I've actually been doing these working away from home construction jobs for 4 years since starting on a solar farm on my second day in Australia.... absolutely clueless about what to expect (I had to Google what a solar farm was at the airport before I left the UK LOL). However, what I earned on my first solar farm, was spent down to the last cent before I started on my second so hence the title of this blog post. It's been about 3 years since I started taking my finances seriously and my partner and I set ourselves some goals.
I don't regret spending all that money from my first job in Oz. I had 6 months off after that, went to Sydney and had a luxurious holiday in Bali with my - then, new - partner and explored my new home between landscaping our front and backyard and just getting settled into the new house and living together.
As mentioned in my previous blog post, "How My Money Values Have Changed Since Working FIFO", my partner was just finishing building his first house when we met, which is the house we live in. We decided we wanted to invest in property and aim to build a multiple property portfolio to generate wealth in our long term future. So we both started "House 2" funds in our savings accounts and have been putting between $500 and $1000 per weekly pay (minus the odd week when we've had time off or holidays etc.) each in our respective house funds for the majority of the time we have been together.
We've had other things we've saved for and had separate savings accounts for those, including my Partner Visa fee, Emergency Funds, Holidays, Jeep SRT (our "goals" car) and shares portfolios. However, the house fund would always be the non-negotiable saving from each pay.
With the type of work that we do, we pretty much work consistently for the duration of a project and then have a few weeks off before starting the next. When we know we're getting towards the end of a project, we would pre-plan for our time off and make sure we had left ourselves enough spending money set aside to enjoy our time off not working with no worries. That would mean we might save $500 into the house fund instead of $1000 for a few weeks in the lead up to having time off.
I've always been casual too, which means my earnings aren't always consistent as sometimes we can't work due to inclement weather. Those weeks may also be when I would end up putting less into my savings accounts than usual. However, I would always try and do $1000 a week into the House 2 fund and then adjust everything else accordingly depending on my savings hierarchy at the time. If I had a holiday coming up, then maybe that would take priority for a couple of weeks so it would be $500 into the House 2 fund, for example.
When my partner and I had got the ball well and truly rolling with our House 2 funds and we were getting excited about how quickly they were growing, we started looking at houses online. Me, not being from Australia, had no idea about what were good suburbs or not to live in, let alone for good investment returns. In fact, I didn't really know much at all about property investment and certainly nothing about the Australian property market at all. So I set out to learn as much as I could.
That's when my podcast obsession started. I realised I basically had 10 hours a day of doing repetitive tasks at work (shout out to anyone who's worked on a solar farm - you know what I'm talking about) where I could let my mind wonder while my hands did the work.
I started with 'The Property Couch', as my partner recommended it to me. Honestly, at first I had no clue what they were going on about but I stuck with it and feel like I really started to grasp the basics and terms like "capital growth, cash flow, negative gearing, median house prices" etc. etc. It also inspired me while I was working to reach our end goal of buying investment properties so it was motivating for me on days where work felt like a drag.
We also narrowed down our searches online when doing our research to beachside suburbs where we realised we could afford based on our earnings and house prices, at the time... just before COVID hit and changed the game! The more we looked online and the more we saved, the more we realised we could actually afford around the $1 million mark. We eventually landed on a very specific suburb that was about 20 minutes from the CBD, 10 minutes from the beaches and had houses built on a beautiful lake where you can have your own dock off your house into the lake! We had idyllic dreams of being able to kayak or paddle board off our backyard. Ultimate GOALS!!!
The plan was to buy a double block, regardless of the house that was on the land, as long as it was rentable, then rent it out for 10+ years then knock it down, subdivide the land and build a dream home for us to live in and one to sell or rent out, depending on our financial situation and what would be the best plan when the time comes. When we first looked at this suburb, those plans were completely attainable with the budget we expected to have when looking at what we could afford in mortgage repayments and how quickly we were saving our deposit.
Then COVID hit... and house prices sky rocketed in 2021.
