$5million net equity in 5 years

T

TAG

Hi all,

We ahve been very impressed with the SS foruma nd have learnt a lot in the past 12 months. So thank you all who has posted! We have now set down some concrete goals for us to achieve.

Our goal is to achieve fianancial freedoom by 2017 with $5million of net equity in IPs/shares and net rental income of $250k+ rental/share income.

We would like to hear from others who have achieved this goal post and would shed some light on their staregy, what they have done or not done, time it took to achieve it and other important factors in the equation.

Also given the uncertainty of the market, we believe that there are buying opportunities in the next few years, so would like to refine our strategy in preparation.

Thanks in advance,

TAG:)
 
Hi TAG,

Just a quick couple of questions:

- your heading says $5mil in 5 years yet your goal says 2017, I am confused?
- do you have any equity to start with?

I would like to be in a position to retire in 10 years but will be a hard slog for me with no equity and still looking at buying my first place.

Good luck with it, and please keep us updated on your progress! :)

Cheers

Ben.
 
$5 million net equity in 10 years

Hi Belu,

Good pick up:) I have changed the title as that reflects our goals. If anyway has done in 5 years, love to hear and learn our you did it.

Yes, we started our IP investment a few years now but really put our focus in 2007. We have built equity approaching the $600K and compounding.

Currently holding off IPs at the moment and paying down the rest of our PPOR debt but will look to buy IPs again soon.

TAG
 
Feeling a bit glum, I started 5 years ago, and have net equity of about $100k and negative rental income before tax of about $20k p/a... I guess it does make a diference of what you start with, I started with $4k as the deposit on my first house, and still have no o/o property...... Its interesting $4k into $100k over five years is a great capital return, however I need to factor in my negative gearing losses over that time, making it a more realistic return. Its still better than saving money in the bank, as if I have %5 capital growth, and rents and interest rates stay the same, over the next year I will 'net' a capital gain of $17k, which would be an interest rate of 17% if I was saving in the bank...
 
Heh, we have a 5 year goal (more like 4 and a half now) purely because that's when one kid starts high school and the other one starts primary school, so no plans for early retirement or world travel - too many little people in the house. But our end goal is just to be in a good area in Adelaide with a solid passive income rather than owning $X million of assets, and we have rather a lot of concurrent schemes in place to do so. Any one of them could get us there, and if they all succeed, bonus!

Property is plan C not the main event, and I'm not going to touch anything with a 10 foot bargepole unless its cheap and positively geared. Plan B is the one making all the money at the moment. Maybe I should reorder them :)
 
Thats great if you wealthy parents:)

How about those who have bulit their portfolio from the ground up. How are tracking in 5 years and 10 years.

TAG
 
I had a similar goal when I started only a few years ago - to have 5 million net equity in shares/property 15 years from starting.

It's now 3 years in, and so far we seem to be tracking OK. Have PPOR + 3 IPs (and ready to buy IP 4 as soon as a good deal is found), have about $500k in equity (not including superannuation). The plan is to try to acquire another 7 properties over the next 8 years or so, then hold for 4-5 years whilst gradually drawing down equity to buy shares. I have also set the goal of having my PPOR paid off completely when I start living off investment income.

In some respects I have it easier than others here, in that I have a high working income, but balance that against earning well only in the last 5 or so years as my career has progressed. I'm currently 32.

I have a young son who will turn 18 when I'm 47, so if I could achieve the goal by then I'd be very happy, even though it's a couple of years after the original goal time.
 
Never say never but I think unless you earn significant cashflow/income and time the market to perfection, $5 million gross in 5 yrs is a stretch. Assuming youre on a moderate Y, let's say $100K or so, I think %5 mill net in today's dollars is achievable after about 2 property cycles ie 2 booms. And thats with a little luck/smart picking on your side.

So my view in general is $5m net in today's dollars in 20 yrs start to finish, notwithstanding inheritances etc.

You know its funny that you should quote that number - that's EXACTLY my minimum goal and the style in which I'd like to achieve it ie prop/shares combination. But I think, I at least have to be realistic about the timeframe. Been investing for 10 yrs now so that's where its heading ie 20-25 yrs. I also have 2 young kids and that could/will delay your financial goals to some extent as well.
 
$5 million net equity in 5 years means IPs worth about $14m (bank valuations)in 5 years time at 80% LVR means max available equity at $11.2m and loans at $6.2m. IOW, you gotta buy $6.2m worth of IPs as fast as you can....that increase in value by 125% or better within your 5 year time frame. Them's the numbers. Hope you earn really big-bucks .... or can do miracles.
LL
 
landlubber said:
$5 million net equity in 5 years means IPs worth about $14m (bank valuations)in 5 years time at 80% LVR means max available equity at $11.2m and loans at $6.2m. IOW, you gotta buy $6.2m worth of IPs as fast as you can....that increase in value by 125% or better within your 5 year time frame. Them's the numbers. Hope you earn really big-bucks .... or can do miracles.
LL
Click to expand...

Or add massive value. I believe it can be done IF you have the knowledge to apply. Like any trade (sparky, dentist etc), it takes time to build your skills to the level where you can make serious money.
 
We know $5 Million in 10-15 years is achievable.

Will let you know once we have achieved it.

But also would like to hear from those who have done it already so we can learn from them.

Thanks for you inputs so far from those tracking from the earlier stages of their property investment. How about those who have been in the game for say 7-10 years+ who have been through 1/2 property booms.

Thanks,
TAG
 
I had similar goals 10 years ago.

It is a good thing to have goals like that - it gives you something to work to. You also need to refine it as you go (review annually?)

Unfortunately, we are not there yet (ok, ok, not even close! :p)

1. forecasting is difficult, as growth does not happen linearly - i.e. things can go rip snorter for 2 years and tank completely in the 3rd and/or go flat for 5 years

2. generating a high, stable casdhflow other than working has been challenging, with similar volatility to returns.

End result - still trying! :)

Cheers,

The Y-man
 
TAG said:
We know $5 Million in 10-15 years is achievable.

Will let you know once we have achieved it.

But also would like to hear from those who have done it already so we can learn from them.

Thanks for you inputs so far from those tracking from the earlier stages of their property investment. How about those who have been in the game for say 7-10 years+ who have been through 1/2 property booms.

Thanks,
TAG
Click to expand...


Hi, I would like to know what your plan is to get there.

Yes it's nice to have a goal but it needs to have the hows attached to it. Otherwise it's just a wish list.

Assuming property doubles in 10 years. If you want $5mill net in 10 years then you need to buy %5mill in property this year. Unless you have massive money to pay down the loans in the meantime. Or do you have a different strategy?

I have my goals (not as ambitious as your I have to admit) with year by year aims and projections. Fingers crossed.
 
TAG said:
We know $5 Million in 10-15 years is achievable.

Will let you know once we have achieved it.
Click to expand...

I think so too.

Don't let the dis-believers sway you.

Having a clear, realistic, and attainable plan to get you there and sticking to it is essential though.

Good luck with it.
 
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