How much debt do you carry?

S

simbi99

A pretty hard question I think?
How much debt do you carry? How much debt is too much debt?
I guess it varies as to where you are in the buy/sell process. If you have just built and are waiting to sell developments $1mil+ Debt isn't too far off the mark.

Anyway where do you draw the line?
 
Around 1.5m in debt.
No drawing of lines, if its all being paid for by people other than myself, then why would I put a lid on it?
 
The only debt that I carry, is that on my own home, which isn't very much at all.

My tenants carry all of my investment debt and then some, so the amount is irrelevant.
 
simbi99 said:
A pretty hard question I think?
How much debt do you carry? How much debt is too much debt?
I guess it varies as to where you are in the buy/sell process. If you have just built and are waiting to sell developments $1mil+ Debt isn't too far off the mark.

Anyway where do you draw the line?
Click to expand...

About 3 million. Rents help to pay most if not all expenses. Can't put a figure on it as long as debt can be serviced.

If you are finding it hard to sell your developments and you have debt of $1 million, this would be a concern
 
Nth Brisbanite said:
About 3 million. Rents help to pay most if not all expenses. Can't put a figure on it as long as debt can be serviced.

If you are finding it hard to sell your developments and you have debt of $1 million, this would be a concern
Click to expand...

My thoughts exactly if the debt can be serviced without trouble you shouldn't have a lid, just wanted to know if it was the same thought process all round
 
About 8 mil in loans currently.
But have a bit in the PPOR offset at the moment.
Have never had a 2nd thought about debt levels as I have a high tolerance towards risk.
 
I like a quote from Noel Whittaker I think it was something like: it depends on the strength of your assets, the strength of your income and the strength of your nerve
Debt by itself is almost irrelevant without context
 
hugh72 said:
I like a quote from Noel Whittaker I think it was something like: it depends on the strength of your assets, the strength of your income and the strength of your nerve
Debt by itself is almost irrelevant without context
Click to expand...

Exactly.... and LVR vs Asset Base.....Kudos to you:)
 
Only $1.3m at the moment--the least amount I'll have for a very long time.

There's no limit to I what I'd be comfortable with for the reasons others have mentioned.
 
In terms of magnitude, we have 10 times more property debt now than we did as first homebuyers starting with the one property 12 years ago.

It was much more stressful back then than now, we were struggling to move forward financially with just the one mortgage!

I agree with the above posters, once the mindset is changed, the actual $$$ figure of debt is irrelevant if it is all part of "the plan" to accumulate a large asset base for the long term.

Without "the plan" though it is probably very daunting to most.
 
hugh72 said:
I like a quote from Noel Whittaker I think it was something like: it depends on the strength of your assets, the strength of your income and the strength of your nerve
Debt by itself is almost irrelevant without context
Click to expand...

Great point! I guess it all depends on your attitude towards debt and how much risk you can take on. If the strength of your assists have weight you can send the chickens to roast Amy day you like
 
simbi99 said:
How much debt do you carry?
Click to expand...
The property portfolio is just under the million dollar mark with almost $400,000 ready to go for the next development. It is very irrelevant to me though. LVR, borrowing capacity and cashflow mean things to me. Total debt means nothing.

simbi99 said:
Anyway where do you draw the line?
Click to expand...
I'm not risk averse with regard to total debt, I'm risk averse with regard to LVR. I don't like the LVR of the property portfolio to go much over 70%. That is very conservative for many investors but it suits my risk profile and I sleep easy at night :cool:

That is something I need to keep an eye on though. Last year I realised my LVR had dropped below 60%. Not good if I want my portfolio to work for me. Hence the new loan for the next development.
 
perthguy said:
The property portfolio is just under the million dollar mark with almost $400,000 ready to go for the next development. It is very irrelevant to me though. LVR, borrowing capacity and cashflow mean things to me. Total debt means nothing.


I'm not risk averse with regard to total debt, I'm risk averse with regard to LVR. I don't like the LVR of the property portfolio to go much over 70%. That is very conservative for many investors but it suits my risk profile and I sleep easy at night :cool:

That is something I need to keep an eye on though. Last year I realised my LVR had dropped below 60%. Not good if I want my portfolio to work for me. Hence the new loan for the next development.
Click to expand...

That's pretty fair enough! I guess as long as your debt is not effected your borrowing capacity it's not too much.
However at one stage or another, you hve to sell out of debt? I guess that point is different for everyone. But you certainly don't want to be 2 million in debt at 50
 
simbi99 said:
However at one stage or another, you hve to sell out of debt? I guess that point is different for everyone. But you certainly don't want to be 2 million in debt at 50
Click to expand...
I'm not that far away from 50 ;)

I buy development sites, so they all need to be built out and held for some time (my strategy) before I would consider selling out. As long as the rent covers the repayments, it would not bother me to be 2 or 3 million in debt at 50. Cashflow and LVR trump debt with the strategy I am using. As long as my developed properties are positively geared and I can cover if a couple become vacant at the same time, I don't have a debt limit at any age. Of course if I needed to sell to pay down some debt, I would.
 
simbi99 said:
However at one stage or another, you hve to sell out of debt? I guess that point is different for everyone. But you certainly don't want to be 2 million in debt at 50
Click to expand...

Why?
To me age does not come into the equation. if it makes sense to have debt working for you at 25, why not at 50? Why not at 75?
 
simbi99 said:
Great point! I guess it all depends on your attitude towards debt and how much risk you can take on. If the strength of your assists have weight you can send the chickens to roast Amy day you like
Click to expand...

I am not planning on reducing my current debt level at age 50 (12 years away)

I reckon we are close to the end of our own accumulation phase and we are at an LVR of approx 81% currently.

With a theoretical 5% CG growth rate over the next 12 years that would see our LVR reduce to approx 45%.

Then at this point based on rent and cash saved should be free to do as we please. It's a much longer timeframe than most on here, but I am realistic about my wife's expected lifestyle and how many $$$$ per year that actually requires :)

My plan is to then open up lines of credit to the max accross the portfolio before giving up the PAYG servicability as a BIG buffer.
 
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