Good point Rolf.
Blair, I was once like you and buying a property per year, all was going good and I was getting rich! But.. After the 4th one a few years back, I'm out of finance options. I could sell it and lose my stamp duty and government charges and maybe break even but that kinda defeats the purpose because I still have to pay it again if reinvested so thats a waste of $60k or so.
One pointer for you: Look for capital growth AND cashflow properties (props that offer both) and don't purchase if it does not meet you criterea. Simple.
If I'd done this myself I would have more free cash, work less, be wealthier and less stressed, with the ability to add more property and wealth to tghe portfoio. Thats the greatest thing I've learned in 10 years of investing. I still love my tax returns but that doesn't meet my goal of being financially free just yet, put it that way.. I now have changed plans and have a further 4 years or so before I feel like we've achieved what we're looking for.
Hey yeh, hopefully as each year goes by i learn more, get more contacts etc so i,ll be able to find those properties with better growth and yield.
i sort of used the 250000 property 6% yield as a bench mark but ideally i would like to do more developments, ill have better yields, fast equity gain and will be able to use equity to fund any shortfalls in my property expenses ( seems like my expense estimates are a bit short )
Thanks terry, good advice.Why would you want a LOC for private expenses? Borrowing to buy items which won't be deductible may not be a good idea. I would stick to the cash in the offset account for this and use a LOC to borrow solely for investment expenses.
Nice VaSSagO, it keeps me motivated when i see what the long term results are. I might adjust my rents then and also have a flat figure for each properties expenses per year like you (increasing with inflation). might make things a bit tougher but i think i can get better buys than what i have stated with higher yields and better growth so if i take into account that aswell i think i can still reach my target. how long have you been investing for, are you IPs in perth?I like your spreadsheet. I have done up one for myself quite similar (increasing from 3 IPs to 8 IPs over the next 5 years) and also used 4% growth for rent & capital gains. The government appears to target ~3% for inflation, so if rents increase inline with inflation it just means slightly longer to retirement / semi-retirement.
I have based my costs for rentals currently at 6% interest (probably a bit low i think) plus $3.5k per property (increase at 4%pa) to cover rates, insurance etc (I manage the properties myself).