Meet Akira Ellis a 13-year-old kid. He just bought his first piece of real estate, a $552,000 four-room one bath house in Melbourne’s Frankston.
Akira Ellis snapped up the 575 square metre four-bedroom, one-bathroom home in Frankston in May – when he was still 12 – and recently settled the sale.
“[Buying a house] can be quite scary, especially when it’s your first purchase and renovation – there are so many things to think about,” he told the Express Advocate.
“It’s a big investment and a mistake can cost you a lot”.
Although he hunted down and picked the property, the Gosford teenager is not alone in the venture with a fair bit of help from his parents Frank and Mychel.
Even his brother Oliver and sister Saskia chipped in some pocket money to make it a whole family affair. The pint-sized housing prodigy said he planned to ‘totally transform’ the 1970s home before renting it out and looking for his next investment.
His plans include replacing the bathroom and kitchen, updating the lights and window furnishings, changing the carpet and polishing the floorboards. Akira also wants to refresh the roof and landscape the garden to boost the property value and make it more attractive to renters.
The article mention he had “help” from his parents but it did not say how much. He did find that house himself, perhaps with help from “renovating for profit”. Akira is already looking for his next property.
What can possibly go wrong?
Mike “Mish” Shedlock.
It doesn’t say how much annual income Akira makes or what the down payment was for this property.
Hmm, why would that matter? I’m sure he knows a good deal when he sees one.
LMAO.
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Can a minor even legally enter into a contract?
The end result of massive fiat money printing at 0.0001% interest rates….
The money will go somewhere.
The banker, relator, inspector, appraiser and taxman all got their cut.
Who cares if the taxpayers guarantee it all. Always be closing (ABC).
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This is contrarian indicator? Even minor are entering to this investment world indicating the market is boiling point. Collapse soon.
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“Mychel”? Lol. Bogans.
Straight outta Dumbf#ck, Tennessee
This kid will be the poster-child for the top of the Aussie housing market.
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That’s exacly Mish’s point.
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First home buyer accessing no state stamp duties for first home buyers, aka parents being creative.
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He is learning early and has already mastered that one essential quality to all property speculators here in Australia;
The all knowing look of smugness plus the shit eating grin.
The ‘shoeshine boy’ of Australia’s utterly grotesque property bubble.
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Is the age of majority in Australia different than in the rest of the developed world? I mean, in the US people cannot sign a binding legal contract until they are 18. A quick Google suggests that the Aussie law reform commission suggested the age of majority be reduced to 18 way back in the 1970’s, but it doesn’t seem to have changed from there.
Maybe he’s using the equivalent of an LLC. But would anyone in their right mind rent from a 13 year old?
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Yes, I don’t believe the kid has title. It would certainly be impossible in the US.
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In the news today but likely forgotten when someone else buys his house for less than 1/2 of what he paid in another few years. 2012 was a good year to buy here locally, about 1/2 of 2008, >9% annual return as a rental in 2012, now it’s above 14%%. 😉
Now is not the time to be buying imho.
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student loan for 600,000 at 6% with notihng to show for it with lots of study or mortgage at 3% with probably a 300,000 house after 5 years to show for it and a further 100,000 invested to upgrade the house..
lose 600,000 or 400,000, the kid is way ahead of a student loan, unless of course, the kid got a job at 30,000 a year after taxes renovating houses and saved his money – in which case he would be 150,000 ahead and still with no education.
child labor much? i though thise would be illegal even in convict country.
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LOL a rookie buying when the housing market in Oz has clearly topped out.
Good lesson for him and his family though
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Yeah,
I remember buying my place in Sydney, back in ’03, after the market had just run up about 100% after the Olympics. All the well wishers said the same thing.
I started investing at 11, admit to doing everything wrong and losing at anything I touched, I was a freakin’ statistical anomaly how many times in a row I lost, but I stuck with it. I wish the kid well.
Above and beyond, I would bet that there is a lot more to this story than meets the eye. No way the parents aren’t behind this. Probably a good tax lawyer as well.
