Dear , it’s Helen here.
Buying my first home was exciting really filled me with enthusiasm – it was an exciting time in my life given that I had paid off my huge personal debt as well as managing to save up a deposit to buy our first property!
However our real milestone as fully-fledged investors happened when we purchasing our next property while we were on our honeymoon!
That’s also what got the ball rolling for us.
Before we knew it we had six properties in our portfolio and we were really proud and excited, and looking forward to chalking up property number 7.
So when the time was right, off we went to the bank to take out a mortgage for our 7thproperty, except this time we received a different response: the bank manager said “no” to us!
We were stunned! Why would they say no?
The bank manager told us that we were too highly leveraged – if we were to lose our jobs, then we wouldn’t be able to repay the mortgages on our investment properties – and having 7 unpaid mortgages was too high a risk for them.
Everything we had worked so hard for came to a grinding halt – we had hit the financial brick wall!
We were in a bit of a spin, as we had not anticipated this at all!
We needed a solution and so we had spoken to so many different people and this was the advice we got:
“get a second job”
“start a business”
“negotiate a pay rise”
“be happy with what you have”
OK, these options were not really fantastic!
So we went from seminar to seminar and spoke to expert after expert after expert.
Finally someone advised us to buy a cash flow positive property. So we took the advice and started the search for suitable properties, and after some serious searching we found something, and we were ready to go to the bank and try again for another loan.
So, here we are sitting in the bank manager’s office for what seemed like forever, while they were reading through the figures and finer details. Finally they looked up at me and said the magic word: “yes” and we were super excited! We could finally buy more property!
In the midst of the excitement, I had a thought – “what if I bought more of these cash flow properties, how much could I borrow?” So I went ahead and asked the bank manager.
They did the figures and then looked at me and asked me “would another million be enough to tie you over?”
I almost fell off my chair with excitement!
All of a sudden that dormant 20-year old shopaholic inside of me woke up again, and we went crazy and bought six properties in six weeks!
Now, I don’t recommend you do that, because you will be buried under a mountain of paperwork!
However, that’s where it clicked for me: I should be buying more strategically, and building a balanced portfolio of property – some that were cash flow positive, and some that were capital growth. This balance would allow me to buy more property without hitting the financial brick wall again.
That’s the Secret!
When I discovered how to invest strategically, I finally had success as a property investor, and not long after I was saying goodbye to retiring off $30,000 a year at 65 years of age. Instead I retired in my 30’s.
I tell you this story, not impress you, but to show you that I am no different to anyone else out there. What made me different was the fact that I believed in myself, I had a desire to push through, and I had the discipline to keep going. I had to change my habits and that took some time, some education, and a fair bit of patience and persistence.
So let me ask you…what is it going to take for you to achieve your results? What actions are you prepared to take to make it a reality?
Hmmm…food for thought 🙂
To Your Thirst for Knowledge and Success,
P.S Here are some definitions for you to master (if you haven’t already) 🙂
- Capital Growth Property – a property that will have a considerable increase in value over time, and will deliver a return upon sale.
- Cash flow Positive Property – a property that will deliver a profit from rental income after all expenses are paid
- Financial Brick Wall – The point in investing where you are unable to borrow any more money because you will not be able to service the loans based upon your current income.
P.P.S.S In my next e-mail, I’ll talk about the simplicity around property investing and the financial advantages of building a property portfolio.