From $0 to $5.6 Million in 4 years

skater said:

But not everyone CAN earn a high income, no matter how hard they work at it.

Click to expand...

Completely disagree with you there. That's exactly like saying not everyone can earn a high income from property investing.

High incomes are within the reach of us all in a number of forms (including investing) if we are prepared to work (hard) towards them... how we achieve them is for us to work out according to our own capabilities.

Actually his cashflow bleed is a lot less than a 100k per annum...

He are the numbers.

Owes about $3.3m (2 are being built off the plan)...assuming 6.5% I/O...he is paying about 215k interest.

Assume about 45k for expenses (I allow about 4k per property...houses tend to be cheaper)....and his total outgoings of about 260k.

$3545pw works out to be 185k...so the shortfall is about 75k.

So how lets assume that Quyen and his wife work as public servants earning say 85k and 90k for a net 130k. This still leaves them about 55k per annum to live on particularly if they are as frugal as they say they are!

Now this does not assume any sort of tax claw back by using the Tax claw back and variation forms to increase cashflow. If they did this they would be even further ahead. Lets assume they total depreciation is 4.5k per property (or a total of approx. of 50k per annum)...this added to their loss from properties would leave them with a table incomes of 22k and 27k. If they put in a tax variation form via thre ATO they would only pay taxes of $2500 and $3500...so they would have a CF of 169k. This would allow them to live a reasonable lifestyle....as they would be living on about 95k per annum!

High risk.....but doable non the less.....Quyen...congratulations! But this is not within my conservative risk profile....well done!

topcropper said:

Quyen has current property value of ....$5,620,000.
Purchase cost of...............................$4,543,000.
A few pages back Quyen said he owes, $4,000,000.

Rents equal $3,545 per week, or,............$184,000. per year.



I don't even know what resi interest rates are now. I suppose they are heaps less than business and commercial and farm? Are they 6.5%..??

4 million at 6.5% is $260,000 per year.
Surely extra costs and repairs to 11 properties must bring this figure to over 300k?



So we have rents of $184,000.
costing..................$300,000.

No doubt there is some tax savings there.


Is it costing more than 100k per year to hold? What have I missed here?
Can someone work out the tax savings, I'm not right up with that stuff.


See ya's.




ps. OK, there is 2 properties bought off the plan that aren't yet paying any rent. So that will make the figures look better when the rent starts coming in. Forgot that bit.

Click to expand...

HiEquity said:

Completely disagree with you there. That's exactly like saying not everyone can earn a high income from property investing.
.

Click to expand...

I tend to agree with Skater. Not everyone can do it. The proof is looking at us right now. Quyen has 12 properties! That puts him in a special league. How many people own 12 properties in Australia? Possibly point one of one percent however statistically I'd reckon much less.

Dazz is a bit of an investing legend in my books. But it took Dazz to see what no one else could, because if others could have seen it, the properties Dazz bought would have been way more expensive.
Nathan is a bit of a legend too. He continues to amaze us all what he does, but if everyone could see the short term profits to be made, and be able to control a team of builders like Nathan does, then Nathan wouldn't be buying those houses at the prices he does.

Brenda Irwin, another. There is probably heaps on this forum who have done amazing things as far as creating wealth. And it's a bit like a biased forum with biased results that tends to pick mainly winners too, because I'm sure many have crashed and burned, but often those forum members slink away never to be heard of again.

And Quyen could crash and burn yet too. I could think of many things that could happen to bring him undone as could many on here.

I find myself a bit embarrased comparing what I've achieved to what some have done here, I haven't really done much at all as I got a great start and most of my wealth will be inherited, however as a farmer who is doing well, I'm sort of already a winner anyway, as agriculture in Australia has been sort of a survival of the fittest for 100 years, and those still going are already winners. The losers went bust and have been going bust for 100 years.



Nope. Not everyone can create massive wealth. Not everyone can end up in a big paying job either. Not everyone can run a hundred metres in 10 seconds or represent Australia at sport, and not everyone can be a doctor, or invent something the whole world needs. It's lucky that most can't, because if everyone was individually brilliant, then there wouldn't be the opportunities out there for those that can see the light. Most people end up mediocre, because that's what they are, average normal people, and then others at the bottom end up at the club playing the pokies and with nothing.


