Ali Pilling

How my son Sam bought his first investment property at age 18 The FOUNDATION OF BUILDING WEALTH STARTING FROM SCRATCH  

Step 1 : PERSPECTIVE 

‘PLANT THE SEED’  

*RAISING children to have an Optimistic Vision of:-

1.) them self: 

2.) their future and 

3). the world

*Instilling the mindset that:                                                                           ‘Money works for you, you don’t work for money’

*Three cores Values: 

1). Value self

2). Value money

3). Value time

Step 2: PASSION FOR LEARNING:  FINANCIAL EDUCATION

I took Sam along to his bank to deposit money that he had saved from doing chores around the house and working in the family business. We would ask the bank tellers for the best interest rate and the best deal for his savings account.

Reading Newspaper and internet Articles:

Sam was inspired by reading a few articles about successful youth who purchased their first house at young ages, 18 and 19 and knew that it was possible for him too.  

Parents leading by good example:

As parents we were very conscious about leading by good example. It is commonly said that ‘Children are a product of their upbringing’. I tend to agree and I believe that parent’s are one of the most influential people in a child’s life. A parent’s work ethic is hugely important when teaching your children that ‘Work ethic is a direct reflection of your wealth and that wealth is stored work’.

Managing money wisely as parents: Earning, saving, investing and spending the rest was another message handed down to Sam. He had added confidence in following his own parent’s footsteps.

Meetings with Bank Lenders and Real Estate Agents:

SAM has a keen interest in real estate so prior to him buying his first investment property Sam and I both thoroughly enjoyed going along to seminars called “fast-track -How Houses Buy Houses.” Now Sam is over six feet tall, and he was sitting in the front row, slouching down, legs right out in front, and the speaker, Julio De Laffitte, who is featured in my pending book Live, Don’t Exist said to him, “Hey Sammy! How old are you now?”

“Sixteen,” Sam replied at the time.

“You do what I do, mate,” and Julio slapped his hands together, right in front of Sammy, and told him, “and you’ll be out by age thirty-five! If you do what I do, you’ll have your money working for you.”

Sammy enjoyed learning about “houses buying houses” so much that he took himself along to another full-day seminar with Julio, but this time he took his older sister Georgie along, without me even being there. This was when Sam started telling us he wanted to buy his first house by 18, because he could now visually see how it all works.

Step 3: EARN INCOME:  WORK & PERSEVERANCE

From an early age Sam was given the opportunity to work along side his parents and siblings in the family business.  Earning a ‘piece rate’ rather than an hourly rate taught Sam a valuable entrepreneurial lesson, that the more productive you are, the more financial reward you receive.

NEGOTIATING CHORES AROUND THE HOUSE?

Rather than paying an allowance which resembles a wage Sam mainly chose the jobs he enjoyed and the jobs he was good at. It was a fun learning experience negotiating the jobs and the renumeration for those jobs. 

Step 4: PATIENCE:   Working in the family business 

‘Life rewards action’. From a very, young age, Sam and his siblings earned money working on weekends and school holidays in the family business, along with extra chores around the house. It’s amazing how that money earned and saved (when not spent) over time can represent a decent deposit for a house. It reinforces the notion that “wealth is stored work.” For a young child, working alongside their parents and siblings can be a huge learning experience and a lot of fun. An interest in either what they are doing or perhaps the feeling of earning money is a good enough incentive to want to work. And from the young age of eight Sam was offered a position working in the family nursery business, ePlants. There was always so much to do. Sam and his siblings began on a ‘piece rate’, as it was pretty difficult to determine what rate a young child is worth per hour, so we decided to teach the important lesson that the more productive you are, the more money you earn. Quite fair, really. It was impressive to see their determination, especially when there was an incentive offered to earn more money or a goal in mind, like when Bayley, Sam’s younger brother worked towards purchasing his first iPhone. As Sam grew older and gained more experience, his rate increased and therefore his income grew.

Of course, the bank was a big part of the funding Sam’s investment property. In their determination whether to make the loan to Sam or not, the bank took into account character, capacity, and collateral, which I’ll summarise below:

Character is essentially your credit history, the main thing that banks use in making their lending decisions. Banks, like all lenders, want to know about your credit history, whether there are any defaults or if you are bankrupt, or if you have a good borrowing history. In Sam’s case, over a ten year period (from say 8 year’s old to 18 year’s old) he had a 10 percent deposit saved and his savings history was a good indicator of his character.

Capacity is your ability to pay the loan back, based on how much income you earn versus the loan repayment. Sam showed full-time income for more than twelve months. He had job security as he had been a long-term employee of the family business from the age of 15 as a school-based trainee. Sam also acquired a real estate rental appraisal that included a projected, rental return for the investment property that he was going to purchase, this added to his existing income (ie. $480 per week x 52 weeks = $ 24960). Keep in mind Sam was able to save a large portion of his income as he had a low cost of living —he was living at home.

Collateral is the security you provide for a loan. In Australia the bank lends up to 80 percent of the purchase price for residential, investment property, which means Sam would need to pay the remaining 20 percent deposit himself. There are various options if you don’t have the 20 percent deposit, and in this case Sam didn’t.

o Option 1 was called a Limited Family Guarantee, meaning my husband Rob and I could guarantee a percentage of his loan. The guarantee is limited to the amount of shortfall in the 20 percent deposit. For example, on a property purchase of $300,000 a bank would lend up to $240,000. If you were to borrow $270,000 a Family Guarantee of $30,000 would be required to cover this difference. In Sam’s case we offered a Limited Family Guarantee of 10%. 

o Option 2 was called Lenders Mortgage Insurance. In this case, the bank uses mortgage insurance which insures the bank for the loan amount above 80 percent. To give you an example, on a property purchase of $300,000 with a Loan of $270,000 (90%) mortgage insurance is $3,862. This amount increases or decreases based on the loan amount and the percentage above 80 percent lending.

