How many Ip's needed to retire? (I am a bit shocked!)

[jaycee]

Being CF+ it would be net.

It is quite easily achievable, but as I said before, you have to be in the market for enough time for inflation to do it's magic. Most of my rents have gone up $100pw in the last couple of years. Seeing as the portfolio was more or less neutral, that is an extra $100pw cashflow for each IP.

Exactly how long skater to build up $60k pa in NET rent ?
Any example of buy & holders of nomral resi porperty as perJan Somers model alons, who live off $60k pa net rent ? How long did it take ?

The posters I seem to notice here who have acheived that have done it by not only following this model - love to see the examples, but alaso, the skater / dazz's and sash's even the Rixter's aren't doing it that way.. skater uses share houes to increase income, Daz went commercial, sash buys specialied and also invests in other areas, Rixter lives off equity not his rents.....

Plse tell me it's easy, it will give me hope that even I could do it if it is easy enough, but sometimes I feel I'm just reading the thory of buy & hold agin not instead when this is the very thing beign questioned...

 

[sash]

NET of interest and all expenses including repairs...thus the range.

As I have day salary...I pay about 42% in tax out of this.....so I am buying more property or channeling into refreshing some of my places to increase rents and value.

It can be like a never ending packet of Tim Tims really.

I reckon if you get in now and select well...you should be able to secure your $1000 per week in about 5-7 years. Make sure that the yield is at least 6-7% and the capital growth is 7-10% per annum.

Great...this was exactly what I was looking for. Is the 50 - 60K NET or GROSS income?

 

[skater]

The posters I seem to notice here who have acheived that have done it by not only following this model - love to see the examples, but alaso, the skater / dazz's and sash's even the Rixter's aren't doing it that way.. skater uses share houes to increase income, Daz went commercial, sash buys specialied and also invests in other areas, Rixter lives off equity not his rents.....

Plse tell me it's easy, it will give me hope that even I could do it if it is easy enough, but sometimes I feel I'm just reading the thory of buy & hold agin not instead when this is the very thing beign questioned...

I hate to dissillusion you Jaycee, but I don't do share houses at all. Out of the people mentioned above, I am more like Sash. I don't buy expensive properties. I like a good yield and increase rents as soon as possible. I usually buy for well under market value. However, I have also made some mistakes and sold dogs, or sold too soon, or bought a dog that I have trouble getting rid of, etc.

It is not easy, as nothing worthwhile usually is. It takes time and patience. But if you keep plodding along you can do it.

We bought our first IP in 1998. Nothing for a few years, then we went mad and bought heaps. Have been just plodding along for the last few years with no new purchases, however a new PPOR last year and a new IP recently.

 

[sash]

....and there lies the key to investing.....being able to presevere even when you buy the occassional dog.

Though in my case I sold a so called dog....a2 brm unit in Punchbowl...only to have it go up 25k after I sold! Valuable lesson....hey hindsight is a wonderful things...

There are no short-cuts.....just persistence to be successful.

The other valuable asset to investing is manage the little voices in your head which are thinking about all the things that can wrong...the "what ifs". And no I don't have multiple personalities... Focus is important.

The funniest things have happened to me...twice in fact in the last 2 months..some of the agents have called me an "Entrepreneur"....I was almost on the ground rolling laughing. He/she looked puzzled....I turned around and said...mate I am just a simple guy who goes and buys affordable houses. All I did was research areas with potential and gave it a go......a simple concept....which I just repeat over and over with an occassional reno (well more frequent in the last year).

However, I have also made some mistakes and sold dogs, or sold too soon, or bought a dog that I have trouble getting rid of, etc.

It is not easy, as nothing worthwhile usually is. It takes time and patience. But if you keep plodding along you can do it.

We bought our first IP in 1998. Nothing for a few years, then we went mad and bought heaps. Have been just plodding along for the last few years with no new purchases, however a new PPOR last year and a new IP recently.

 

[jaycee]

NET of interest and all expenses including repairs...thus the range.

