hard their entire life and still be struggling financially right to the end.
It was a hard, deeply sad lesson that only added fuel to my fire. I was determined to make money work better for me so I could create financial security and wealth over time.
My first jobs
At 14, I started working after school at KFC to help bring in some extra money, and by 16 I had switched over to McDonald's. Everybody starts somewhere, and these jobs worked well around my school hours and gave me some pocket money.
It was during my time at McDonald's that my interest in property really began to take off. A 19-year-old workmate happened to mention that he had just bought his first investment property with the help of his dad. It blew me away. How had this guy only three years older than me managed to buy a property when none of my family members or friends, or indeed anyone I knew, had managed it? If he could do it, why couldn't I? My goal of owning a home suddenly started to look achievable.
When I was 17 years old, working long shifts at McDonald's for less than $11 an hour, I would imagine where I would be financially 10 or 15 years down the track. I was certain I didn't want to keep struggling. I remember thinking, How can I make sure I'm financially set up when I'm 30 years old? What can I do in the next few years that will put me ahead of everyone else? As a start, I made sure I saved as much as I could. I was saving at least $200 to $250 a week out of my part-time wage of $340.
One morning I was working a very early morning shift at McDonald's with another crew member, Steve. We were doing the open shift, which means opening up the store, turning on all the equipment and getting the cooking area of the restaurant ready for preparing the breakfast food. Steve was complaining about money and how tired he was of working at Macca's — in a couple months he would have been there 10 years, and he was turning 28 years old.
I said, ‘Steve, why don't you just quit here and apply for other jobs that pay more, or something you'd enjoy more?’
I still remember his reply: ‘I can't quit, I don't have enough money to pay my rent, bills and car loan. And I don't have the time to look for other jobs or go to interviews because I'm always working.’
‘But you have some money saved from working here for 10 years though, right? You have the nicest car!’ I said, trying to make him feel better. ‘You could just sell that if you needed money?’ He was a car fanatic and always loved talking about his car.
‘I barely have any savings. My wage goes out as fast as it comes in. I've got my car loan to pay off too! That's almost $30 000. I thought about selling the car to get rid of my loan, but I won't even get $15 000 for it now.
‘Never buy an expensive, brand-new car’, he added. ‘It's one of my biggest regrets. The bank charges huge interest, then after five years or so the car's not even worth half of what you paid! The car goes down in value and you can't even get your money back if you want to sell it in a few years' time.’
I could hear the regret in his voice. He knew he'd made a mistake that would cost him dearly for years.
Like Steve, many of my friends had started taking out personal loans to buy nice cars on finance. The temptation to do the same was strong. I had always wanted an old Ford Mustang and was close to dropping all my savings on the car of my dreams. Luckily, thanks to Steve's well-timed advice, common sense prevailed and I managed to resist the temptation.
But sadly, I saw lots of friends fall into the car finance trap. While they struggled to repay the loans on their quickly depreciating cars, I caught the bus, drove a bomb and continued to save money each week.
Making that choice, opting for logic over emotion, changed a lot of things for me. Had I gone and bought my dream car, I might have thought I looked cool for a while, but in the long run I would have been financially much worse off. It took a lot of discipline, but in two years I had managed to save enough for a small deposit.
I turned my focus to buying my first property. I spent many hours on the internet trawling through the real estate listings. I read and re-read the old property investment books Mum picked up for me from the op-shop (I still have them today). I got a new job as an office junior at an automotive paint shop. In this role I did the banking, calculated the daily earnings, reconciled accounts and dropped off the daily takings and receipts at the bank. Working with numbers every day was an excellent learning experience and gave me some valuable insight into the financial end of running a business.
I knew I had just enough for a deposit on an investment property, but I also knew that obtaining finance was going to be tough. I used every online mortgage calculator I came across to find out what I could borrow. Altogether I tried 11 different lenders, but my woefully low salary of $26 000 ensured I was either rejected outright or offered a measly $30 000 home loan. What could I buy with that? I needed to increase my income, and fast. So I took on a second job as a bartender at the local RSL, working long hours in the evenings and on weekends.
After months of setbacks and rejection, I was driving to the bank to drop off the daily takings for work when I decided it was time to go in there and speak to a lender in person. What did I have to lose? I nervously approached the counter and asked to speak with someone about getting a home loan. The teller raised her eyebrows and gave me a look. I did look pretty young. Nonetheless, she made an appointment for the following day with a mortgage lender named Kathy.
The next day I told work I would take a little longer at the bank and set off to my appointment. Kathy was awesome. Together we went through my income, expenses and overall financial situation and I felt like someone was finally taking me seriously. We spoke about the sorts of properties that I had been looking at and my expected price range. Finally, she told me what I had been waiting to hear. If the property I wanted to purchase had a rental income of over $200 a week, my borrowing capacity would be boosted to $140 000. I was ecstatic. Not only had she taken the time to explain everything thoroughly in terms I could understand, but she had approved me when everyone else had said no. I walked out of that meeting with a conditional pre-approval and a spring in my step.
I couldn't believe it was finally happening — I was on track to buy my first property at just 18 years old. And with no mentor or parental help; I had done it on my own.
CHAPTER 2 Purchasing my first property
Those familiar with my story might now wish to jump to Part II and my evaluation of the different investment options. Otherwise, read on for an account of my first seven years as an investor, from owning nothing to having ten properties under my belt by the age of 25.
Due diligence
I was 18 and ready to buy my first property — I just needed to find the right one. I had already spent years studying the market on the internet, so I had a pretty firm grasp of the various suburbs of Sydney and their price ranges. It was already clear to me that even the western suburbs were going to be beyond my initial budget, so I turned to another familiar area — the Central Coast.
During the school holidays my family would occasionally go camping together, and the Central Coast of NSW was one of the only holiday destinations we could afford. It was an hour-and-a-half drive from Sydney and had a decent-sized population, as well as a seasonal influx of tourists. It seemed a lot nicer than Mount Druitt, and I thought that just maybe I could afford to buy something at the price and rental return I was looking for. I searched day and night, but although prices were lower than in Sydney, most places were still just out of my reach. Finally I came across a property listed at $145 000.
My eyes lit up as I read the description. It had two bedrooms, one bathroom, a balcony and a car space. It was only 20 minutes' drive from where we used to holiday, at The Entrance. Better still, it was rented out at $200 a week. It seemed too good to be true. Comparable properties in the same area were selling for more than $165 000. There had