$100,000/pa Passive Income...

Call me selfish, but this is part of the reason I'm not very keen on having kids. Theres other reasons too, but this isnt the right thread for it. Seems to upset most girls though :rolleyes:

I would never call anyone selfish. I actually think the opposite, if you KNOW that kids aren't for you then don't do it. Kids do better when you want them ;)

I wouldn't have it any other way. We have so much fun with our kids. We have chosen the hard way to do things but are on our way to living very etraordinary lives (we already have TBH).

We started off with no property to leverage (well we actually started when the FHBG was pretty huge and had parents as guaruntors) but after a couple of houses we sold everything and travelled with the babes for 6 months. I loved it but we have had to start from scratch and that has been hard.

To get back into the market we sold our caravan and fancy 4wd and moved back in with parents. That was tough. BUT we have clawed our way back up and are sitting well as it stands.
 
Actually I don't think it's hard at all and I'm pretty lazy really. I did get pretty motivated for those few years though. :D

We had 2 (one PPOR 1 IP) in 2008 when I joined this forum. Now we have 10 CF+ properties with less than 50% LVR. Going part time with work next year.:D

Crack the Champaign
Cos you must have been a quick learner:), you worked out that you need cash flow. When I started investing the mantra was just keep buying properties (negative geared is the way to go), no consideration for the impact on lifestyle, borrowing capacity etc.

Good for you:)
 
Crack the Champaign
Cos you must have been a quick learner:), you worked out that you need cash flow. When I started investing the mantra was just keep buying properties (negative geared is the way to go), no consideration for the impact on lifestyle, borrowing capacity etc.

Good for you:)

Hi MTR - I gather your properties were negative after tax too?
 
Actually I don't think it's hard at all and I'm pretty lazy really. I did get pretty motivated for those few years though. :D

Yep, gotta agree with you. It's certainly not hard & I'm pretty lazy too.

I think the stumbling block is that people max out really quickly because they go for the stuff with the 3% yields in the hope & a prayer that they will increase in price. Well, I'm sorry, but if you are losing money with each purchase, how many properties do you really think you are going to be able to hold? Especially if you are on an average income!
 
Back on the original topic - how do Somersoftians propose someone goes from starting from scratch to 100k pa?

The reason I ask is because a lot of the success stories are by people who already had their home (partially / fully) paid off. Therefore they drew the equity out, bought houses / shares with it and were wealthy relatively quickly. I dont wish to detract from their success at all though.

Regardless of owning your home or not, the key building equity, and continually learning new skills to improve the outcome, getting outside of your comfort zone.

I have mentioned one strategy, developing property, there are a few new/young investors on SS that are either land banking ready to move and reap the rewards down the track or actually doing this now. I would be researching topics under "adding value".

Another good way to fast track is buying in markets that are rising, I see you are from Perth, did you buy anything in Perth over the last 18 months? if so, congratulations I am sure you have made money as the market was rising.

If you did not jump into the Perth market it is not too late to look at other markets that are moving, Sydney is going gangbusters, why wait for a boom when you can jump into a rising market. Research is the key, then buy as many as you can and sell down prior to peaking or access equity and keep moving/buying.

I would probably only sell down to improve cash flow, however, with interest rates so low and another drop expected on 6 August you may be able to hold all, of course depending on your situation, age etc.

MTR
 
Hi MTR - I gather your properties were negative after tax too?

Yes, also at one point interest rates were as high as 9-10% imagine the impact of this, when you have multiple properties, for example I had a property period home in Coburg, Melbourne purchased at $500,000 renting for 400 pw @9% IR, high maintenance property:rolleyes: It hurt, I sold it 2 years later for $700,000 I guess I made up the short fall at the end. Not something I do now, unless I could do something creative like build at rear and make it neutral if you get my drift.
 
If you did not jump into the Perth market it is not too late to look at other markets that are moving, Sydney is going gangbusters, why wait for a boom when you can jump into a rising market. Research is the key, then buy as many as you can and sell down prior to peaking or access equity and keep moving/buying.


MTR

MTR, I understand booms only last about 18 mths or so (or historically have) - so does that mean we have another year to go in Sydney? so that is not too long really?

How much growth are we talking about?
 
MTR, I understand booms only last about 18 mths or so (or historically have) - so does that mean we have another year to go in Sydney? so that is not too long really?

How much growth are we talking about?

I would think the market will continue to rise from what I have been researching and read, how long, no one knows?? a lot will have to do with market sentiment and what is reported in the media, this can make or break the market as we know. That is why in part I like to buy in a rising market and sell off a few when I have made a good profit rather than hold everything. Also, interest rates do go up and when they do this can really hurt.

This is what I have just done in Perth, this way I still hold properties but I also take some money off the table, sold 1, selling another in October. I learnt a very big lesson in the boom of 2001 - Perth market and that is to reduce debt, when the market crashes your profits can also be wiped out and you are left with debt, so I believe in rationalising.

IMHO, many lose their heads when the market is booming, easy to do of course.;)
 
Back on the original topic - how do Somersoftians propose someone goes from starting from scratch to 100k pa?

Starting out from scratch, and if I had a PPOR, I would pour as much cash flow into it to create sufficient equity for a deposit on the next property, then keep duplicating the same..

With each subsequent purchase I would look for areas & properties where I could create fast CG in the short to mid terms to keep purchasing as per my CGA Investment Strategy area purchasing criteria..

If starting out without a PPOR I would save enough for a deposit then duplicate the same as mentioned above.

I hope this helps.
 
