How to grow a multi-million dollar portfolio on an average income

Discussion in 'Property Finance' started by Redom, 4th Mar, 2015.

  1. glowplug

    glowplug Member

    Joined:
    9th Jan, 2015
    Messages:
    8
    Location:
    melbourne
    What a fantastic read full of informationI I read a lot on these forums and want to start out on the investment property venture however I don't believe I'm ready just yet the wait continues. Thanks
     
  2. james start

    james start Member

    Joined:
    10th Jul, 2011
    Messages:
    140
    Location:
    Galaxy 5
    So what is regarded as an average income? 70k?
     
  3. euro73

    euro73 Member

    Joined:
    13th Oct, 2009
    Messages:
    795
    Location:
    Sydney, NSW
    Someone taught you well, grasshopper!
     
    Redom likes this.
  4. Redom

    Redom Mortgage Broker

    Joined:
    1st Jul, 2014
    Messages:
    1,324
    Location:
    Sydney (West) and Canberra
    Yep - can go well into the millions with a much lower income too, using the same principles outlined.
     
  5. paisneil

    paisneil Member

    Joined:
    11th Jul, 2005
    Messages:
    100
    Media:
    6
    Location:
    Melbourne
    I am certainly doomed then

    Got NAB (Homeside) and Macquarie for 3 IPS and Westpac PPOR

    No hope for me
     
  6. Jamie M

    Jamie M Mortgage Broker - Oz Wide

    Joined:
    20th Jul, 2009
    Messages:
    4,085
    Location:
    Canberra and Sydney
    Nah - not at all.

    There are quite a few other lenders similar to Mac and homeside that can be used up later on too.

    From my experience - investors generally run out of equity/deposits before hitting a servicing wall.

    Cheers

    Jamie
     
  7. Rixter

    Rixter $uper Investor (Retired)

    Joined:
    15th Mar, 2001
    Messages:
    9,335
    Media:
    12
    Location:
    Highton Vic.
    Property investing / Portfolio building is not about property - its about finance!

    Property is merely what banks take hold over as security for loaning you the finance in the first instance.

    Structuring one self correctly so as to be in a position of being able to continually access it when ever you want is vital - whether it be for investment/business and/or lifestyle.

    We built a multi-$million property portfolio spread across Australia on less than the average wage starting out in 2000 and with pay rises over the years worked up to the average, to finally exit the rat race last year.

    Living proof it can be done.

    Kudo's to you redom for your post. I tried to give kudo's but I was told I needed to spread the love around elsewhere. :(
     
    Last edited: 5th Mar, 2015
    Redom likes this.
  8. sash

    sash Member

    Joined:
    10th Feb, 2003
    Messages:
    3,581
    Location:
    North Shore, Sydney
    Noice....add to this:

    4. Diversify your portfolio not only suburbs in a city but also spread it across the country. Banks look at the risk attached to your portfolio when you get past 10...they don't want you holding all 10 in Mt Duie!

    5. Balance the portfolio with yield and capital growth. A couple of years ago I started a thread on a the balanced approach...whilst yield is the petrol in the tank....the capital growth is the nitro which will help you build your portfolio quickly.

    6. Be greedy when others are running from a market...and be fearful when others are greedy! Current Sydney investors take note!

    7. Once you hit over 10 properties....look at buying newer properties...plan for the day when you get 100k in net income from properties. The depreciation from these will save you a fortune and help build further deposits.

    8. Aim to have LOTS of cash in offsets...revalue and put into an offset. This will ensure that you navigate any issues comfortably.

    9. Finally there is no reason someone starting today cannot get up to 20-30 properties in 15-20 years in capital cities. Buying on the back of Thargminda..will just give you headaches....

     
    Redom and Rixter like this.
  9. Nem

    Nem Member

    Joined:
    25th Aug, 2014
    Messages:
    181
    Location:
    Sydney, NSW
    Great post Redom, thank you!!!
     
