At just 24 years old, Sarah saw her property portfolio experience rapid growth, increasing in value by $50,000 – equal to that of her salary.
“I signed the contract for my first property when I was 21. I used money I had inherited from my dad, as well as the Victorian First Home Owner Grant. The property was in Wodonga, Victoria and I borrowed $250,000 for the $415,000 property.
When I found out about the inheritance, all I could think was that I had to do something meaningful with it.
At this stage, I was earning around $65,000 a year, but I’ve since had a career change and it’s now down to $50,000.
I settled in and was living in the property but was thinking I should begin building my portfolio. Because of my financial situation, I had very specific parameters around how I needed my properties to be.
I chose to look in Albury/Wodonga because I know the area, understand what is happening there and where to buy.
I needed something that was going to be cash flow-positive or neutrally geared because my income wasn’t high and I didn’t want to put myself under financial stress.
My plan was to ‘buy and hold’, but I realised that if I was to reach my goal of having 10 properties in 10 years, then I would need to manufacture growth; just buying and holding wasn’t going to give me enough growth in a regional area.
So I started looking for properties that had a way to inject equity – be that through renovation, subdivision or development.
After countless open homes and numerous rejected offers, I secured my second property – a four-bedroom, one-bathroom house in Wodonga. I purchased in 2012 for a discounted price of $220,000. I used equity from my first property and it was positively geared from the start.
I had nightmare tenants at first. They didn’t pay rent for months and when they were finally evicted, I had to pay to get the house cleaned up because it was left in a mess.
Once this property was back on track, I was ready to purchase again. I had to do some tricky financing to get this one across the line because my earnings are low, but we got there.
This one was in Albury – a two-bedroom old weatherboard house on a 947 square-metre block. I purchased it for $180,000 in 2013 when I was 23. I’ll redevelop it and replace it with three townhouses. I want to generate $150,000 profit from this project.
I am having to wait to do the development on this because I am young and life is rapidly changing. I guess life got in the way of investing, plus I have to build up some equity and borrowing capacity.
In 2014, I had my properties revalued and I had gained $50,000 in equity in one year – one of my Wodonga properties had climbed from $220,000 to $250,000 and my Albury one went from $180,000 to $200,000.
That is my year’s wage, and I earned it doing absolutely nothing! This is before I started any renovations.
It’s great to know my hard work is paying off and that property works. And all of this happened whilst I was travelling, changing careers and on a low income.”