Ken is a 27-year-old professional working in Gladstone on one of Australia’s largest mining projects. Ken comes from an entrepreneurial family and began looking at property investing after finishing university. Ken currently owns one inner city property and plans to buy a second in the next 12 months.
What makes Kens story interesting is that although he is doing extremely well in his career he has identified that he would like to create passive income through property and shares to create a better work life balance.
I asked Ken 5 questions to better understand his approach to property investing and to share his experiences as a young property investor with you all.
1. When and why did you begin looking at property investment?
After completing university and having to pay rent I realised I wanted to put my hard earned money to good use instead of paying off someone else’s mortgage.
2. What are 5 things you wish you new sooner?
- Negative gearing is not all its cracked up to be. By paying off your assets off as soon as possible they can begin to generate income.
- Owning property is easy.
- Establish Interest Only Loans, especially if you want to increase your cash reserves to buy more assets.
- If your company offers benefits, such as pre-tax deductions from your salary for interest on investment loans, start straight away! If your company allows you to do this you can claim these payments as an expense every few months, instead of waiting 12 months for the end of financial year. This enables you to put your pre-tax dollars to use straight away.
- Don’t use run of the mill financial planners. Find a good Accountant, preferably a Chartered Accountant, which specialises in taxation. Ask if they have their own portfolio of assets and find out what strategies they use to manage them. While their personal strategy may not suit you, at least you know they’re a like-minded investor with real experience in the game.
3. What is your personal investment and property investment strategy?
To own as many income-producing assets as possible, allowing me to live a great lifestyle, with protection through diversification. My strategy is to not just hold an asset, but own it outright with no mortgages or loans over the underlying asset.
4. What is the most important thing you have learnt from your experiences in property investing to date?
Don’t get emotional and don’t look at the property like you are going to live there. If a property suits you now, chances are it may not in ten years. Always remember it’s an investment and people will move in regardless of your personal preferences and tastes. Don’t try and find something that fits you personally, find something that suits the market.
5. If you were starting again what would you do differently?
Only put a small deposit down. I started with a 20% deposit, which tied up a huge chunk of cash. If I could do it again I would only put a 10% deposit down and pay the relatively small cost of Lenders Mortgage Insurance. This way I could have kept a large chunk of cash for the next investment and still had this excess money sitting against the loan in an offset account until I found my next investment.
If you have any property investment stories or need a question answered please let me know in the comments below…