Continuing to grow - Ideas

[Ridin-High]

G'day Folk,

I've got a problem and i read somewhere awhile ago if you got a problem tell as many people as you can and someone will have a solution.

Here is the story

Property Portfolio

Value: $1.04m (3 houses)
Debt: $955k
LVR: 91.8% (tripple 95LVR + LMI capped loans when purchasing)

Shares Portfolio

Val: $335k
Debt: $215k
LVR: 64%
Positions in: BHP, RIO, CBA, WBC, ANZ, TTS, WPL, QBE, WOW, WES, SLF, BEN (As you can see mainly ASX 20)


Cash flow position is very manageable @ current interest rates, after tax negative CF is only 1/4 of my income.

Now what i want to do is to continue to grow my portfolio and i feel sorta stuck. I've been pulling out all the expenses to reduce outgoings from personal/investments and to increase buffers which i must admit their isn't much in the cash tanks at the moment, but with dividends flowing in thats quickly being topped up.

I'm using all methods to increase income to get cash deposits. Income tax variation, having a special type of leave we have @ work paid out in small portions each pay.

As an agressive young bever, i want to continue to gather sticks to build my castle...

Can i get some opinions/views on if i should just sit on my hands for abit or if someone has an idea of how i can continue to expand.

I prefer exposure to shares/commercial property. But if people can provide ideas on other investment vehicles im willing to listen.

Also note propertys are not x-colled, one is tho with a property of my mothers. (note i haven't considered using my property as security for other investment types. Eg comm property/shares etc, but will listen to people that have concepts/ideas about it)

Regards,

RH

 

[Propertunity]

.....As an agressive young bever, i want to continue to gather sticks to build my castle...

Can i get some opinions/views on if i should just sit on my hands for abit or if someone has an idea of how i can continue to expand.

I like your attitude

You are fairly highly leveraged - which is not saying anything you don't already know. You are young and hardworking and so that is in your favour. I think it is OK to be highly geared in the accumulation phase (I was too, still am come to think of it)

You need more cash to move forward. So where do youm get it? There is not much equity to be drawn down, you have reduced expenses, you have got tax back on a weekly basis - all good.

One thing I see is your share portfolio. It is producing dividends and presumably growth (longer term). But you could be milking it for more cash.

Many of your shares are "optionable". Have you considered writing covered calls on them to generate monthly income? If not, I'd suggest you are overlooking a potential source of cash income.

Cheers, Alan

 

[random]

Hi RH.
I shouldn't be suggesting anything to you, you have 'way' more than me but I have 8 x your equity in mine.
Your shares do much better at 1/4 the out lay as you know, like my property.
Your property is terrible though sorry for that amount of debt, there's nothing. I'd get more out of one 70k cheapy sorry , you'll easily be way into dangerous territory if things slow and right in the poop.

Instead of rushing into any more you have to start 'really' looking at what you buy next , you need to buy much better than what you have.
Too much aggression and not enough selectiveness , there's no deals in there . There's just expensive buys that have given you nothing .
Better off buying one good deal in a property that will be safely covered with a stack of createable equity built in + the buy itself already being 'well' under market , than 3 or 4 crap buys with nothing in them but a mountain of debt.

Cheers

G'day Folk,

I've got a problem and i read somewhere awhile ago if you got a problem tell as many people as you can and someone will have a solution.

Here is the story

Property Portfolio

Value: $1.04m (3 houses)
Debt: $955k
LVR: 91.8% (tripple 95LVR + LMI capped loans when purchasing)

Shares Portfolio

Val: $335k
Debt: $215k
LVR: 64%
Positions in: BHP, RIO, CBA, WBC, ANZ, TTS, WPL, QBE, WOW, WES, SLF, BEN (As you can see mainly ASX 20)


Cash flow position is very manageable @ current interest rates, after tax negative CF is only 1/4 of my income.