As I have day salary...I pay about 42% in tax out of this.....so I am buying more property or channeling into refreshing some of my places to increase rents and value.

It can be like a never ending packet of Tim Tims really.

I reckon if you get in now and select well...you should be able to secure your $1000 per week in about 5-7 years. Make sure that the yield is at least 6-7% and the capital growth is 7-10% per annum.

How much property is that in 5-7 yeqrs you ahve to meet servicability for Sash ?

How many would I need to buy in this 5-7 year period ?

Is this actually possible in the timeframe you mention when one's income is not that high enough to be taxed at 42% by 12% or more ?

 

[sash]

Jaycee

Well that depends.....but it could be as little as 8 properties.

In your case CF will be more important ...then it maybe more prudent to buy in regional areas like Skater suggests. In some of these areas you can buy with returns of 8-10%....but you will need to be quite careful and will need to get down to which streets in suburb are okay and which are not particularly if you are buying in ex commission suburbs.

For example lets say you have already 3 properties....you can buy another 5 in high growth regional areas (refer to Terry Ryder reports).

Lets assume each costs you 140K inclusive of costs....and returns 260pw. You buy 5 over the next 2 years. The properties at 6.5% interest only on a 700k loans will cost about 46k and other expenses are 15k. The rent (assuming todays rent) is about 68k per annum. You are postive by 7k at year 3. assuming a growth of 10% per annum rent growth by year 7 you could positive to the tune of 30-40k plus whatever CF+ from the other properties.

Something to ponder....sometimes being successful is just a small shift in mindset..

How much property is that in 5-7 yeqrs you ahve to meet servicability for Sash ?

How many would I need to buy in this 5-7 year period ?

Is this actually possible in the timeframe you mention when one's income is not that high enough to be taxed at 42% by 12% or more ?

 

[tess85]

I hate to dissillusion you Jaycee, but I don't do share houses at all.

I bet Jaycee was thinking about Ozperp in relation to sharehouses / student accom?

 

[tess85]

Can you give er literal examples here Nqthan ? One that you are planning on using so that I can see it in black & white rather than just being talked about.

The way that I like to think about it, is that rents rise over time, but interest repayments stay roughly in the same range... sure, they fluctuate, and they may go up to > 10%, but they'll mostly stay under 15%. But rents will keep going up forever...

 

[jaycee]

Quote:
Originally Posted by skater View Post
I hate to dissillusion you Jaycee, but I don't do share houses at all.
I bet Jaycee was thinking about Ozperp in relation to sharehouses / student accom? Yes I was, worong on that one.

The way that I like to think about it, is that rents rise over time, but interest repayments stay roughly in the same range... sure, they fluctuate, and they may go up to > 10%, but they'll mostly stay under 15%. But rents will keep going up forever...

I undertand that, but would like to see an example of it working within 5-7 years buying normal res clsoe to the cbd property and then retiring off the rent , and being able to do it on what is considered the average aussie wage and noting more. Which is what is being alluded to but I am nto yet convinced of actually being the norm (be a decent shot).

Sash gave examples of how onemight acheive thi, but this deviates miles & mile form the original posters buy &hold trategy and then living off the rent.

AS sunifsh said on another thread, there seems to be a low nubmer of peroppeople here living off $1k / week clear rent, is that coiincenence ?

I amnot denying success is possible, jsut debating if it's sas simple as buying average 3x2 houses not too far from the cbd. Both your strategy & NAtha's are different to this, can you advie why you choe thi instead of going the real simple rout of buying a few poreprties and rethen living of $1k / wkk retn ? I keep thinking aprt of it is cause it's not that simple.

Prove me wrong please, it sounds pretty easy ! I have 2 IP's, I'll buy 1 next year, 1 the year after, I'll be 41... wait 5 years and have $1k pa.. 46 yrs old... Not bad... Got some shars andsome super... GuessI could ue those two to keep growing and thus keep me busy & in the money.,

But I doubt the first part of the plan

my calcuations show me that I will most likley have a netural portfolio.

