How ‘late bloomers’ can succeed in property investment

When did you decide to start investing in property?

I was a late starter, I was in my 50s before my wife and I brought our first investment property. I was a senior executive, good pay, good equity in our residential home, everything was growing. We came to a period of time, 10 years ago, where things would just grow and you would think that would go on forever. Then, the GFC came in and you realise that things don’t ... and you start looking at your birthday candles and you think, oh my goodness, I’d better do something.

So, I went to a lot of education courses and seminars. I thought, well, I’m in my 50s, the last thing I want to do is stuff it up because I haven’t got the time. I’m sure I’ve got a lot of time left, but I haven’t got as much time as my 30-year-old sons to recover if there was something not done right.

Aside from your age, what was your “lightbulb moment” or catalyst to start investing?

Where am I going to derive a retirement income from? What’s that going to look like? So, really, that was it. It just built up and then I started doing the seminars and the education. I’m a very conservative investor, so I wanted to make sure I was well-educated before I took that first step.

By “conservative”, do you frame that in a risk perspective? As in there’s not much time to make a lot of mistakes for you?

That’s right, and one thing age can give you is the ability to – just because of the number of years – have built good equity. I certainly didn’t want to lose any of that, I just wanted to build on that.

What’s the benefit of being one of the elders in the field?

The benefit of being a bit older – no mortgage. You know, they say you spend to your income level and I’d agree with that. More money I earned, the more we spent, and we didn’t invest it. [Then], we discovered Right Property Group, and [they said] it was about a strategy, about having a strategy, the right strategy, a timeline and minimising the risk. There is always risk but [you can minimise] the risk. So, our residential property was quite strong in equity so we’ve never really had a problem with the banks.

How will you describe your strategy?

Part of the strategy was to build our base portfolio very quickly. So, within about three years, we had seven investment properties along the east coast of Australia. Overall, the portfolio has been cash flow neutral, with some good tax depreciation making it cash flow positive, if you take the tax depreciation into place and really good equity, really good growth we’ve had.

It was [also about] spreading the purchases across the country. As I said, we’ve got two in Queensland, four in New South Wales and one in Victoria. Some of those are in my name, some are in my wife’s name, some in both our names to minimise land tax and maximise depreciation. Within that, there are some apartments, there are homes, there are houses and land, there’s regional city.

How many properties are in your portfolio now?

Seven – two of those are home and land. This year, we’re looking at putting subdivisions and granny flats, just to increase the cash flow.

What is your goal for retirement?

We’re aiming for a $150,000 income in retirement.

We’re now going through an increase in the cash flow component. Roughly speaking, if you buy something for $300,000, you should get $300 a week rent. We’ll put a granny flat and subdivide and put properties that will cost us $150,000 to build, and we’ll pull $300 plus rent out of those. So, three of those each year will increase our cash flow. Then we’re going to go into really paying off, consolidating so some of those properties may be sold down to pay off the others ... [then] we pay down the portfolio and we’re left with [a nice retirement].

What is your advice to budding investors?

In my case, I have three children who are in their late twenties, early thirties, and I expect them to develop their own portfolio. I mean, for just little old me, if you’re young, get on to it. Get on to it now, you’ve got the time, build it. [My kids] can do what they want with [my properties after I’m gone], but I expect them to get moving. That’s the big thing I’ve learnt.

Tune in to The Smart Property Investment Show’s special episode at the Property Buyer Expo to know more about setting goals, repaying loans, and working your way up the investment ladder through good education and the right strategy.

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