By following proven and simple strategies and choosing to acquire assets and add value through renovations, I have found just by acquiring a number of properties over the last five years I now only need to work in my day job 2-3 days a week. But the best thing is you can do it too and there are plenty of opportunities out there right now.
A big difference between the rich and middle class is not only how they think but what they spend their money on. While growing up many of my school friends got a job, earned good money but spent it on depreciating assets such as cars, motorbikes and other boys toys. During the same period I spent my money on appreciating assets such as property, commodities and businesses.
While they racked up credit card debts and personal loans I was paying of mortgages and body corporate fees. After five years many of my friends and I were in very different financial positions.
Who am I?
Well, I don't have a rags-to-riches story to tell. What I do have is nearly 10 years of experience investing successfully in real estate, commodities such as gold and silver and the stock market.
Firstly I am not a property bug, yes property prices can go down and even crash, if I think that will happen you will be the first to know. I am a cycles investor, therefore I do not preach real estate all the time.
 Being a cycles investor means you must be very observant and use market cycles to forecast market direction and choose investments based on those forecasts. By recognising what market cycle is currently in progress, identifying investments that are “in the cycle,” and investing heavily in them before they reach peak price can make you very wealthy.
Today, we’re in a precious metals and commodity cycle. That means I am currently investing heavily in gold and silver bullion as well as oil, agriculture and other commodities.
I am also still investing in property but not as heavily. Property will still see good growth over the next 10 years but nothing like the boom of the 90’s. Property is now moving into a new phase where capital gains will eventually take a back seat to cash flow, something we haven’t seen for almost 20 years.
Secondly I am a property investing expert. I have bought and renovated many units and houses, in different locations over a number of cycles. So I know the boom times when most novices mistake luck for skill, and the down times when they question the merits of investing in real estate at all.
Thirdly, because I have invested successfully in the real estate market for so long, I know what works and what doesn't. For example many first home buyers make the mistake of buying in new developments on the city fringes because their dollar buys more. In reality these can be the worst places to buy in terms of future growth. I have always said your first home is your most important investment as it can sling shot you to great wealth or keep you in the poor house.
Knowing what has happened in the past is essential to becoming financially educated today. Knowing what missteps have led others to failure or ruin allows us to avoid those same missteps today.
Recognising patterns that have repeated over and over again in the past allows us to predict what will happen when we see those same patterns repeating today. A solid understanding of history and its relevance to the present allows us to face the future with confidence.
How Did I Start Property Investing?
I started small like any new investor, buying what I could afford, a very dated 70’s two bedroom unit in an inner city suburb. I still own that property today and after a small cosmetic renovation it has doubled in value over the last five years.
I can’t emphasize enough how important it is to buy a quality property for your first home. It can really sling shot you towards great wealth. That decision alone to buy in an area that I knew would see increased demand allowed me to buy three more properties and make passive income that has allowed me to cut back my hours in my day job to focus on other ventures such as this education business Property Toolbox.
 I started investing in my mid 20’s, like many experienced investors I wish I started in my teens or even early 20s. My father who is a very successful property developer was always in my ear about buying my first home. It is the corner stone of your future he would always say.
I found a great two bedroom unit in Windsor (3km’s from the CBD). As soon as my offer was accepted I got to work fixing the place up. It was all original 70’s, including the bright yellow kitchen benches and wood veneer cupboards.
It was hard work and my first renovation project. After 2 months of work the cosmetic changes including new flooring, paint, light fittings, fans kitchen and bathroom was complete.
When I first purchased the property it was receiving $230 a week in rent, two years on I rented out the renovated two bedroom unit for $380 a week. A great result and one that got me hooked on property investment.
It was the peak of the market in 2007 and I was on the hunt for my first investment purchase. After many months of research I pinpointed down my investment location to Southport on the Gold Coast. The Gold Coast had a booming population, the Broadwater was being turned into parklands and a light rail system was being planned to link Surfers Paradise to Southport. On top of all that a new hospital was being planned in the suburb which meant many more jobs would be created.
Once again it only took a few weeks to find another two bedroom unit in the heart of Southport. Good bones close to the Gold Coast CBD, hospital and parklands, it was in a great spot. After a few rounds of negotiation I picked up the unit for $255,000, once again it had renovation potential, and the tenants were paying well below the market value of $240 a week.
Over the next 6 months I increased the weekly rent to $290 a week to be in line with the market.
You Can Only Learn From Your Mistakes
Compared to my Windsor unit, Southport has performed poorly to date from a capital gain perspective. An oversupply of units in the higher end has stunted capital growth in the area, too much supply not enough demand. Over time this will change as the property cycle continues, I expect by 2012 Southport will be one suburb that will outperform many. On the bright side the rent has increased to $300 a week meaning the property is not costing me anything to hold on to.
A great lesson I took from this investment purchase is not too buy too early. I bought 4 years before the major infrastructure projects would be finished. I know now prices go up when infrastructure projects are finished and people can see and use them, not when they are announced or under development.
Buy When Others Are Fearful
I wanted my own home, a patch of dirt I could call my own. Using equity in my previous two properties I was once again in the hunt for a new home and also a property that would see above average capital growth.
It was 2008, during the peak of the mortgage meltdown in the USA. I knew this was a great time to buy following my fathers advice of counter-cyclical investing. Affordability was now an issue for many Australians, so I knew to look for more affordable suburbs that were still close to the CBD, transport and amenities.
I looked at many open homes and in most cases I was the only one who showed up, it was in stark contrast to the amount of people bidding and showing up at open homes during 2007.
I narrowed my search down to the north-side of Brisbane to suburbs that were affordable and would still benefit from major road and tunnel projects in the area.
After many months of searching I finally found a property 8kms from the Brisbane CBD. Once again the property had good bones and renovation potential. The suburbs median price was $428,000, 80k lower than all the suburbs surrounding it and was made up by owner occupiers and post war homes. This suburb showed potentional for growth.
The property was advertised for $457,000, and after two weeks of negotiation and no other offers submitted by any other party we picked it up for $428,000, a great price.
Two years later, the same property is now worth $510,000, and has caught up to the suburbs surrounding it. Not bad considering over half of Brisbane’s suburbs has had negative growth over the same period.
I am once again on the lookout for property today, and I can see some more great opportunities in the current market.
It's Time To Educate Others
Over the years I have helped many young Australians achieve similar results through financial education passed down from my family.
 For most of us 100% of our income comes from our employer, if we stop working so does our income. If you lost your job tomorrow how long could you live on your savings?
Most of us trade time for money. This creates the belief that making money is directly connected to time. The average person believes the only way to earn more money is to work more hours, with the exception of raises and bonuses.
While most Australian’s focus on income from their jobs the wealthy focus on building their assets. Assets give you the option to build passive income which generates cash regardless if you work or not.
Get Educated. Get Smarter.
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