See ya's.

topcropper said:

Nope. Not everyone can create massive wealth.

Click to expand...

Hi TC

As we are getting way OT here, I will agree to disagree...

All I see is

$4m - $5.6m is the same ratio as
$2m - $2.8m is the same ratios as
$1m - $1.4m is the ratio I woudl be at if I bought anotoher IP for aobut $300k

but I bought myfirst proerty 10 yrs ago, my 2nd 6yrs ago and my 3rd 6 mths ago, so it'll be 11 yrs to get here lol

This chappy's done it in 4 yrs - I take my hat off, so what if he earned more, I could be earning more now and I know exactly whose choice it was not to...

Rixter said:

BT, its my idea first - you can hold the camera tho.

Click to expand...

Settle down big fella, I was not trying to cut your grass just suggesting that maybe one smack from u was not enough for the naughty post by Skater and that 2 (from u) might be more appropriate.

I bet Lil Skater is loving this thread

Bigtone said:

I bet Lil Skater is loving this thread

Click to expand...

I bet Lil hasn't read this thread or else she would show her embarassment.

I think Quyen's effort is in a way much more inspirational than Brenda. He came here with nothing. Many Australians like Brenda already had a strong foothold in Australia (English barrier, financial, family, community support, culture shock).

From going from nothing to holding steady jobs, and then amassing millions of dollars in properties shows he never takes no for an answer, his persitance has paid off. I'm sure he isn't among the types that say "I will never earn x per year because there is just no way"..

As I said earlier, having a good salary can really expedite your property acquisition goals, many people blasted me down saying this had nothing to do with wealth. Well, try telling an African living on $1/day he can be a property millionaire if he tries harder.

Hey, you guys are great!

It'll be fantastic indeed if we could all get together in a room one day to discuss the ins and outs of property investing.

I think it's part of human nature to compare and comment on the achievements or non-achievement of others... That's what make life so interesting!

One think I can confidently say is that Australia presents us all an opportunity to excel. Whether it be to become a doctor, an engineer, a teacher, a bus driver, a day trader with shares, a zoologist or even a property investor! Whatever it is that we choose to do, I'm sure if we have the right attitude, the right tools and encouragement, I'm sure we will all succeed in our own right.

We are all great only if we want to be

Take it easy guys and if any of you are ever down Canberra way, drop us a line and we'll get together for coffee! My shout.......

Cheers

Quyen

jaycee said:

t
gees, the same thinking applies to $400k debt - if you cant meet the interest payments you're stuffed... lets say that every single time we hear someone say "I just bought my first IP"

Click to expand...

But interest on 400k for an IP earning rent is easily paid buy anybody who's interested in doing a bit of work.
On 4mil a 1% increase is 40k. So from 5.5 to 6.5% is an increase of 80k.
And loans for OTP are not offset by rents till settlement without problems.

Bigtone said:

I said it once before on here if the banks would lend me $120m to buy $100m worth of property and surplus meant I could hold properties for at least 5 years I would sign up in a heartbeat

Click to expand...

Yet when the banks were lending to anyone with a heartbeat they still would'nt do it.
They wrote off billions in bad loans but still would'nt do this one.
Why? Because the banks are in the business of making profits whilst keeping risks low.
Not taking on risk for others.

jaycee said:

All I see is

$4m - $5.6m is the same ratio as
$2m - $2.8m is the same ratios as
$1m - $1.4m is the ratio I woudl be at if I bought anotoher IP for aobut $300k

but I bought myfirst proerty 10 yrs ago, my 2nd 6yrs ago and my 3rd 6 mths ago, so it'll be 11 yrs to get here lol

This chappy's done it in 4 yrs - I take my hat off, so what if he earned more, I could be earning more now and I know exactly whose choice it was not to...

Click to expand...

I just meant it this way Pistonbroke... Seems like he's got about the smae LVR as me but 4 x the assetts... so he's hoping for the sme growth etc that I am..

Is the difference that he's risking too much $$, that wht you're saying ? or is 70odd%LVR too far to push the envelope from a risk point of view ?

