Like many investors, Nhan Nguyen once believed what we all believe at some point, that success means going to school, working hard, getting a good job and maybe one day having enough money to retire. Then he read Robert Kiyosaki’s Rich Dad Poor Dad and his views changed forever.
Then 19, Nhan decided that his future would be best served by investing in the property market. The Brisbane local started attending a multitude of investment seminars and tried to soak up as much property information as he could. Soon he had a new goal. Young, ambitious, he set his sights on buying 200 properties.
“It was just a goal I set myself. It had nothing to do with going into development or the strategies I’d use to get there. All I knew is that I wanted about $200,000 a year in passive income. I just had to work out how I would achieve this,” he says.
Nhan made his first step in reaching this goal at age 21, purchasing his first property. On reflection, he says the financing was easy because he had some savings stored up and was able to access the first homebuyers grant.
The problem came when trying to arrange his next property. “I had to get creative because I didn’t have any money left. I thought, ‘how can I purchase without putting any money down?’ and it got me thinking.”
What helped was that since university Nhan had been working in the property industry. He had first done 12 months at a property education company and then some time at a development and marketing company. The exposure to big property deals gave him great insights into how to negotiate deals, find partners and get wind of opportunities.
Armed with an arsenal of ideas on how to progress forward, Nhan began picking up an array of properties in the Brisbane area – all financed without any of his own start-up capital. By the time he was 23, he was in a position to branch out on his own, becoming a full time investor.
“There are two strategies I mostly use,” says Nhan. “I either get a money partner or I use option agreements. Either way, it’s a process. You have to invest your time and knowledge into knowing how to do these deals, and only then can you start.”
Nhan adds that in the beginning he found money partners through seminars and property clubs. He would approach people who were in the market for property and explain to them the type of deal of he wanted to do: how much money they’d need to put down and what they would get in return.
“I provide my partners with all the information they need to make a decision, plenty of numbers and forecasts. I also show how it can work independently of my skills. I like to include information on how the price we’d be getting is already something of a bargain. The impression I want to give them is that the deal is going to work whether I’m involved or not, yet it just so happens that I found it and will be managing the process. I basically show them that it would have to take a complete idiot to mess the project up.”
Some of Nhan’s deals:
Location: Camira, Qld
Purchase price: $270,000
Money down: $7,000
Sales price: $306,000
“The sellers were relatives of mine and had been struggling to sell their investment property. They had had two contracts fall through and the house had been empty of tenants for months.
“I knew that they just needed some cash to support their mortgage costs, so I got them to agree to a $3,000 option agreement and took possession of the property. I then spent $4,000 on a renovation and eventually sold the property for $306,000, pocketing the difference.
“The project worked because I kept the renovation costs under control. I bought a second hand kitchen for just $400 and erected an interior wall to create an additional room.”
Location: Bulimba, Qld
Purchase price: $650,000
Additional costs: $90,000
Money down: $0
Sales price: $840,000
Profit: $50,000 (50/50 share of $100,000)
“In 2009, I came across a block of land in Bulimba, about 4km from the Brisbane CBD, and decided that it would be an excellent site to build a house. I knew the market well and, being an upper market area, knew houses were selling for about $900,000.
“I bought the land for $350,000 and built a house on it for $300,000, with an extra $50,000 required for stamp duty and other purchasing costs. I got the upfront capital needed by getting an investor friend to put up $150,000 equity as a deposit and I borrowed the rest from the bank.
“By the time the house was completed the GFC had hit and the market was pulling back a bit. We didn’t get $900,000, but still got $840,000 and plenty of profit.”
Location: Under construction
Purchase price: $472,000
Additional costs: $100,000
Money down: $0
Expected sales price: $750,000 (for 3 properties)
Profit: $89,000 (50/50 share of $178,000)
“This is another project I’ve doing with a joint venture partner. He put up the deposit and the purchasing costs and I secured a loan from the bank. The property is a 600 sqm block with an established house on it. We purchased it for $272,000 and decided to build an additional two townhouses out the back.
“The construction costs are only $200,000 because the townhouses are single storey brick and tile and will be sold for $250,000 each. Following a minor renovation, the established house will also get $250,000.”
Can you afford to buy in this suburb? Find out how much you can borrow