Now what i want to do is to continue to grow my portfolio and i feel sorta stuck. I've been pulling out all the expenses to reduce outgoings from personal/investments and to increase buffers which i must admit their isn't much in the cash tanks at the moment, but with dividends flowing in thats quickly being topped up.

I'm using all methods to increase income to get cash deposits. Income tax variation, having a special type of leave we have @ work paid out in small portions each pay.

As an agressive young bever, i want to continue to gather sticks to build my castle...

Can i get some opinions/views on if i should just sit on my hands for abit or if someone has an idea of how i can continue to expand.

I prefer exposure to shares/commercial property. But if people can provide ideas on other investment vehicles im willing to listen.

Also note propertys are not x-colled, one is tho with a property of my mothers. (note i haven't considered using my property as security for other investment types. Eg comm property/shares etc, but will listen to people that have concepts/ideas about it)

Regards,

RH

 

[Shaneelastic]

RH, a few questions for you to consider before moving forward.

What do you want to achieve and when by?
The cross sec with your mum, Is this ideal? What is the risk minimisation strategy here for her?
What is your risk minimisation strategy for prolonged time off work/sickness or retrenchment

 

[Deltaberry]

I have no qualms with gearing, but gearing on negative cashflow means the only thing you rely on is capital growth. If all minds thought like you, we'd be in genuine bubble territory.

- Have you factored in downside from losing your job as a result of double dip US recession?
- Have you factored in stagflation resulting from lack of growth in the city you're in (eg Sydney/Melb) while cost of debt (ie interest rates) are driven up due to inflation in mining cities?
- Have you considered both scenarios occuring with a simultaneous crunch on liquidity resulting in the recall of your loan or further securitisation?
- Have you worked out how much annual cpt growth you'd need post stamp duty, land tax, council rates etc to get an IRR of >5% over a 10 year holding period? Probably a fairly high one to be honest...

As I said, I have no qualms with gearing. But if you are eating 1/4 of your salary (and I'm assuming you're talking about your gross salary), that's too excessive.

Funny you mention young bever. You might just be older than me...

 

[Lofty]

Hi RH

I'm of the opinion you've got too much negative gearing and it's stopping you from building your portfolio. If it were me, I'd sell one of your three properties with vendor finance. This would turn this property into a positive cash flow asset as against it's current status, i.e. a negative cash flow liability.

By turning one property to positive cash flow, you'd move towards a more balanced portfolio and the closer your total property portfolio approaches a neutral cash flow position the quicker you'll be able to get your next loan.

For our property portfolio building, we usually buy one positive cash flow property (i.e. we buy it and on-sell it with vendor finance), followed buy a negatively geared buy & hold. It's stopped us from running up against the "too much negative gearing barrier".

Cheers, Paul

 

[Dazz]

I want to continue to gather sticks to build my castle...

To help you RH, we need to know what / when and where exactly this castle looks like.

Most investors - especially young ones - when you ask them specifically what they want out of the process they usually answer "Yeah, well y'know, I want what everyone else wants, to be loaded and never have to work again."

When you actually get down to tin tacks, they actually don't know exactly what they want, and cannot articulate it clearly for their advisers to help them. It's a bit like spraying a shotgun around hoping to hit something, rather than taking a high powered rifle and bullseyeing a known target.

Trouble is of course, as you are young, the target or goalposts keep moving....mine certainly did as I grew as an investor. There were many many things I didn't know I didn't know. That area has decreased of course, but there are things out there that I should be pursuing that I don't even know of as yet.


Maybe spend some time writing down exactly where you want to be in a certain time frame. Small chunks are best at first. Those 3 houses you have look and sound like shotgun blasts to me....lots of noise and bang, but it sounds like you pointed up into the air hoping to score a prize teal, but missed everything.


If you have a slant towards CIP and shares, it sounds like you enjoy the passiveness of the investing, cos in my experience there isn't alot to do in both fields of endeavour.


Anyway, give it a go, write it down and come back with what you are really after. Cheers.

