1million in Equity!

Hi can anyone tell me if they have achieve their goal of 1Million in net equity from their property portfolio and how long it took them to reach that goal!

I want to do it in 3 years is it possible! Any ideas or suggestions.

thanks

Trom!
 
Trom,

I'm there (just) but it took me a lot longer than 3 years starting from scratch. It actually took me about 15 years, but I did it the hard way and wasn't even holding a property through the last property boom.

I'd like to think the next million will come easier than the first, but it certainly takes a lot of knowledge, drive and action to achieve. Of course, leverage can enhance your results, but you need to know when leverage is an appropriate tool to employ and when caution is a more appropriate route. My history suggests I was probably too cautious when leverage would have helped, but I'm more attuned to the market now and am actually heavily leveraged at present despite the Sydney market still being mostly doom and gloom.

Good luck,
Michael.
 
Hi, yes it is possible.

If you earn $1mil/yr it's easy
If you already own $10mil in property then it's easy.
If you own nothing, have saved nothing, have a <$50k/yr job and a family to support then it is almost impossible.
 
Thanks Michael

I want to leave my boring govt job and concentrate on full time investing! I have finally realised that a strategy of buy and hold or buy renovate and hold for long term is the way to achieve growth. Alot of people are telling me that cashflow is more important but i belive that it is another job so to speak!

I will use leverage for sure to get there quicker!
 
How about $1 million in (good) debt? :D We'll definitly be there within 3 years! With purchase of next IP (very very soon hopefully!), we'll be about $750k in debt, 1 more and it's $1million - can't believe I get so excited about that :eek: :D :eek:
 
Hi can anyone tell me if they have achieve their goal of 1Million in net equity from their property portfolio and how long it took them to reach that goal!

I want to do it in 3 years is it possible! Any ideas or suggestions.

thanks

Trom!

$1m equity - yes
Was it a Goal - no, it's just a big round number
How long - from broke about 8yrs, (on average bit over $50k pa income)
Am I rich - hell no
Do I still work way to hard - hell yes
How long will I have to keep working - a lot longer
Suggestions - start now and remember you don't get rich from what you earn, but how you spend it
 
7-10 Year Plan

Hi can anyone tell me if they have achieve their goal of 1Million in net equity from their property portfolio and how long it took them to reach that goal!

I want to do it in 3 years is it possible! Any ideas or suggestions.

thanks

Trom!

Hi Trom,

Welcome to the Somersoft Forum , this being your first post.

Im also in Perth, a govt employee (not for too much longer) and personally have a $M+ property portfolio (net) spread across Australia.

This is a recent post that describes my investment strategy that involves Villas & Townhouses. It may be of interest to you.

The capital growth averaging (CGA) strategy I employ utilises a regular purchasing cycle similar to what Dollar Cost Averaging is to the sharemarket. The major underlying principle to its success is it relies on your "time in" the market, NOT "timing" the market, and never never sell. So in other words it does not matter whether you buy at the top of a boom or at the bottom, just so long as you purchase good quality, well located property in high density areas ( metro area capital cities), at or below fair market value, on a regular basis. I've been purchasing IP per year and currently into year 6 of this 10 year plan.

I've been purchasing new or near new property over older style property for several reasons, the main ones being (in no particular order) -

1/ To maximise my Non-Cash deductions
2/ To minimise my maintenance & repair costs
3/ More modern & Attractive to tenants - thereby minimising potential
vacancy rates
4/ Ask a higher rent - thereby Maximising yields

Without getting into the "which is better debate, houses or Units??", I preferr to purchase Townhouses & Villas with a 30% or greater land component thereby eliminating multi story units or high rise apartments, for several reasons. The mains ones being (in no particular order) -

1/ lower maintenance & upkeep for the tenant
2/ lower purchase or entry level into a Higher capital growth suburb area
3/ rapidly growing marketplace (starting both now & into the future) wanting these type properties. This is due the largest group of people to ever be born (being the Babyboomers and Empty nesters) starting to come into their retirement years. They will be wanting to downsize for the following main reasons - lifestyle & economic.
4/ greater tax advantages & effectiveness thus maximises cashflow.
5/ able to hold more individual properties spread across your portfolio - thereby minimising area over exposure risks by not holding all your eggs in only a few baskets, so to speak

I look to buy in areas with a historic Cap growth of 7%pa and/or are under gentrification. I look to where the Govt, Commercial, Retail, private sectors are injecting money. This ultimately beautifies the area and people like the looks so move in creating demand.

