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

[jaycee]

I am sure they are NAthan, didn't say they weren't

I'm just not sure aobut how practical is to for every average Joe to be able to do what you do.

You have explained your personal strengths and affintities which make what you do posible, I do not discount how much emphasis you ahve put for example on "knowing what you're doing"

Are your seriously suggesting newbies should do what you do and they'll retire in 5 yrs flat ? simple a that


why doesn't EVERYBODY do it like that ?

 

[HandyAndy888]

Good to see progress at your website Nathan...

 

[jasonk]

im new to this and want to know how a new investor on 50k salary be able to purchase multiple IP's in the medium term (1-5years). Say i could roughly get 400k loan. and buy IP's at 300k.

how would i proceed to purchase second IP? as it would be difficult to be cash flow + in the first few years? and how would i get my borrowing up to say like $550k?

 

[Rixter]

Jason, buy this book and it will be all explained to you. Its written by Jan Somers who kindly provides this forum to us all. Its the best book on property investing you will ever read.

Hope this helps.

im new to this and want to know how a new investor on 50k salary be able to purchase multiple IP's in the medium term (1-5years). Say i could roughly get 400k loan. and buy IP's at 300k.

how would i proceed to purchase second IP? as it would be difficult to be cash flow + in the first few years? and how would i get my borrowing up to say like $550k?

 

[tess85]

Ditto to what Rixter said, except you can also borrow it from the library if you are trying to put money away for an IP deposit

 

[tess85]

The thing that I like about Jan Somers' "More Wealth" book is that it shows that property investing is accessible to every layperson. You don't have to be supremely gifted like Nathan or a few others on the forum, in finding fantastically undervalued and CF+ properties. Sure it will help speed the process up, but the slow and steady approach also works

 

[redwing]

Another thread in the same vein started in 2003

Not diverting thyge thread, just adding to it... as I'm enjoying the read

How many properties to retire?


I'm sure there's a few more also

 

[josko]

im new to this and want to know how a new investor on 50k salary be able to purchase multiple IP's in the medium term (1-5years). Say i could roughly get 400k loan. and buy IP's at 300k.

how would i proceed to purchase second IP? as it would be difficult to be cash flow + in the first few years? and how would i get my borrowing up to say like $550k?

Welcome Jason,

Hyperthetically speaking:


STAGE 1

1. You buy an Ip at 300k.
2. The property increases by 20% (60k.)
3. You INCREASE or REFINANCE your loan and use the 20% Equity as a deposit for the next property.

STAGE 2

4. You now have two properties that both increase by 20%.
5. You refinance increase and buy yourself TWO properties.


In order to service these loans you will need to make sure the properties you buy are as neutrally/positively geared as you can get them. You can also get by on less than 20% for the purchase.

If you have enough for a deposit on a 400k purchase, then you can get Positively Geared.

Of course noone can guarantee a 20% increase within a certain timeframe, but in the present stage of the Property Cycle you have a fairly good chance that it will happen sooner rather than later.

Regards JO

 

[Nathan]

I am sure they are NAthan, didn't say they weren't

I'm just not sure aobut how practical is to for every average Joe to be able to do what you do.

You have explained your personal strengths and affintities which make what you do posible, I do not discount how much emphasis you ahve put for example on "knowing what you're doing"

Are your seriously suggesting newbies should do what you do and they'll retire in 5 yrs flat ? simple a that


why doesn't EVERYBODY do it like that ?

Nope not everyones goals are the same, therefore different stratergies required, just used it as a real example I see every day availible. Many on here have purchased propeties with similar numbers and similar outcomes.

I had done it in 5 years, however i push myself to the boundaries of the extreme. I am sure anyone can do anything if they apply themselves to their end goal, just depends how committed one is.

I was listening to Brad Sugars whilst driving to victoria yesterday and he said a valid point... some ask help me get rich quick, which he cannot teach, however if your definition of quick is 10 years then he is your man.

I say the same, one can do better then what I have done, one could do less then I have, however it all comes down to ones circumstances, and commitment to getting where they want.

Nath.

 

[tess85]

You could also buy the property undervalued... (say 10% undervalued) - that means the market only needs to move by 10% before you can refinance.

 

[crc_error]

Welcome Jason,

Hyperthetically speaking:


STAGE 1

1. You buy an Ip at 300k.
2. The property increases by 20% (60k.)
3. You INCREASE or REFINANCE your loan and use the 20% Equity as a deposit for the next property.

STAGE 2

4. You now have two properties that both increase by 20%.
5. You refinance increase and buy yourself TWO properties.

the details left out of this nice scenario is servicing the properties.

In today's climate, you will not be buying CF+ properties in high growth areas.

Plus you need to factor in 2% increase in interest rates.

Realistically, purchase your first IP, spend 3 years paying it down as much as you can, then purchase 2nd IP, again trying to pay it down as much as you can.

This way you keep your shortfall to a min, and still buying in high growth areas.