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While in Jr high a friend of mine’s father died unexpectedly, soon after his grandmother died as well. They had done some “interesting” accounting to avoid taxes by putting a lot of the family assets in the kid’s name. Of course this made things very complicated because he wasn’t old enough to own anything. So it all went into a trust until he reached maturity. In the meantime his mother had to work (she was a housewife with no practical experience in the workforce, and there was enough there with two life insurance policies, property, etc that she should have been pretty well off) and they had to scrape by to make ends meet, and jumping through legal hoops to buy cars and other necessities. I’m sure a big chunk of the money went to the trust managers, lawyers and accountants too. But hey, they didn’t pay much in taxes, right?
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Amazing how people seek the negative. Sad.
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Yeah like every financial calamity is the same. Good luck with that.
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“Probably a good tax lawyer as well.”
Did someone say tax lawyer?
Yes, the 13 yr old played buyer, but who do you suppose was the seller?
LMAO.
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575 square meters ( 6180 sq ft), 4 bedrooms, and only one bath?
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Spoken like a true American, Greg. We do love our bathrooms and most homes here in my neighborhood have more baths than bedrooms. We have four, and two of them are never used. Four bedrooms and four baths for two people. What a waste of toilets! We would do just fine with a one-bed, one bath apartment and probably reduce our overhead by $40, 000 per year. But, that’s the price of privacy.
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We’ve been 2 for 13 years now and have 4 beds 3 baths. Use all the baths to this day… 1 of them is first floor. Had 5 kids living in the house at one time, but the best of times was the weekend spent in a 10 foot pop up camper. We all fit.
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The house in the photo does not look like it has 6189 sq. ft., which would be a very large house. That must be the lot size.
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You Re right. Looks about 1300 to me. $552,000 now become the problem. Come to think of it, they didn’t see a crash when we did. That kid might become a casualty at that price.
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This kid will be counting his money in ten years time as the people waiting for the housing crash will have to save double the amount for the deposit as house prices have doubled.
I have waited and waited for this housing crash like mish and Keen have predicted and nothing.
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Join the kid and buy
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“Patience, grasshopper.”
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Patience? Is that what is required? In the upside down, bass ackwards world we now live in?
13 yr old kids buying half million dollar homes. It dovetails nicely with the ever expanding trend of adult coloring books and coloring classes.
Walked into a Michael’s the other day and a bunch of grown adults were fully engaged in a discussion about their coloring books. No sh-t.
http://www.michaels.com/search?q=coloring%20books%20for%20adults
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Yes, patience. Fiat currencies will continue to be devalued. It’s the only way the debt can be sustained a bit longer. Voluntary austerity topples governments. Destruction of the currency is the natural way governments meet their end.
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Isn’t currency devaluation a reason to applaud this purchase? I’m sure the mortgage will be substantial, and he will be paying it back with devalued dollars over time while continously raising the the rent each year. Sounds like the kid is brilliant!
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My oldest child did the same thing at age 19 after her first year of university. She did everything. I supplied the down payment and I did have to co-sign everything, as no mortgage lender would deal with a student with unsteady income. I’m certain that this young man has his parents co-signed on everything as well.
My daughter arranged the student renters, lived there herself, and managed the property. As a result she didn’t have to pay rent for the remaining years of university. When she sold the place privately 6 years later, she walked away with around $70k US, plus I got my down payment back. I wasn’t worried about profiting myself, as I figured it saved me a bundle in helping her pay rent.
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Certainly, it’s possible. I’m just skeptical about jumping in at the top of the cycle and making it work. Whatever bargains were to be found have already been found, no?
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I wish I could answer that but unfortunately I’ve come to accept that I have absolutely no idea where in the cycle price currently is, it’s interesting that you know this with absolutely certainty.
Having been endowed with such omniscience, you must be an extremely wealthy individual.
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The top of a bubble? Maybe. But gee, my crystal ball is all fuzzy! People have been saying that in Australia for many years to their dusmay.
Lol. Sorry. But if I knew the correct timing of such things I would be, um, God?
All I’m saying is that people who are using this stunt to “guarantee” the top of a bubble should be the ones investing money in whatever they think will make them money when the guaranteed bubble burst happens. The market can stay irrational much longer than I can stay liquid, so I don’t like to call the “top” of anything.
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There are always bargains.
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At least he’s young enough to start over after he loses everything when Mr. Market clobbers him. Question is: will he learn anything or suffer institutional amnesia like so many other real estate investors.
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It’s also possible that everything works out well for him, he learns a lot, and uses his knowledge to be wealthy by the time he’s 35. It worked out that way for my daughter.