 

[tess85]

I undertand that, but would like to see an example of it working within 5-7 years buying normal res clsoe to the cbd property and then retiring off the rent , and being able to do it on what is considered the average aussie wage and noting more. Which is what is being alluded to but I am nto yet convinced of actually being the norm (be a decent shot).

Aah, I see. In that case I actually can't really provide an example because I think a 5-7 year timeframe is way too soon to see any action, unless you are extremely gifted at finding opportunities. To the average Joe (eg. me) I'm prepared for it to take a lot longer... time in the market not timing the market.

 

[Nathan]

Buy a property for $200k which has real value of $250k rent $320pw


Cashflow would be fairly neutral.

pull equity out and use as deposit for the next one and repeat the same purchase.

get 10

so 10 x properties costing $0pw from your pocket.

wait 5 years and when the rent goes up $100pw then there is $100 x 10 = $1000pw pos cashflow.

Theres an example.

 

[sash]

I like to be different....there are heaps of us doing the Pure CF things....they are just silent and in the background.

I buy and hold.....I have also considered the LOE....but given the GFC...it just got a bit harder....will come good again. I will probably use a hybrid as I will use the LOE to supplement things like car/boat purchases.

Can see how you got a neutral portfolio unless you are buying proprties with poor returns. Remember one aspect of valuing properties is rent return.

Sash gave examples of how onemight acheive thi, but this deviates miles & mile form the original posters buy &hold trategy and then living off the rent.

AS sunifsh said on another thread, there seems to be a low nubmer of peroppeople here living off $1k / week clear rent, is that coiincenence ?

my calcuations show me that I will most likley have a netural portfolio.

 

[sash]

Yep...definitely works......also using 95% loans with LMI capitalised to 97% also helps you to acquire like crazy in a shorter period of time.

20% deposits are to expensive. Remember on 200k property LMI is about $5000 at 97% (incluse of LMI capitalised)....but this is tax deductable over 5 years...so you only pay $3000 when you are on the 40% bracket.

LMI is just a cost of doing business....happy to pay this instead of coming up with about 50k (deposit, stamps, establishment and legals) for a 200k property. If you go down the LMI route the cost is more like 22k.

Buy a property for $200k which has real value of $250k rent $320pw


Cashflow would be fairly neutral.

pull equity out and use as deposit for the next one and repeat the same purchase.

get 10

so 10 x properties costing $0pw from your pocket.

wait 5 years and when the rent goes up $100pw then there is $100 x 10 = $1000pw pos cashflow.

Theres an example.

 

[jaycee]

Aah, I see. In that case I actually can't really provide an example because I think a 5-7 year timeframe is way too soon to see any action, unless you are extremely gifted at finding opportunities. To the average Joe (eg. me) I'm prepared for it to take a lot longer... time in the market not timing the market.

Thank you Tess, that is what I belive too.

My question was more to skater & nathan who, suggeted it can be done.

 

[Alex P Keaton]

So high CG is not too important?

Buy a property for $200k which has real value of $250k rent $320pw


Cashflow would be fairly neutral.

pull equity out and use as deposit for the next one and repeat the same purchase.

get 10

so 10 x properties costing $0pw from your pocket.

wait 5 years and when the rent goes up $100pw then there is $100 x 10 = $1000pw pos cashflow.

Theres an example.

So is this what you Sash and Skater are saying... That your not too fussed about getting high CG (from eg a close to cbd unit) you are more after the cf.

Because I have always wandered..... you might get these great yields and everything and be pg, pc which is great, but it confused me because i wandered how you would be able to leverage into the next deal if your only getting 8% cg.

But i think your strategy has finally clicked for me. You buy something under value. eg by $50 K. You have already made your $50 K deposit to leverage into your next ip. You will have great cashflow. But over time, over the course of many years e.g. 20 years you wont have the great cg that you would have if you had of bought close to the cbd.

