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5 Properties By 28 & What I Learnt pt.1

Hi everyone, As the title suggests, I went out and bought 5 investment properties by 28, which I can say I’m genuinely proud of. This honestly would not have been possible without being a member of this forum. To say I’m grateful for the learnings, advice and people I’ve met is an understatement. The purpose of this post is to pass forward what I learnt with the intention of helping some of the members of the forum. At the risk of this being a huge essay, I've cut a lot of details out. Anyway, this is all about what worked for me and what I learnt along the way with each property. Enjoy! As soon as I could work, I was one of those kids who saved hard, squeezed every penny and at times worked a few jobs. I never really knew what I wanted to do with my savings. A good friend of mine put the idea in my head of being a property investor and going to collect the rent directly from tenants...I thought this was a pretty cool idea but nothing ever eventuated from that. Fast forward to when I started to work in Wagga at one of the major banks as a graduate. During that time, a colleague gave me a property investing book. That day changed my life forever when I read it from cover to cover in one night. I learnt that you could use property to build wealth outside a 9 to 5 job and I was so excited!! This ultimately lead me to buy my first investment property: IP 1 - Wagga Wagga NSW - 2013 Property Type: House with 3 bdrm, 1 bath and 1 car. Price: $171K Worth today: 200K Rent: $230 pw Lessons learnt: 1. Take Action Sometimes taking action can be really hard for first-time buyers because there is so much to learn and understand. Even when you know quite a bit about the process, it can still be really daunting to just start - I know this all too well because I was one of these people. I spent a lot of time reading property magazines, property investing books and attending loads of seminars. Doing all this was a good thing but in hindsight, I did this for far too long and got ‘analysis paralysis’.

Learning:

  • I should have pounded the pavement and spoke to agents way sooner.

  • Let the numbers do the talking. It takes the emotion out of it and helps you arrive at a decision way easier.

2. Buying With A View Of Moving Forward One thing I failed to recognise, is that when you're looking at building a property portfolio, you have to buy with a view that it will allow you to move forward to the next one with ease. Unfortunately with this one, I hadn't made any value on the way in from either renovating or just buying well.

Learning:

  • After all the dust has settled on the purchase, I now had to find my next property at a much cheaper price than I had previously anticipated.

3. No Significant Growth Drivers I bought in a regional centre where there were no significant growth prospects. Compared to most regional centres, Wagga does have more going for it than other regional centres because it doesn't rely on one particular industry, it is quite diverse and it has a pretty high population.

Learning:

  • The big learning I had from this, especially in hindsight now, is that when you're looking for growth drivers you have to look for things that will increase jobs and encourage people to move there.

  • There were no big things that we're coming that would significantly influence prices (Like a Uni being built, Westfield or lots of multinationals chains).

  • With the little cash that I did have, I had to buy something cheap and renovate for ‘sweat equity’.

  • This then led me to do my first ever renovation project and boy what a project it was!

IP 2 - Orange NSW - 2014 Property Type: House with 2 bdrm, 1 bath and 1 car. Price: $80K Reno cost: $50K Reval $180K at the time. Today it is worth $234K Rent: $230 pw This was so cheap because it had been damaged by fire about 2 years prior and had been left vacant ever since. This was one where you could literally see right inside the ppty and walk right into the dining room from the street. See below.

1. Interview potential members of your team I didn't know any of the local tradespeople, property managers or other professionals in Orange. I was very lucky that I knew at least one person who lived there and even more lucky that they had done many renovations themselves. They put me in contact with their builder. Based on the quote I received, I could tell he didn’t want to do it, so I asked for 3 others that he could recommend. Learning:

  • This taught me the power of word of mouth and leveraging relationship connections.

  • I then ‘rinsed and repeated’ the same process with property managers, solicitors and anybody else that could help me with the project.

  • I’d then interview a string of these professionals and pick the ones who were investors or had extensively worked with them - I wanted someone who has my interests at heart.

2. Pay people to do the things you can’t Very early on in the process with my builder, he wanted to know what he needed to do and what I was going to do. To save on costs I pretty much did everything that regular people could do. Truth be told, I was as green as they come! I couldn't erect structural beams, close the ceiling or install windows...let alone know how to work a paintbrush

Learning:

  • The learning here is that you need to pay people to do the things you're not good at.

  • The same thing applies when it comes to using a solicitor, property manager etc.

  • Just focus on what you're good at!

3. Leveraging your property manager pre & post renovations. Learning:

  • Before buying, I got my property manager to do an appraisal.

  • This helps with forecasting for completion but also can give you a second opinion as real estate agents normally provide one too.

  • When I was getting close to finishing renovations, I got the property managers to look at the place a week before the builder was done and handed the keys over.

  • This gives the builder enough time to fix anything that might be outstanding and keeps them accountable.

  • It is much easier to get your builder to finish before the final progress payment than it is after!

To see the valuation come in higher than I thought was a huge sigh of relief. I was able to use the equity to go and purchase the next property. To be continued...


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