 

[Intrinsic_Value]

my opinion, you are 'turbo charged' enough with those debt levels.
Therefore i would be looking at creating extra income to pay down debt levels to
(a) increase the stability of the portfolio
(b) have something spare so you can take advantage of future currently unknown opportunities.

Hence i would be looking for either/and a pay raise/second job.

 

[Player]

The analogy Dazz provides is apt.

FOCUS on what it the goal/ambition for one year, five years, ten years. Work backwards to establish what tasks (chunks of activity) need to be done and in what time frame. Be a little flexible, but remain committed to the end target and milestones along the way. By chunking down, you have incremental "baby steps" to take toward moving to you to your target.

Yes you are highly geared. You are young and energetic, so if it is comfortable to remain so, do just that. Whilst you are sitting back reflecting on where you want to be, drop the rifle and sit on your hands...............line up your little ducks in a line before you don the rifle once more. To carry the theme, aim carefully before you shoot next.

 

[JamesGG]

FOCUS on what it the goal/ambition for one year, five years, ten years. Work backwards to establish what tasks (chunks of activity) need to be done and in what time frame. Be a little flexible, but remain committed to the end target and milestones along the way. By chunking down, you have incremental "baby steps" to take toward moving to you to your target.

I'm reminded of something that I've seen you write on these forums from time to time, Player;

"People often over-estimate what they can achieve in a year however, completely under-estimate what can be achieved in a decade."

Whilst this settle-down-and-focus theory might not have been what the OP wanted to hear (I never used to like it either, and it's a theory that the Old Man used to hammer me with on a regular basis ), I think that there is probably more than a little wisdom to it.

So often, I see people who buy whatever they can as soon as they can. This, I think, is how many property investors end up with three, maybe five, properties and struggle to add much more to the portfolio. I like the analogy of taking careful aim before shooting again; sometimes, the right target may take a moment longer than preferable to reveal itself. Patience can be a virtue.

Ridin-High; if the idea is to get into commercial property at some point in the near future, then having large wads of cash or equity will usually prove somewhat advantageous. Perhaps the short-term plan might involve paying down some debt, and/or adding value to your current stock?

 

[Ridin-High]

One thing I see is your share portfolio. It is producing dividends and presumably growth (longer term). But you could be milking it for more cash.

Many of your shares are "optionable". Have you considered writing covered calls on them to generate monthly income? If not, I'd suggest you are overlooking a potential source of cash income.

Cheers, Alan

Thanks Al

To be honest i don't know what covered calls are. From the responses on this thread so far, i have written down things to look into and i will go on the ASX website and research CC's.

I shouldn't be suggesting anything to you, you have 'way' more than me but I have 8 x your equity in mine.
Your shares do much better at 1/4 the out lay as you know, like my property.
Your property is terrible though sorry for that amount of debt, there's nothing. I'd get more out of one 70k cheapy sorry , you'll easily be way into dangerous territory if things slow and right in the poop.

Hi Random,

I think the debt picture can paint the wrong story. Please note that since i purchased each house, i've used loan top ups + cash to fund the others so the LVR has remained high. I've just recently done loan top ups on properties 2+3 to increase share holdings so the chunk of equity in the shares is not due to me being a god of timing but more using property equity to fund.

RH, a few questions for you to consider before moving forward.

What do you want to achieve and when by?
The cross sec with your mum, Is this ideal? What is the risk minimisation strategy here for her?
What is your risk minimisation strategy for prolonged time off work/sickness or retrenchment

- I would like to replace my PAYG annual income but slightly above it. I earn 80k P.A at the moment, i would like to have that @ 100k so it gives me the choice to retire or work part time.

- The X-collage with mums unit is not ideal because to do any loan top ups i have to nag and whinge for her to sign it, its basically @ 95% LVR on that property anyway. This was my first purchase, i didn't know about somersoft then and the friendly CBA lady told me i would avoid paying LMI. Now if i was to break away the LMI fee would be large (probably 10k or something).

