Success Story: Simon Bought His First Property!!!
Simon bought his very first investment property! In this episode we talk to Simon about his brand new investment property, why he chose it and what his investment plans are for the future.
Book a free strategy session – https://onproperty.com.au/session/
0:00 – Introduction
0:37 – Why he chose existing property over a new build
1:53 – What Simon did to save his deposit
3:23 – How long did it take him to save his deposit?
4:27 – What was Simon’s strategy and did he stick to it?
7:05 – What made this property the perfect property for Simon?
10:13 – Simon’s renovation details
12:33 – What are the plans now with the property?
13:47 – Why Simon is looking for property #2 instead of building a granny flat
16:55 – Using equity to leverage into the next property
Buying Our First Property: Our Current Plans (July 2018) – https://www.youtube.com/watch?v=03QNAjhS8A0
Building and Pest Inspection of Simon’s Property – https://www.youtube.com/watch?v=cUMo7zX1SMk
Simon’s Renovation Vlog – https://www.youtube.com/watch?v=8hRPGPXXnHk
Hi Guys. Ryan here from on-property. Really exciting news today. Simon has gone ahead and purchase his first investment property in Queensland, so he’s really excited and pumped about that. So this is a success story. What we’ll talk a bit about his journey, what he did to save his deposit as well as purchasing how that went. And talk a bit about it. Say, Hey Simon, how’s it going? Yeah, good. It’s finally happened. Yeah, all those videos about us talking about different things and different properties and stuff. I finally was able to find the right one. It took me a while, but I got it. I got there. So you went back and forth. So over a couple of videos dating back about six months, I’ll link up to the first time we did down below your talks about you are going existing property. Then you build an existing that you build and I think you finally settled on existing, right? Yeah. Well it was tough because once I got the, yeah,
how’s it together? I was like, Oh shit, everything’s achievable. But then when you peel back the onion and you look inside, it’s like, okay, well some of these things aren’t really appropriate to me and are a little bit further out of my reach. So initially, yeah, it would have loved to build a brand new home and take advantage of the concession that the Queensland government gives to you. But I just didn’t have enough deposit to execute on that type of deal. So I had to go back to the existing property strategy, which is what I ended up.
So was it the fact that to purchase an existing property, he was going to be more affordable, therefore you needed less of a deposit even though you didn’t get the concessions? That’s exactly right. I’d be able to buy land and then have to build. And then obviously you’ve got to go through that process and you’re not getting any rental income during that period as well.
Exactly. So for someone in my situation, it just didn’t stack up where the opportunity that came over for these existing property was just too good to pass up.
Okay. Well let’s, let’s take people on the journey that you went through. So about six months ago, I think we were talking, you were in the process of saving your deposit. So yeah. What did you do in order to save your deposit and get yourself into a position to buy it?
Yeah, so when I first started working full time, I really figured out my expenses. I pretty much just forced myself to continue living like a uni student, but was earning much more money then when I was at Uva. So like I was so used to living that life because I’ve been at uni for three years and working part time. So I was so used to paying rent and living really, really, really cheap. So I kind of just was like, okay, well let’s try and just continue this because this is a massive goal of mine. I really want to achieve this. So basically I’ll live in the life of a uni student, but on a decent income. Yeah. So basically I would put a certain percentage of my way to weigh every single week. So it’s pretty much buried anywhere between four and $600 a week. Um, like it’s a sufficient amount of money and then the rest of it was coming to my expenses, my bills, my rent, my phone, all of those little things kind of came after that.
So I was heavily prioritizing getting this savings deposit together so we paying yourself first. Exactly. Yeah, yeah, exactly. So paying myself first to make sure that I can get this, this over the line as soon as well how long did that take? Because I remember doing one episode and you nearly bought a bike and that set you back a month or, and then you were going to go your bed and we’re going to go to the Superbowl where then he just saw it and said this is the way that my life is sometimes. Like I get so much fomo. Like right now I was, I was on the um, have you stopped living like a UV shouldn’t now that you bought one? Well, I don’t know. I don’t even know. Cause even when I was at uni I was still traveling and going overseas. At least once a year.
So, you know, always managed to enjoy it a lot, but just being really strict with my savings. But um, yeah, the other day I was actually like looking at flights to Japan because all of my mates were there snowboarding and I’m like, you want me going? Then I’m like, I’ve got these renovation to do. You shouldn’t be doing that. It’s like constant battle between the angel and the devil on my shoulders. How long did it take? So say the deposit. Yeah, it took about 18 months to get the deposit together, but then it took about six months to find the right property there. So from when I had that deposit to when I actually settled on the property was about two years of saving.