But now im thinking instead of getting that great cg from the actually property itself, your more than making up for it with (in Sash's case) his 60 K pa net income and in 7 years time his rental income will be around $100 K. So the money is coming in as a high amount of net rental income rather than the cg. Its making more sense to me now.

There are lots of different strategies arn't there!! You would have to be really experienced and skillful to be able to choose the right areas to invest in if its regional property. I have always thought regionals are more riskier areas than others. But perhaps I could have a mixture of inner city units and regionals for the cashflow. I dunno.

This strategy could work well for someone on a below average income like myself. What do you think?

There have been a few on ss that have done well through regional propety. Off the top of my head Karina being one.

Am I thinking right?? Please confirm thanks

 

[sash]

CF+ is only 50% of the equation....the other is CG....my average CG is not different to buying in bluechip areas (7%-10%). As a matter of fact some in my portfolio have done about 14% per annum...which means in 5 years they will double.

So is this what you Sash and Skater are saying... That your not too fussed about getting high CG (from eg a close to cbd unit) you are more after the cf.

But i think your strategy has finally clicked for me. You buy something under value. eg by $50 K. You have already made your $50 K deposit to leverage into your next ip. You will have great cashflow. But over time, over the course of many years e.g. 20 years you wont have the great cg that you would have if you had of bought close to the cbd.

But now im thinking instead of getting that great cg from the actually property itself, your more than making up for it with (in Sash's case) his 60 K pa net income and in 7 years time his rental income will be around $100 K. So the money is coming in as a high amount of net rental income rather than the cg. Its making more sense to me now.

There are lots of different strategies arn't there!! You would have to be really experienced and skillful to be able to choose the right areas to invest in if its regional property. I have always thought regionals are more riskier areas than others. But perhaps I could have a mixture of inner city units and regionals for the cashflow. I dunno.

This strategy could work well for someone on a below average income like myself. What do you think?

There have been a few on ss that have done well through regional propety. Off the top of my head Karina being one.

Am I thinking right?? Please confirm thanks

 

[Alex P Keaton]

CF+ is only 50% of the equation....the other is CG....my average CG is not different to buying in bluechip areas (7%-10%). As a matter of fact some in my portfolio have done about 14% per annum...which means in 5 years they will double.

But i always thought, you cant have both at the same time.

You would really have to research and be sure about the areas your going into wouldn't you!

 

[Nathan]

I wont both where best possible.

CF+CG=

 

[RumpledElf]

Our Obsession and Nathan are the two who seem to have a lot of +ve regionals, although Nathan has a lot of city ones too.

Two decent IPs will do it for us if they are paid off, although late this year we'll be overall positive (we're $35pw gross negative now), even more so if I get house #1 sold as I really don't want to keep it. House #1 rents for $110pw, #2 will rent for something over $200pw, and the combined mortgage on all three will be $280pw so only just squeaking into positive territory there despite 2x 20% yeilds - the PPoR will have the largest debt. Even if all our other plans go belly up I'll get rid of #1 and #2 (which will leave us debt free and then some) and build us a really nice place in a few years and keep #3 indefinitely as an IP. Its very slow on 60% lends.

Really need to get at least one house sold soonish to get a bigger car with. Having some issues getting those enormous modern baby seats into the back of our little car.

 

[sash]

Who told you that?? There are plenty of areas where you get CG and CF if you look.

Some recent examples of my purchases:

1. 2006: 3 brm house in Werribee Vic purchased for 130k rent 165pw. Worth 230k today and rents for 220 pw....rent will go to 235pw in May.

2. 2007: 3 brm house in Melton South Vic purchased for 155k rent 180pw. Worth 225k today and rents for 225 pw

3. 2009: 3 brm house in Deception Bay Qld purchased for 235k rent 270pw. Worth 280k today and rents for 310pw.

Investigating a house in the Hunter where it is expected to sell for 200k and will rent for 280pw.

Plenty of deals out there...if you research well....it just requires time and persistence.

But i always thought, you cant have both at the same time.

You would really have to research and be sure about the areas your going into wouldn't you!