Thats an excellent yield for resi IPs, well done. Presumably with 21 Ips, they would be spread out in different states. Do you find managing 21 IPs with multiple different PMs to be a major consumption of your time and source of anxiety?
What are some of the "exaggerated stories" you've heard from investors/magazines??
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Thats an excellent yield for resi IPs, well done. Presumably with 21 Ips, they would be spread out in different states. Do you find managing 21 IPs with multiple different PMs to be a major consumption of your time and source of anxiety?
There was a lot of growth between 2003 and 2007- obviously the GFC happened.
Sash is right- just do it. Yes, in the short term, properties can go down. A property in a bad location or an unsuitable property will probably not perform well. But historically, good properties perform well in the long term. But the growth is never a smooth rise. Canberra has had more dips and straight lines than Sydney, but in the good times, it has performed very well. I don't know your ppor, but if the location is in demand (ie, not an oversupply of land or houses) then it should perform in the long term.
Thanks....they are spread out across 5 states.....
I don't manage the properties....I only get involved when the agents are not doing their jobs. I am far to busy to micro manage....and I am not anxious...you can't otherwise you will not manage to grow such a portfolio.
I only have 19 now...and plan to sell some...I am in the process of buying newer or renovated properties so I avoid maintenance. I am also concentrating on more quality to up the growth rate. So a swap out of my portfolio is underway. Most people never get past 5 IPs because of the way they think!
It is very possible i will be sitting on $15-20m property in the next 10-15 years if a continue down this track. I am having a lot of fun building this...I am also starting to rapidly grow my super. I am 46 years now...I want to be out of the workforce and purse developments sometime in my 50s....
I don't manage the properties....I only get involved when the agents are not doing their jobs. I am far to busy to micro manage....and I am not anxious...you can't otherwise you will not manage to grow such a portfolio.
I only have 19 now...and plan to sell some...I am in the process of buying newer or renovated properties so I avoid maintenance. I am also concentrating on more quality to up the growth rate. So a swap out of my portfolio is underway. Most people never get past 5 IPs because of the way they think!
It is very possible i will be sitting on $15-20m property in the next 10-15 years if a continue down this track. I am having a lot of fun building this...I am also starting to rapidly grow my super. I am 46 years now...I want to be out of the workforce and purse developments sometime in my 50s....
Very true - I have friends who own a couple of properties in a volatile mining town ... rent dropped from $2,000/wk to can't get tenant at $300/wk ... pity they retired expecting the larger amount and are now really struggling.
Wife wanted to sell when the rent was high - they would've cleared $250k profit each property - but hubby refused
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Didn't I see something a while back - someone on this forum who shall remain nameless - who bought an industrial site for $4mil - cleaned it up significantly (removed many many truck loads of rubbish) - got an international tenant in - revalue by bank at 10x purchase price.
Is do-able
Start with one as soon as you can afford ... then a second as soon as you can afford ... then two more ... as said, it snowballs ... the hardest part is buying the first and then second
Don't try and second guess the market - after watching a cycle or two, or doing some study, you get a gut feel about where the market is at. Don't try and judge the absolute peak or trough - near enough is good enough.
Must be a rare exception. A bit like winning the lottery for one site to go from 4mil to 40mil in a short time.
Yes I think with any investment that does not show a sustained history of capital growth, the best time to sell is when the rental yield is at its highest because the opportunity is unlikely to come again in the present lifetime.
I agree - but he was after specific properties that would appeal to specific clients and scored ... but not unreasonable to buy something commercial for, say $4mil, and with small improvement and right tenant be revalued at twice the purchase price in a short period ... talking industrial commercial here ... it's about knowing your market and consumer.
Often I look at failed businesses and scratch my head as to why the heck they ever opened up where they did when there are so many better options at similar prices ... obviously no market research as to location and market
No offense but anyone who thinks they can buy a property for 600k (I'm guessing ) and rent it out for 2000 per week (17% yield) for ever, especially In a mining town, let alone as a part of their retirement strategy is just plain dumb
I think a lot of these failed businesses are small ma and pa type ventures where they think it would be good to run their own business without knowing what a ball busting and difficult venture it is.
