1million in Equity!
- Thread starter TROM
- Start date
It is very possible to achieve in 3 years even without many years of experience up your sleeve. It has only been a year and a half since I started to try to educate myself and figure out how it all works.
Approx a year before that it occurred to me that if we bought a block of land and divided it in two we would own 2 bits of land that would have a combined value exceeding the value of the land when it was only one block, further enquiries revealed that our house had quietly been increasing in value and now held equity that would enable us buy the piece of land. We went ahead thinking that we would then sell the divided land and make some money as although the block I found came with approved plans buying the land meant we had reached our servicability wall in the eyes of our bank. As it turned out the sub-divide took forever and suddenly the bank thought maybe we could borrow a bit more money after all and we were able to start plans to build on the 2 blocks (new plans as by then the DA had run out and the builder - Masterton homes - whacked another $50,000 on the cost of each house) We then discovered Eagle Homes who were far cheaper and proceeded with them.
In the meantime I discovered the best broker in all the world (he knows who he is) and having learned a thing or two I was able to start some fast tracking, having realised that I should have learned all this stuff years ago and now I was behind the eight ball!
So in the last year and a half I learned enough to take some chances and this is where we are at now in terms of equity:
PPOR - $367,000 built 10 years ago
Port Kembla 1 - $110,000 completed April
Mandurah townhouse - $120,000 bought 10 months ago
Anchorage 1 Rockingham - $150,000 land settled December, construction began February, completion approx 6 weeks away
Anchorage 2 Rockingham - $150,000 details as above
Current projects should be finished by the end of 2007:
Port Kembla 2 - $60,000 anticipated, slab only just going down as we had no idea what we were doing when we got started!
NSW project - $200,000 anticipated, plans in council for pair of townhouses
Yanchep - $100,000 minimum anticipated titles November builder lined up.
So apart from PPOR the rest should fall close to that 3 year time frame even though we spent the first year not having a clue plus in a few months time there should be other stuff in the pipeline and more increases in equity to bring it up to the million by the end of 2007 excluding PPOR.
Of course there are a couple of LOCs involved to help keep it all rolling along but the question was can the equity be made and it can.
Sorry the post seems to have dragged on a bit but hopefully it will be useful!
Sparky
Approx a year before that it occurred to me that if we bought a block of land and divided it in two we would own 2 bits of land that would have a combined value exceeding the value of the land when it was only one block, further enquiries revealed that our house had quietly been increasing in value and now held equity that would enable us buy the piece of land. We went ahead thinking that we would then sell the divided land and make some money as although the block I found came with approved plans buying the land meant we had reached our servicability wall in the eyes of our bank. As it turned out the sub-divide took forever and suddenly the bank thought maybe we could borrow a bit more money after all and we were able to start plans to build on the 2 blocks (new plans as by then the DA had run out and the builder - Masterton homes - whacked another $50,000 on the cost of each house) We then discovered Eagle Homes who were far cheaper and proceeded with them.
In the meantime I discovered the best broker in all the world (he knows who he is) and having learned a thing or two I was able to start some fast tracking, having realised that I should have learned all this stuff years ago and now I was behind the eight ball!
So in the last year and a half I learned enough to take some chances and this is where we are at now in terms of equity:
PPOR - $367,000 built 10 years ago
Port Kembla 1 - $110,000 completed April
Mandurah townhouse - $120,000 bought 10 months ago
Anchorage 1 Rockingham - $150,000 land settled December, construction began February, completion approx 6 weeks away
Anchorage 2 Rockingham - $150,000 details as above
Current projects should be finished by the end of 2007:
Port Kembla 2 - $60,000 anticipated, slab only just going down as we had no idea what we were doing when we got started!
NSW project - $200,000 anticipated, plans in council for pair of townhouses
Yanchep - $100,000 minimum anticipated titles November builder lined up.
So apart from PPOR the rest should fall close to that 3 year time frame even though we spent the first year not having a clue plus in a few months time there should be other stuff in the pipeline and more increases in equity to bring it up to the million by the end of 2007 excluding PPOR.
