IP portfolio that performs regardless of market movements!

Thought I would drag this thread out....the fundamentals are just as important in a booming market...albeit a couple of changes:

1. I now prefer to buy only in capital cities. Stay out of Sydney though. ;)
2. 6% yield is plenty to be neutrally or positively geared with current IR.
3. The balanced approach works...on my way to $10m with..LVR up a bit to 43%!

Hope this helps.....

Hi All,

With all the doom and gloom around, I thought I would share a way to structure your portfolio which will perform whether the market is falling/flat or booming!

As I have said previously, this is part of my risk mitigation strategy of buying properties with balanced growth and cash flow and tightening expenses.

My portfolio has grow from about $1m to about $5m in about 6 years based on this strategy.

The premise of this strategy is based on the following:
1. Buy in 5 major cities or larger regional (i.e. over 100k in the greater
catchment) metropolitan areas
2. Buy with minimum of 7% yield with a view of increasing this to 9-10% in
2-3 years
3. Buy in areas with infrastructure improvements within 3-5 years
4. Diversify your portfolio around the country - to reduce risk as well as
reduce any land tax liabilities
5. Balance between gorwth and CF - this the only optimum way to continue
to grow your portfolio and your wealth in my opinion without significant risk

Having said that..some of your investments may not always getting growth or cashflow. Unfortunately, this is happening across 2 properties in Qld and 1 in Melbourne (though the CG has been fantastic). But this only represents less than 20% of my portfolio...but my overall portfolio is still CF.

So now down to the nitty gritty of my portfolio:

1. My existing portfolio is geared at an LVR of 37% (would like this to be
34%) this is despite me acquiring 3 properties this year for about 800k
2. The overall portfolio is returning 5.1%
3. The CF+ position once fully let (have 2 vacant due to reno) is around 3k
per month
4. Equity has grown 420% over 6 years

My portfolio is structured in way it will perform whether the market is falling/flat (as it is now) or booming!

How is this possible? Well easy to see property performs in a booming market...so no explanation required. As for falling/stable market...see below...

I believe my portfolio will still perform in falling/flat market as rents and interests drop.

My current IR repayments are about 126k per year. The rents have been stable or slightly dropping in the last year.

Given that IR are about to drop (fixed rates have already dropped)...if my rates drop to an average of 6%....I will say about 30k in interest repayments. Further more I have started increasing rents by 5% which will bring about 7k in additional rent.

So my 36k positve income will become 72k per annum if additional rent and interest reductions are included. If I take 4k for additional increase in costs I am at 68k ...not bad!

Welcome any comments about my assumptions. This theory was tested in the GFC and is now on track to perform in the way....
 
I just read all the posts from the beginning and only half way thru realized it was written 2011! :)
Wow, very inspirational post!!

Thank you very much for sharing your story and for update!!! Well done!!
 
Thought I would drag this thread out....the fundamentals are just as important in a booming market...albeit a couple of changes:

1. I now prefer to buy only in capital cities. Stay out of Sydney though. ;)
2. 6% yield is plenty to be neutrally or positively geared with current IR.
3. The balanced approach works...on my way to $10m with..LVR up a bit to 43%!

Hope this helps.....


Next question...... when are you going to retire?? more ME time, or to do what you love doing, collecting houses:p

What can I say, a strategy that was sound, consistent and achieved amazing results, with interest rates at all time lows your cash flow should be working just fine at the moment. Anyway, good for you. Brilliant work.

MTR:)
 
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Well done Sash.....a good sound strategy which has worked the rewards for you.

For anyone starting out here is a classic example of a successful blue print.

I tried to give you kudo's sash but it says I must spread the love around before I can again.
 
Thanks NEM, Rixter, MTR

I am working on moving to the next step....the issue is I don't mind my job..as I will be 48 this year. In any case I see myself definitely pulling the plug within 5 years.

By then the portfolio will be well and trully well over $10-15m gross (with market adjustments for Sydney)....even if equity grows only 50%...I will not be able to spend this and will live comfortably. The real bonus is my super is growing...and I hope to be on target to be at 750-$1m by 60. This should give me an income stream of 35-50k per annum on top of my passive property income.

I plan to fix some of places on low rates.

The real issue is to ensure I don't get bored.