Step 5: Purpose: Parents helping out with a ‘Limited Family Guarantee’

 Believing in Sam

Rob and I were in the fortunate position to help Sam and we decided we were more than comfortable providing a Limited Family Guarantee equal to the 10 percent deposit, being the 10 percent shortfall. This meant that Sam saved more than $5,000 on mortgage insurance, which made great sense to all three of us. Sam borrowed the whole loan amount in his own name. Rob and I secured the 10 percent shortfall of the purchase price. After 18 months from the date of purchase, I suggested to Sam to organise a bank valuation. It turned out that his property had increased in value substantially in the short-term ($80,000 in fact) and this was enough for the bank to release our Limited Family Guarantee. Sam was now standing on his own with his first investment property after just 18 months.

Sam has learned significant financial lessons in this experience, purchasing his first investment property. He has learned to budget for expenses such as: insurance, repairs and maintenance, water, and electricity, and now that Sam is managing his tenants himself, there will be many more valuable lessons to follow. These lessons are real-life lessons, experienced by the act of doing. These are lessons you don’t learn at school.

Sam made a courageous decision at the young age of 18. He doesn’t want to work for money, he wants his money working for him. “Now that you have purchased your own house at age 18,” I asked him, “could you imagine being an inspirational speaker and standing up on stage, encouraging youth to value money, to value themselves, to pay themselves first and to share your stories on how you’ve started your financial journey at such a young age? Because if you can do it at that age, others can too.”

“Yes,” he said. Sam can picture himself up on stage. Just by chatting with him, just by asking him questions, it helped him create a picture.

I don’t mean to put pressure on my children. Whether he does, or whether he doesn’t become a speaker is totally fine either way. I don’t want him to think he’s failed me if he doesn’t want to follow through with the ideas I throw around. It’s entirely up to him if he wants to run with any of them. Actually, Sam and his sister Georgie did get up on stage at their old high school, St. Teresa’s, and they spoke to the year- 10 students. It was Q&A segment. The topic was “Life After School.” Sam got the chance to share with the year-10′s the importance of managing your money, and Georgie spoke on how important it was to follow your passion and do something that you love.

Sam’s Story:   

I interviewed Sam for my book “Live, don’t exist and I love what he had to say:

I’m 21 now. In Australia, you have to be at least 18 to buy property, and when I was finally legal I was ready. I’ve been working for my parents in their nursery business as a source of income over the years. My brother, sister and I grew up with a family business so we’ve always had plenty of work opportunities and a chance to earn money. It gives me money to do the things I want to do, to invest in things that will go up in value over time. People are surprised, when you’re young as I was and you’re able to invest in property. But if you keep earning and put it away for all that time and don’t spend it, it’s there to use. I was pretty young when I started working in the nursery. I started out on a ‘piece rate’, earning as little as $2 per tray.

The property I bought when I was 18 only took a couple of weeks to get rented out, and it’s going very nicely. It’s only about ten minutes down the road. It was like a blank canvas. The house is a brick home, easy to take care of. It had no yard, just grass, when I bought it, so my family and I, being in the nursery business, on my days off we landscaped the yard, put borders for the flower beds, added fencing, added fake turf for the patio area, added some palms—and it looks great now.

My parents have been good role models. When we go food shopping, even though we’re what others might consider well-off, my mum is always looking for the bargains and if it’s too dear, we just do without. I’m that way now, too. In fact if it’s not on special, I often just won’t get it, at least until next week, when it does go on special. When I go clothes shopping, I always look for the 60 percent off sales and things like that. We spend so much money in life, you just have to look for all the ways to save that you can.

When I go out to clubs I watch my friends get on a roll and they can’t stop drinking. I can actually say ‘no’ when I have had enough—I can stop. I think, “Man! How much money are they wasting?” Every drink is sometimes another 10 dollars, and you have to think, you have to be conscious every time you go out, even if you’ve been drinking. You need to be aware of what you’re spending! But a lot of people don’t care, they just go out, have a good time, just ‘live for the now’. But I don’t. When I spend, I am conscious of every time I put my card down to pay for something, it’s like, “Oh, man!”

One thing I’ve noticed is that a lot of people my age take out loans for cars and stuff like that. But I haven’t spent money on things that will go down in value—I believe we have the choice to spend on things that will go up in value. More of us need to make smart financial decisions because I do see people my own age who are already in debt about $40,000 or more, and on things that will go down in value. Now, I laid out $40,000 on a house which is the same money as on a car but mine’s going up and theirs is going down at a rapid rate.

But if I ever get money stolen or see it go unnecessarily it gets me really upset. I went to the beach once and got a speeding ticket for $276, just for doing a couple of k’s over the speed limit. I was driving on the beach not long after that, and got written up for irresponsible driving—on sand it’s easy to let the car drift a bit as you drive. I got caught doing that, and that was another $276. So that’s $552, and to think of all the things I could have done with that money, like pay it towards my house!

“I can’t sleep at night knowing I’ve got those fines to pay!” I told my mum.

“You’ve just got to learn from it, Sam,” she said.

And when your parents charge you for board, rent, life expenses, you get used to paying your own way. Some of my mates pay like $50 and some pay nothing, thinking, “What’s the point?” when here, I’m paying like $100, which I think is pretty good, actually. It makes you feel independent, because you are.

And I would like to buy more property as investments, but since I bought this first property my funds are down a bit. I’ve been saving since the purchase of my house and I’m on the way to having the next deposit for another one. I work five days a week, go to gym every afternoon, the beach on the weekends. I don’t yet know what I want to do with my future but I know I want to earn a good wage and have all of these houses underneath me. For now, that’s the dream, and to over time have them paid off, a bit like what my parents are doing, how they invest in properties. Invest and spend the rest.

Put every dollar away that you can. Just put it somewhere and leave it there. Most people, as soon as payday comes, they go and they spend it. Spend yours on things that will go up in value. It’s especially powerful at an early age.