Hobby horse...........
Claims that Xcoll will get you further, faster and more efficiently, and wont present any issue at all to your lending future at any time. ...........especially if you have all your loans with the one lender as well
ta
rolf
Claims that Xcoll will get you further, faster and more efficiently, and wont present any issue at all to your lending future at any time. ...........especially if you have all your loans with the one lender as well
ta
rolf
yes
1. Portability or security substitution where a fixed rate or LMI loan isin place,and the cost of breaking or moving can be problematic
2. Some family guarantee scenarios, though there are lenders where it can be done with sole security
3. Sometimes, at the brink with ONE lender they will insist on tying uo your bloodflow - at that point of no deal, or risker deal,many will choose
4. Xcoll is an education thing. Many lenders., bankers and brokers will swear by it - after all, xcoll isnt a problem until it becomes a problem
5. Other isolated scenarios, eg small property values...... 3 x 100 k props crossed on a single loan can simplify things
6. If you have 20 ips say, and want to refi them all, 20 separate veda enquiries will probably not serve you
Im sure there are others.
ta
rolf
That story was of a mining town with volatile rents, so pay little attention to that as a normal indicator for Resi.
Stories about folks paying $2k per week are nowhere near the normal life in this Country. Most folks don't even earn $2,000 p/w; let alone pay that much in rent. Personally, I wouldn't even buy in a place such as that because the very level of rent would suggest the returns are unrealistic over the longer term....you would need to look at the average rent return and what the buy price of the property is, first.
For the majority of Resi - and probably most well located Comm - the rents don't fluctuate much.
We have only ever owned well loacated Resi, and the rents haven't ever gone down - only slow growth for some of the time or consistently up as the market demand decided.
Our current IP in Kalgoorlie is case in point. Rent at purchase was $180p/w back in 2003. Now it is $310. The market there is dead quiet at the moment, and we originally had it at advertised at $340 after I did the reno on it in June, 2013.
So despite the prolonged slump, a drop of $30 p/w only. By next lease renewal it quite possibly could return to the $340 p/w predicted.
Seriously.
"ONLY" $1 mill pre tax?
That is a very, very small world of folk you refer to here in Aus.With an income like that, and an ability to source CFPAT (Cash Flow Positive After Tax) properties would make it so easy to accumulate enough IP in 10 years with a passive income big enough to live off it would be scary.
All a person needs to do with a $1mill pre-tax income is live like a bloke on $100k gross, re-invest the remaining unspent income into IP loans, reinvest the tax returns into the investments as well, and keep repeating the whole process of buying similar IP's as soon as the next deposit is saved up, or equity is available - bigger loans makes it harder to find CFPAT though, so a cash deposit would work better.
Assuming you start with say; a 5-15 year old property worth about $350-400k (maximising on-paper deductions), and repeat that each time, you should cream it within 10 years without raising a sweat.
If you went for value-add projects etc instead, the result would be accelerated even more; most likely. This requires way more input though.
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I agree - I think they bought at $300k (or thereabouts) - and she admits in hindsight they just got greedy
Wow 34% return
I'd hate to imagine what the people selling the Property were saying!
"Double your money in 3 years! Why not buy ten from us!"
Still at 5.5% odd yield its hardly a disaster
Lucky for them
It's not a lottery at all. The only luck that person had was that their preparedness met opportunity. Also I am not sure if the 10 fold increase is accurate. It may have been a little less than that although I stand to be corrected. Regardless, a smashing outcome for that person and their portfolio.
The acronym of LUCK being Labour Under Correct Knowledge was apt in that case. Especially, the labour part. They took action and administered plenty of elbow grease and guts.
The point remains that one must start. Grow where you are planted.
http://www.businessblueprint.com.au/spontaneous-inspirational-speech/
Why cash flow positive after tax - would it not be better to be cash flow positive before tax?
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