Yeah. And so we talk a lot about having a strategy in place before you go and purchase. What was your strategy? What sort of mindset did you go in when looking for property and did you stick to that strategy or did you guess come across some obstacles and change your strategy or
why? Um, look when certain opportunities presented themselves, I start, I started deviating from my core strategy, which was essentially to target the Brisbane market because I, I liked where it was situated in the, in the property cycle. Um, I liked how affordable it was and I liked some of the key performance indicators that were occurring in the Brisbane market. Like the population growth, infrastructure growth, and job growth. All of these things were shaping up to be really, really nice. So I knew that I wanted to focus on the Brisbane market.
So you didn’t really deviate from that. Did you basically focused on those key areas, key suburbs that you looked at? And that’s really just the types of properties change. So yeah, we’re all on the road and we stopped at this little shocking house. I can’t believe it was, it was still standing. It was, you wouldn’t even call it a two bedroom house and that it was, but the guy was there and we went in and had a look at it and he showed us around us. He showed us everything that was wrong with it, which was so much, it was hilarious. But the lane valley there was, it was good. That was one of those examples where I guess you probably have a clear strategy and then you’re like, oh, but there’s this opportunity here for land value where you could see the so
like opportunities like that. And this is where it’s so tough about property investing sometimes like your emotions just take the better of you. Sometimes in situations like that I’m like no Ryan, it’s perfect, it’s perfect but I go to this app, this is bad and had this huge Eastland yeah,
surge or something as well. It’s like he, I don’t think you can develop on but you were you excited and seeing the opportunities like hey come buy this land next door. And the guys like those people will never sell and you’re like
there were so many different moving parts there. And like, cause I had that deposit and had been like four months at that point in time around like I just want to freaking buy something. Like I’m so ready. I’m so prepared to buy something, but you know, you just can’t let your emotions take over. So when you get back, you know, you might go see a property, but then when you start doing your due diligence and you’re looking at those easements and things like that, flooding zones, bushfire zones, housing commission, and you’re like, okay, well this isn’t going to benefit me longer term. So I think we had that conversation the next week. I was like, where did you get with with that? And you’re like, yeah. And then funny enough like two, three weeks after that, the perfect property came up. Um, so,
so what was the perfect property and what made this property good in the fact that it lined up with your strategy and you while this property?
So I want it to be within walking distance to the beaches. It was just something that I wanted to achieve. I grew up on the southern beaches of Sydney and I just know how nice it is to live by the water and how much Australians like to live by the water and still within a decent proximity of the CBD. So the area that are bought in, I kind of compare it to like the Granola of Brisbane personally and it’s in walking distance to the beach. This is a massive 622 square meter piece of land. So it’s much larger than the average and it was just a beat down ass. Like I pretty much got their house at a $10,000 discount. So it was well and truly under market value, which is super rare. But I knew that around Christmas time there was going to be some great opportunities because people freak out when they’re putting properties onto the market and sometimes they sit on the market for a longer period of time. So this one had been there for I think like three weeks before I even decided to inspect it. And then when I walked through it, it just looked like shit. It was so bad. Like I’ll walk through and the tenants were just, the grubby has people that you’ve ever met. There’s like kitty litter all over the floor, poop all over the floor from the cat holes in the asbestos walls, like writing like oh this negative writing all over the walls and stuff and like curtains falling off. Um,
I wonder why I was sitting on the market.
Yeah. Conditioning unit at, so I had was being hung up by pieces of string. It just looks so bad. So every I like can’t get past that and most people can’t get past that. But I could see the value in it. Like it was a nice big flat rectangular piece of land in a really nice pocket of the suburb. Like I think if I was to put this property on the market today, I probably would have already made $40,000 but I’ve is that since during your renovation? That’s after doing a little bit of a renovation. So like there was, there was lots of upside to it and I’ve also got the potential to add a granny flat on that piece of land as well. So it was ticking all the boxes. It was in the Brisbane market. It was within its certain, it was within 25 kilometers of the Brisbane CBD who was within walking distance to the beaches in a really nice up and coming suburb.