Saving is putting aside part of your income to provide for your future 

— Sam Pilling

How my son Sam bought his first investment property at age 18 The FOUNDATION OF BUILDING WEALTH STARTING FROM SCRATCH  

Step 1 : PERSPECTIVE 

‘PLANT THE SEED’  

*RAISING children to have an Optimistic Vision of:-

1.) them self: 

2.) their future and 

3). the world

*Instilling the mindset that:                                                                           ‘Money works for you, you don’t work for money’

*Three cores Values: 

1). Value self

2). Value money

3). Value time

Step 2: PASSION FOR LEARNING:  FINANCIAL EDUCATION

I took Sam along to his bank to deposit money that he had saved from doing chores around the house and working in the family business. We would ask the bank tellers for the best interest rate and the best deal for his savings account.

Reading Newspaper and internet Articles:

Sam was inspired by reading a few articles about successful youth who purchased their first house at young ages, 18 and 19 and knew that it was possible for him too.  

Parents leading by good example:

As parents we were very conscious about leading by good example. It is commonly said that ‘Children are a product of their upbringing’. I tend to agree and I believe that parent’s are one of the most influential people in a child’s life. A parent’s work ethic is hugely important when teaching your children that ‘Work ethic is a direct reflection of your wealth and that wealth is stored work’.

Managing money wisely as parents: Earning, saving, investing and spending the rest was another message handed down to Sam. He had added confidence in following his own parent’s footsteps.

Meetings with Bank Lenders and Real Estate Agents:

SAM has a keen interest in real estate so prior to him buying his first investment property Sam and I both thoroughly enjoyed going along to seminars called “fast-track -How Houses Buy Houses.” Now Sam is over six feet tall, and he was sitting in the front row, slouching down, legs right out in front, and the speaker, Julio De Laffitte, who is featured in my pending book Live, Don’t Exist said to him, “Hey Sammy! How old are you now?”

“Sixteen,” Sam replied at the time.

“You do what I do, mate,” and Julio slapped his hands together, right in front of Sammy, and told him, “and you’ll be out by age thirty-five! If you do what I do, you’ll have your money working for you.”

Sammy enjoyed learning about “houses buying houses” so much that he took himself along to another full-day seminar with Julio, but this time he took his older sister Georgie along, without me even being there. This was when Sam started telling us he wanted to buy his first house by 18, because he could now visually see how it all works.

Step 3: EARN INCOME:  WORK & PERSEVERANCE

From an early age Sam was given the opportunity to work along side his parents and siblings in the family business.  Earning a ‘piece rate’ rather than an hourly rate taught Sam a valuable entrepreneurial lesson, that the more productive you are, the more financial reward you receive.

NEGOTIATING CHORES AROUND THE HOUSE?

Rather than paying an allowance which resembles a wage Sam mainly chose the jobs he enjoyed and the jobs he was good at. It was a fun learning experience negotiating the jobs and the renumeration for those jobs. 

Step 4: PATIENCE:   Working in the family business 

‘Life rewards action’. From a very, young age, Sam and his siblings earned money working on weekends and school holidays in the family business, along with extra chores around the house. It’s amazing how that money earned and saved (when not spent) over time can represent a decent deposit for a house. It reinforces the notion that “wealth is stored work.” For a young child, working alongside their parents and siblings can be a huge learning experience and a lot of fun. An interest in either what they are doing or perhaps the feeling of earning money is a good enough incentive to want to work. And from the young age of eight Sam was offered a position working in the family nursery business, ePlants. There was always so much to do. Sam and his siblings began on a ‘piece rate’, as it was pretty difficult to determine what rate a young child is worth per hour, so we decided to teach the important lesson that the more productive you are, the more money you earn. Quite fair, really. It was impressive to see their determination, especially when there was an incentive offered to earn more money or a goal in mind, like when Bayley, Sam’s younger brother worked towards purchasing his first iPhone. As Sam grew older and gained more experience, his rate increased and therefore his income grew.

Of course, the bank was a big part of the funding Sam’s investment property. In their determination whether to make the loan to Sam or not, the bank took into account character, capacity, and collateral, which I’ll summarise below:

Character is essentially your credit history, the main thing that banks use in making their lending decisions. Banks, like all lenders, want to know about your credit history, whether there are any defaults or if you are bankrupt, or if you have a good borrowing history. In Sam’s case, over a ten year period (from say 8 year’s old to 18 year’s old) he had a 10 percent deposit saved and his savings history was a good indicator of his character.

Capacity is your ability to pay the loan back, based on how much income you earn versus the loan repayment. Sam showed full-time income for more than twelve months. He had job security as he had been a long-term employee of the family business from the age of 15 as a school-based trainee. Sam also acquired a real estate rental appraisal that included a projected, rental return for the investment property that he was going to purchase, this added to his existing income (ie. $480 per week x 52 weeks = $ 24960). Keep in mind Sam was able to save a large portion of his income as he had a low cost of living —he was living at home.

Collateral is the security you provide for a loan. In Australia the bank lends up to 80 percent of the purchase price for residential, investment property, which means Sam would need to pay the remaining 20 percent deposit himself. There are various options if you don’t have the 20 percent deposit, and in this case Sam didn’t.

o Option 1 was called a Limited Family Guarantee, meaning my husband Rob and I could guarantee a percentage of his loan. The guarantee is limited to the amount of shortfall in the 20 percent deposit. For example, on a property purchase of $300,000 a bank would lend up to $240,000. If you were to borrow $270,000 a Family Guarantee of $30,000 would be required to cover this difference. In Sam’s case we offered a Limited Family Guarantee of 10%. 

o Option 2 was called Lenders Mortgage Insurance. In this case, the bank uses mortgage insurance which insures the bank for the loan amount above 80 percent. To give you an example, on a property purchase of $300,000 with a Loan of $270,000 (90%) mortgage insurance is $3,862. This amount increases or decreases based on the loan amount and the percentage above 80 percent lending.

