Thanks to some kind words from Gerrard and Fudosan I have decided to inflict you with my story so far, In the hope that it will show that with the right attitude and some help from those that have done it any things possible.
I bought my first property just on 4 years ago now while my wife and I where still flatting in Wellington.
We had a mate who needed to get out of a property in Lower Hutt it was worth $95,000.
It was your average 3 bedroom ex state up and down flat.
I offered my mate $85,000 for it because thats what he needed at the time, he accepted.
I then had to figure out how I was going to pay for it, but having just read Rich Dad poor dad I figured that I was bullet proof and could not fail (wish I had bottled some if it at the time).
Even though I had no money at all.... Like zip I think I may have had like $1200 in a savings account but thats it.
So I read everything I could get my hands on and decided It would have to be a no money down deal.
I changed the contract for sale and purchase to read that I would pay $95,000 for the property, and then wrote a side agreement with my mate the vendor saying that if I settled on time on settlement day I would get a $10,000 discount.
So off to the bank I go and ask for a 90% loan on the value of $95,000 the bank said yes presuming that the shortfall between purchase price and finance figure was to be my deposit, I settled paying the vendor $85,000 and using the $500 for legal cost's.
The following week my tenants gave notice, and told me that there mother wanted to move in so that was cool, I put the rent up from $190 per week to $220.
Later I sat back and figured out that this property was getting me a 12.5% return, but at the time I was just happy that it was covering the bills.
A year after buying this flat I sold it when an agent brought me an offer unsolicited for $155,000.
I sold and the following week bought another unit in the same block for $111,500 renovated this at a cost of $11,500 doing all the work myself.
I sold this property 2 weeks later for $157,500.
At this point I had to sit back and figure that I had managed to make just over $100k in 12 months.
At the same time I had been working 50 hours a week to earn $45,000 per year, and so when I was fired from my "Day" job a couple of months later I decided to not get another regular job.
Instead I took my former employer (a well known NZ retail chain) to employment court and won enough money to pay a deposit on 2 more houses.
At this stage I was still flatting in Wellington and had not purchased a home to live in for myself.
I'm convinced this was a good move up until this point I had been living rather cheaply and did not know what I was missing.
At this point it was time to buy a real home so after looking round for about 2 weeks we found a 2 bedroom semi detached flat that had been part of a home and income.
They had been subdivided and the house had been sold off, but not the flat.
It was nice but a bit small and the access was an issue as it was walk up, flat but still say 12 paces from the car to the house.
It was advertised at $185,000 so we offered $140k and settled on $144.5k.
We lived in this house for my first year of fulltime investor status.
During that time we painted, worked on the bathroom and put in some small gardens, really nothing that could not be acceived in 3 good weekends.
We placed it on the market when our first child arrived and we decided to move to a bigger house.
We listed it for $230,000 and sold for $222,000 making a $78,000 profit in 1 year spending about $3000 on refurb costs.
During the year we were there we also completed 3 more projects in the block of 12 in Lower Hutt, they were the same type as my first purchase.
3 bedroom in average area, talked the body corp into repainting the outside, do up inside with some colour new whitewear if needed.
Also got on to how to get the most out of your tenants by offering the flat in the paper for say $220 per week then when a prospective tenant shows some interest I would offer 2 weeks rent free if they fix the rent at $240.
Now you are probably saying what the heck it would take you 22 weeks to get your money back.
But you have to remember that I was doing up to sell, so I would find a good tenant, give them a two week rent break for signed for 12 months.
The tenant would love it, the new owner would have a fixed rental for his new property.
Also if I was getting down to negotiations with a purchaser and we were say $5000 off my price, I would go to the occupier and ask them if they would pay $10 per week more for a dishwasher, most would say yes.
Then I would re right there aggreement at + $10 x 52 = $520 per year @ 8% yield say $6500.
So the occupier now has a dishwasher for $10 per week, I get $5000 for a $700 appliance, and the new owner gets a better return and a new appliance to depreciate.
Everyone wins, it's not very often that I don't pull that one out at some point in a sale now.
