1million in Equity!
- Thread starter TROM
- Start date
hi all
this is a very interesting post.
I have gone back to the first page and I think i am on it.
well that was 2006 and the question was then can you make 1 mil.
well the answer is very simply yes.
if you had have invested in a commercial property in sydney, bris, perth , or melbourne in 2006 for say 250 sq and you had bought at say 2.5mil which is not alot of money your investment would have been 374k 2.5mil less 85%(bank loan) and you had a 5% annual increase ( and your income was 9% which is a norm) and you worked out the annual increase and then revalued today that property would be worth 4,134,000 take the 2.5mil off and you have your 1.634 mil.
so can you make 1 mil
well yes you can and if you had invested at that time you would be 1.634 mil better off.
oh and thats not allowing for the growth in the areas that just off the lease.
in perth from 2006 to today is about a 40% increase sydney comm is around the 30% and melbourne is off like a rocket at the moment.
bris is moving very nicely and also and i have not factored in vacant rate rises.
just a little side line
this is a very interesting post.
I have gone back to the first page and I think i am on it.
well that was 2006 and the question was then can you make 1 mil.
well the answer is very simply yes.
if you had have invested in a commercial property in sydney, bris, perth , or melbourne in 2006 for say 250 sq and you had bought at say 2.5mil which is not alot of money your investment would have been 374k 2.5mil less 85%(bank loan) and you had a 5% annual increase ( and your income was 9% which is a norm) and you worked out the annual increase and then revalued today that property would be worth 4,134,000 take the 2.5mil off and you have your 1.634 mil.
so can you make 1 mil
well yes you can and if you had invested at that time you would be 1.634 mil better off.
oh and thats not allowing for the growth in the areas that just off the lease.
in perth from 2006 to today is about a 40% increase sydney comm is around the 30% and melbourne is off like a rocket at the moment.
bris is moving very nicely and also and i have not factored in vacant rate rises.
just a little side line
Hindsight is always 20/20 !
Hi Rixter
It sounds as though you've done very well by applying a strategy that has worked for you. Congratulations.
We must be talking about capitalising interest here as part of your strategy. Can I please confirm with you that you've done this by means of a LOC on your PPOR and on some of your earlier purchased IPs?
That's the critical difference right there.
There's no way in the world I'd be buying an IP on 4% yield when finance is at 8% (or more now).
This is "capital city" mentality. Look outside the cities and you'll see better options; and with decent cap growth, but you have to research the factors that will support it in that area.
HI Lukey,
I havent capitalised 'interest' per se. All my incomes go into one of my LOC's and all my expenses are direct debited from the LOC.
Any shortfall between in's & outs simply increases the LOC balance for the month. This particular LOC is secured by my ppor.
I have also used another LOC for investment purposes secured against earlier IPs.
Im also in the process of releasing my PPOR title and taking it across to another lender to lend up to 80% of it value for further investment purposes.
My original PPOR debt will remain with my first lender secured by some of my other property portfolio they already hold.
Hope this answers your query?
Rixter,
So Your relying on capital growth to fund your shortfalls. ok I can see what your doing. So in my situation had I kept the 3 properties I had in 2005, I worked out I would have another $90,000 in capital growth over the last two years. (5% PA growth assuming). I was losing $35k PA so thats $70k loss over 2 years. You would pay the $70k loss from your income AND capital growth?
PS My capital growth was allot better than that over the last 2 years, I know one property went up by about 100k since I sold.
So Your relying on capital growth to fund your shortfalls. ok I can see what your doing. So in my situation had I kept the 3 properties I had in 2005, I worked out I would have another $90,000 in capital growth over the last two years. (5% PA growth assuming). I was losing $35k PA so thats $70k loss over 2 years. You would pay the $70k loss from your income AND capital growth?
PS My capital growth was allot better than that over the last 2 years, I know one property went up by about 100k since I sold.
You have the structure correct, however, using your example, I would not have purchased property that exposes me to a loss of that size in the first instance.
Those properties would not pass my purchasing criteria test.
But, yes you have the basic structure.
Hope this helps.
My benchmark minimums - areas with a historical CG of 7% or better with a rental yield of 5.5%-6% current or manufactured from value adding.
If you cash flow is tight when starting I would recommend you insulate your self from rate rises by fixing either partially or 100% of your exposure.
Hope this helps
I can agree 100% with gross.
We did just that with Commercial Property in Perth purchased last year.
Its well up on purchase price ( over $1 mil) and will go up further once DA is in place ( 3 to 6 months fingers crossed)
We also have resi property in regional/mining WA which yields over 15% on cost, and still achieves around 10% on market value.
And the cap growth or price rerating between cost and market value has been around 70% + ( in one year)
So yes, it is possible, and yes it still is posible to achieve $1 mil in equity in a relatively short time, even in the current market.
kp
Getting closer every day. Nearly there.
Of course there is - derr
They were referring however to it being near impossible for a family with less than $50k pa income to do build $1m equity, starting with $0 equity, in 3 short years
My equity situation
I have 94 K equity atm
"early days"
Its so exciting!
2 properties
Property Values 470 – Property Loans 376
470 - 376 = 80% LVR
$94 K net equity
lol the other night at my parents house I got excited looking at this property on re.com I commented to dad that most women drool over clothes i drool over property! Have also thought to myself hmmm wouldnt mind a 3 year old toyota yaris but noooo way would i ever buy one. Would rather buy another ip. I'm that committed. I'll treat myself to a brand new car in 20 years time
I have 94 K equity atm
"early days" Its so exciting!
2 properties
Property Values 470 – Property Loans 376
470 - 376 = 80% LVR
$94 K net equity
lol the other night at my parents house I got excited looking at this property on re.com I commented to dad that most women drool over clothes i drool over property! Have also thought to myself hmmm wouldnt mind a 3 year old toyota yaris but noooo way would i ever buy one. Would rather buy another ip. I'm that committed. I'll treat myself to a brand new car in 20 years time
Have also thought to myself hmmm wouldnt mind a 3 year old toyota yaris but noooo way would i ever buy one. Would rather buy another ip. I'm that committed. I'll treat myself to a brand new car in 20 years time
I'll bet that when the time comes, you won't buy brand new.
By then it won't matter to you and you'll be over the whole "new car" thing.
My guess is that you'll end up buying something 2-3 years old that someone else has taken the depreciation hit on.
They are the best to buy. I bought 1.5 years old Mitsubushi Outlander for 22K, it had done 44,000 Kms and the new one was for 36K. That's VFM (Value for money).
