How a property investor just retired at 28 years old
Yep, you read that right. I’ve just read a story about a young guy who has retired from his day job, thanks to his investment property portfolio. While he lives and invests in my old backyard (well, nearly − he resides in West Sydney), his story should prove to anyone of any age that it is neither too early nor too late to start investing in property and change your life. When you read his story, you’ll also realise that an investment property portfolio is within reach of everyone, no matter your education or earnings.
Before I recount the story of 28-year-old Tony Fleming, I want to take a look at reasons you should make a property investment your first (or next) property purchase.
Why start young in property investment?
Conventional wisdom is that you go to school, then:
- on to university (where you rack up a heap of debt);
- start work (where you work hard to pay off your debt);
- get married, buy a house, and have children (not always in that order); and
- plan for your retirement.
Along the way, you may have made a few investments and saved some money. That’s probably come in your 30s and 40s. As every financial advisor will tell you: the later you start, the lower your retirement income is likely to be.
Here’s are five reasons why you should consider property investment when you’re young.
1. You are independent
Most people think about property investment when they’re already married. They’ve probably got kids already, and a mortgage to pay. That’s when they start reading investment guides, surfing property investment blogs, and looking for property investment opportunities.
The problem is that the more responsibilities you have, the less able you are to act independently and take a little risk. So when you get to the age when most people start to think about property investment, your options are restricted by responsibility and those day-to-day expenses like mortgage costs, utility bills, and the need to put food on your family’s table.
When you’re young, you spend more money on other things. Your disposable income is high. That means you have an incredible opportunity to slash spending on your lavish lifestyle and redirect to building your future. Do this right, and you’ll take a big step to retiring before you’re 30 years old.
2. Investment property is cheap
Okay, with that one headline you probably think I’m crackers! After all, everyone knows that investment property prices have skyrocketed. However, if you look at the history of house prices in the UK and do your property investment research, you’ll see that despite every economic shock and financial crisis the UK has suffered, there has been one constant: property investment has paid big dividends.
Instead of becoming downhearted because investment property is so expensive in today’s money, think about how much it could be worth in the future. When do you think you’ll be able to buy an investment property, if you don’t do it today?
If you wait between eight and ten years, and investment property values continue to rise at the pace they have done for the last 100 years, you’ll have to pay twice the amount you’d pay today. Look at property investment regarding its future potential, and you’ll come to the conclusion that investment property is cheap. In fact, it’s a snip at today’s prices.
3. You want more income
Whatever your chosen career path, or even if you’re at university, a second income would be very handy. If you do your property investment research and buy in the best places to invest in property UK, as soon as you get tenants you’ll start receiving rental income. There will be costs and probably mortgage interest pay, but if you’ve been wise with your property investment cash flow projections you could create a very handy source of passive income. And its passive income that will enable you to retire early.
4. You’ve got the benefit of the Bank of Mum and Dad
When you’re young, it’s probable that your parents have a bigger ability to help you financially. In a previous investment blog, we discussed the Bank of Mum and Dad.
When your parents are still working and have equity in their home, they are more able to help you get on the property investment ladder. Later in life that advantage will probably have disappeared.
5. You get to make money with other people’s money
Investing in property is like no other investment you can make. You get to make money by using other people’s money. It is called ‘leveraging’. (See our property investment blog about how leveraging works to grow a property portfolio for more information.)
Let’s say you invest using a mortgage, and that the mortgage rate is 4%. Do your due diligence and invest wisely, and the mortgage interest and other costs of property investment will be covered by the rent. So any rise in the value of your investment property is all yours (except the tax you’ll need to pay on any capital gain if you sell your property).
Meanwhile, as time goes by you’ll be increasing the rent you charge to tenants.
So you’ve bought an asset that is likely to provide an increasing income and an increase in value over the long term. That’s a win/win and made on other people’s money.
If you think you’re too young to start in property investment, or there’s just no way that you can afford to take advantage of today’s property investment opportunities, then read on. I’m a property investment veteran, and even I find Tony Fleming an inspiration.
28-year-old Tony Fleming retires thanks to property investment
I read this story in the Gold Coast Bulletin and summarise it here.
Tony Fleming decided to change his life at a very early age. When he was just 18 years old and delivering pizza for a living, he decided he wanted more. He loved his job, but it wasn’t a career choice. He was swamped in debt. He’d read about how property investment could create incredible passive income, and so made a plan to buy an investment property.
The first thing he did was to work off his debt. He worked all the hours he could (his wage was just $10 per hour) and cut out unnecessary spending. He lived with his parents, and regularly worked 60 hours per week.
He’s very quick to say how living with his parents helped him save for a deposit for that first property that became his home. He reduced his mortgage costs by having friends rent out his spare rooms.
Having done his property research well, and after some keen negotiating, he’d bought a property that doubled in value in a year (helped by some renovation work, too). He used this increase in value to release equity and pay a deposit on an investment property.
He’s been using this strategy to grow his portfolio. Every property he bought was negotiated down to a keen price. The tenants effectively pay the mortgage, and as each subsequent property increased in value, he has released equity and repeated the cycle.
He now owns 13 investment properties and has rental income of $130,000 per year. He stayed at the Dominos store where he began and worked his way up to manager. His hard work, dedication, and saving mentality has meant that he’s been able to do what others can only dream of: he’s retired at 28 years of age. He plans to spend some of his time on finding and investing in new properties. The rest of his time will be spent with his wife Hayley (and any children they may have) – again, something only a handful of 28-year-olds living conventionally will ever experience.
Here’s how Tony Fleming explained his success to Australia’s Daily Telegraph:
“I survived on two-minute noodles and free pizza. I was always working, so I never had the chance to spend money.
“Such an approach is vital in a market where prices have spiralled out of control,” he added.
“Just because you’re on a low income doesn’t mean you can’t buy property,” he said. “You just have to be careful with money. You don’t need to go on holiday all the time. Try to drink less alcohol. If you can reduce your non-deductible debt, it will help.”
Tony Fleming was young, keen, and eager when he set about changing his life through property investment. It took him less than ten years to build an investment portfolio that has more than replaced his income from work. He’s not just an inspiration to youngsters; he’s an inspiration to everyone.
If you want to be similarly inspired, contact us today on +44 (0)207 923 6100. We’ll introduce you to the property investment strategies that help investors remain profitable throughout a property cycle. Strategies that have the ability to change your life, in the same way that Tony Fleming’s life has been transformed by property investment.
Live with passion