How much have you made?

[MichaelW]

Hi All,

Its good to take stock every now and again. Like others here we've done it the hard way with our share of stuff ups along the way, but we seem to have crafted together a decent start now.

Our units we built in Sydney now value over $1M each so we have about $1.2M equity in there now. They're cash flow positive so we've decided to just set and forget. Rents keep going up each renew.

Our new PPOR build in Brisbane seems to have gone really well too. The only debt is $300K against the land purchase, we built it out of cash flow and the proceeds from the sale of our former Sydney PPOR, and it just valued around $1.3M on completion so another $1M in there.

We've found our sweet spot "building in" equity. Although the recent little run in Sydney has certainly helped with our $3M in assets going up nicely with no work on the tools from me! That's a nice change!!

So, what's that, two and a bit in equity. Not big numbers like quite a few others here, but its a start. My wife reckons we've got one more PPOR build in us. I'm not so sure...

Cheers,
Michael

 

[rizzle]

Where's the $0 option Ace

Bought a PPOR about six months ago, the market hasn't done anything since.

 

[rizzle]

I think that we have actually made equity growth of over $4m in the last year or so.

*jealousy intensifies*

Well done handyandy, I am incredibly jealous/motivated

 

[Ace in the Hole]

Where's the $0 option Ace

Bought a PPOR about six months ago, the market hasn't done anything since.

I believe Less than 250k covers that option champ.
Where'd you buy?

 

[MTR]

Hi All,

Its good to take stock every now and again. Like others here we've done it the hard way with our share of stuff ups along the way, but we seem to have crafted together a decent start now.

Our units we built in Sydney now value over $1M each so we have about $1.2M equity in there now. They're cash flow positive so we've decided to just set and forget. Rents keep going up each renew.

Our new PPOR build in Brisbane seems to have gone really well too. The only debt is $300K against the land purchase, we built it out of cash flow and the proceeds from the sale of our former Sydney PPOR, and it just valued around $1.3M on completion so another $1M in there.

We've found our sweet spot "building in" equity. Although the recent little run in Sydney has certainly helped with our $3M in assets going up nicely with no work on the tools from me! That's a nice change!!

So, what's that, two and a bit in equity. Not big numbers like quite a few others here, but its a start. My wife reckons we've got one more PPOR build in us. I'm not so sure...

Cheers,
Michael

Hi Michael
I really enjoyed reading your thread on Mona Vale, good work.
Where to from here? Would you consider another development project, just curious, and now that you live in Brissie will you play in this market?

MTR

 

[pieman]

Hi All,


Our units we built in Sydney now value over $1M each so we have about $1.2M equity in there now. They're cash flow positive so we've decided to just set and forget. Rents keep going up each renew.

nicely done Michael as I remember when you started and there was a doom and gloom site that was dying for you to fail. They thought you were all **** and wind, so kudos to you for declaring it all (and the issues along the way)

 

[rizzle]

I believe Less than 250k covers that option champ.
Where'd you buy?

Yeah but I need to know there's others out there who have also made specifically $0 from property so far haha. I bought in Moonee Ponds.

 

[Ace in the Hole]

Yeah but I need to know there's others out there who have also made specifically $0 from property so far haha. I bought in Moonee Ponds.

Don't worry about it, I'm sure there's been quite a few who have snapped up OTP properties in recent times, still to complete, who may facing some decent losses if and when completion date comes around.

 

[MichaelW]

Hi Michael
I really enjoyed reading your thread on Mona Vale, good work.
Where to from here? Would you consider another development project, just curious, and now that you live in Brissie will you play in this market?

MTR

Hi MTR,

Yes, I think I'll probably start doing something else in Brisbane now. As I said in that same post, we've just finished our new PPOR in Brisbane. Total cost on that build including the land was around $800K and its just valued at $1.3M so we seem to be doing something right.

We'll pay down that remaining $300K non-deductible debt for a little while then look to take out an LOC against the new PPOR or use the $400K in LOCs against Mona Vale to buy a site up here and go again.

