interesting, I am about 1 (total family incomes):1.2.
An interesting metric . Income vs equity growth
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Our net wealth over the past 14 years far outstrips the last 26 years of gross income.
Really? Let me copy and paste my strategy for the 100th time
Lucky its not considered a criminal conviction.
Three points on this topic
(a) the longer the time horizon, the greater the factor should be
(b) see Oracles other posts about the benefits of different rates of compounding
(c) Velocity of returns. This links (a) & (b). This was a real eye opener to me and why I haven't been a passive investor for several years. I switch the asset class mix periodically, I prefer active investment in shares, and I only invest in 'index' shares when the overall index is very cheap and I don't have enough experience investing in that index (for example the Vietnamese stock market at the moment)
Has served me very well
(a) the longer the time horizon, the greater the factor should be
(b) see Oracles other posts about the benefits of different rates of compounding
(c) Velocity of returns. This links (a) & (b). This was a real eye opener to me and why I haven't been a passive investor for several years. I switch the asset class mix periodically, I prefer active investment in shares, and I only invest in 'index' shares when the overall index is very cheap and I don't have enough experience investing in that index (for example the Vietnamese stock market at the moment)
Has served me very well
I'm working on it. I don't really have an end goal, just an interim goal and then reassess. Interim goal is to build out my Perth retain and build and build out my Melbourne retain and build (or knock down and develop). The recent increase in property prices has allowed me to borrow the funds to do the first development. With finance in place, I am one step closer to achieving my interim goal.Bump
I can understand why property investors move from passive investing to trading to speed the process.
Curious with the recent property booms in particular Syd, Melb, Perth anyone just got that little bit closer to achieving their end goal??
MTR
Property is still volatile
I know someone who was nearly at that independence pt from property investing just before the GFC. They had loans from non-bank lenders and rates went up rather than down. They had already quit their job and couldn't refinance with another lender. They burnt into equity, sold half a dozen props before finding a job again. Light at the end of their tunnel now tho.
I know someone who was nearly at that independence pt from property investing just before the GFC. They had loans from non-bank lenders and rates went up rather than down. They had already quit their job and couldn't refinance with another lender. They burnt into equity, sold half a dozen props before finding a job again. Light at the end of their tunnel now tho.
Yes, that old chestnut, serviceability????
Shame those damn LOE gurus they told me property went up 10% every year, but it aint so..... sometimes it goes backwards..... then what
and then it doesn't do dot for another 7 years. then completely unexpectedly it doubles (often the year after you have lost hope and sold up)
there was a lot of people with these loans including myself - more second tier wannabe banks like macquarie. I had friends stuck in RAMS version 1.0 etc and there was a lot of pain there
What if some one structures a CG portfolio that will provide more than sufficient funds required to maintain their lifestyle for over 10+ years of property cycle & it's already approved and available for access via LOC?
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Then they've won 'the game'. Most PIs I know can barely keep their balance sheet above water during such seven year doldrums, and that's with them requiring to put money in from their current employment to keep the negative gearing monster at bay. Living off the equity while being able to weather a 10 year property cycle is pretty much beyond their reach, but at least they are giving that dream a go!
Interesting one of the property gurus (M Yardney) wrote recently that to follow the LOE strategy you need a $5,000,000 property portfolio and 50% LVR $2,500,000 and own your own primary residence. $100K income pa.
I could be wrong but in the main I think it would be difficult for investors to achieve this in short time frame with the buy and hold strategy.
MTR
I could be wrong but in the main I think it would be difficult for investors to achieve this in short time frame with the buy and hold strategy.
MTR
alot of what ifs in the last few post...
what if 3 of your 6 properties with a 70% certainty you know that it will go side ways, down and recover, and at the end of 7 years it only grew 5% and assuming you're in neutral cash flow position for the 7 years.
would people hang on and ride it out for the 7 years? or would they sell out, and invest in other property markets?
what if 3 of your 6 properties with a 70% certainty you know that it will go side ways, down and recover, and at the end of 7 years it only grew 5% and assuming you're in neutral cash flow position for the 7 years.
would people hang on and ride it out for the 7 years? or would they sell out, and invest in other property markets?
I'm at about 1 (income) :0.8 (equity). Bought first property at the end of a boom, (2005 in Sydney) no capital growth for 3 years. Then suddenly, boom.
Over the years could have bought better and have been stuck with financing issues (damn partner just not into property investment. Arrrggghhh). Would have loved to have bought some additional properties (eg. Lavender Bay and Doonside) but could not get financing. Both would have done great. It is what it is though.
Then suddenly, boom. Over the years could have bought better and have been stuck with financing issues (damn partner just not into property investment. Arrrggghhh). Would have loved to have bought some additional properties (eg. Lavender Bay and Doonside) but could not get financing. Both would have done great. It is what it is though.
Since I started in 2008, my gross income has increased a lot faster than house prices. My gross income has probably increased at the same rate as my equity.
No prizes for the right answer, buy in rising market and cash in prior to peak, balance the portfolio sell some, keep some, neutral or cash flow positive would be better. Buy and hold takes more time, if you can speed the process by selling down and keep buying why not, makes sense to me
Example lifestyle budget of $1000 per week x 52 weeks = $52k.
$52k x 10 years = 520k.
Interest on $52k per year over the decade @ 6.5% = $90k
Up front funds required in LOC for the decade = $610k (520k + 90k).