Of course there are a couple of LOCs involved to help keep it all rolling along but the question was can the equity be made and it can.
Sorry the post seems to have dragged on a bit but hopefully it will be useful!
Sparky
It's just sooooo eeeeasy! Why doesn't everyone do it?
If, 5yrs ago you invested $10k in each of BSG, MCR, OXR and PDN (all penny dreadful mining stocks which you couldn't get margin on) and BHP which you could margin to 75%. your portfolio would now be worth $2.5 mil. That is without "working" it. By that I mean you didn't borrow against increased equity, never increasing the original margin loan of $30k (on BHP). In that five years yuo would never have had to chip in one cent!!!!!
Impossible? No, I just showed you how. Improbable? Similar odds to winning lotto I'd imagine. Have retail punters made over a mil on some of these stocks? Definately yes. I personally was invested in two of these speccies before they took off but it is hard to stay staunch.
Is there a point to this post?
Only that one can't navigate by looking in the rear view mirror. Any young entrepreneur today, with this goal, will have to find their own way and our, (well meaning) advice will probably be more a hinderance than help.
To make a mil in three yrs starting with a modest stake (which is how I read the original post) one would need to be particularly canny. And one would need to use the "Crash through or crash" philosophy, one I've never used.
ps I would expect that in a couple of years you could live on the dividends of this portfolio. Nice work if you can get it. LOL
If, 5yrs ago you invested $10k in each of BSG, MCR, OXR and PDN (all penny dreadful mining stocks which you couldn't get margin on) and BHP which you could margin to 75%. your portfolio would now be worth $2.5 mil. That is without "working" it. By that I mean you didn't borrow against increased equity, never increasing the original margin loan of $30k (on BHP). In that five years yuo would never have had to chip in one cent!!!!!
Impossible? No, I just showed you how. Improbable? Similar odds to winning lotto I'd imagine. Have retail punters made over a mil on some of these stocks? Definately yes. I personally was invested in two of these speccies before they took off but it is hard to stay staunch.
Is there a point to this post?
Only that one can't navigate by looking in the rear view mirror. Any young entrepreneur today, with this goal, will have to find their own way and our, (well meaning) advice will probably be more a hinderance than help.To make a mil in three yrs starting with a modest stake (which is how I read the original post) one would need to be particularly canny. And one would need to use the "Crash through or crash" philosophy, one I've never used.
ps I would expect that in a couple of years you could live on the dividends of this portfolio. Nice work if you can get it. LOL
Hi Trom
My wife and I were fortunate enough to be holding enough property through the last boom to now be in a position where we now have over 1mil in equity. I say fortunate because at the time we were holding the property, neither my wife and I really understood much about the property market other than that investing in property was suposed to be a good thing.
Since then I've become a bit more educated about the ins and outs of real estate to be able to comfortably say that achieving your goal of 1 million in equity in 3 years is very achievable. I've seen others do it before who have started with nothing and the things these people have in common are, a clear and definate goal, drive, education in property and the ability to think outside of the box.
Take a look through the real estate section tomorrow or go for a walk down a street and take a look at some houses. At first glance you may not be able to see any opportunities, but while your looking at those real estate pages or walking down that street be sure of one thing, and that is that there are opportunities all around you, however you may not be seeing them yet. Train your mind and be creative. The riches you will create won't be made out in the field they will be made in your mind, through immagination and creativity.
By learning to think outside of the box and become more creative it will be interesting to take that same real estate section or walk down that same street in another year and find that all of a sudden you are surrounded by opportunities you could never see befor.
Good Luck
My wife and I were fortunate enough to be holding enough property through the last boom to now be in a position where we now have over 1mil in equity. I say fortunate because at the time we were holding the property, neither my wife and I really understood much about the property market other than that investing in property was suposed to be a good thing.
