How many IP's would you like to have?

[pennyk]

I was talking to someone a few days ago about Jan Somers. They said "She has 50 IP's. Why would you want to do that? It would be so much work". and it got me to thinking how many IP's does one person need. Do I invest in them for the "thrill of the chase" or because it's actually doing me some good!?
I guess I would like maybe somewhere between 5 and 10. Enough for some good cash flow and not so many to be a pain in the ****.

What about you?

Penny

 

[alexlee]

The more properties I have, the more money I have (assuming I do it right). If the portfolio generates enough money, I can hire someone to manage the properties for me. Economies of scale works in any business.

Alex

 

[Sim]

Sorry to say this, but the number of IPs is a meaningless figure. I know it makes people feel good to know that they have so many IPs, but really - it means nothing. Now if you started talking portfolio value and returns, then it starts to have meaning.

 

[Sunfish]

Sorry to say this, but the number of IPs is a meaningless figure. I know it makes people feel good to know that they have so many IPs, but really - it means nothing. Now if you started talking portfolio value and returns, then it starts to have meaning.

Glad you said that Sim.

Personally, I couldn't think of anything worse than owning big mobs of IP's. They are a means to an end..... not an end in themselves.

At least you'd be assured of a Xmas card from your PM with a Bermuda stamp on it. LOL

T

 

[Kristine..]

Hi Penny

Questions such as this are good to contemplate from time to time.

It is necessary to ask 'where have I come from, where am I, and where am I going'.

Doesn't matter whether the question relates to future fortune, number of properties, whatever.

For me, property is partly the 'thrill of the chase', and all the altruistic reasons - nice places for other people to live, work for my local community, making the money go round - but it is also because My House Has Many Rooms - and as Freud connected the dream exploration of houses is the dream exploration of ourselves, well, perhaps I see the accumulation of houses as a sign of self respect.

As I get older it is not just my waist line which is growing, but my persona as well. Will I ever get to fill the space which the Universe has allocated me? Well, I don't know. I don't see the houses as gross or net or anything much, they are just an extension of me (no wise cracks about extensions not being worth the money spent on them!). Working on the houses gives me the greatest pleasure, perhaps as Michelangelo felt when working in cramped conditions producing a beautiful ceiling.

How many properties? Well, I'm eyeing off an arcade at the moment, can I afford it? Can I achieve it? Who knows, but I'm having fun having a crack at it.

How many are enough? I'll let you know when I get there. How many would I like? There are no limits. I hope I never lose my interest in property and that there is always one more deal to do.

All together now ....

And there's one more river, there's one more river to cross ...


Hehehe

Kristine

Gosh! on rereading this it's a bit maudlin, isn't it? No, I'm not calling Dial a Chiron quite yet! But perhaps how many houses is like saying how old do you want to be, or other completion type questions.

and I guess I'd rather design and build a bridge over the River Styx than simply cross it, even in a chauffeur poled boat.

Now, will I toll the bridge?

Cheers

 

[Sim]

They are a means to an end..... not an end in themselves.

Agree ... I was actually considering adding another option to the poll "How many IPs would you like to have ?" ... answer: "Enough"

(I thought it might be a bit too obtuse for some)

 

[astroboy]

Personally, I couldn't think of anything worse than owning big mobs of IP's.
T

We all know that Thommo, some of us think otherwise.
The Big Roo.
aka
AstroBoy

 

[Peter 14.7]

Hi All

Very good responses so far and overall this thread raises a good point.

I have a saying “it is not what you earn but what you keep”.

I.E. A person earning $100k pa and spending $80k is worst off than a person earning $25k and keeping the lot. Yet in today society and especially in Sydney your income has a lot to do with prestige and hence the above logic is lost on many.

When you consider IP perhaps the saying is “It not the number of IPs you own but the net return you get”

Obviously 1 solitary IP in say Darling Point worth $1M is equal to 10 x $100k houses in Outback NSW.

