (rather than paying the $$ off a property, then being unable to buy the next one without having to borrow it back again….). There is lots to learn, RY&F.

    Softly softly,

    Benny

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    RYF email me and i will send you a copy of an API interview i did a few years back.

    I retired in 2004 at 40 years of age owning 40 properties outright with a cash flow well in excess of $1M per annum and a net asset position of over $26M using a variety of different strategies.

    Thankfully the properties in Brisbane have doubled and in some cases trebled so the asset value has increased considerably.

    Nowadays we do a number of things but with the focus on building cash flow.

    Even in a stagnant or declining property market you can always make money.

    I have 3 adult children and they are learning the techniques to set themselves up nicely for the future without having to rely on mum and dads money.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of StoreybuilderStoreybuilder
    Participant
    @storeybuilder
    Join Date: 2016
    Post Count: 45
    Profile photo of fxdaemonfxdaemon
    Participant
    @fxdaemon
    Join Date: 2013
    Post Count: 114

    Hi Richard
    Just emailed you asking for copy of your API interview too :-) hope you don’t mind.

    Can’t wait to get it and learn!!!

    Thanks
    FXD

    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    My 2c: buy well, manufacture growth, refinance, repeat as many times as you can.

    When the time is right to sell, you should be able to sell a few and keep the rest debt free.

    Property investing is lots of fun! We simply love it.

    Best wishes!
    Ethan

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
    Email Me | Phone Me

    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    FXD received and emailed off.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of fxdaemonfxdaemon
    Participant
    @fxdaemon
    Join Date: 2013
    Post Count: 114

    Thanks Richard got it, very inspiring read.
    Wish I have met mentor like yourself who can educate me years ago.
    Hopefully not too late yet :-)

    Cheers
    FXD

    Profile photo of prabmprabm
    Participant
    @prabm
    Join Date: 2016
    Post Count: 4

    Hi Richard, @qlds007
    Could you send me copy of your API interview too :-)
    Just started looking for our 1st Investment property and dont know where to start.

    Thanks,
    Prab

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