how long did it take to accumulate $1 mil equity?

[ericproperty]

hi guys

it seems the first 1 mil of equity is the turning point of wealth creation, from the first 1 mil on, the journey will be easier, faster.

not sure whether it is true

how long did it take you to reach the $1 mil mark?

regards

 

[beachgurl]

It took me about 6 years

 

[LeoT]

3-4 years .


Leo

 

[LeoT]

, from the first 1 mil on, the journey will be easier, faster.

not sure whether it is true

yes and No. Depending on what you do with the 1mil equity. That will make all the difference.

Leo

 

[The Y-man]

yes and No. Depending on what you do with the 1mil equity. That will make all the difference.

Leo

Absolutely agree.

In theory YES - due to compounding etc.

But:

1. You can get greedy an do various things to make it "go faster". When you get burnt, you withdraw and go overly conservative (which slows down the growth)

2. Ok, this one is a first world problem and I admit a nice one to have - as your equity grows and your portfolio grows in variety (as well as in different holding vehicles), it gets harder and harder to track what your equity value is at any time.......

The Y-man

 

[D.T.]

I guess it depends on whether you're in acquisition mode or just cruising?

If you're heavily acquiring, you'll keep using your equity to buy more, therefore your networth won't actually improve much. This is me at the moment, rebuy at max lvr as often as possible.

Therefore, I'd hate to have a million equity, it'd mean I missed buying opportunities.

 

[ericproperty]

Hi LeoT

I guess I am assumming the 1 mill will be re invested, not spent

 

[HD_ACE]

I guess it depends on whether you're in acquisition mode or just cruising?

If you're heavily acquiring, you'll keep using your equity to buy more, therefore your networth won't actually improve much. This is me at the moment, rebuy at max lvr as often as possible.

Therefore, I'd hate to have a million equity, it'd mean I missed buying opportunities.

+1

Depends on ones strategy and appetite.

Re_investing is the key to get that equity working for you.

 

[ericproperty]

Hi DT

your answer has reflected the "critical mass" question, which has been mentioned many times by Michael Yardley. what do you see when the critical mass can be reached or how much of asset could be seen as sound critical mass?

 

[sanj]

I guess it depends on whether you're in acquisition mode or just cruising?

If you're heavily acquiring, you'll keep using your equity to buy more, therefore your networth won't actually improve much. This is me at the moment, rebuy at max lvr as often as possible.

Therefore, I'd hate to have a million equity, it'd mean I missed buying opportunities.

That doesn't make sense to me because if you're borrowing against equity from one property and using it as deposits on another the equity still exists so why would you be opposed to having $1m in equity?

Eg even if you had 10 properties worth $5m @ 80% LVR it's hardly lazy equity lying around

 

[Banvard]

DT - why does having 1 million of equity mean you missed buying opportunities? at a 90% LVR that would be a nice big portfolio.

I am not there yet - I wish I had that much equity.

 

[Brady]

I've racked up $1M of debt pretty quickly. Be nice to see the equity follow, but through the acquisition phase will a lot of purchase costs eating into it. Hopeful some develoments can boost it quickly

 

[ericproperty]

" 1. You can get greedy an do various things to make it "go faster". When you get burnt, you withdraw and go overly conservative (which slows down the growth)"

The Y-man[/QUOTE]


Hi Y-man, this is an extremely important point, it is partly the reason why some investors fall apart, and some investors are overly cautious.

 

[D.T.]

Sanj / banv

Agree, but im not up to there yet, as per bradys post

 

[Brady]

DT - why does having 1 million of equity mean you missed buying opportunities? at a 90% LVR that would be a nice big portfolio.

I am not there yet - I wish I had that much equity.

That doesn't make sense to me because if you're borrowing against equity from one property and using it as deposits on another the equity still exists so why would you be opposed to having $1m in equity?

Eg even if you had 10 properties worth $5m @ 80% LVR it's hardly lazy equity lying around

Purchase costs - but unless you're buying dud properties and buying super fast would expect to see some growth in there also.

 

[nhg]

Should be rephrased to usable $1M equity.

I don't have that much, however whatever it is, it does not translate to that much usable cash. It is all chewed up in 80% LVR (I am a conservative investor).

I had this chat with my ex. Between us we had ~$4M in property at less than 80% LVR. As neither of us were willing to sell and wanted to keep expanding the porfolio, we worked out we could possibly pull out $100-200k in cash to buy our own place. It basically put us in exactly the same rat race as my friends who didn't own property and had just saved up over time.

It really is a looooong term game.

Reminds me of when I tried to put my credit card up form $2000 to $3000, man it was SO much work to get the bank to upgrade it, I gave up on it 3 times before I finished the app forms. Yet my mate who earns almost half and has no savings or investments had a $30k credit card.

 

[Brady]

nhg have you always worked off the original equity, or overtime have you also input some cash. Sounds like a perfect example of why 90% works well. If you had of gone slightly more overtime you would of paid some LMI but possibly had fair lump of cash to dump onto a PPOR.

I'm also a conservative investor, thats why I use LMI. I prefer to have a healthier cash reserve, will be getting dumped into the PPOR when it's built (well actually it probably wont, it will go into the offset of the PPOR)

 

[Ace in the Hole]

Thinking back, discovered the beauty of property investing about 13 years ago at 26 years old.
Started with just enough to put 20% down on a 355k property, actually had to get a cash advance from a credit card to get over the line.
Probably took 6 years to get the first mil equity.
About another 3 years to get the 2nd mil.
After that maybe just over a year for the next, etc, etc.
Most of this was earned income.
But now with a decent portfolio, the gainz accelerate nicely due to compounding, especially if we get close to double digit CG.
Sure beats earned income.

 

[neK]

hi guys

it seems the first 1 mil of equity is the turning point of wealth creation, from the first 1 mil on, the journey will be easier, faster.

not sure whether it is true

how long did it take you to reach the $1 mil mark?

regards

I'm trying to figure out how this is worked out?

Is it just simply saying that if you sold everything and paid off all debt you would have $1m?
What about inflation, how is that taken into account?

That said, assuming the above is your definition, then 9 years for the 1st 1m, then 2 for the next 1m.

I think if i was more active in the first few years, i would probably have double what i have now. But things happen as they do for a reason. I'm glad how they have worked out so far

 

[nhg]

nhg have you always worked off the original equity, or overtime have you also input some cash. Sounds like a perfect example of why 90% works well. If you had of gone slightly more overtime you would of paid some LMI but possibly had fair lump of cash to dump onto a PPOR.

I'm also a conservative investor, thats why I use LMI. I prefer to have a healthier cash reserve, will be getting dumped into the PPOR when it's built (well actually it probably wont, it will go into the offset of the PPOR)

It isn't quite the full story. I borrowed a 'now' relatively small sum for house 3 and to start building from fam with the condition I wouldn't go over 80% LVR. The extra equity would largely outweigh that amount now, but it avoids stress 'at home' by staying at 80% LVR.

I have put money in, but relative to my income it was quite small. I didn't cut back on lifestyle whilst I've invested. Have travelled extensively both abroad and in Australia last few years amongst other things.