Step 5: Purpose: Parents helping out with a ‘Limited Family Guarantee’

 Believing in Sam

Rob and I were in the fortunate position to help Sam and we decided we were more than comfortable providing a Limited Family Guarantee equal to the 10 percent deposit, being the 10 percent shortfall. This meant that Sam saved more than $5,000 on mortgage insurance, which made great sense to all three of us. Sam borrowed the whole loan amount in his own name. Rob and I secured the 10 percent shortfall of the purchase price. After 18 months from the date of purchase, I suggested to Sam to organise a bank valuation. It turned out that his property had increased in value substantially in the short-term ($80,000 in fact) and this was enough for the bank to release our Limited Family Guarantee. Sam was now standing on his own with his first investment property after just 18 months.

Sam has learned significant financial lessons in this experience, purchasing his first investment property. He has learned to budget for expenses such as: insurance, repairs and maintenance, water, and electricity, and now that Sam is managing his tenants himself, there will be many more valuable lessons to follow. These lessons are real-life lessons, experienced by the act of doing. These are lessons you don’t learn at school.

Sam made a courageous decision at the young age of 18. He doesn’t want to work for money, he wants his money working for him. “Now that you have purchased your own house at age 18,” I asked him, “could you imagine being an inspirational speaker and standing up on stage, encouraging youth to value money, to value themselves, to pay themselves first and to share your stories on how you’ve started your financial journey at such a young age? Because if you can do it at that age, others can too.”

“Yes,” he said. Sam can picture himself up on stage. Just by chatting with him, just by asking him questions, it helped him create a picture.

I don’t mean to put pressure on my children. Whether he does, or whether he doesn’t become a speaker is totally fine either way. I don’t want him to think he’s failed me if he doesn’t want to follow through with the ideas I throw around. It’s entirely up to him if he wants to run with any of them. Actually, Sam and his sister Georgie did get up on stage at their old high school, St. Teresa’s, and they spoke to the year- 10 students. It was Q&A segment. The topic was “Life After School.” Sam got the chance to share with the year-10′s the importance of managing your money, and Georgie spoke on how important it was to follow your passion and do something that you love.

Sam’s Story:   

I interviewed Sam for my book “Live, don’t exist and I love what he had to say:

I’m 21 now. In Australia, you have to be at least 18 to buy property, and when I was finally legal I was ready. I’ve been working for my parents in their nursery business as a source of income over the years. My brother, sister and I grew up with a family business so we’ve always had plenty of work opportunities and a chance to earn money. It gives me money to do the things I want to do, to invest in things that will go up in value over time. People are surprised, when you’re young as I was and you’re able to invest in property. But if you keep earning and put it away for all that time and don’t spend it, it’s there to use. I was pretty young when I started working in the nursery. I started out on a ‘piece rate’, earning as little as $2 per tray.

The property I bought when I was 18 only took a couple of weeks to get rented out, and it’s going very nicely. It’s only about ten minutes down the road. It was like a blank canvas. The house is a brick home, easy to take care of. It had no yard, just grass, when I bought it, so my family and I, being in the nursery business, on my days off we landscaped the yard, put borders for the flower beds, added fencing, added fake turf for the patio area, added some palms—and it looks great now.

My parents have been good role models. When we go food shopping, even though we’re what others might consider well-off, my mum is always looking for the bargains and if it’s too dear, we just do without. I’m that way now, too. In fact if it’s not on special, I often just won’t get it, at least until next week, when it does go on special. When I go clothes shopping, I always look for the 60 percent off sales and things like that. We spend so much money in life, you just have to look for all the ways to save that you can.

When I go out to clubs I watch my friends get on a roll and they can’t stop drinking. I can actually say ‘no’ when I have had enough—I can stop. I think, “Man! How much money are they wasting?” Every drink is sometimes another 10 dollars, and you have to think, you have to be conscious every time you go out, even if you’ve been drinking. You need to be aware of what you’re spending! But a lot of people don’t care, they just go out, have a good time, just ‘live for the now’. But I don’t. When I spend, I am conscious of every time I put my card down to pay for something, it’s like, “Oh, man!”

One thing I’ve noticed is that a lot of people my age take out loans for cars and stuff like that. But I haven’t spent money on things that will go down in value—I believe we have the choice to spend on things that will go up in value. More of us need to make smart financial decisions because I do see people my own age who are already in debt about $40,000 or more, and on things that will go down in value. Now, I laid out $40,000 on a house which is the same money as on a car but mine’s going up and theirs is going down at a rapid rate.

But if I ever get money stolen or see it go unnecessarily it gets me really upset. I went to the beach once and got a speeding ticket for $276, just for doing a couple of k’s over the speed limit. I was driving on the beach not long after that, and got written up for irresponsible driving—on sand it’s easy to let the car drift a bit as you drive. I got caught doing that, and that was another $276. So that’s $552, and to think of all the things I could have done with that money, like pay it towards my house!

“I can’t sleep at night knowing I’ve got those fines to pay!” I told my mum.

“You’ve just got to learn from it, Sam,” she said.

And when your parents charge you for board, rent, life expenses, you get used to paying your own way. Some of my mates pay like $50 and some pay nothing, thinking, “What’s the point?” when here, I’m paying like $100, which I think is pretty good, actually. It makes you feel independent, because you are.

And I would like to buy more property as investments, but since I bought this first property my funds are down a bit. I’ve been saving since the purchase of my house and I’m on the way to having the next deposit for another one. I work five days a week, go to gym every afternoon, the beach on the weekends. I don’t yet know what I want to do with my future but I know I want to earn a good wage and have all of these houses underneath me. For now, that’s the dream, and to over time have them paid off, a bit like what my parents are doing, how they invest in properties. Invest and spend the rest.

Put every dollar away that you can. Just put it somewhere and leave it there. Most people, as soon as payday comes, they go and they spend it. Spend yours on things that will go up in value. It’s especially powerful at an early age.

