petrona’s take on the highs and lows of personal finance

I was reading Get Rich Slowly, an interesting little blog about one guy’s debt to savings journey, when I saw this post.  It raised a whole heap of personal associations for me, so rather than let my mundane and ordinary observations sit unuttered in my brainbox, I thought I’d write it all out here. (Apologies in advance, dear readers.  If personal finance doesn’t interest you, feel free to move on.)

SO and I generally don’t disclose the fact we have four investment properties.  Our friends know, especially as we share with them the ups and downs of renovating property and handling tenant issues.  Some, but not all, of our immediate family also know.  Extended family (by which I mean aunts, uncles, cousins etc) have no idea, and nor do work mates (apart from a very few who we are close to).  

This is for a number of reasons.  People tend to look at you like you’re a freak if you have more than your own property, particularly at our age (early to mid 30s).  We also get asked all kinds of questions, some of them fairly personal, like, ‘But what about when you have kids? Will you put them into daycare while you both work??’  Well, for one, we don’t even know if we’re going to have kids.  Also, how is it any business of yours what we do with them??  As long as they’re looked after, it doesn’t really matter who cares for them.  (I don’t think daycare is the devil, and I also don’t think it’s a saviour; I just tend to think that it’s nobody else’s business what the parents decide to do.)  So yeah, we don’t really mention it.  This has led us to instances where we’re lying by omission, but that’s the way you have to go sometimes to maintain your privacy.

For those people who know, though, there are still questions.  Mainly they’re along the lines of, ‘Why do you do it?’  Why do we have four, not one, investment properties?  Why do we always pick sow’s ears that we turn into silk purses through renovation?  Why do we then manage them ourselves, rather than pay the piddling commission to a property manager?

Well, for us, the main goal is this: We want to retire in about ten to fifteen years’ time – ideally, in ten years.  This would be the ultimate for us (and probably for a lot of people).  This is why we pick run down units and do them up – it adds to their capital value, which increases our capacity to borrow again.  This is why we do the renovating ourselves.  (I could paint cornices blindfolded at this point.  And don’t even start on patching dings and dents in walls.)  This is why we manage the units and do any repairs ourselves.  It all increases the profitability of the properties, and helps us to get that little bit closer to early retirement.

Also, despite the downturn in the economy, our plan is already reaping rewards.  This is a huge incentive to continue.  My superannuation is worth about $40K.  Our equity in all our properties is worth about ten times that amount.  Only half of this is from the increase in value in our home – the rest is from our investments.  Also, there’s no way anybody will retire a millionaire from their super, and we’re certainly not banking on it to be there for us.  So our property investing is our retirement plan, essentially.

And we enjoy it.  SO and I tend to lead fairly separate lives, in a lot of ways – we get home from work, he goes into his study, I sit in the lounge on my laptop.  We do spend a fair bit of time apart.  But when we do a renovation, it’s all hands on deck, and we work well together.  SO does a lot of the grunt work (including electrical and plumbing stuff that I have no idea about) and I do the organising, the painting, the collection of furniture.  We work really well together, and we get a kick out of it.  So that side of it is very rewarding, also.  It’s kind of like an interest that makes us money (or will do, at some time in the future).

So, for us investing is definitely worth the financial constraints that we live with on a day to day basis.  We wouldn’t do it any other way, to be honest.