See more of Patrick's blog posts here.
Hi and welcome to the first installment of my property investment blog.
I live in Perth WA ( when I'm in Australia). My partner's name is Elena and we have a 4.5 yo son who goes by the name of Alexander- after 'The Great' one.
I have been involved in property now for 16 years, but only 9 years as an 'investor'. It took me 7 years to see the advantage in leverage of using 'other people's money' that property investing offered - that can make a huge difference in one's life, and that difference has allowed me to escape the rat race and live life on my own terms.
As I write this I am in Russia with my family about to leave for Australia via Thailand after an epic trans-continental train journey of nearly 10,000km on the Trans Siberian rail crossing. From Vladivostok in the Far East to St Petersburg in the North West with stops along the way.
We have been away for a month now virtually living on trains, Russian food vodka and Baltika ( Russian beer) and has been quite an experience for all 3 of us.
As I have several projects on the go back in NW Australia as well as 2 property purchases in progress it's been important to maintain communication - both phone and internet where possible. To say this has been challenging while crossing the Siberian wilderness is somewhat of an understatement!
I have been involved for 12 months now with two other investors in a commercial development, building 2 commercial/industrial sheds with office space in the industrial heartland of Port Hedland- Wedgefield.
The sheds are now complete and while we await titles to be issued from Landgate they have both been put under lease and sold to investors. Both are now under contract awaiting settlement which is rather inconvenient timing with me being away as I'm required to sign as a Director on the new issue of title documents and this is rather problematic when overseas as they have to be originals (not copied) and require the services of a Consular Official to witness my signature and complete a 100 point ID check.
Well, the nearest Australian Consulate is in Moscow about 2000km away (I was there 2 weeks ago), and now we are along the Silk Road to the South at a city called Almaty, which is now the Southern capital of Kazakhstan and has no Australian Consulate service. We've been hiking in the Tian Shan mountains just to the south of the city along the border with China, and have been completely isolated from phone fax and internet, not to mention the world.
This document signing will now have to wait until my return to OZ at the end of the month as there's not much I can do from here. Final figures on the development show a fairly healthy profit, with land purchase and build cost of circa $1,850,000 and sale price for both coming in just over valuation at $2,410,000 netting $560,000.
Another project that I have been monitoring closely whilst away and is now close to completion is the building of a 4x2 transportable house at the front of a 960m2 block in South Hedland with an existing 3x2 house, which I purchased and renovated in early 2011. The transportable is 'planted' on its stumps and all but some landscaping, concreting and finishing to go.
The completion is now within sight but more than 1 month overdue, due to a delay with Horizon power, and I have been desperate to get the valuer in to release the increase in equity that I've generated.
Both houses together will bring in $4200 pw rental, and valuation is expected to be circa $1.8-1.9m; Purchase cost was $680k + 30k on renovations; transportable house cost $375k= total cost ~$1.1m, so $700-800 k equity
I'm relying on this equity to purchase another 2 houses - a South Hedland development size ( 1500m2) block with existing 3x2 house as a joint venture with a friend. The size and position of the existing will allow us to build 2 new houses at the rear straight away and potentially 3 at the front when the zoning change allows (planning scheme amendment 51).
We now have conditional approval from the bank, although I've had to go to a new lender to get the finance as I've just discovered that I've exceeded a lending cap for 'consumer lending' with my existing lender (I already use 3 lenders for my current portfolio, and try to keep my commercial lending and consumer lending with separate banks).
My broker Andrew has been working overtime trying to pull this deal together while I've been away and especially hard to contact at times. The feeling is at the present is that we're not getting a good deal this time as the new lender will only offer the finance at a 70% LVR which is not too favorable but as we were out of time on finance extension already, we had to take it to get the deal over the line.
The plan is to refinance once the property settles, on better terms. The property is a good deal at $1.05m, but it requires circa $360k in cash/equity to purchase at 70% LVR, settlement is scheduled for 30th Aug.
The other purchase is an old house on a very large block in a very sort after suburb of Perth, City Beach. The existing house is a 4x2 built in 1969 with some sea views, with enormous potential to rebuild as a 2 storey to enhance the view and maximize the location. In the short term I will keep the existing as a rental for 12 months or so with a view to get plans together for the New house which will become a PPR.
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YIP’s 2010 Investor of the Year, Patrick went from being broke, unemployed and struggling with a mountain of debt to becoming a multi-million dollar property tycoon in just eight years. Patrick got his start with just $22,000 of his own cash and leveraged the rest of the money from the banks to get him to where he is today. Having gone on to acquire a couple of commercial properties in Port Hedland, and with other projects on tap across NW Australia and abroad, Patrick has retired from his day-job as a pilot and achieved his goal of escaping the rat race.