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Plus I’m certain this is going to help him pull some nice azz in a few years. He should install a striper pole in the living room.😀
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Ha!
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Only thing it’s going to help him do is to have his own gamer’s cave in the basement.
Question : are houses in Oz built on basements or just on top of slabs?
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The ones I know were all slab built, maybe different further south or new builds.
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Some aren’t even on slabs, but on posts, raised up above the ground. This provides ventilation, protects against floods, and of course protects your house from many of the dangerous critters in Oz.
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Obviously didn’t keep the one in the article out, serious cave gamer discrimination written all over.
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The problem with ‘wealth’, Realist, is that it is not locked in i.e. assets can fall as well as rise while your debts are set. The issue facing all the wealthy today is that their asset values are propped up with a mountain of debt — take away the debt and the assets collapse in value.
That’s exactly the future that asset owners face today. Your daughter will be among them unless she is able to lock in her gains somehow.
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She locked in her gains from her first home. Used it as a down payment for her present home, and has already paid off the mortgage on it. She could actually retire now (in her thirties) but sees no reason to at such a young age. She works now because she wants to, not because she has to.
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Nope. The only way you lock in your gains is to go to cash. Selling one house and buying another leaves you exactly the same spot, unless you sell a $2,000,000 house and trade DOWN to a $1,000,000 house (locking in $1m).
Not to worry though. I’m very proud all the same.
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No Lege… She went up in price on that second home, so she is now MUCH worse off then she was when she had nothing.
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According to Realist she is ‘debt free’ so she’s only worse off to the extent that her net worth falls further when asset prices tank, but yes, I take your point.
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Yes, her second home was worth about 50% more than the first.
Yes, her equity is locked into her home, so if it drops in value, she would lose some of that equity.
However, she has to live somewhere, and the house is just as likely to keep appreciating in value in the long term.
The main thing, is that she is comfortable no matter what happens. Money is not much of a worry for her. When she asks me for advice today, it is mostly for where she should be investing her excess income. Sorry to sound like I’m bragging. She’s just a very astute person.
The whole point was simply that she learned at an early age. Perhaps this 13 year old kid will learn and be successful as well.
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He might be our President some day!!
Hope he/she is a great patriot!!
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Typical late-stage market euphoria.
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“pictured here with his renovation mentor”
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Good looking people can get away with anything.
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I was expecting a parody…
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Ain’t reality the greatest.
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in Aust it would not be Legal for anyone under 18 susp Huge amount of Parent `help’
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A minor will own real estate in a trust. This story is a puff piece. It is propaganda for the real estate industry. I hope that kid knows it and doesn’t believe he is special.
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All of today’s massive pile of debt is just future demand pulled forward into the present supply cycle.
In some sense, a thirteen year old who manages to scrape up some equity out of the pillaging of his future, actually is perhaps special. His peers will have nothing by the time they reach an age where buying a house makes sense.
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Does he also happen to be a “shoeshine boy”?
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Good observation.
A 13 year old investing in a $552k house could be a sign that real estate market has topped out.
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Ya think? 😉
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He must be so proud to be a tax shelter for his parents.
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“What can possibly go wrong?”
Should be no problem. The price is in Australian dollars. $AUD 552k is only about $US 437k.
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Only ??
I bought my 2222 sq ft, 4 bedroom 2 1/2 bath in a nice neighborhood in a Dallas suburb in 2001 for $135,000. Even then I had to think twice before buying such an “expensive” house because I already owned a 1100 sq ft 3 bedroom 1 1/2 bath in the same city that sold for less than half as much.
Dallas read estate values have certainly increased since then, but still a bargain compared to national and international costs.
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This is as insane. It’s like hearing rational people around you discussing the topic du jour, that stupid Honey Boo Boo kid show, and people are fascinated by it. Children purchasing half million dollar homes to RENT out is absolutely insane. Wow.
The world is, in my mind, officially bonkers.
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It’s also possible that everything works out well for him, he learns a lot, and uses his knowledge to be wealthy by the time he’s 35. It worked out that way for my daughter
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Absolutely
If he over leverages I suspect it will be his parents who get in trouble
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Hey shamim, that was my post. Who said you could copy it?
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Some facts are missing, but that would spoil the sensationalist bend of the story (did the parents re-mortgage their overpriced house). But good try dear mainstream media, sensationalism is all you are good at. I suppose, it has a place here to highlight how diphit crazy it has become under the current regime.