We might just scale back and try doing reno to flip and see how we go. We've got a fair bit of equity to play with now and an eye for opportunity as well as really good skills on the tools and a good team of trades. Even a 20% gain on a buy/reno/flip would be a great outcome. We might hold one or two of the good ones along the way, but its a good way to generate a good income.

Cheers,
Michael

 

[MichaelW]

nicely done Michael as I remember when you started and there was a doom and gloom site that was dying for you to fail. They thought you were all **** and wind, so kudos to you for declaring it all (and the issues along the way)

Thanks pieman, yes there was a lot of negativity about my amateur development at the time. Every man and his dog was telling me what an idiot I was and how I was going to lose everything and how there was no margin in it etc etc.

Ah well, its worked out pretty well in the end. Cash flow neutral and over $1M in equity now. Was bloody hard work but worth it in the end.

Thanks for the cheer up.

Cheers,
Michael

 

[Moneyman_85]

are you coming to the syd meet up Michael? nice units BTW, drive past them a bit

 

[MichaelW]

are you coming to the syd meet up Michael? nice units BTW, drive past them a bit

Would love to but I'm a Brisbane boy now...

 

[euro73]

Too kind!
Definitely will hit you up later for some more in depth questions as I get charged a fair bit for income tax as well, not as high of as you but still heart breaking.

Setting aside all discussions about growth for the moment, the tax side of NRAS can be beneficial to different people in different ways. It's really all about squeezing all the juice out of your particular lemon , should that be how you wish to employ NRAS. Everyone has a different lemon, so just worry about what your particular circumstances allow, , because thats the best you can hope to achieve.

For example, if you accept broadly that a vanilla 400K(ish) NRAS property typically produces @ 18-20K of deductible losses ( 8-10K from pre tax cash flow loss and 10K depreciation) , and also typically produces @ 10K CF+ against a MTR of 45%, @ 8.5K against a MTR of 37%, @ 7.5K against a MTR of 32.5% and @ 4.5K against a MTR of 19% , this is how it can be viewed.

100K salary. 4 x NRAS properties would create @ 72-80K of deductible losses. ( if each property creates 18-20K of deductions) This would reduce the 100K salary to 20-28K taxable, resulting in a tax bill of ... well, less than $1900 if we use 28K as our worst case scenario. That is based on the tax free threshold being $18,200, so a taxable income of 28K means tax would be payable on $9,800 @ 19% , or $1862. Of course, the first NRAS property would return you @ 8.5K, because its neg gearing is effected at 37% MTR. The 2nd and 3rd would be effected at 32.5%, meaning @ 7.5K each ( x 2) and the 4th would return @ 4.5K So the bottom line would be. 100K earned from your PAYG salary. An additional 28K earned after tax from NRAS credits, and a total tax bill of less than $1900. Should you purchase a 5th NRAS? mmmm.. might be squeezing a little more juice out of the lemon than you need to. It would not be a bad decision, but 4 would be about the maximum I would recommend.

200K. 9 x NRAS = @ 162 - 180K of deductions. The first 1 will return @ 10K CF+ . The next 5 ( neg gearing is effected at 37% MTR) make you @ 8.5K CF+ tax free, the next 2 ( neg gearing is effected @ 32.5% MTR ) make you @ 7.5K CF+ tax free, and the 9th ( neg gearing @ 19% ) makes you @ 4.5K CF+ tax free. That equates to an income of 200K, plus an additional @72K tax free... and you'll pay very little or no tax. You may well wish to push for 10 in this example, but 9 is probably about right.

Keep in mind though, the tax side of NRAS is but one way to view the NRAS prism. Available equity and borrowing capacity are just as important, as is property selection. Wanting to purchase X number of NRAS properties so you can minimise your tax and maximise your cash flow and then aggressively pay down debt is wonderful in theory, but wanting something isnt the same as being able to do something. Budget is all important. Running out and trying to purchase 10 x 600K NRAS properties may not be readily achievable, for example, but 10 x 350K NRAS may be possible, based on your particular equity and borrowing capabilities.

Working out a budget is the key first step to any multiple property investment plan, whether you're considering NRAS, non NRAS, DHA, Granny Flats, Off The Plan, buy and flip, or anything else.... Without some sense of a budget, you should never start shopping