Follow along with the video below to see how to install our site as a web app on your home screen.
Note: This feature may not be available in some browsers.
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 Dazzling
Just a quick one, what do you mean by assets not equity?
You talking properties fully paid off?
Cheers mate
Hi Dazzling
Just a quick one, what do you mean by assets not equity?
You talking properties fully paid off?
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.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!
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%).
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
You must have used debt as a tool when you first kicked off in this caper Peter?
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.
I understand a bolder, lucrative approach is to undertake developments where, really, no equity need be put in and potentially millions can be made in one deal, over a period of say a year or two. Such a strategy is uncharted territory and a little scary for some.
What do you think?
Peter: Interesting you spend a fair chunk of your book espousing the benefits of using other peoples money, and now you make a comment like this?
Dont get me wrong, I very much enjoyed your book (the 2nd one, havent read the other one), but it seems a touch rich to now indicate people should not want debt...
i think peter was getting at, was that he wanted people to pause and question what is the purpose behind the debt they were amassing, and that due diligance was being done to ensure the value of the property would increase far above the rate at which the debt is increasing ... rather than just debt for debt sake to buy more properties (or whatever) without a plan.
did i get this right?
I've never done a full analysis , but a recent basic calculation in another thread , showed ( for me ) that in certain circumstances, selling and paying CGT , can actually give me more capital and cash flow to take the next step. ( IMHO this is applicable when we 've had strong growth , with no significant anticipated growth in the near future ).
See Change
**************************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?