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I am not sure who is more stupid, the people who put out crap like this thinking people will believe it or those who read it and actually believe it.
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Most Trump supporters are fine with their Messiah killing random people on the street so obviously people will believe in anything. There are people earning a living writing fake news on Facebook for Trump supporters. In fact I have started myself on a small scale writing made up nonsense that they will click on republish.
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Not familiar with statutory law in Australia. But I bet if this same kid got caught drinking a 12-pack with his friends in his front yard the cops would cite him and mandate an appearance before a magistrate in juvenile court.
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Does anyone know if Australia has inheritance taxes? (I am guessing it does, but since I don’t live there I don’t want to assume…)
To me, this story sounds like creative estate planning on the part of the parents. And the kid probably gets a lot of “first time home buyer” tax credits and loan incentives.
They already say its going to be a rental, so its probably incorporated — all the siblings own “shares” in the LLC (or whatever the Aussi equivalent is). Since he isn’t sole owner, it won’t be used against him for college tuition benefits.
It sounds like a very creative estate planning move by the parents, with the Aussi taxpayer providing a free “put” option if the real estate market tanks.
Can a 13 year old maintain the books for a rental? Yes, lots of kids had paper routes years ago — and accounting hasn’t changed much in 300 years. Can the kid filter and select good repair / trades people? As a minor, can he legally hire them?
Not that I doubt the experience of a 13 year old. I am sure he took wood shop and can change light bulbs.
But this sounds like the parents are doing things in the kid’s name for tax purposes
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Then, does it strike you as the smartest thing to publicize the scheme to the whole world. I know, scrutiny is banished, but what if there is an old geezer in the basement office who did not get the memo.
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No inheritance tax in Oz. Yes, first time home buyer benefits. No idea if the parents are setting up a trust, but that’s one option. Might be a publicity stunt, or they might be trying to get him stated in real estate. Hard to know the reasons.
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more likely there is a TV program in the making. Cherie Barber, the renovation mentor is also a TV personality on a TV reno show.
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The kid didn’t do it. He couldn’t qualify for a loan. His parents qualified. It is well to do parents giving an inheritance to their kid. It is probably a tax advantage for them to do that now rather than later bequest the house to him. It might be full blow tax avoidance to do that.
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The $64K question is whether the Aussi tax authorities and so-called “regulators” are going to look the other way (while collecting taxpayer pensions for sitting on their hands)?
That is what the useless humanity in Washington DC did. Some of the higher ranking bureaucrats used taxpayer money to hire marketing consultants to develop excuses for bank CEOs (but not bank tellers who are of course all evil doers — the CEOs are innocent I tell ya).
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If he gets first time buyer credits it can only happen once. It’s conceivable that his parents benefit and he gets screwed later when he wants to buy his own house. But as I say, who knows what this is all about? Much ado about nothing.
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Reminds me of all of us contractors chipping in with trade equity, to help a 16 year old carpenters apprentice buy his first duplex in CA back in the early 70’s. Right at the “peak” of the market. Lotta folks said he was nuts. He paid $27 k equivalent for it. Care to guess what that place is worth on the Monterey Peninsula today?
The “Kid” by the way is worth many millions today. He just kept rolling over his income into more property for decades. He especially concentrated on distressed builder properties during recessions.
Bottom line,,,the bricks and mortar will still be there long after the Fiatskies are gone.
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Excellent post professor. This could work out great for this kid. Amazing how some people look on these kinds of stories as doom and gloom. Maybe the parents are taking a risk, but heck, it might be brilliant!
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bet he drove a old pick up for years & kept working as a carpenter
millionaire next door
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Aren’t such contracts entered into by minors rescindable. Sounds like a heads i win , tails you lose contract on the part of the 13 year old or am i missing something?
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Reblogged this on World4Justice : NOW! Lobby Forum..
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He got his . 15MINUTES OF FAME…..
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Realist sorry
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Wow. An apology! Thanks. Just don’t let it happen again. Lol.
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Maybe grandma gave him his inheritance? And parents don’t trust the stock market. Maybe investing in Realestate us off when you rent it off . Depending on the rental market here in USA it works well as a cash cow if the income exceeds the rental income with depreciation. Not everybody is stupid.
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