  10. datto

    datto Member

    Joined:
    24th Dec, 2010
    Messages:
    8,806
    Media:
    8
    Location:
    sydney, westie - middle class bogan (MCB)
    Sounds great but, yeah sorry about the but, what happens when there is no property boom and prices stagnate or fall. You then got to ride it out, could take years.
     
    oc1 likes this.
  11. oc1

    oc1 Developer

    Joined:
    31st May, 2005
    Messages:
    1,827
    Location:
    .
    You then change the name of this thread to "how to grow a multi million dollar portfolio of debt". ;)
     
  12. datto

    datto Member

    Joined:
    24th Dec, 2010
    Messages:
    8,806
    Media:
    8
    Location:
    sydney, westie - middle class bogan (MCB)
    Whoa....oc1.....I suppose if there is a cash buffer then some of that cash could be used in equities or other income producing activities but it will be gut wrenching.
     
  13. Jamie M

    Jamie M Mortgage Broker - Oz Wide

    Joined:
    20th Jul, 2009
    Messages:
    4,085
    Location:
    Canberra and Sydney
    Rate hikes are another thing to consider too.

    Lenders are basing their serviceability calculations on rates which are at an all time low.

    For that reason - it's extremely important to assess your own household budget and work out what's actually affordable for you (based on a higher rate than what's on offer today) - rather than what AMP, Nab, Mac and the like are willing to lend.

    It could be quite stressful having a lowish income, a mill or two in debt and seeing rates start to rise.

    For that reason - a cash buffer is quite important too.
     
  14. Rixter

    Rixter $uper Investor (Retired)

    Joined:
    15th Mar, 2001
    Messages:
    9,335
    Media:
    12
    Location:
    Highton Vic.
    Yep, like any asset class for investment one should always be working towards maximising cash flows and minimising risks where & when ever possible.
     
  15. Rixter

    Rixter $uper Investor (Retired)

    Joined:
    15th Mar, 2001
    Messages:
    9,335
    Media:
    12
    Location:
    Highton Vic.
    By doing nothing, you're riding it out for more years to attain mediocrity any way.
     
  16. Michael_X

    Michael_X Member

    Joined:
    10th Jun, 2013
    Messages:
    372
    Location:
    Sydney, NSW
    Great post Redom! Forwarded this to a few friends already :)

    Good to break this down, a real eye opener for investors starting out. It's amazing what the possibilities are with the right loan structure.
     
  17. Mick C

    Mick C Mortgage Broker

    Joined:
    26th Jan, 2011
    Messages:
    2,048
    Location:
    Sydney, NSW
    Kudos Redom!

    Great post buddy, will def help a lot of investors understand the importance of loan structuring :)
     
    Redom likes this.
  18. Redom

    Redom Mortgage Broker

    Joined:
    1st Jul, 2014
    Messages:
    1,324
    Location:
    Sydney (West) and Canberra
    Not at all mate, there's plenty of other ways to work it.

    As I mentioned in the post, over time as investors grow their portfolio, they work themselves to your lenders anyway.

    Perhaps get your broker to check your servicing with Westpac other middle tier lenders for your next deals - if it doesn't work, try and spread between some of the others that take actual repayments. With a few properties up your sleeve, you may still have those options available to you. If possible, i'd leave some firepower with Macquarie to be used down the track.

    Cheers,
    Redom
     
  19. Redom

    Redom Mortgage Broker

    Joined:
    1st Jul, 2014
    Messages:
    1,324
    Location:
    Sydney (West) and Canberra
    Haha quality line oc1.
     
  20. Redom

    Redom Mortgage Broker

    Joined:
    1st Jul, 2014
    Messages:
    1,324
    Location:
    Sydney (West) and Canberra
    Great advice Rixter, completely agree with your first line (as its how I view my own investing).

    Is there a Rixter interview available to read for the SS community? :) ;)
     
    oc1 likes this.