Well done Deltaberry. How do you define self made? Self made I see is when you have no backing what so ever and do it from scratch. I also add that you don't have any one to learn from by osmosis. From what you've posted, you seem to have learned a lot from your family and connections. I think that really helps.

Self-made just means I never used a dollar from my family, except had a place to stay at. That said, I got a good education from them (which was free), had good experience and knowledge imparted on to me (which is good), and a free luxury car so that helps. Everything else though I earned from my job which I got from a competitive process (around 1000 top grads apply for these roles every year and only 1-2 are hired, nearlt $200k in my first year at 21 years old), from my investments (more than tripled my equity in shares, multiple times again in property excluding the rent) etc.

No denying that my family has some small but good assets and have good networks though. Or to put another way, I didn't come from a family which struggled to make ends meet.
 
Other alternative is stay with your parents for free rent as long as they let you.

Save for deposit , buy IP and then repeat the process.

Or move into share house with friends , cheaper rent and do the same , though takes longer .

The starting is the hard bit . Once you have some growth , redraw equity and buy another etc.

Back on the original topic - how do Somersoftians propose someone goes from starting from scratch to 100k pa?

The reason I ask is because a lot of the success stories are by people who already had their home (partially / fully) paid off. Therefore they drew the equity out, bought houses / shares with it and were wealthy relatively quickly. I dont wish to detract from their success at all though.

We were in this boat.

We had equity in our PPOR when we started investing in the early 2000's , but took 15 years to build that up .

In retrospect we had the income to build up much quicker , but we didn't have the knowledge and /or we didn't ask the right people for advice . The one advisor we asked said pay your home of first ..... We also looked at keeping our first home instead of selling it but as we'd paid down the loan instead of having an offset account it was not tax effective . I don't know if they had offset accounts back then ( 1994 ) . I maybe wrong , but I recall the first offset account we had decreased our interest by 2 % .. does that ring a bell anyone ?

Cliff
 
I'm fairly sure I had a 100% offset account with CBA in 1983 (first PPOR). I remember it was called a set-off account back then. If not that purchase, then 1986 next purchase I had one. I didn't have any money to put in it though.
 
I love it how some people think that having kids means you join some mile high club that gives you the right to look down on those without kids

Is it that deep down they are jealous of the non married people and their extravagant lifestyles and the freedoms they have?
 
Back on the original topic - how do Somersoftians propose someone goes from starting from scratch to 100k pa?

The reason I ask is because a lot of the success stories are by people who already had their home (partially / fully) paid off. Therefore they drew the equity out, bought houses / shares with it and were wealthy relatively quickly. I dont wish to detract from their success at all though.

Dave, don't forget that for that PPOR to be partially or fully paid off you there was hard graft and starting from scratch when that was bought. Everyone starts somewhere and for many the scratch point was buying a PPOR and paying it down to get equity.
My first property was a IP that I bought in '97. From scratch was saving up the few grand I needed for the deposit on the house and land. Total cost $120k. Sold it in 2002 and together with our savings from years of sacrificing built our PPOR debt free. It took us a few years and savings to finish it off then more savings for an IP development site we bought in 2007 and developed in 2011.
Passive income around $60k now and should hit $80k next year. I am yet to see the income though as I keep investing it ;)
 
I love it how some people think that having kids means you join some mile high club that gives you the right to look down on those without kids

Is it that deep down they are jealous of the non married people and their extravagant lifestyles and the freedoms they have?

I am of the reverse position. I am single with no kids and am envious of happily married couples with kids. I am envious of the warmth of their relationships and a strong reason to live and work for the sake of their spouse and kids.
 
Back on the original topic - how do Somersoftians propose someone goes from starting from scratch to 100k pa?

The reason I ask is because a lot of the success stories are by people who already had their home (partially / fully) paid off. Therefore they drew the equity out, bought houses / shares with it and were wealthy relatively quickly. I dont wish to detract from their success at all though.

I don't think that they became wealthy quickly. Buying one property after another while scrimping together the deposits takes many years to generate 100k pa.
 
Back on the original topic - how do Somersoftians propose someone goes from starting from scratch to 100k pa?
This is what I did... and hopefully can achieve that 100K goal in a decade+

Study hard to get decent qualification/s.
Work hard to get a decent income.
Marry a girl who earns more than you but spends less than you :p
Don't throw away your money.
Get on a investment vehicle as soon as you can.

oh.. if you are desperate to reach that goal then don't have kids!
 
I don't think that they became wealthy quickly. Buying one property after another while scrimping together the deposits takes many years to generate 100k pa.

In the interviews section, check stories like KeithJ's (and a few others). I don't wish to detract from his great success by any means, but essentially he just pulled out his equity and went IP shopping. He didn't 'scrimp together deposits' as you put it.
 
they wan't $100,000 of passive income when they retire.

Its very easy, and I say this after 20yrs of investing, but like most people, it takes time to acquire knowledge.

It doesn't matter the asset class.

It depends on (total return - borrowing costs) x inverse LVR ratio.

It really doesn't matter its property or some other asset class that I can borrow against.

That's it in a nut shell, that's the real secret of wealth creation.

The follow on from this is the velocity of returns.

The ability to keep switching that money from one asset class to another to maximise the above formula.

Now maybe I should charge $20,000 to give this formula away but only to those who really want the secret of wealth creation (ie I need some serious speal so people who fork out that money believe that they have got value for money).

God dam it, I think I have just given some sprukers out there their next wealth creation insight. Maybe I need to copy right it and charge a royalty fee.:D
 
Back
Top