- I'm not really sure what you mean by risk minimization for her means. Obviously are guarantor she is taking on risk. It's more like a gift to the child i presume.

- My FY10-11 goals are actually focused around risk minization, i will note them they are posted on my wall. Reduce share portfolio LVR, Look into risk mitigation strats, stop loses, insurance products, increase cash buffer

But yeah its always good for reminder about risk etc. Cheers


I will reply to other posts shortly, Milo break

 

[Propertunity]

To be honest i don't know what covered calls are. From the responses on this thread so far, i have written down things to look into and i will go on the ASX website and research CC's.

Study up on them, ask Q's.
Read this thread: http://www.somersoft.com/forums/showthread.php?t=53581

 

[Shaneelastic]

Hi RH,

My day job is dealing with family finances/structuring in the business and HNW space, so I do have some experience to qualify what I am about to say.

You need to untangle your mother from your loans. People don't realise if things go pear shaped which they could, you never know whats around the corner, you may need to move in with you mum and rely being in her house for a while? Think about it.

Secondly, you said her loan is at 95% as well, if this is the case, there may be also a risk on yourself?

I am all for family help, however I believe that your scenario today, with no risk strategy involved can potentially put yourself and your family in trouble?

I also heard you saw nag and whinge your mum to sign the documents. Is she fully aware of what position you are in?

 

[marg4000]

My main concern is that your mother's property is entangled with yours.

As we all know, $#@#$ happens. Often when least expected and to the most unlikely people.

At worst, you are young enough (by the sounds of it) to start again, but if things go badly wrong you run the risk of your mother losing her home, which would truly be disastrous for her.

I suggest your first priority is arranging things so that your mother's property has clear title and is not tied up with your loans.
Marg

 

[Ridin-High]

I have no qualms with gearing, but gearing on negative cashflow means the only thing you rely on is capital growth. If all minds thought like you, we'd be in genuine bubble territory.

- Have you factored in downside from losing your job as a result of double dip US recession?
- Have you factored in stagflation resulting from lack of growth in the city you're in (eg Sydney/Melb) while cost of debt (ie interest rates) are driven up due to inflation in mining cities?
- Have you considered both scenarios occuring with a simultaneous crunch on liquidity resulting in the recall of your loan or further securitisation?
- Have you worked out how much annual cpt growth you'd need post stamp duty, land tax, council rates etc to get an IRR of >5% over a 10 year holding period? Probably a fairly high one to be honest...

As I said, I have no qualms with gearing. But if you are eating 1/4 of your salary (and I'm assuming you're talking about your gross salary), that's too excessive.

Funny you mention young bever. You might just be older than me...

Hi Delta,

- To be honest i haven't given much consideration to how a double dip recession in the US would impact my job. I work for the NSW govt in a fairly fundamental security type role.

- Yeah i've considered prices staying on the side lines for abit, i think after a yr of pretty good results its to be expected (total return on property portfolio in the last yr has been 13-15%). But i'm in it for the long haul as they say. I sappose if it doesn't work out in 10yrs people can throw eggs and pies at me and laugh.

- For the Margin loan on the shares yes this is concern. With residential property i can't forsee this happening in the short term and if it is happening now i presume its in select cases. I've never missed a payment on anything, my credit rating is of the gods. But yeah with any type of investing their is a risk, i sappose it's if you can handle that risk.

- I have worked it on post All holding costs (land tax, council fees, water, accounting fee's, property management fee's, 2 weeks vacantcy per property per year, $750 per property for maintance p.a etc etc) But i did not include stamp Duty and i should because that is a real/large cost.