Saving is putting aside part of your income to provide for your future 

— Sam Pilling

How my son Sam bought his first investment property at age 18 The FOUNDATION OF BUILDING WEALTH STARTING FROM SCRATCH  

Step 1 : PERSPECTIVE 

‘PLANT THE SEED’  

*RAISING children to have an Optimistic Vision of:-

1.) them self: 

2.) their future and 

3). the world

*Instilling the mindset that:                                                                           ‘Money works for you, you don’t work for money’

*Three cores Values: 

1). Value self

2). Value money

3). Value time

Step 2: PASSION FOR LEARNING:  FINANCIAL EDUCATION

I took Sam along to his bank to deposit money that he had saved from doing chores around the house and working in the family business. We would ask the bank tellers for the best interest rate and the best deal for his savings account.

Reading Newspaper and internet Articles:

Sam was inspired by reading a few articles about successful youth who purchased their first house at young ages, 18 and 19 and knew that it was possible for him too.  

Parents leading by good example:

As parents we were very conscious about leading by good example. It is commonly said that ‘Children are a product of their upbringing’. I tend to agree and I believe that parent’s are one of the most influential people in a child’s life. A parent’s work ethic is hugely important when teaching your children that ‘Work ethic is a direct reflection of your wealth and that wealth is stored work’.

Managing money wisely as parents: Earning, saving, investing and spending the rest was another message handed down to Sam. He had added confidence in following his own parent’s footsteps.

Meetings with Bank Lenders and Real Estate Agents:

SAM has a keen interest in real estate so prior to him buying his first investment property Sam and I both thoroughly enjoyed going along to seminars called “fast-track -How Houses Buy Houses.” Now Sam is over six feet tall, and he was sitting in the front row, slouching down, legs right out in front, and the speaker, Julio De Laffitte, who is featured in my pending book Live, Don’t Exist said to him, “Hey Sammy! How old are you now?”

“Sixteen,” Sam replied at the time.

“You do what I do, mate,” and Julio slapped his hands together, right in front of Sammy, and told him, “and you’ll be out by age thirty-five! If you do what I do, you’ll have your money working for you.”

Sammy enjoyed learning about “houses buying houses” so much that he took himself along to another full-day seminar with Julio, but this time he took his older sister Georgie along, without me even being there. This was when Sam started telling us he wanted to buy his first house by 18, because he could now visually see how it all works.

Step 3: EARN INCOME:  WORK & PERSEVERANCE

From an early age Sam was given the opportunity to work along side his parents and siblings in the family business.  Earning a ‘piece rate’ rather than an hourly rate taught Sam a valuable entrepreneurial lesson, that the more productive you are, the more financial reward you receive.

NEGOTIATING CHORES AROUND THE HOUSE?

Rather than paying an allowance which resembles a wage Sam mainly chose the jobs he enjoyed and the jobs he was good at. It was a fun learning experience negotiating the jobs and the renumeration for those jobs. 

Step 4: PATIENCE:   Working in the family business 

‘Life rewards action’. From a very, young age, Sam and his siblings earned money working on weekends and school holidays in the family business, along with extra chores around the house. It’s amazing how that money earned and saved (when not spent) over time can represent a decent deposit for a house. It reinforces the notion that “wealth is stored work.” For a young child, working alongside their parents and siblings can be a huge learning experience and a lot of fun. An interest in either what they are doing or perhaps the feeling of earning money is a good enough incentive to want to work. And from the young age of eight Sam was offered a position working in the family nursery business, ePlants. There was always so much to do. Sam and his siblings began on a ‘piece rate’, as it was pretty difficult to determine what rate a young child is worth per hour, so we decided to teach the important lesson that the more productive you are, the more money you earn. Quite fair, really. It was impressive to see their determination, especially when there was an incentive offered to earn more money or a goal in mind, like when Bayley, Sam’s younger brother worked towards purchasing his first iPhone. As Sam grew older and gained more experience, his rate increased and therefore his income grew.

Of course, the bank was a big part of the funding Sam’s investment property. In their determination whether to make the loan to Sam or not, the bank took into account character, capacity, and collateral, which I’ll summarise below:

Character is essentially your credit history, the main thing that banks use in making their lending decisions. Banks, like all lenders, want to know about your credit history, whether there are any defaults or if you are bankrupt, or if you have a good borrowing history. In Sam’s case, over a ten year period (from say 8 year’s old to 18 year’s old) he had a 10 percent deposit saved and his savings history was a good indicator of his character.

Capacity is your ability to pay the loan back, based on how much income you earn versus the loan repayment. Sam showed full-time income for more than twelve months. He had job security as he had been a long-term employee of the family business from the age of 15 as a school-based trainee. Sam also acquired a real estate rental appraisal that included a projected, rental return for the investment property that he was going to purchase, this added to his existing income (ie. $480 per week x 52 weeks = $ 24960). Keep in mind Sam was able to save a large portion of his income as he had a low cost of living —he was living at home.

Collateral is the security you provide for a loan. In Australia the bank lends up to 80 percent of the purchase price for residential, investment property, which means Sam would need to pay the remaining 20 percent deposit himself. There are various options if you don’t have the 20 percent deposit, and in this case Sam didn’t.

o Option 1 was called a Limited Family Guarantee, meaning my husband Rob and I could guarantee a percentage of his loan. The guarantee is limited to the amount of shortfall in the 20 percent deposit. For example, on a property purchase of $300,000 a bank would lend up to $240,000. If you were to borrow $270,000 a Family Guarantee of $30,000 would be required to cover this difference. In Sam’s case we offered a Limited Family Guarantee of 10%. 

o Option 2 was called Lenders Mortgage Insurance. In this case, the bank uses mortgage insurance which insures the bank for the loan amount above 80 percent. To give you an example, on a property purchase of $300,000 with a Loan of $270,000 (90%) mortgage insurance is $3,862. This amount increases or decreases based on the loan amount and the percentage above 80 percent lending.

