‘I know where I want to be in the next 30 years': 25-year-old reveals wild property plan

News.com.au

3 days ago

A young Aussie owes over a million in mortgages, but he isn't sweating it, because he believes rent-investing is his best chance at amassing wealth.
Rent-investing involves renting where you want to live and buying where you can afford to buy. The property tactic has become more popular because the housing crisis has meant so many Aussies can't afford to buy where they live.
Jett Elliot was born and raised in Sydney, where the median house price is over $1.7 million, and the median unit price is now over $800,000.
Mr Elliot told news.com.au that after looking online at real estate, it dawned on him that he 'couldn't afford' Sydney.
'I'd rather build a portfolio where I can afford to,' he said.
The 25-year-old is a client of property investor Jack Henderson, who runs the buying agency Henderson Advocacy and is a rent-investor himself.
Mr Henderson rents a $15 million mansion in Paddington but owns over 12 properties across Australia. He still rents because he wants to use the bulk of his income to invest, not just on a single mortgage.
'You can rent a home and have none of the expenses and none of the maintenance costs and then use the money you've saved to invest,' he previously told news.com.au.
Mr Elliot, a fan of Henderson's podcast, is following his lead and putting his money into investment properties. However, even dodging Sydney's inflated property market hasn't made the homeownership dream easy.
Mr Elliot, on paper, is living the Australian dream. He is in his mid-20s and already taking home over a six-figure salary.
He works for the army, where he earns over $130,000, but even buying to invest has stretched him to the limit.
The 25-year-old has purchased two homes in Newcastle, where property prices are lower than in Sydney. The average house price in Newcastle is just over $900,000 and the average unit price is over $600,000.
Mr Elliot purchased a two-bedroom apartment and a three-bedroom house, but they're both negatively geared.
He rents in Sydney's eastern suburbs, and both investment properties are tenanted, but it costs him around $1000 a week to cover the mortgages, because he owes a million dollar spread across two mortgages.
'I bought my first place at 22 and I bought my second place at 24,' he explained.
Mr Elliot's first property was a two-bedroom apartment that he bought for $655,000, purchased with a 5 per cent deposit in 2022.
He put $35,000 into the home and had about $80,000 in the bank but wanted to set aside some funds.
In the first year, the property increased in value by $127,000. He refinanced, pulled out the $35,000, and had 'none of my own money' in that house anymore.
He used the $35,000 to buy his second property and added an extra $55,000 to put down $90,000, securing a three-bedroom home on a corner block for $650,000. His plans include eventually building a granny flat and renting it out as well.
At the moment, Mr Elliot's financial situation is tight. The mortgages cost him $1k a week, plus he pays over $700 a week to rent in Sydney.
Considering he is earning $130,000 a year, which works out to be roughly just over $1850 a week, he is only left with $150.
To earn extra cash and alleviate financial stress, Mr Elliot works on the weekends as a barista, which gives him an extra couple of hundred dollars to work with.
It sounds like the mortgages would be a source of stress, but Mr Elliot said he lives simply and isn't racked with anxiety about money.
'I'm not worried, I'm not going out and buying steaks and I pretty much eat the same thing every night. I have a Mexican bowl and it's a long-term plan,' he said.
'A lot of people want it right now instantly. I know where I want to be in the next 30 years and the sacrifice it takes.'
The 25-year-old lives by the mentality that as long as he can 'pay the mortgage every month,' he'll be fine.
If that means he won't have the funds to go on a yearly overseas holiday or drive a nice car, but is able to afford his investment properties, then Mr Elliot says he is fine to live frugally in the short term.
He drives a beat-up old car, rents, and hasn't ordered UberEats for so long that he doesn't even have the app on his phone anymore.
It's a big contrast to the lifestyle that so many of his mates are living, where they're 'betting all their money on the dogs or buying brand new Land Cruisers that have a loan on them'. He said this isn't a lifestyle he wants to replicate.
'I drive a $10,000 car around because I know all my money is going into property,' he told news.com.au.
Mr Elliot argued that a lot of young people have their 'priorities mixed-up' and are living beyond their means with no long-term plan.
'They like the flashy cars, they don't want to buy a place that might look rundown, and they're worried what their friends will think about them, they've got to live in a brand new apartment or a brand new house,' he said.
The 25-year-old said that he finds it 'so interesting' when he sees Aussies reveal on social media how little they have in savings.
'They're interviewing 30-year-olds and 40-year-olds who have like $500 in savings. How have you gotten to a point where you have $500? You haven't been doing the right thing,' he said.
'What are they doing? They are blowing all their money on something.'
The army employee is doing the exact opposite of blowing all his money – he is putting practically everything he makes back into investing.
Mr Elliot said he knows the counterargument; he has heard it plenty of times. 'What if you die tomorrow?' but he argued it is a flawed point.
'Chances are you won't,' he pointed out.
The long-term plan isn't set in stone, he just knows he wants to create a passive income and not have to worry about money.
'Maybe I'll buy six or so properties and sell them and buy a property in the eastern suburbs or leverage them to buy in the eastern suburbs,' he said.
The 25-year-old made it clear that he isn't motivated by the idea of owning as many properties as humanly possible.
'I want $250,000 positively cashflowed, that is my goal, and I'll use property as a vehicle to achieve that,' he said.
'You have to have a plan in place.'