I have found this works well if you are looking for short to medium term capital growth so as to leverage against and build your portfolio faster.

Getting back to CGA, as the name suggests it averages out the capital growth achieved on individual properties with your portfolio throughout an entire property cycle, taking into account that property doubles in value every 7 - 10 years. Thats 7%pa compounding.

The easiest way to explain what Im meaning by this is to provide a basic example taking into account that all your portfolio cashflow will be serviced via Rental income, the Tax man, an LOC and/or Cashbond structure.

For ease of calculation lets say we buy a property for $250k, so in 10 years its now worth $500k. Now lets say we do that each year for the next 7-10 years. Now you can quit the rat race.

So in year 11 ( 10 years since your 1st Ip) you have 250K equity in IP1 you can draw out (up to 80%) Tax free to fund your lifestyle or invest with. In year 12 you do exactly the same but instead of drawing it from IP1 you draw it from IP2. In year 13 you do the same to IP3, in year 14 to IP4, etc etc etc. You systmatically go right through your portfolio year by year until you have redrawn from each property up to year 20.

So what do you do after you get year 20 I hear you say ?? hmmm..well thats where it all falls into a deep hole - You have to go get a JOB - nope only joking!

You simply go back to that first IP you purchased as its been 10 years since you drew upon it first time around and its now doubled in value ($1M) yet again - so you complete the entire cycle once again. Infact chances are you never drew each property up 80% lvr max , so not only have you got entire property cycle of growth to spend you still have what you left in it first time round that compounded big time. Now you wealth is compounding faster than you can spend it! What a problem to have

Getting back to what I said in my opening paragraph about it does not matter where you buy within a property cycle just so long as you do buy, This is because you will not be wanting to draw upon it until 10 years later after its achieved a complete cycle of growth.

Well thats the Basic Big Picture of CGA. Once its set up its a self perpetuating, TAX FREE Income Money Machine.

Trom, I hope this has helped you.
__________________
 
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Hi, yes it is possible.

If you earn $1mil/yr it's easy
If you already own $10mil in property then it's easy.
If you own nothing, have saved nothing, have a <$50k/yr job and a family to support then it is almost impossible.

Why the "almost"?

I've always considered borrowing to invest as leveraging your income. Without income where does seed capital come from? More importantly, where's the security for your loans?
 
Why the "almost"?

I've always considered borrowing to invest as leveraging your income. Without income where does seed capital come from? More importantly, where's the security for your loans?
OK lets call it impossible. I qualified it with almost because of the Karina and Brenda Irwin factor :)
 
Some people have been known to leverage their time . ie they do all the running around and take a cut for their effort.

I don't think the impossible should be there.

To the best of my knowledge there are many people on this forum with Net equity over 1 mill.

See Change
 
Hi Trom,

Welcome to Somersoft.

You will hopefully find, like many of us addicts here that there is an amazing resource in the archives. Filed away in the posts will be at least one way that you will find suits how you want to achieve your goals. Happy reading!

Just one point about going full time investing. If you intend borrowing then it may be worthwhile doing all the necessary paperwork whilst still employed to keep the conservatives in the lending institution happy. Of course, if you have enough cashflow/assets without then Goodbye JOB.