Step 5: Purpose: Parents helping out with a ‘Limited Family Guarantee’

 Believing in Sam

Rob and I were in the fortunate position to help Sam and we decided we were more than comfortable providing a Limited Family Guarantee equal to the 10 percent deposit, being the 10 percent shortfall. This meant that Sam saved more than $5,000 on mortgage insurance, which made great sense to all three of us. Sam borrowed the whole loan amount in his own name. Rob and I secured the 10 percent shortfall of the purchase price. After 18 months from the date of purchase, I suggested to Sam to organise a bank valuation. It turned out that his property had increased in value substantially in the short-term ($80,000 in fact) and this was enough for the bank to release our Limited Family Guarantee. Sam was now standing on his own with his first investment property after just 18 months.

Sam has learned significant financial lessons in this experience, purchasing his first investment property. He has learned to budget for expenses such as: insurance, repairs and maintenance, water, and electricity, and now that Sam is managing his tenants himself, there will be many more valuable lessons to follow. These lessons are real-life lessons, experienced by the act of doing. These are lessons you don’t learn at school.

Sam made a courageous decision at the young age of 18. He doesn’t want to work for money, he wants his money working for him. “Now that you have purchased your own house at age 18,” I asked him, “could you imagine being an inspirational speaker and standing up on stage, encouraging youth to value money, to value themselves, to pay themselves first and to share your stories on how you’ve started your financial journey at such a young age? Because if you can do it at that age, others can too.”

“Yes,” he said. Sam can picture himself up on stage. Just by chatting with him, just by asking him questions, it helped him create a picture.

I don’t mean to put pressure on my children. Whether he does, or whether he doesn’t become a speaker is totally fine either way. I don’t want him to think he’s failed me if he doesn’t want to follow through with the ideas I throw around. It’s entirely up to him if he wants to run with any of them. Actually, Sam and his sister Georgie did get up on stage at their old high school, St. Teresa’s, and they spoke to the year- 10 students. It was Q&A segment. The topic was “Life After School.” Sam got the chance to share with the year-10′s the importance of managing your money, and Georgie spoke on how important it was to follow your passion and do something that you love.

Sam’s Story:   

I interviewed Sam for my book “Live, don’t exist and I love what he had to say:

I’m 21 now. In Australia, you have to be at least 18 to buy property, and when I was finally legal I was ready. I’ve been working for my parents in their nursery business as a source of income over the years. My brother, sister and I grew up with a family business so we’ve always had plenty of work opportunities and a chance to earn money. It gives me money to do the things I want to do, to invest in things that will go up in value over time. People are surprised, when you’re young as I was and you’re able to invest in property. But if you keep earning and put it away for all that time and don’t spend it, it’s there to use. I was pretty young when I started working in the nursery. I started out on a ‘piece rate’, earning as little as $2 per tray.

The property I bought when I was 18 only took a couple of weeks to get rented out, and it’s going very nicely. It’s only about ten minutes down the road. It was like a blank canvas. The house is a brick home, easy to take care of. It had no yard, just grass, when I bought it, so my family and I, being in the nursery business, on my days off we landscaped the yard, put borders for the flower beds, added fencing, added fake turf for the patio area, added some palms—and it looks great now.

My parents have been good role models. When we go food shopping, even though we’re what others might consider well-off, my mum is always looking for the bargains and if it’s too dear, we just do without. I’m that way now, too. In fact if it’s not on special, I often just won’t get it, at least until next week, when it does go on special. When I go clothes shopping, I always look for the 60 percent off sales and things like that. We spend so much money in life, you just have to look for all the ways to save that you can.

When I go out to clubs I watch my friends get on a roll and they can’t stop drinking. I can actually say ‘no’ when I have had enough—I can stop. I think, “Man! How much money are they wasting?” Every drink is sometimes another 10 dollars, and you have to think, you have to be conscious every time you go out, even if you’ve been drinking. You need to be aware of what you’re spending! But a lot of people don’t care, they just go out, have a good time, just ‘live for the now’. But I don’t. When I spend, I am conscious of every time I put my card down to pay for something, it’s like, “Oh, man!”

One thing I’ve noticed is that a lot of people my age take out loans for cars and stuff like that. But I haven’t spent money on things that will go down in value—I believe we have the choice to spend on things that will go up in value. More of us need to make smart financial decisions because I do see people my own age who are already in debt about $40,000 or more, and on things that will go down in value. Now, I laid out $40,000 on a house which is the same money as on a car but mine’s going up and theirs is going down at a rapid rate.

But if I ever get money stolen or see it go unnecessarily it gets me really upset. I went to the beach once and got a speeding ticket for $276, just for doing a couple of k’s over the speed limit. I was driving on the beach not long after that, and got written up for irresponsible driving—on sand it’s easy to let the car drift a bit as you drive. I got caught doing that, and that was another $276. So that’s $552, and to think of all the things I could have done with that money, like pay it towards my house!

“I can’t sleep at night knowing I’ve got those fines to pay!” I told my mum.

“You’ve just got to learn from it, Sam,” she said.

And when your parents charge you for board, rent, life expenses, you get used to paying your own way. Some of my mates pay like $50 and some pay nothing, thinking, “What’s the point?” when here, I’m paying like $100, which I think is pretty good, actually. It makes you feel independent, because you are.

And I would like to buy more property as investments, but since I bought this first property my funds are down a bit. I’ve been saving since the purchase of my house and I’m on the way to having the next deposit for another one. I work five days a week, go to gym every afternoon, the beach on the weekends. I don’t yet know what I want to do with my future but I know I want to earn a good wage and have all of these houses underneath me. For now, that’s the dream, and to over time have them paid off, a bit like what my parents are doing, how they invest in properties. Invest and spend the rest.

Put every dollar away that you can. Just put it somewhere and leave it there. Most people, as soon as payday comes, they go and they spend it. Spend yours on things that will go up in value. It’s especially powerful at an early age.