Since then I've become a bit more educated about the ins and outs of real estate to be able to comfortably say that achieving your goal of 1 million in equity in 3 years is very achievable. I've seen others do it before who have started with nothing and the things these people have in common are, a clear and definate goal, drive, education in property and the ability to think outside of the box.
Take a look through the real estate section tomorrow or go for a walk down a street and take a look at some houses. At first glance you may not be able to see any opportunities, but while your looking at those real estate pages or walking down that street be sure of one thing, and that is that there are opportunities all around you, however you may not be seeing them yet. Train your mind and be creative. The riches you will create won't be made out in the field they will be made in your mind, through immagination and creativity.
By learning to think outside of the box and become more creative it will be interesting to take that same real estate section or walk down that same street in another year and find that all of a sudden you are surrounded by opportunities you could never see befor.
Good Luck
Trom, what's behind this three year thing? If I told you that it'll take you 5 years to get to $1m equity, would you just say it's not worth it?
Even more importantly, what are you doing / planning to do to achieve $1m in 3 years? Most of the members are telling you their history based on ever-increasing experience and knowledge. You won't be able to replicate what they currently do without going through what they went through first.
The important thing is to start. Save money. Read books. Go out there and look at properties. That's how we all started.
Alex
It's the start that's the hardest. Say you have the following:
Portfolio A: $2m in assets, $1.8m debt
Portfolio B: $1m in assets, $800k debt
In both cases, the EQUITY is $200k. However, Portfolio A will, given normal growth rates, produce much more equity faster ($140k a year for P-A, compared to $70k a year for P-B, if growth = 7%).
A lot of investors tend to have very little equity in the beginning (first couple of years) as they build up assets. Then once the assets hit a certain level the equity growth really kicks in.
I don't think it's realistic to assume long term you can always find the markets (like Perth in the last 3 years) that go up 40% a year. Investment in exponential. So the biggest dollar gains come in the later years. My portfolio ends up costing me money, but the equity is growing steadily.
Alex
Thanks to the Perth boom we are probably now over that mark. It took us over 12 years of investing in IP. I think your goal would depend on how much you are able to invest / support. Our formula was to spot up and coming areas - the areas that a lot of other people bawked at (Balga in Perth 12 years ago - I owned this property when I met my husband and told him I lived in Westminster when he asked what area I lived in!) It actually wasn't until around 6 years ago that we went from 2 IP's to buying more around the rockingham area with the formula that they had to be close to the beach (within 400 metres). Our most recent purchase was in SalisburySA (next to Elizabeth which has been discussed a few times)- this being one of our more expensive properties to date at 160K so we also stuck to managable investments - hence the move to investing in SA. Another interesting investment we had was a cheap (5K) block of land in Beverley WA that has jumped significantly in two years - so this has me wondering about rural land that people think will never go (although I know this block has been part of WA boom - but still I thought this was interesting and not a big gamble.
There is a variable in there. Well two I can think of actually. One is service ability and also maintenance would need to be the same in both cases.
cheers, was just checking, 10 million in fully paid of assets seemed like a pretty damn good achievment! not that 10 million in assets with loans on them is not impressive!
Patience is certainly a virtue when you start out.
In 1996 we strated doing our first Vendor Finance deal and although my partner and I owned our own home and a couple of IP's only had around $800K in equity.
Some 8 years later we had completed and settled 187 wraps worth a total of in excess of $22Million and although financing was initially around $16M this has now come down to less than $8M with equity in excess of $12M between the 2 of us.
Couple with some astute (another name for luck and being in the right place at the right time) IP and development purchases in Brissie since 1998 we are confortable and hopefully soon debt free.
As has been said it is the first 1 Mil that takes the time the rest comes a lot easier.
By the way Thanks Sharon for your compliment the cheque is in the mail by the way. Just dont cash it yet in case it bounces.
In 1996 we strated doing our first Vendor Finance deal and although my partner and I owned our own home and a couple of IP's only had around $800K in equity.
Some 8 years later we had completed and settled 187 wraps worth a total of in excess of $22Million and although financing was initially around $16M this has now come down to less than $8M with equity in excess of $12M between the 2 of us.
