Shahin who often posts here has built a good reputation with multiple investors
ta
rolf
ta
rolf
Finance broker for large portfolios
- Thread starter Christianlaws
- Start date
Are we taking $150K properties or more realistic priced ones like average $350K.
It is not possible to accumulate $7mil worth of property in a short period on $70K pa with an already high gearing level / limited equity.
Good luck to you though happy to be proven wrong. Use me a fuel.
It is not possible to accumulate $7mil worth of property in a short period on $70K pa with an already high gearing level / limited equity.
Good luck to you though happy to be proven wrong. Use me a fuel.
I believe you owe me a beer.
Soon
I'd be happy to buy you a beer. Well done. Just one question how long since you bought 1st and second properties?
Why do you mention the first and 2nd ones specifically? Are they different to the others?
I tend to agree with Marty...
I've got a few clients who have been able to build quite large portfolios worth reasonable amounts of money on an average income. The achieve this over time.
In the first year they might buy two or three properties, then they'll run out of equity or savings. The second year perhaps another property can be purchased, maybe two.
After a few years, equity and cash flow tend to build up in the first properties bought which helps get you into the next round of properties. From this point things start to get interesting.
My point is in most cases a 20 property portfolio can't be achieved in 2-3 years. It is achievable in 10+ years.
The other way it can be done is to buy extremely low value properties in what are effectively slums. Steve McKnight and Nathan Birch did this purchasing properties worth less than $100k. This has quite a few down sides and can be very risky in its own right. For the right type of person with the right risk profile.
The real question to be asked, is why 20 properties? 20 is just a number and meaningless without context. I'd suggest 10 properties worth $400k each is a better outcome than 20 properties worth $100k each.
It was just to give an indication of how long you have been in the market and when you started investing. I could also add time between each purchase.
Marty, you should be saying "I don't know how to do that" rather than "it's not possible". There are plenty of ways to create equity through developements and reducing your LVR and DTIR. If your strategy is to simply buy 20 property's from realestate at 5% yield at 90% lvr in 3 years on a 70k income, then no, it's probably not possible.
It appears we have been talking about different things.
Peter, I have suggested 20 properties not as my goal but a qualifier for a broker. I do have 10 years as my timeline for this.
A property worth 400k is no better than a property worth 100k and vice versa. It's what the property is adding to your portfolio and how it will get you to your end goal. Lower valued properties tend to have a higher yield. It's uncommon to have a property worth 400k and rents for $800pw but it's not as uncommon for a 100k property to rent for $200+PW. So if cashflow is part of your strategy then that might be part of your strategy.
A property worth 400k is no better than a property worth 100k and vice versa. It's what the property is adding to your portfolio and how it will get you to your end goal. Lower valued properties tend to have a higher yield. It's uncommon to have a property worth 400k and rents for $800pw but it's not as uncommon for a 100k property to rent for $200+PW. So if cashflow is part of your strategy then that might be part of your strategy.
Thanks Rolf
Thanks Michael
Using 20 properties as a broker qualifier is reasonable I guess. To be fair though, there are very few brokers who have financed clients into 10 properties. 20 properties is rare indeed. The real point of course is it's about building a portfolio to achieve goals, not arbitrary numbers.
I agree that the rental income as a function of value is higher in lower value properties. So are the costs. Rates, management, maintenance, financed costs are all significantly higher as a function of value. In my experience the rent in really cheap properties tends be dependant on government handouts which isn't really a growth market at the moment. Capital and rental growth rates tend to be better in median value properties.
I'd guess that the number of clients I've financed into 20 concurrent properties to be less than 1%, but the average property value would currently be somewhere between $300k and $500k. They've focused on a balanced portfolio, rather than one or the other. They also look for properties where they can manufacture value, rather than waiting for it.
I was under the impression after talking to my broker that I kept the yield up at a certain percentage (I think 8.1%), I could effectively keep purchasing properties indefinitely.
Is this not the case?
Unfortunately it isn't always that clear cut. Policies change all the time.
More like 10% - 13% unfortunately.
The 8% scenario kind of works with a few lenders where they use other lenders debts at the actual repayment. The problem is they still look at their own debts at an assessment rate which still puts some limits on how much you can do with a single lender. Then the problem is eventually you run out of lenders.
Also people have this strange habit of topping up to access equity for more deposits. The debt tends to increase so you need to look at it as a function of debt, not purchase price.
Throw in some LMI and you've got even more restrictions.
Its not that a broker 'doesn't know how to do it' but rather it never having happened to that broker's client's situation. I have had 1 client that purchased and held more than 35 properties but just 1 and that is because of that particular client\s personality, style and type of property that they concentrate on.
I have clients who have maybe 4 properties who have made more money than this other person with many more properties.
So I think you are barking up the wrong tree with your question - as if it is due to a broker's skill when it depends on a whole host of other factors - such as
how long they have been in the game
where they started from
income
rental yield
timing
capital growth
And don't forget it is not a race to see who can buy the most properties...
how do you keep coming up with the deposits?
The last couple were from refinancing, but I should be able to save up at least one 20% deposit per year, which will obviously increase the yield if only the loan is being considered.
Well you should be able to go a long way if you can come up with at least 20% and your properties are high yielding - maybe even 20 properties.
Peter, I m might give you a buzz today to have a bit more of a chat, if that's okay.
Thanks
Thanks