Saving is putting aside part of your income to provide for your future 

— Sam Pilling

How my son Sam bought his first investment property at age 18 The FOUNDATION OF BUILDING WEALTH STARTING FROM SCRATCH  

Step 1 : PERSPECTIVE 

‘PLANT THE SEED’  

*RAISING children to have an Optimistic Vision of:-

1.) them self: 

2.) their future and 

3). the world

*Instilling the mindset that:                                                                           ‘Money works for you, you don’t work for money’

*Three cores Values: 

1). Value self

2). Value money

3). Value time

Step 2: PASSION FOR LEARNING:  FINANCIAL EDUCATION

I took Sam along to his bank to deposit money that he had saved from doing chores around the house and working in the family business. We would ask the bank tellers for the best interest rate and the best deal for his savings account.

Reading Newspaper and internet Articles:

Sam was inspired by reading a few articles about successful youth who purchased their first house at young ages, 18 and 19 and knew that it was possible for him too.  

Parents leading by good example:

As parents we were very conscious about leading by good example. It is commonly said that ‘Children are a product of their upbringing’. I tend to agree and I believe that parent’s are one of the most influential people in a child’s life. A parent’s work ethic is hugely important when teaching your children that ‘Work ethic is a direct reflection of your wealth and that wealth is stored work’.

Managing money wisely as parents: Earning, saving, investing and spending the rest was another message handed down to Sam. He had added confidence in following his own parent’s footsteps.

Meetings with Bank Lenders and Real Estate Agents:

SAM has a keen interest in real estate so prior to him buying his first investment property Sam and I both thoroughly enjoyed going along to seminars called “fast-track -How Houses Buy Houses.” Now Sam is over six feet tall, and he was sitting in the front row, slouching down, legs right out in front, and the speaker, Julio De Laffitte, who is featured in my pending book Live, Don’t Exist said to him, “Hey Sammy! How old are you now?”

“Sixteen,” Sam replied at the time.

“You do what I do, mate,” and Julio slapped his hands together, right in front of Sammy, and told him, “and you’ll be out by age thirty-five! If you do what I do, you’ll have your money working for you.”

Sammy enjoyed learning about “houses buying houses” so much that he took himself along to another full-day seminar with Julio, but this time he took his older sister Georgie along, without me even being there. This was when Sam started telling us he wanted to buy his first house by 18, because he could now visually see how it all works.

Step 3: EARN INCOME:  WORK & PERSEVERANCE

From an early age Sam was given the opportunity to work along side his parents and siblings in the family business.  Earning a ‘piece rate’ rather than an hourly rate taught Sam a valuable entrepreneurial lesson, that the more productive you are, the more financial reward you receive.

NEGOTIATING CHORES AROUND THE HOUSE?

Rather than paying an allowance which resembles a wage Sam mainly chose the jobs he enjoyed and the jobs he was good at. It was a fun learning experience negotiating the jobs and the renumeration for those jobs. 

Step 4: PATIENCE:   Working in the family business 

‘Life rewards action’. From a very, young age, Sam and his siblings earned money working on weekends and school holidays in the family business, along with extra chores around the house. It’s amazing how that money earned and saved (when not spent) over time can represent a decent deposit for a house. It reinforces the notion that “wealth is stored work.” For a young child, working alongside their parents and siblings can be a huge learning experience and a lot of fun. An interest in either what they are doing or perhaps the feeling of earning money is a good enough incentive to want to work. And from the young age of eight Sam was offered a position working in the family nursery business, ePlants. There was always so much to do. Sam and his siblings began on a ‘piece rate’, as it was pretty difficult to determine what rate a young child is worth per hour, so we decided to teach the important lesson that the more productive you are, the more money you earn. Quite fair, really. It was impressive to see their determination, especially when there was an incentive offered to earn more money or a goal in mind, like when Bayley, Sam’s younger brother worked towards purchasing his first iPhone. As Sam grew older and gained more experience, his rate increased and therefore his income grew.

Of course, the bank was a big part of the funding Sam’s investment property. In their determination whether to make the loan to Sam or not, the bank took into account character, capacity, and collateral, which I’ll summarise below:

Character is essentially your credit history, the main thing that banks use in making their lending decisions. Banks, like all lenders, want to know about your credit history, whether there are any defaults or if you are bankrupt, or if you have a good borrowing history. In Sam’s case, over a ten year period (from say 8 year’s old to 18 year’s old) he had a 10 percent deposit saved and his savings history was a good indicator of his character.

Capacity is your ability to pay the loan back, based on how much income you earn versus the loan repayment. Sam showed full-time income for more than twelve months. He had job security as he had been a long-term employee of the family business from the age of 15 as a school-based trainee. Sam also acquired a real estate rental appraisal that included a projected, rental return for the investment property that he was going to purchase, this added to his existing income (ie. $480 per week x 52 weeks = $ 24960). Keep in mind Sam was able to save a large portion of his income as he had a low cost of living —he was living at home.

Collateral is the security you provide for a loan. In Australia the bank lends up to 80 percent of the purchase price for residential, investment property, which means Sam would need to pay the remaining 20 percent deposit himself. There are various options if you don’t have the 20 percent deposit, and in this case Sam didn’t.

o Option 1 was called a Limited Family Guarantee, meaning my husband Rob and I could guarantee a percentage of his loan. The guarantee is limited to the amount of shortfall in the 20 percent deposit. For example, on a property purchase of $300,000 a bank would lend up to $240,000. If you were to borrow $270,000 a Family Guarantee of $30,000 would be required to cover this difference. In Sam’s case we offered a Limited Family Guarantee of 10%. 

o Option 2 was called Lenders Mortgage Insurance. In this case, the bank uses mortgage insurance which insures the bank for the loan amount above 80 percent. To give you an example, on a property purchase of $300,000 with a Loan of $270,000 (90%) mortgage insurance is $3,862. This amount increases or decreases based on the loan amount and the percentage above 80 percent lending.