Post tax benefits (NOT including depreciation, not considering tax rebates on LMI premiums which are large, done over a 5yr period) on my total property portfolio i'm CF- $14,000 P.A

I require 1.34% capital growth per annum to cover my short fall.
If you consider 2011 Tax depreciation benefits and LMI charge tax deductions that amount drops to 1.00%

If you throw my share portfolio in the mix i require 0.76% P.A Cap growth across entire portfolio to break even

Those numbers include everything, except stamp duty, they include brokerage costs etc. So i feel i can sit out awhile if growth is flat or slightly negative.

- Im talking 1/4 of my net salary after tax, CF neg 580 per pay, take home 2300 per pay. Not including depreciation/LMI rebates.

- I might be older, im 23... People in the future/past will do it quicker, bigger, better then myself so gotta learn to control those feelings of envy and just focus on improving my own game

I'm of the opinion you've got too much negative gearing and it's stopping you from building your portfolio. If it were me, I'd sell one of your three properties with vendor finance. This would turn this property into a positive cash flow asset as against it's current status, i.e. a negative cash flow liability.

Howdy lofty,

My Neg CF- isn't as bad as you think. To give you the 411 on purchases and rentals on my propertys

Property 1. Purchase 335k, Renting $420 (Fixed increase @ 6 months $435)
Property 2. Purchase 250k, Renting $340
Property 3. Purchased 318.5k, Renting $400

Shares portfolio is Neg CF- $500 p.a (note i have heavy weighting on BHP Billiton and Woolworths 1/3 of share portfolio)

To help you RH, we need to know what / when and where exactly this castle looks like.

Most investors - especially young ones - when you ask them specifically what they want out of the process they usually answer "Yeah, well y'know, I want what everyone else wants, to be loaded and never have to work again."

When you actually get down to tin tacks, they actually don't know exactly what they want, and cannot articulate it clearly for their advisers to help them. It's a bit like spraying a shotgun around hoping to hit something, rather than taking a high powered rifle and bullseyeing a known target.

Trouble is of course, as you are young, the target or goalposts keep moving....mine certainly did as I grew as an investor. There were many many things I didn't know I didn't know. That area has decreased of course, but there are things out there that I should be pursuing that I don't even know of as yet.


Maybe spend some time writing down exactly where you want to be in a certain time frame. Small chunks are best at first. Those 3 houses you have look and sound like shotgun blasts to me....lots of noise and bang, but it sounds like you pointed up into the air hoping to score a prize teal, but missed everything.


If you have a slant towards CIP and shares, it sounds like you enjoy the passiveness of the investing, cos in my experience there isn't alot to do in both fields of endeavour.


Anyway, give it a go, write it down and come back with what you are really after. Cheers.

Heya Dazz,

Yeah the ""Yeah, well y'know, I want what everyone else wants, to be loaded and never have to work again." sounds pretty good

I have written it down a few times, but your right the version keeps changing, the goal posts get pushed abit further back in the chase of a larger deposible income and the vehicle changes abit, firstly it was resi property, then it was CIP, now its shares.

Values on the houses have done alrite. Just some of the debt is being used for shares.

Property 1. Purchased May 08 335k, 2.5k renovation - Val 400k
Property 2. Purchased Jan 09 250k, 4k Reno - Val 280k
Property 3. Purchased Nov 09 318.5k, 8k reno - Val 360k

Val's have been done by bank, Property 2 Value i personally think is higher, but that means nothing i can't burrow against what i personally think.

Cap growth on shares is only 6.3% (only been involved for 2-3months) and that changes all the time. CG on property has been higher, but has been held for longer.

But thanks i will write my goals down again for retirement. I'm the type of person when i write a goal down i just hammer it until i get their

my opinion, you are 'turbo charged' enough with those debt levels.
Therefore i would be looking at creating extra income to pay down debt levels to
(a) increase the stability of the portfolio
(b) have something spare so you can take advantage of future currently unknown opportunities.

Hence i would be looking for either/and a pay raise/second job.

Yeah the extra income would help, i do like to try maintain sort of a life/work balance. I find if i hammer away to hard @ work i start becoming to emo. I've been @ my job for 3yrs now and never considered applying for the promotions that have become available. I might be able to get secondary employment, but i have to apply @ my main job to be allowed to do it.