What we initially looked at that ticked all of the above boxes for around $900,000, was now impossible to find. In fact, we went and looked at an old house that was only a single block so half the size of the land that we originally planned to buy, that went for $1.2m. We really didn't want to spend that on something that, at that time, we didn't think was worth it. We just agreed to keep saving and watch the market and see what we think when we had more cash saved up for deposit enough to secure a $1.2m home loan.
I know these numbers sound like a lot for a first investment property AND I've heard a lot of experts say that you should never buy an investment property that you plan to live in or get emotionally attached to; but our thinking was that we may not both be earning the money we are earning now, so if we can secure a blue chip property in a location that is likely to have very good long term capital growth; then we always have that good performing asset behind us from early on in our investment journey. The same growth percentage of a higher purchase price equals more long term profits! This could also help with future leverage for buying more cash flow positive investment properties in relatively quick succession after securing this first one. Some people work all their lives to retire in the type of houses we realised we can afford right now on That FIFO Money so we may as well get them under our belt while we can!
Ultimately, as 2022 was rolling around, we could see that the COVID growth wasn't slowing down anytime soon. We spent a lot of time researching more into market trends and ultimately realised that there was no point in waiting for a 'crash' that may never come to pick up a bargain, as the property market in Australia just generally does not work in that way. As I understand it, there may be a 'correction' from the high growth in such a short space of time due to the pandemic but in general, property prices continue to grow. Therefore, we decided that it was time to take action!
We hadn't quite hit the savings goal of $200k between us but we were getting closer and heard on some of the property investing podcasts that we listen to that if you can't save faster than the market is growing then you may never get to buy what you want; as you'll always be chasing the market and missing out. We had already experienced that on the double block, lakefront property idea so we started to broaden our search.
We narrowed it down to a few beachside suburbs that had strong potential for capital growth. For all of the hours of research we did, between general education and advice from podcasts, to our own comparable sales research in the specific beach locations; we actually had a really quick and easy searching journey. We only viewed around 5 properties before having an offer accepted. I think because we weren't in any rush or desperately looking for 'the one', we actually found it really easy to look objectively and non-emotionally. Saying that, when we went back to look at the property during our cooling off period to check some items that the building and PEST inspector had raised in their report, we did feel very emotional. We were a bit anxious in the couple of days after our offer was accepted that maybe we had overpaid and if we had made the right decision but when we saw it again, we were blown away by what a good location it was in and felt immensely proud.
The house overlooks a small secluded section of a beach from a cliff edge (more of a hill than a cliff actually, cliff sounds a bit more dramatic than it is haha) and, as you can imagine, has amazing views from the backyard and living area. It's a nicely finished house that was built in 2012 that needed absolutely no work doing before getting tenants in. We're getting a really good rental return of $650 per week, meaning that we only need to put in around $10k a year to cover the mortgage. Between us with That FIFO Money, that's nothing. We can see the potential of how much that will grow in value over the long-term and also, the potential of the type of house we could build in its place to live in and enjoy those spectacular ocean views ourselves one day...
The day the house settled, we were at work and so very excited and proud! It also motivates us to keep going as we have now seen what That FIFO Money can do for us and what is possible for our future if we keep working hard now. We didn't even have to spend our whole deposit amount that we'd saved in the end as we only ended up paying $815,000 (I say 'only' compared to the $1.2m we thought we initially would end up paying for somewhere like this!) so those 'House 2' funds have been renamed in our banking apps as 'House 3' and we're back on the grind to saving for the next investment property! Other than the $250 per week that we each transfer into our joint account to cover the mortgage and any other expenses that may come up for the investment property, our savings goals and amounts that we are putting into each account with each pay haven't changed much. The account we pay that money into is the same account that the rent paid by our tenants comes into and the mortgage is taken from.
I'll write a more detailed post about the property buying process soon as that was something I was very confused about at first and now I feel like we know more of what to expect for next time around. I'm sure sharing some of our experiences vs. expectations will be useful to other first time buyers, whether that's investment property or principle place of residence.
Monday tomorrow! This Property Investor has got bills to pay! :)
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