Step 5: Purpose: Parents helping out with a ‘Limited Family Guarantee’

 Believing in Sam

Rob and I were in the fortunate position to help Sam and we decided we were more than comfortable providing a Limited Family Guarantee equal to the 10 percent deposit, being the 10 percent shortfall. This meant that Sam saved more than $5,000 on mortgage insurance, which made great sense to all three of us. Sam borrowed the whole loan amount in his own name. Rob and I secured the 10 percent shortfall of the purchase price. After 18 months from the date of purchase, I suggested to Sam to organise a bank valuation. It turned out that his property had increased in value substantially in the short-term ($80,000 in fact) and this was enough for the bank to release our Limited Family Guarantee. Sam was now standing on his own with his first investment property after just 18 months.

Sam has learned significant financial lessons in this experience, purchasing his first investment property. He has learned to budget for expenses such as: insurance, repairs and maintenance, water, and electricity, and now that Sam is managing his tenants himself, there will be many more valuable lessons to follow. These lessons are real-life lessons, experienced by the act of doing. These are lessons you don’t learn at school.

Sam made a courageous decision at the young age of 18. He doesn’t want to work for money, he wants his money working for him. “Now that you have purchased your own house at age 18,” I asked him, “could you imagine being an inspirational speaker and standing up on stage, encouraging youth to value money, to value themselves, to pay themselves first and to share your stories on how you’ve started your financial journey at such a young age? Because if you can do it at that age, others can too.”

“Yes,” he said. Sam can picture himself up on stage. Just by chatting with him, just by asking him questions, it helped him create a picture.

I don’t mean to put pressure on my children. Whether he does, or whether he doesn’t become a speaker is totally fine either way. I don’t want him to think he’s failed me if he doesn’t want to follow through with the ideas I throw around. It’s entirely up to him if he wants to run with any of them. Actually, Sam and his sister Georgie did get up on stage at their old high school, St. Teresa’s, and they spoke to the year- 10 students. It was Q&A segment. The topic was “Life After School.” Sam got the chance to share with the year-10′s the importance of managing your money, and Georgie spoke on how important it was to follow your passion and do something that you love.

Sam’s Story:   

I interviewed Sam for my book “Live, don’t exist and I love what he had to say:

I’m 21 now. In Australia, you have to be at least 18 to buy property, and when I was finally legal I was ready. I’ve been working for my parents in their nursery business as a source of income over the years. My brother, sister and I grew up with a family business so we’ve always had plenty of work opportunities and a chance to earn money. It gives me money to do the things I want to do, to invest in things that will go up in value over time. People are surprised, when you’re young as I was and you’re able to invest in property. But if you keep earning and put it away for all that time and don’t spend it, it’s there to use. I was pretty young when I started working in the nursery. I started out on a ‘piece rate’, earning as little as $2 per tray.

The property I bought when I was 18 only took a couple of weeks to get rented out, and it’s going very nicely. It’s only about ten minutes down the road. It was like a blank canvas. The house is a brick home, easy to take care of. It had no yard, just grass, when I bought it, so my family and I, being in the nursery business, on my days off we landscaped the yard, put borders for the flower beds, added fencing, added fake turf for the patio area, added some palms—and it looks great now.

My parents have been good role models. When we go food shopping, even though we’re what others might consider well-off, my mum is always looking for the bargains and if it’s too dear, we just do without. I’m that way now, too. In fact if it’s not on special, I often just won’t get it, at least until next week, when it does go on special. When I go clothes shopping, I always look for the 60 percent off sales and things like that. We spend so much money in life, you just have to look for all the ways to save that you can.

When I go out to clubs I watch my friends get on a roll and they can’t stop drinking. I can actually say ‘no’ when I have had enough—I can stop. I think, “Man! How much money are they wasting?” Every drink is sometimes another 10 dollars, and you have to think, you have to be conscious every time you go out, even if you’ve been drinking. You need to be aware of what you’re spending! But a lot of people don’t care, they just go out, have a good time, just ‘live for the now’. But I don’t. When I spend, I am conscious of every time I put my card down to pay for something, it’s like, “Oh, man!”

One thing I’ve noticed is that a lot of people my age take out loans for cars and stuff like that. But I haven’t spent money on things that will go down in value—I believe we have the choice to spend on things that will go up in value. More of us need to make smart financial decisions because I do see people my own age who are already in debt about $40,000 or more, and on things that will go down in value. Now, I laid out $40,000 on a house which is the same money as on a car but mine’s going up and theirs is going down at a rapid rate.

But if I ever get money stolen or see it go unnecessarily it gets me really upset. I went to the beach once and got a speeding ticket for $276, just for doing a couple of k’s over the speed limit. I was driving on the beach not long after that, and got written up for irresponsible driving—on sand it’s easy to let the car drift a bit as you drive. I got caught doing that, and that was another $276. So that’s $552, and to think of all the things I could have done with that money, like pay it towards my house!

“I can’t sleep at night knowing I’ve got those fines to pay!” I told my mum.

“You’ve just got to learn from it, Sam,” she said.

And when your parents charge you for board, rent, life expenses, you get used to paying your own way. Some of my mates pay like $50 and some pay nothing, thinking, “What’s the point?” when here, I’m paying like $100, which I think is pretty good, actually. It makes you feel independent, because you are.

And I would like to buy more property as investments, but since I bought this first property my funds are down a bit. I’ve been saving since the purchase of my house and I’m on the way to having the next deposit for another one. I work five days a week, go to gym every afternoon, the beach on the weekends. I don’t yet know what I want to do with my future but I know I want to earn a good wage and have all of these houses underneath me. For now, that’s the dream, and to over time have them paid off, a bit like what my parents are doing, how they invest in properties. Invest and spend the rest.

Put every dollar away that you can. Just put it somewhere and leave it there. Most people, as soon as payday comes, they go and they spend it. Spend yours on things that will go up in value. It’s especially powerful at an early age.

Saving is putting aside part of your income to provide for your future 

— Sam Pilling