Australians are making copious amounts of cash through investing in property and as such I’ve decided to do a series of short pieces on investors I have met along the way who have started from nothing and built a property portfolio most of us would be envious of.
My first contributor is Darryl; he’s a 33 year old full time investor who started out delivering pizza, earning an income of approx. $20k per annum. He first became interested in investing after reading Steve McKnight’s “0-130 Properties in 3.5 Years.” Most budding investors will be familiar with Steve McKnight, but for those of you who aren’t, he is an extremely well-known figure in property investing circles for having amassed a huge portfolio based on cash flow positive properties.
Darryl currently owns 13 properties (another 2 are presently under contract) throughout NSW and QLD. He has accumulated this tidy property portfolio over the last 12 months with his first property purchase in Broken Hill costing him a whopping $44,000. It is currently rented out for $180k (yield of approx. 19% before costs) and valued at $89,000, doubling the purchase price.
The best performer in his portfolio to date is another property in Broken Hill which is achieving an incredible yield of 36%! It would seem that whilst regional areas can get a bad reputation in terms of offering poor capital growth, yields like this can certainly make it worthwhile. Darryl certainly seems to have an affinity with regional properties but is not averse to purchasing closer to the city if there is the opportunity to make quick capital gains on a property with renovation potential. However, like many other investors, cash flow is high on the priority list and for many reasons, the main one being that it provides income to support his lifestyle. Purchasing multiple cash flow positive properties has afforded this young man a life of freedom, something most of us can only dream of. In fact an average week for Darryl involves “a few hours a week looking for new properties; the existing ones don’t need any additional work and if a new property needs renovating it will take about 2-3 weeks if you’re doing it yourself.”
So, how does one become a full time investor? When given the opportunity to ask Darryl just that he replied “(you’ll need) 20%+ of your current income. Don’t touch your normal pay for 6 months, and then you know you’re full time.”
For Darryl, property investing is one of the best investments going around because “there is no glass ceiling on how much you can earn and it’s a royalty based income” and his number one rule? Always buy below market cost, highlighting the fact that “money is made in the purchase not in what you do with it. Don’t listen to friends and family with no investing experience on where to invest.”
There you have it: Pizza delivery boy to investor extraordinaire in as little as 12 months. It just goes to show that it doesn’t matter how much you earn, it’s what you do with it that counts.