 

[jasonk]

thanks josko and crc

 

[Lynchy]

the details left out of this nice scenario is servicing the properties.

In today's climate, you will not be buying CF+ properties in high growth areas.
Plus you need to factor in 2% increase in interest rates.

Realistically, purchase your first IP, spend 3 years paying it down as much as you can, then purchase 2nd IP, again trying to pay it down as much as you can.

This way you keep your shortfall to a min, and still buying in high growth areas.

I dont think thats true at all

I brought my 1st IP in Feb 09 for $340,000 yielding over 6.5% straight away without any improvements on a $50,000 wage. Had it valued last week by my bank for $427,000 after a minor $5000 reno. Taking out the equity and buying another 1 in the next couple of months on a wage thats only 5% higher. Could have brought 3 months ago if I had got my act together.

You can get good yield and high growth, you just need to find the right property and/or vendor.

Theres no way im waiting 3 years per purchase

 

[Alex P Keaton]

I brought my 1st IP in Feb 09 for $340,000 yielding over 6.5% straight away without any improvements on a $50,000 wage.

Hi Lynchy

What bank did you get your loan with?

I'm on 50 K too but the most I could get from the bank was low $200 K for my first ip. This was my 2nd property. My first is my ppor valued at $260 K with loan of $177 K. I x-col both properties with ANZ. ANZ wouldn't let me go above 80% LVR as i bought a small 1 bed.

I wander if I go with another lender next time I can get a bigger loan so that I can get a 2 bed unit around the $270 K - $300 K mark. I doubt ANZ would give me that much for my next ip? But then again if my next one is a 2 bed then maybe they will let me go up to 90% LVR.

 

[Lynchy]

Hi Lynchy

What bank did you get your loan with?

I'm on 50 K too but the most I could get from the bank was low $200 K for my first ip. This was my 2nd property. My first is my ppor valued at $260 K with loan of $177 K. I x-col both properties with ANZ. ANZ wouldn't let me go above 80% LVR as i bought a small 1 bed.

I wander if I go with another lender next time I can get a bigger loan so that I can get a 2 bed unit around the $270 K - $300 K mark. I doubt ANZ would give me that much for my next ip? But then again if my next one is a 2 bed then maybe they will let me go up to 90% LVR.

Hi Kim,

I went with HSBC. My work does my banking with them so I dont pay any fees through the life of the loan, except for valuation when refinancing

When i brought my house the bank valued it at $385,000. The purchase price was $340,000 but because the valuation was $385k it allowed me to purchase with only a $15,000 deposit as I was borrowing less then 80% of the valuation price.

 

[jaycee]

the details left out of this nice scenario is servicing the properties.

In today's climate, you will not be buying CF+ properties in high growth areas.

Plus you need to factor in 2% increase in interest rates.

Realistically, purchase your first IP, spend 3 years paying it down as much as you can, then purchase 2nd IP, again trying to pay it down as much as you can.

This way you keep your shortfall to a min, and still buying in high growth areas.

Also, how much of a deposit will $60k.. .or even $48k (80% LVR and all that) actually give you ?

 

[agent007]

Hi All,

I was doing some calculations over the weekend, see I have two IP's and am looking to buy my 3rd, and just as a test I wanted to see how many IP's I should have which will permit me to retire.

Here is the things...I calculated the income for the two properties for a period of 1 year...that is I removed the mortgage repayments as my scenario was that I had paid off the two houses.

Here is what I found out...when I subtracted water rates, council rates, Property management fees, insurance and repairs...my costs for the year was a whopping 36% of my income...and that was with the mortgage repayments not being counted (I would hate to think what the % would come to if I had to pay land tax as well!)

All in all, my NET income for the year was as low as $375 a week...for the two properties combined.

I am needing approx. $1000 a week to live nicely...so this means that I need to buy atleast another 3 properties with mortgages paid off to live well....which means that I will never retire soley on property.

If I include mortgage repayments...well, you need something like 15 properties or more....at least.

I guess this is why people say cashflow should not be the goal of PI.

I guess Im a little shocked by just how low the ROI is in terms of real income.

Some time ago the API magazine run a series of very good articles with different strategies in this same topic.

 

[Random Eagle]

Useful API mag articles related to this topic.

The following API articles will be a good informative source for this topic giving useful examples and case studies of those who have been successful.

Oct 2007 page 34 - How many properties does it take to retire?;
Nov 2007 page 30 - How long does it take to retire?;
Dec 2007 page 36 - 3 ways to retire on property;
Jan 2008 page 24 - Super & property working together in retirement;
Feb 2008 page 24 - The clock's ticking: How late is too late to start invest...;
Mar 2008 page 24 - 6 Retirement nightmares & how to avoid them;
April2008 page 36 - How I won my financial freedom: 5 investors reveal strats.

 

[Alex P Keaton]

though i'd bump this thread up

 

[Alex P Keaton]

Some time ago the API magazine run a series of very good articles with different strategies in this same topic.

there was an interesting positive cashflow article in the latest mag