All the best,

Kenny
 
To say it is almost impossible to achieve given an average income job and a family is an absolute load of crap.
Is $1mil in 3 years a tough call? Maybe. Has it been done before? I would suggest it has been done, and more than once or twice.
If that is a goal you decide to go for, go for it. If you work hard going for that goal, and you miss by $200,000, or $500,000, or even $700,000 then you are a hell of a lot better off than you are today.
I honestly dont see the need for a negative comment like this.
If you say it is impossible for you to do it, then it is. If you say it is possible, and mean it, you will be a lot further ahead than those who just say it is impossible.
There are plenty of people who plugged away, kept working at their plan, and even if it took 10 years they hit their $1mill equity mark. if they were mega conservative and have no leverage, maybe their portfolio is only growing by $50,000 a year now. If they were a bit more aggressive then their portfolio is growing 5 times that or more.
 
hi TROM
is it possible yes
can you do it yes if you put your mind to it and research the area you want to invest in.
with that 1 mil equity will you have alot of debt yes again.
will you do it with out debt for me no.
so it depends your comfort levels and if you don't mind debt.
ust make sure thats its debt that is covered by enough in cash flow or split loans to cover the debt in case of hickups.
 
I'm sure its easy in any boom but the skill will be trying to do it over the next 3-5 years. Equities having a 3 year monza run, housing affordability still relatively low for locals and especially so in WA and Qld due to recent growth. Where do you go??

Also Rixter, are you finding that you're getting much cap growth from your townhouse strategy? I agree some of the locs are excellent but still dubious about the cap growth and strata fees. I have a t/house in a gated community in my portfolio and its been the worse performer so far. Peter Spann would've shot this dog long ago. Perhaps I bought in at the high? Theres been cap growth - about 6.5% in last 3 years I reckon. More so that the rents dragged it up (from $185 to $235p/wk). Have put myself on the committee. Theres been some issues as the development is about 13 years old now. Its been a good learning experience, isn't that what its all about really?
 
We bought our first house late 2002 and to date we've managed to build ~700k in equity.
This is a pretty good result, but we have been fortunate as we bought 3 houses which all caught some if not all of the WA boom.
Granted one of these houses is our PPOR and so while it can still be used for leverage it's not exactly liquid.
We have been relative conservative I would say in terms of LVR, so I would say given some foresight we could have maxed this out and hit the 1 mill mark by now. Of course there were a few years prior to the first purchase dedicated to a good deposit.
This was also achieved with two above avg incomes.
 
Hi Trom,

It is possible in three years. For me, it took <4 years - calculated with bank valuations - & I also had realised my dream of a Ferrari. Now, a year and a half later, the net equity is a few times as much. The booming WA market made it possible. Still, even without that, I'm sure many people have reached the first million in ~3 years.

best wishes,
 
Mark C posted a photo at the time. Car is a few years old - 1989 model 328 GTS. I've driven it heaps and immensely enjoying ownership. Plenty of club events, track days and trips. Last month was a week long trip around Tassie! Sunday was a club drive around Perth. Friday was the first track day - they are every two months - that I've missed. Had a few things to do and the car only returned the day before from over east. Anyway, to not forget the topic, a million in ~3 years is achievable.
 
How about $1 million in (good) debt? :D We'll definitly be there within 3 years! With purchase of next IP (very very soon hopefully!), we'll be about $750k in debt, 1 more and it's $1million - can't believe I get so excited about that :eek: :D :eek:

i can totally belive it ... i get very excited about the $1.7mil we have in good debt - and seeing the mortgage broker tomorrow about putting another $300k onto that - oooo - that will take us up to $2mil ... very very exciting.

i didn't stop to count the equity - to busy creating it to stop and add it up. but in just 6 years we went from owning our ppor to a net equity of over $2mil thru working smart, some hard and not being fearful. sure i'd glance at the worst possible scenario - but then i'd forget about it and concerntrate on making the best possible scenario come about.

now i have to sit down tonight and draw up the future direction plan - purely for the broker tomorrow. i know where we're headed and how to get there already.
 
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