In fact it worth more as 10 homes equals ten rates, ten insurances, ten loans, ten agent commissions, 10 repairs allowances and ten min land tax charges.

Where one equal home equals one set of rates (albeit higher value but lower overall charge per value) 1 set or repairs, one loan, and one agent which assuming a healthy profit for minimal work would be happy to manage for a lower commission.

And in the event you sell, a much lower agent commission.

Has made me think more about my future plans.

Thanks.

Peter 147

BTW I voted 1 to 10.

 

[astroboy]

Very true Peter,
But what is a quality Ip portfolio ? Is it 6 relatively expensive properties in Sydney ?
Is it 12-15 of the same in Brisbane with thought to future growth ?
Is it a smattering of properties in beachside suburbs with a high boomer potential ?
Hmmm who has a crystal ball, and what of the close, 'somewhat regionals', such as Ipswich, Sunstone would applaud that area.
Ips scattered in B.F.E. dont interest me, all the above mentioned areas do.
Obviously quality over quantity is my view, but quantity quality is a good thing.
Onward and Upward.
astroboy.

 

[Peter 14.7]

Agree ... I was actually considering adding another option to the poll "How many IPs would you like to have ?" ... answer: "Enough"

(I thought it might be a bit too obtuse for some)

The Perfect Answer.
A lot of thinkers say we are here on this earth to find our reason and that once money is OK aka "enough" we seek enlightenment.

I remember on holiday traveling down the north east coast of Tassie , south of St Helens. Pristine beach beckoned to the left so we pulled over to a side track to the top of a dune. It was around 10:30am and no-one for miles.

Then over the dune I came across an old Hilux with a late 20ish Guy who was sipping a coffee as he read the morning paper. His Dog was running along the beach.

All 50m from the waves.

I apologised for my intrusion but he answered “No Worries Mate" as my wife patted his dog. So we sat on another dune, not far away and enjoyed local cheese we had bought the day before and a cup of tea.

Him, his dog, my wife and I were the only people for miles as we looked east and pondered that the nearest people facing us were in New Zealand.

After the break we went back to the car I said thanks and got talking. I asked what he did. He said he was a chippie (carpenter) from Melbourne. Had sold up in Melbourne and bought that valley over there. Building a shack for wife and me.

I left thinking, regardless of what the world thinks of wealth, power, prestige or status, this guy had made it.

This guy has enough.

Peter 147

 

[Peter 14.7]

Very true Peter,
But what is a quality Ip portfolio ? Is it 6 relatively expensive properties in Sydney ?
Is it 12-15 of the same in Brisbane with thought to future growth ?
Is it a smattering of properties in beachside suburbs with a high boomer potential ?
Hmmm who has a crystal ball, and what of the close, 'somewhat regionals', such as Ipswich, Sunstone would applaud that area.
Ips scattered in B.F.E. dont interest me, all the above mentioned areas do.
Obviously quality over quantity is my view, but quantity quality is a good thing.
Onward and Upward.
astroboy.

Hi Astroboy

Maybee the answer is the one that suits you.

For example:

For you being Qld, the Qld market makes sense.
For someone who likes travel, then one in every state.
And perhaps for me, a few in Sydney Inner City and few in Vic near the family.

What I do know is opportunities are everywhere and those who always think the grass is greener on the over side, often never get around to sowing any seeds.

Peter 147

PS are you watching the new adventures of Astroboy? I was more of a Kimba the White Lion and Speed Racer Fan.