Next question...... when are you going to retire?? more ME time, or to do what you love doing, collecting houses:p

What can I say, a strategy that was sound, consistent and achieved amazing results, with interest rates at all time lows your cash flow should be working just fine at the moment. Anyway, good for you. Brilliant work.

MTR:)

Well done Sash.....a good sound strategy which has worked the rewards for you.

For anyone starting out here is a classic example of a successful blue print.

I tried to give you kudo's sash but it says I must spread the love around before I can again.
 
Posted in 2015 it would have been impressive. But the fact that this dates back to 2011... I'd hate to see what a monster of a portfolio you have in the current market.

BLOODY WELL DONE!


I see back in 2011 you were aggressively targeting niche areas with great CF, I was wondering if you were ever stung by any of those regional areas, and for those budding investors that are hoping to emulate your success, would you advise them against that strategy?

Love it that you are so receptive of everyone's questions, thanks again!
 
JameZ.....don't mind talking about it all.

I had regrets as to whether the properties I bought from 2009 to 2012 would come good. ...I bought in North Albury, Deception Bay, Margate, Woy Woy, Tenambit, Watanobbi, Barrack Heights would make money! Believe me I had some doubts.....and some regrets. But time heals all...5 years late it is a different story

Fast foward Woy Woy, Tenambit (near Maitland), Barrack Heights have had significant increases most were bought sub 250k. Even North Albury has done 40%...this was bought for 122k....

Deception Bay, Margate did nothing till late last year...they are now moving fast price wise.

Looking back the $5m gross in 2011 is on track to double by the end of this year or early next year. 50% of will be capital growth and the other 50% via further acquisitions.

Whilst my rent roll pales in comparison to others....the plan is to have it hit over 500k in the next 2 years. It already gives me a six figure positive income...but is based on current rates...this can change on a dime if the rates move up. :rolleyes: C'est la vive.

Posted in 2015 it would have been impressive. But the fact that this dates back to 2011... I'd hate to see what a monster of a portfolio you have in the current market.

BLOODY WELL DONE!


I see back in 2011 you were aggressively targeting niche areas with great CF, I was wondering if you were ever stung by any of those regional areas, and for those budding investors that are hoping to emulate your success, would you advise them against that strategy?

Love it that you are so receptive of everyone's questions, thanks again!
 
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Very true. Time does indeed heal all, especially in property! A stern reminder that there is never a bad time to start investing, the sooner the better!



JameZ.....don't mind talking about it all.

I had regrets as to whether the properties I bought from 2009 to 2012 would come good. ...I bought in North Albury, Deception Bay, Margate, Woy Woy, Tenambit, Watanobbi, Barrack Heights would make money! Believe me I had some doubts.....and some regrets. But time heals all...5 years late it is a different story.

I think at the rate you're going, you are the only one chasing the dream, everyone else is just chasing you! :D

"Chase the dream...not the competition!".
 
We'll done on your achievements sash

I am currently looking at tenambit myself trying to get in before the
New hospital !!

Their is massive money being poured into maitland ATM
 
Thought I would drag this thread out....the fundamentals are just as important in a booming market...albeit a couple of changes:

1. I now prefer to buy only in capital cities. Stay out of Sydney though. ;)
2. 6% yield is plenty to be neutrally or positively geared with current IR.
3. The balanced approach works...on my way to $10m with..LVR up a bit to 43%!

Hope this helps.....

Sash - You are an inspiration! What you have achieved is amazing.

May I ask where would you look now for good yield plus capital growth (without developing / renovating)?
 
... use yield as the initial filter and then research what potential for the suburb is. Affordability and amenities are key as well as infrastructure changes.[/B]

Looks like you got it right, sash. There are a couple of very successful investors here who use this approach. Very inspirational - thanks for sharing it with us.
 
As i said in the where to buy in Brisbane post...investors are buying inner city houses. Think out side of the square and target anything 3-7 klms from Brisbane CBD for less than 350k. Go for 2 bedrooms which are at least 60sqm, have car space, and balcony.

I bought 2 places last year one was a 58sqm 2 brm unit in Annerley and 90 sqm unit on Moorooka for 263k and 260k.

Sash - You are an inspiration! What you have achieved is amazing.

May I ask where would you look now for good yield plus capital growth (without developing / renovating)?


No worries WattleIdo
Looks like you got it right, sash. There are a couple of very successful investors here who use this approach. Very inspirational - thanks for sharing it with us.
 
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