Couple with some astute (another name for luck and being in the right place at the right time) IP and development purchases in Brissie since 1998 we are confortable and hopefully soon debt free.
As has been said it is the first 1 Mil that takes the time the rest comes a lot easier.
By the way Thanks Sharon for your compliment the cheque is in the mail by the way. Just dont cash it yet in case it bounces.
1 yr 3 yrs or 5yrs.... it is all irrelevant because each individuals starting circumstance is different.
If it only took 3yrs, then there are heaps of very wealthy 20 somethings here... and if everyone shoots be down and says "3 yrs from starting to invest" well I say that just does not count.
Just because you started at age 30 on a solid income with 40k in savings and managed to amass $1M in 3 yrs does not mean it is 'possible' for a 21 year old trade/uni graduate with $5 in the bank to achieve.
No I don't have $1M dollars but I have personally achieved more than alot of people who have. Circumstance goes a long way to creating a platform from which to build wealth. Demographic, education, life experience, unexpected personal events.... simply enjoying life instead of money....(money does help though )
Possible? Anything is possible. Probable? Only one person can answer that.
If it only took 3yrs, then there are heaps of very wealthy 20 somethings here... and if everyone shoots be down and says "3 yrs from starting to invest" well I say that just does not count.
Just because you started at age 30 on a solid income with 40k in savings and managed to amass $1M in 3 yrs does not mean it is 'possible' for a 21 year old trade/uni graduate with $5 in the bank to achieve.
No I don't have $1M dollars but I have personally achieved more than alot of people who have. Circumstance goes a long way to creating a platform from which to build wealth. Demographic, education, life experience, unexpected personal events.... simply enjoying life instead of money....(money does help though
) Possible? Anything is possible. Probable? Only one person can answer that.
I think the last boom has helped a lot of investors (including me!!) over the last few years...particularly if they already had holdings. This probably has fuelled the 3mil scenario....because it HAS been achievable with the recent boom.
Great gains are still possible, though maybe not quite as dramatic as has recently been the case...........now, homework is more important to realise decent gains.
Just my tuppence worth
Ann
Great gains are still possible, though maybe not quite as dramatic as has recently been the case...........now, homework is more important to realise decent gains.
Just my tuppence worth
Ann
Yes, but I have never measured my success by the level of debt I hold.
I have always measured it by my level of net worth.
I'm only skewed a weeny bit. $2m equity and still a single income family with 2 dependants.
Peter has waaaay more skew than me.
Now that's new - I have skew!
Probably not the right time in the market for it but definately possible.
I am happy enough with debt to boost my investing results it's just in this thread I thought it almost got to the point of celebrating it.
Yup, right on pinky!
Hi SeeChange
What thread was this in?
Has anyone sat down and worked out whther its better to take a profit now and again on a property and to use those profits as a springboard to acquire additional properties.
I mean someone who is a "developer" would not be able to progress too fast unless they sold a property or three as they went woule they?
Maybe as they get a bit bigger and have more available capital they can build 4, sell 3 keep 1, and move forward again?
Is it better to sell and realise a profit every now and again to move forward at a faster pace or not (with new loan products available and the costs going in and out)
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Hiya Richard,
1. Have you heard about this concept called "Zero Deposit" downpayment?
2. The original investment capital needs not neccessarily come from our income sources. Sometimes where the right opportunities arises, we can simply provide the neccessary knowledge and skills and our other joint investing partner will provide all the investing capital and borrowings from the lending banks, to make the investment possible for us.
3. Perhaps, you may have forgotten the creative concept of "leveraging" completely using the "OPM"/"OPR" that both Robert Kiyosaki and Robert Allen talk about? I believe Rick Otton is also an ardent believer of this concept too.
4. I know this "Zero Deposit" concept truly works because I have personally use it and have successfully invested at least twice without using any of my own monies for the initial investment capital. Consequently, my ROI is "infinite"
5. For your kind update, please
6. Thank you.
Cheers,
Kenneth KOH
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