Look, it’s a jungle out there. But, one thing I did right was I started young.Â And that is my property investment advice to you, start at 25 to retire when you are 45.
My name is Phil Allen. I’m a director of Latitude Property Group. I’ve been investing in property for over 35 years, I’ve done it all. I’ve renovated, I’ve bought new, I’ve bought used, I’ve done splitters and I’m doing development so I know the pitfalls and strengths of property and I understand what you’re going through when you’re trying to work out how to invest, perhaps for the first time.
When do you want to buy? What do you want to buy? Who do you listen to? How much do they charge? What property investment advice should I follow? Do you feel like everyone’s trying to yell louder and louder to get your attention and spend money with them? One of the negative side-effects of all this noise is that sometimes you can experience such overwhelm that they just stop and take no action. It’s such a shame. Particularly if you’re young.
Every year you’re not investing means you spending several more working when you’re older. Investment compounds. A year wasted now maybe five more working years to make someone else rich later down the track. I remember when I was in my early twenties and I thought “retirement” was so far away that it didn’t even warrant a thought.
In fact, I used to get irritated looking at my payslips, every fortnight with all that super being taken out and thinking that I could use it better, and of course, using it better back then just means partying. If I would have gotten property investment advice and I’d known then, with minimal, and I mean minimal effort that I could have started the property portfolio and leverage the growth into more properties, essentially for free, I would’ve jumped on that in a heartbeat.
We get that you have a busy life. We’re all busy and you’re busy too. When you’re hearing all this noise about the market and you’re not sure where to put your money, we understand what you’re looking for is a simple, easy to understand process. We know you don’t have eighty hours a week to spend on property and may need a hand with some property investment advice.
Some critics out there think that people are lazy for wanting to get help to invest, it’s weird huh? People get help with all sorts of things, like; tax, law, how to change the oil in their car but for some reason when it comes to property investment advice there’s some out there that think you should go it alone.
Would you spend $450,000 on a share portfolio without getting some pretty solid help? No! So, why is it okay to do that with property? We believe that for new investors who have a busy life, an off-the-plan-property may be a great fit for your first property. Not only that, if you buy correctly and structure your finances well, you’ll be able to gear into more properties far sooner and amass a sizeable portfolio, decades earlier than you otherwise could have on your own.
Off-the-plan is easy. I’m not going to sugar-coat. Purchasing off-the-plan-property is easy, if done correctly. If you know what you’re looking for and you can identify absolutely sensational areas of Australia, poised for seller-growth in the short to medium term, this is how, as a young person you’ll be able to start to accumulating property over a relatively short career and if you choose to, youâ€™d be decades ahead of the rest of the country.
It’s all about purchasing for capital growth. Looking for cash neutral to slightly positive on the purchase and accumulating as many properties as possible while still spreading the risk. In basic terms, let’s say you’re currently twenty-five years old with a working partner.
Let’s assume you’re household income is $90,000, when you target well and get the correct yields you should be able to be cash positive to the tune of around $40 per week from a new $400,000, off-the-plan-investment-property and that’s based on a 100 percent finance.
If your deposit’s larger that number will improve. If that property grows by ten percent over two years, so five percent per annum, it’s now worth $441,000. Which, if you were to purchase another $400,000 property is enough for a 10 percent deposit. There’ll be some refinance fees, taxes etc. but you get those anyway so it’s going to get you to the next property for almost nothing.
Now you have two properties. You’re net growth accumulates twice as fast. The first property’s now worth $441,000 and the new property is worth $400,000, another 10 percent over two years and the first property is now worth $486,000 and the second property $441,000. Given you refinanced the first to buy the second property, you’re now sitting on $86,200 in equity on the two properties. Thatâ€™s the secret ingredient. Capital growth.
Can you see how things start to compound? You won’t need to keep pulling all the equity out of the portfolio to fund the next purchase. Don’t forget that each of these is in isolation and should be paying you around $40 per week cash positive, if your yields are right.
Well this seems like a fairly straightforward process. There is a lot happening in the background. You’ll need trusts, entities, growth, super, tax variations and a very smart finance broker, an experienced Investment Property Strategist and a very clever, competent accountant to help you through. Investing guys, investment is a team sport. You simply can’t do it alone and expect to have high levels of success. So, now that twenty-five year old hero is twenty-nine and he owns two properties with equity over $86,000.
From here things start to move a bit faster, because you’ve got momentum. By the time our hero’s in the early to mid-forties, there’ll be a sizeable portfolio that’s correctly structured, protected and paying a modest annual income. Once you’re happy with the numbers, you complete the last phase of the process. You’ll need to sell down a number of your properties to clear the balance of the debt. Usually the older properties are the ones to go as they’re older, so they’re more prone to maintenance and they’ll have the most capital growth, experienced the most growth.
Once you’ve cleared the debt you’ll be left with a six figure income that’s totally passive. You don’t need to get out of bed and the money will keep turning up. It’s absolutely amazing.
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