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How a 23-year-old on $50,000 per year bought his first investment property

How a 23-year-old on $50,000 per year bought his first investment property
May 24, 2018 Propertyology

If there was a poster boy for savvy investing on a low income, James would be it.

The 23-year-old from regional Queensland appears to have been born with a finance gene, and he’s put it to good use.

“I’ve always liked the idea of making money off your money. Saving money is just how I’m wired I guess,” James said.

“My parents were quite good with money – quite responsible at just not having too much debt. Things like that. Some of what they did would have brushed off on me.”

James kicked off his journey with a part-time job at McDonalds in his teens to earn some extra dollars. After finishing school six years ago he took a job at the local abattoir.

“I do kind of a niche role – it’s basically labouring. I got into it because it’s an unskilled job and its close to where I live,” he said.

But here’s where James became the exception to the norm. A wage of $50,000 a year isn’t big by modern standards, but this didn’t slow down James ‘the super saver’.

“I just don’t spend money on things I don’t need. I’m not a big drinker, I don’t smoke, I’m not into technology – I have an old phone – I’m not into expensive cars. I just spend money on necessities and minimise expenses.”

By applying this simple approach, James accumulated a war chest of over $100,000 in savings towards his first investment.

He started looking at real estate investments but was taken aback by the level of research required to find the right prospect.

“Trying to choose a property – house or unit, what city, how much to pay… it is super overwhelming.”

“You hear about people investing in property so I just started googling. In one of my searches I saw Simon Pressley [Propertyology MD] on a television program speaking about investing in regional areas rather than capital city areas and from what I heard him say I thought that sounded pretty good.”

James was pleased to discover Propertyology were purely there to help investors, and their approach of emotionlessly buying based on extensively researching the most promising markets across Australia was exactly what he was looking for.

“It was music to my ears.”

“I met Bryan (Loughnan) and he firstly asked me why I wanted to try and invest. It was almost like he’s trying to talk you out of it at first – to make sure you’re doing it for the right reason and you actually want to use their service and what they do.”

“It was the best way to go about it based on facts and research. So comprehensive.”

James was also impressed Propertyology provided a flat-fee service rather than charging a commission on the investment’s purchase price.

“Part of their service is to negotiate the lowest possible purchase price. That’s why they charge a flat fee because he (Bryan) goes in there and he fights tooth and claw for you to get the best possible price. He’s a real ruthless negotiator.”

Propertyology helped James secure his very first investment – a three-bedroom home in a regional Queensland location for $350,000 in June 2017.

Combining his huge wad of savings with the property’s excellent return has meant servicing the loan is stress free.

“The deposit was $70,000 – so that’s 20 per cent – and then you’ve got all the other costs (stamp duty, conveyancing etc.) I paid cash for those as well.”

“I had leftover saving after that as well. I didn’t want to scrape the bottom of the barrel to buy an investment property. I wanted to have a cash buffer so if there’s any maintenance items, if interest rates go up, if I hurt myself at work – it’s peace of mind.”

The property also already had tenants in place and they’ve proved to be excellent – the $370 per week rent is handy too.

With his property earning him a gross yield of 5.5 per cent, James is well and truly in the positive column of the life’s ledger.

“Now I’ve got an offset account, all my wages and rental income go into the offset account and I just spend money on what I need and the rest just sits there. It’s simple and its working out for me.”

James is looking forward to buying another investment property with Propertyology at some stage.

“In the future, I’ll definitely be keen to go again.”

“Their service is awesome. There’s nothing else like them – they’re great. They’ve done exactly what I wanted them to do, and more. I’d definitely recommend them to someone else if they want to buy an investment property.”

Propertyology is a multi-award-winning buyers agency and (national) property market research firm. To learn how they can help you find the right property, in the right location, at the right price, contact us now.