What i really like is point (b) with having the funds to grab @ a opportunity when it comes along and that requires discipline which is something im sorta lacking.

 

[Mr. Fabulous]

Hi RH,

Just wondering - do you have Income Protection insurance? If not, I would be looking at getting some asap.

 

[Ridin-High]

FOCUS on what it the goal/ambition for one year, five years, ten years. Work backwards to establish what tasks (chunks of activity) need to be done and in what time frame. Be a little flexible, but remain committed to the end target and milestones along the way. By chunking down, you have incremental "baby steps" to take toward moving to you to your target.

Yeah i work very well by writing down my goals, to be honest i don't have the 5yr/10yr type ones. Something i will make sure to do.

I have my yearly ones which go from July to July (Financial year, Eg Start July 2010 - Mature July 2011) and my over all goal (assets/income etc)

Hi RH,

My day job is dealing with family finances/structuring in the business and HNW space, so I do have some experience to qualify what I am about to say.

You need to untangle your mother from your loans. People don't realise if things go pear shaped which they could, you never know whats around the corner, you may need to move in with you mum and rely being in her house for a while? Think about it.

Secondly, you said her loan is at 95% as well, if this is the case, there may be also a risk on yourself?

I am all for family help, however I believe that your scenario today, with no risk strategy involved can potentially put yourself and your family in trouble?

I also heard you saw nag and whinge your mum to sign the documents. Is she fully aware of what position you are in?

Yeah i understand how my aggressiveness can affect mum. To give abit more of an understanding, It's only one of my propertys that is X-coll with mums unit, the rest are standing on their own. To give some background on mum, she doesn't have the 95% LVR, I do. A small mix up their sorry about that. She is self funded retiree, living of rent from a few un-encumbered resi propertys. So she doesn't have any debt (well she does have 100k, but against PPOR, i know i know she should debt recycle, but trying to explain that is like beating my head against a wall).

I have 120k avaliable in 3 days (if i was to liquidate shares) so i feel that provides a good buffer in the event i get pwned @ work. 120k would cover my short fall on resi propertys for 6yrs, so it gives time for family to offload in case that i died or something.

My main concern is that your mother's property is entangled with yours.

As we all know, $#@#$ happens. Often when least expected and to the most unlikely people.

At worst, you are young enough (by the sounds of it) to start again, but if things go badly wrong you run the risk of your mother losing her home, which would truly be disastrous for her.

I suggest your first priority is arranging things so that your mother's property has clear title and is not tied up with your loans.
Marg

Yeah i feel having 120k buffer if required is enuff, seeing that my cash flows from my resi property are alrite (20k before all benefits P.A) so that could cover it for a long period of time, allowing mum to market and sell if required in the event im dead or a vegie.

If the perfect storm of crap happened, property market crash, lose my job, share market crash the most that would be on the line would be the one unit (note mum owns 3 other propertys no debt and has a super pension and doesn't work).

And just once again its only tied up with one property, the others are not x-colled hence paying LMI ($4.xx k on one and 6.9k on the other)

Hi RH,

Just wondering - do you have Income Protection insurance? If not, I would be looking at getting some asap.

This was suggest to me by my accountant when doing my 09-10 tax return as he noticed my level of burrowing etc. I've had my insurance broker (honan) look into it, because of the risk of my profession its hard to get good terms and its top premiums. Eg $1.xx K P.A, 6 month wait to claim, 70% of wage, only 5yrs pay out (till im 28 say if it happened now) where others do till retirement age, lower premium, higher wage payout. Verdict still out on this one for me at the moment


Thanks for the great feedback from everyone so far

 

[Deltaberry]

Hmm interesting just looking at property 2. Just randomly selected it.

$250k, $340 rent. Stamp duty of $12k?