Thats the end of part one because my fingers hurt from typing,
Back soon
I bought my first property just on 4 years ago now while my wife and I where still flatting in Wellington.
We had a mate who needed to get out of a property in Lower Hutt it was worth $95,000.
It was your average 3 bedroom ex state up and down flat.
I offered my mate $85,000 for it because thats what he needed at the time, he accepted.
I then had to figure out how I was going to pay for it, but having just read Rich Dad poor dad I figured that I was bullet proof and could not fail (wish I had bottled some if it at the time).
Even though I had no money at all.... Like zip I think I may have had like $1200 in a savings account but thats it.
So I read everything I could get my hands on and decided It would have to be a no money down deal.
I changed the contract for sale and purchase to read that I would pay $95,000 for the property, and then wrote a side agreement with my mate the vendor saying that if I settled on time on settlement day I would get a $10,000 discount.
So off to the bank I go and ask for a 90% loan on the value of $95,000 the bank said yes presuming that the shortfall between purchase price and finance figure was to be my deposit, I settled paying the vendor $85,000 and using the $500 for legal cost's.
The following week my tenants gave notice, and told me that there mother wanted to move in so that was cool, I put the rent up from $190 per week to $220.
Later I sat back and figured out that this property was getting me a 12.5% return, but at the time I was just happy that it was covering the bills.
A year after buying this flat I sold it when an agent brought me an offer unsolicited for $155,000.
I sold and the following week bought another unit in the same block for $111,500 renovated this at a cost of $11,500 doing all the work myself.
I sold this property 2 weeks later for $157,500.
At this point I had to sit back and figure that I had managed to make just over $100k in 12 months.
At the same time I had been working 50 hours a week to earn $45,000 per year, and so when I was fired from my "Day" job a couple of months later I decided to not get another regular job.
Instead I took my former employer (a well known NZ retail chain) to employment court and won enough money to pay a deposit on 2 more houses.
At this stage I was still flatting in Wellington and had not purchased a home to live in for myself.
I'm convinced this was a good move up until this point I had been living rather cheaply and did not know what I was missing.
At this point it was time to buy a real home so after looking round for about 2 weeks we found a 2 bedroom semi detached flat that had been part of a home and income.
They had been subdivided and the house had been sold off, but not the flat.
It was nice but a bit small and the access was an issue as it was walk up, flat but still say 12 paces from the car to the house.
It was advertised at $185,000 so we offered $140k and settled on $144.5k.
We lived in this house for my first year of fulltime investor status.
During that time we painted, worked on the bathroom and put in some small gardens, really nothing that could not be acceived in 3 good weekends.
We placed it on the market when our first child arrived and we decided to move to a bigger house.
We listed it for $230,000 and sold for $222,000 making a $78,000 profit in 1 year spending about $3000 on refurb costs.
During the year we were there we also completed 3 more projects in the block of 12 in Lower Hutt, they were the same type as my first purchase.
3 bedroom in average area, talked the body corp into repainting the outside, do up inside with some colour new whitewear if needed.
Also got on to how to get the most out of your tenants by offering the flat in the paper for say $220 per week then when a prospective tenant shows some interest I would offer 2 weeks rent free if they fix the rent at $240.
Now you are probably saying what the heck it would take you 22 weeks to get your money back.
But you have to remember that I was doing up to sell, so I would find a good tenant, give them a two week rent break for signed for 12 months.
The tenant would love it, the new owner would have a fixed rental for his new property.
Also if I was getting down to negotiations with a purchaser and we were say $5000 off my price, I would go to the occupier and ask them if they would pay $10 per week more for a dishwasher, most would say yes.
Then I would re right there aggreement at + $10 x 52 = $520 per year @ 8% yield say $6500.
So the occupier now has a dishwasher for $10 per week, I get $5000 for a $700 appliance, and the new owner gets a better return and a new appliance to depreciate.
Everyone wins, it's not very often that I don't pull that one out at some point in a sale now.
Thats the end of part one because my fingers hurt from typing,
Back soon
)
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