 

[beech]

I voted 11-20,

A mix of maybe 8 units i build to keep(+ cashflow)
4 inner Sydney
4 inner Melb
4 inner Bris

Should be sufficient to take % CG to live very comfortably

 

[kissfan]

Hi all
I think the answer "enough" rings true. When I first started buying I/P's, I did it because I knew it was the right thing to do, but didn't really have an objective. A few years on and now I realize that we (wife and myself) can have an early retirement due to the property portfolio. So my answer would be enough properties to support us but also give me a choice of diversification i.e live off some rents as well as use some equity in other areas such as managed funds and/or maybe a cashbond.
Regards
Marty

 

[geoffw]

Obviously 1 solitary IP in say Darling Point worth $1M is equal to 10 x $100k houses in Outback NSW.

In fact it worth more as 10 homes equals ten rates, ten insurances, ten loans, ten agent commissions, 10 repairs allowances and ten min land tax charges.

Where one equal home equals one set of rates (albeit higher value but lower overall charge per value) 1 set or repairs, one loan, and one agent which assuming a healthy profit for minimal work would be happy to manage for a lower commission.

Perhaps it's worth less- depending on where in the outback. It could well have long vacancies (Peter Spann's Pott's Point mansion was vacant for some months after he moved to Brisbane). Yield would probably be a lot lower. And capital growth would be much more subject to economic cycles (the newly rich high fliers will be the first to feel the pinch)

 

[Peter 14.7]

Perhaps it's worth less- depending on where in the outback. It could well have long vacancies (Peter Spann's Pott's Point mansion was vacant for some months after he moved to Brisbane). Yield would probably be a lot lower. And capital growth would be much more subject to economic cycles (the newly rich high fliers will be the first to feel the pinch)

I agree that a $1M IP may be harder to rent. Overall Best to stick to the main rental market such as medium or lower as per Jan Somers advice.

Peter 147

 

[geoffw]

I agree that a $1M IP may be harder to rent. Overall Best to stick to the main rental market such as medium or lower as per Jan Somers advice.

I'd be happy to go above median- not too far above, and not too far below, unless it's priced lower than true value.

Peter Spann (again, sorry) suggested some years ago that some of the downturns in the mean prices shown in some of the major centres were caused mainly by big downturns in high value properties skewing the overall mean prices- and that the graph would have been at least level if these were excluded.

 

[Sim]

Nothing is hard to rent - provided you are willing to meet the market.

The only reason places in a city stay vacant is that someone is asking more rent than people are willing to pay.

Peter Spann made a point of saying that he doesn't get too worried about yield - it helps, but his focus is mainly on growth.

 

[geoffw]

Peter Spann made a point of saying that he doesn't get too worried about yield - it helps, but his focus is mainly on growth.

Yes, but I also mentioned capital growth- which is the most important part for me. I'd rather have a plodder growing steadily than a hig flier subject to big drops as well as big rises.

Although yield is not nearly as important to me, I would have to be having some good cashflow to support an expensive heavily NG property.

 

[gregss]

From the cashflow perspective, it is simply desired income / average net rent per IP.

Yes that is a bit simplistic as you would also be getting CG and average net rent should be going up each year - i.e. a moving target. However, I think it works well as a goal because you are likely to end up with too much. And you can always give away the excess (if you can't think of anything else to do with it).

Greg

 

[handyandy]

Hi All

In some way it is a very limiting question, which if answered and you believe that answer, will limit your growth.

I would hope that everybody anwered 50+ as this answer says 'the sky's the limit', not because everybody necessarily wants 50+ properties but whybuild a limit in your mind.

It was through a similar limiting believe that I closed my eyes to 2 deals which would have grossed me $2.7mil. (selling now). The deal would have been no problem to finance.

At that point in time I had successfully replaced income up to an arbitrary level and was sitting back. Two buildings were offered, prior to listing, from overseas vendors basically a one horse race. But because of my limiting believes at that time I passed on these 2 and as the market jumped right after that no further property oppurtunities have presented themselves.

Some of the limiting thoughts at that time were

met an arbitrary income level
did not like the buildings
was thinking cash flow rather than capital gain
the wife was anti them
level of debt

So the bottom line is you have enough limiting thoughts/ actions don't load yourself down with more.