So say you are 90% geared (I'm assuming high gearing).
I'll assume you paid the stamp duty.

So you put in $37k cash. Let's say $1.5k all other fees. I'll call it $40k all up in case you have the odd thing to fix etc that capitalises onto your building.

Rent of $18k pa. Rates + taxes + odd agent fees etc... let's say $3k a year? That's $15k left. At $225k debt and 7% interest rates, that's $15k interest. So breakeven. Not too shabby.

So to earn 5% ROE, you'd need $2k cap growth in first year. Not too shabby

As for shares, I have some very good favourites lately, but not sure if this is the place to be discussing these things hahaha... not sure what the liability is if they fall

Didn't look at your other properties/investments... not sure why you're negative gearing $14k pa...

 

[Ridin-High]

Hmm interesting just looking at property 2. Just randomly selected it.

$250k, $340 rent. Stamp duty of $12k?

So say you are 90% geared (I'm assuming high gearing).
I'll assume you paid the stamp duty.

So you put in $37k cash. Let's say $1.5k all other fees. I'll call it $40k all up in case you have the odd thing to fix etc that capitalises onto your building.

Rent of $18k pa. Rates + taxes + odd agent fees etc... let's say $3k a year? That's $15k left. At $225k debt and 7% interest rates, that's $15k interest. So breakeven. Not too shabby.

So to earn 5% ROE, you'd need $2k cap growth in first year. Not too shabby

As for shares, I have some very good favourites lately, but not sure if this is the place to be discussing these things hahaha... not sure what the liability is if they fall

Didn't look at your other properties/investments... not sure why you're negative gearing $14k pa...

-I'll tell you the stamp duty one sec, just opening documents on PC that have it listed.

$7,244 paid in Jan 09.

- I geared 95% Cap LMI. (12.5k deposit)

- Legals/B&P was $1818.50.

- 4k repairs (new fencing/full interior repaint)

I can't remember how much of the deal was funded by equity or cash.

For me the important figure has been total return which for the last yr was around 13-15% combine that with the 95% gearing/leverage has made good profit.


"Didn't look at your other properties/investments... not sure why you're negative gearing $14k pa"

Look at it this way, i paid 14k last yr.

If i was to put that 14k into a high interest account and get 7% *which we all know wasn't available it was more like 5-6%* I would have made $980, paid tax on that @ my tax bracket 30% 686 net profit after tax. To further invest. So a 4.9% return

My portfolio increased by 10% avg in value over the same period and because of leverage my $14,000 returned me $100,000 and i can burrow 90% of that to invest further/increase asset base.

So with the savings account i've increased my funds avaliable to invest by 4.9% with gearing and investing in my neg geared resi portfolio i increased my funds to invest by 642%

BTW my loan on that property isn't 225, its like 252.

Edit: With your shares stuff just add what the people on the hotcopper forum do "DYOR" do your own research


Regards,

RH

 

[Ridin-High]

I was writing down what i wanted to achieve from investing.

The obvious goal is to have the freedom of choice to stay in the workforce or not and if i did to what degree (Fulltime or Part time).

The excess cashflow would allow me to live nicely.


Now were do i need to be financially to achieve that.

Now this is tricky, i was in the middle of writing something and it included no debt... Obviously no debt is no risk, in the future do i really want to sell down to 0% LVR. Or do i wanna say keep gearing @ say 40% so i've still got that larger asset base and leverage working for me.

Do i keep hussling till ive got a large portfolio thats paying the excess cashflow even tho their is still a large amount of gearing (i presumed this is dazz's situation)

At the moment say 10yrs down the track when the propertys depreciation is running low, major repairs required etc selling down the resi flock and using the funds to clear debt on share portfolio and living on the dividends, so transferring the equity to cash and putting that cash into a higher yielding asset class then resi property.

Or do i keep the resi flock and use them as deposits on CIP.

Plenty of options. Basically i'd want an after tax income of $65,000 p.a in todays money