Um, an area that had been pretty sketchy for the last, like ever until the last five or so years. It’s gone through a massive period of gentrification and still is. And it still is. Yeah. There’s a long way to go. So it was ticking all those boxes and I knew I could get into this place, rip all the old tenants stuff out and do a, just put a bandaid over it and get a pretty good rental income for it and just basically have it sitting there now ticking away. So I know, cause I talked to Ben about it, he said you did a renovation, I think you spent a week or a weekend or something. Yeah. Innovating it. You paid to get painting done, cleaned out in the gardens then so you spend about four grand, thereabouts. Yeah. So it ended up coming to about $6,000 for everything. Um, so that was landscaping, which I did with all of my friends.
Um, it was interior paint, so completely painted the whole interior or put something that yourself or did you pay someone that’s, that was the most expensive costs. Getting the interior patched and painted, um, to get those as best as walls patched up was a bit of a pain in the ass. But you know, I, I knew, I knew I was walking into that, so that cost me four and a half thousand dollars pretty much to get it painted inside. That didn’t even include the ad. So I, so you can assume that’s a big job. Yeah. Um, so yeah, replaced all the curtains, replace the light fittings through at, put new door handles on, added a new vanity into the bathroom, um, be clean throughout the whole entire property, new gutters on the outs. So I had, um, so it really looks like a different property pretty much from now.
And it, it’s, you know, I wouldn’t be unhappy to be living in this property now after what I’ve done with it. And how much do you think increase the rental value from doing that renovation? If I did nothing, I don’t even reckon I would’ve been able to get $200 for it. Well, what was the renting for when you purchase a Muslim? Reggie from the lady who owned it, it was her sister living in the property. Um, so she wasn’t paying any rent, which is why this chick just wanted to get rid of the property. She was like, this has been a headache to the last 10 years. So she purchased it at the wrong time in the Brisbane market. So she didn’t see that much growth from it. And then her sister just treated it like absolute shit. I don’t know if they’ve got a relationship anymore or if it was easy to that to my property. I’d be like, we’re done. Always like you can check out, there’s a video on the pumped on property channel about the building and pest inspection we’ve walked through and you can just say it all went back down below so you guys can see it and watch it. You guys do a walkthrough of the external, I’m not sure whether you’re inside a little bit of the inside, but the tenants were there so we didn’t really get too deep on the inside.
Yeah. So, so what’s the plan now? So you’ve got potential to build a granny flat and no one said you were thinking about knockdown, rebuild, guessing you negatively geared at the moment because you haven’t done the grand
but yet. So I’m on a principal and interest loan because I want to pay down the principle of that home as soon as possible because the sooner I can own it out right, the sooner I received that passive income. So if I were to go just interest only, it probably be hit about a 5% yield, but it is slightly negative, about $30 a week, negative at the moment. So on interest only or principle on trinkle in interest. So that’s not too bad. So it’s not too bad. Essentially that $30 a week on paying down. But I’m, I’m putting more money in there as well. So, um, just because I want to pay it down as soon as possible. Like I don’t really have a high risk profile. I’m very low risk person. I knew I was just like, yeah. So I knew I wanted to get into the property market though. So I did take a bit of risk with the loan that I got. Like I would go to alone for over 90% and which is very rare in this current market. But I knew that I had the capacity to pay down debt quite fast. So that’s, that was my goal.
So what’s your strategy now moving forward, moving forward? Are you going to try and pay down debt, jump into property number two, build a granny flat? Obviously things will flex and change as your life and situation changes. But what are you thinking about the future?
So my next step is my second property. So this one I’m happy with that just ticking away Nia. Why no plans, no immediate plans to build a granny flat straight away. Your next goal is property number two. Yeah, I’ve done that renovation on the property. It’s ready for tenants. So that’s all good. My next goal is to save up a bit of a cash deposit and ideally over the next 18 months see some value increase from the property that I’ve bought and use a combination of equity and cash to purchase that next property within the next 18 months.
Yeah. And that’s a common way for people to do the two properties to financial freedom strategy that we talked about. So there’s two methods that you can do. You can do what Simon is talking about, which is a purchase one property, and then you focus all your energy and effort on getting the second property. And after that, then you look at building the granny flats. Yeah. Or you can purchase a property, then build a granny flat and then look at purchasing a second property, then build a granny flat. So what is it that made you lean towards going for that second property first versus building a granny flat first?
