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.
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.