Yet when the banks were lending to anyone with a heartbeat they still would'nt do it.
They wrote off billions in bad loans but still would'nt do this one.
Why? Because the banks are in the business of making profits whilst keeping risks low.
Not taking on risk for others.[/QUOTE]

I agree Piston they would be taking all the risk yet I would receive 95% of the reward, that is why I would sign up in a heartbeat, shame they won't do it!

jaycee said:

Is the difference that he's risking too much $$, that what you're saying ? or is 70odd% LVR too far to push the envelope from a risk point of view ?

Click to expand...

I'm talking numbers not necessarily ratios.
If rates go up another 1%, then it's another 40K yr in interest. $769 per week.
Can you just put up the rent? Well even if you count the OTP ones it's an increase of $70 x wk x IP.

While it started with nothing, it also started with "nothing to loose" by borrowing and buying anything you can.
Same as playing double or nothing on the roulette table.
And a lucky country where bailing out the banks saved the A$$ of a lot of investors who did this and who instead of paying down debt to shore up their position, bought more.
And when interest hits 7.5%? 8%?
Of course this may not happen, or it may.
And if for some reason the gov decides to reduce the allowable % of deductions in the next few years (Henry's recos), then it hits the fan.
Yeah I know, risk reaps rewards & I'm Dr doom... But I'm also the schmuck picking up the tab for those playing double or nothing. I do prefer happy ending.

I'm hearing you, just tryng to undestand it a bit better..

Isnt my risk the same ? The amount of shorfall in proportion to my overall positon and wages is the same as Q's so the unreasonable rent increases reuired to fund his shortfall are the same for me - my tenants wouldnt be happy aobut he size of rent increase compared to what thye're paying any more than Q's would be.

So are we both over indebted ?

jaycee said:

So are we both over indebted ?

Click to expand...

What, with 400K!? lol
That depends on your income. Given the avg income is ~70k yr that should'nt be much for a 2 income household.
A 1% increase is 4k yr ie $77wk. Big Woop!
Worse case for a one earner is you can stack shelves at night time at Coles for time and a half. On public holidays people serving drinks in clubs earn $60 hr.
Notice how they were all happy on Anzac Day?

What do you do if your expenses increase by 80k yr or $1,538 wk?
That's a lot of drinks to pour or shelves to stack. Add a couple bad tenants.... your up **** creek.
A bit different if your earning 300k yr though.

And regarding expenses, anybody running a biz knows (or should!) that extra expenses come from net profit not gross.

My shortfall should interst rates increas would end up being just as big compared to my current debt/loc/equity & wages as Q's. My tenatns would be just as unwilling to take it on and the ratio would feel as large for me too.

But I guess youre syaing, I could budget a bit tighetr, earn a few extra bucks and get by.. whereas in Q's situation, he might have to do 4 x that, not sure if his after hours earning power is 4 x mine, if not, I guess I see your point.

Im lazy and belive Id dip into my LOC howce, which Q would also have the luxury of doing.

Is it really that much riskier just cause the numbers are higher ?

jaycee said:

Is it really that much riskier just cause the numbers are higher ?

Click to expand...

If you can easily come up with an extra 40-60k yr then it's not to bad.
Do banks not charge interest when bad tenants don't pay for 6 weeks?
Or when new buildings have problems? Or wateva else regularly happens to LLs.
And what would happen if in the next few years the ATO "isolates" RE tax deductions as it already does for those deductions incurred from other businesses? What if it only allows a partial amount to be deducted?
Not yet in my lifetime so far.

Hi all,

He builds, you do nothing

Click to expand...

Warning, danger Will Robinson, extreme danger!!!

bye

Piston, if interest rates go to 8% then wont inflation be ticking along nicely and the extra repayments Quyen will be up for will easily be eclipsed by the increase in property values? He can then just sell one if needs be so no problem.

Gools

p.s. Good stuff Quyen. The process to get to where you are at can't be easy so you have put in a great effort.

Piston Broke said:

If rates go up another 1%, then it's another 40K yr in interest. $769 per week.
Can you just put up the rent? Well even if you count the OTP ones it's an increase of $70 x wk x IP.

Click to expand...

As I posted, but if you think $70 a week rent rise is "ticking along nicely" to a resi tenant, and they can be raised even more, then yeah it could be as you say.