Personally for me, Cathflo isn’t the issue right now. I’m building my portfolio is, yeah. So I don’t need the cash flow from the granny flat at this point in time. What I need is a number of great properties. Now, the way that Brisbane is situated at the moment, like we do see it as amazing opportunity and I don’t want to sit on the sidelines and in 10 years time go, I missed out on that. So I’m going to do it.
You don’t want to invest your equity and your savings into what is effectively a cashflow play, building the granny flat, which you can do at any point in the future. You want to actually invest that money into, I guess, land and into purchasing, into expanding your portfolio because you believe in the market cycle and you believe in when prisons app, that’s an obvious thing to salvage. You’re investing in. So I guess your risk profile, you don’t need that cash flow straight away. So you want to get as many foundational properties as you can while the market’s good and all this opportunities out there.
Yeah, right. 100% now that. Yeah. So, you know, my goal is 18 months to secure that next property. Um, as you said, life can sometimes get in the way. Um, it’s been a pretty massive couple of years saving up that deposit and getting that property together. So I do want to spend a bit of time 2019 just on myself and traveling and things like that. Like I’m going to Sri Lanka Ranger, I want to go to New Zealand in August and I’m going to Bali with you. Yeah. In October. Yeah. And a few clients. So, you know, that’s a massive goal for me because I’ve put that sort of stuff on hold for such a long time to get that initial deposit together. I’m kind of like spending a bit of time in a bit of money this year on myself.
Yeah. So I guess your goal is not to save the full deposit like you did this time around, but to save a partial deposit and then use the equity growth that you get from, we’ve manufactured some gross profit from what it was before to what it is now. And then obviously the area grows as well. Yeah. And you can use some of that in order to leverage into the second property, which is really cool.
Yeah. But yeah, I can understand that. Living as a uni shooter, yeah, well I’m 26 I want to enjoy my life. Like you know, that’s a thing about property investing. You need to have a balance there. I knew that it was always going to be the hardest to get that first property because I had no one to help me except my own money. It takes time to get that and he sort of pause it together. But then if you, do you feel relief after buying it? Yeah. Now that you’ve done one, and I guess even if you don’t
worked really hard and accelerator, eventually if you bought well that property is going to go off and you could leverage to buy another one. So do you feel, does the pressure feel like it’s off a bit?
Yeah, because I’ve spent so much time analyzing the market, learning about property investing, developing the right strategy. Then I executed on it and now because I stuck to my plan, I knew exactly what I wanted to do and I did that. There’s a massive weight off my shoulders. It’s like, wow, you’ve achieved, you know, one of your biggest goals and you’ve got your foot in the door, which is everyone. All the investors always say it’s the first property is the hardest one to get and I knew that this fun know that this is going to be the right one for me and there’s going to be great, hopefully short time uplift, but more importantly longterm.
Yeah, and you were saying before we started recording that it was easier than you thought it would be to actually purchase that first property and that’s actually going to be the topic of our next video, which is what’s the process like buying that first property? What are the nerves that you went through? What are the hiccups, what are the hard parts? So if you’re out there and you’re looking at purchasing your first investment property and you’re not exactly sure, or just the whole process makes you nervous, then we’re going to talk about that in the next video, which will come out next week. So thanks so much for sharing your story. Massive. Congratulations on getting that first property that you beat me to it. I’ve got some debt to pay off. And then I’m so lucky in mine. I did a strategy session with Ben on camera. Good stuff the other day. So we’ve got a plan to move forward, but awesome man. Really excited for you. And then I guess we’ll check back in maybe an 18 months time and see where you’re at and see the next steps. But really exciting stuff.
Yeah, no thanks man. Now I’m really stoked on, I’m proud of myself and I think anyone that that is able to take that first step and take the plunge and get into the property market should be proud of themselves. As long as you know that you’ve made the right decision.
Yeah. And so this is really cool episode. Go ahead and check out one of the early ones mean Simon did when we were talking about looking at buying a property. And I’ll also link up down below to next week’s episode where we talked about the process of buying a property won’t be out right now, but in a weeks time it will be. And if you’re looking to set your strategy, if you’re looking to try and work out how to invest in how you can make this two properties to financial freedom work for you, then Simon and the team over at pumped on property do offer free strategy session. So you can get on the phone when Simon or one of the team members over there talk about where you’re at, talk about where you want to be and the next steps that you need to take. So Simon’s obviously successfully done it himself and then can help you guys do it as well. So got on property.com dot or you to learn more about that. You can book a time that suits you over there. So thanks so much for watching today, everyone. And until next time, stay positive.