Is that possible? - please explain

[doxa5]

From time to time, two commercial TV stations (both 6.30pm) show us few single ladys with two or more kids on $35k p.a, as a very successfull property investors. She (They) started investing 2 years ago and already have 9 investment propertys (8, if she was little bit lazy).

Is that possible? How they service all mortgages , expenses, blah, blah,blah.
Where from is the money for next deposit?
Please explain !!!!!!!

Thanks - Doxa

 

[BayView]

The key factor is WHEN did they do it?

I know that a few people were able to pull it off back in the early '90's when you could buy properties in regional areas for well under $100k, with growth, with rent returns around 10% or more. If you also live in the properties and do the renos yourself it is all the better.

I guess it could have been done in the last 2 years, but you'd have to wonder about the areas long term, and the LVR's that they currently are supporting.

 

[FHB]

I guess if they were all positively geared, and the investor had access to funds for the deposit and transfer costs, etc, or was able to use 105% financing and still maintain positive cashflow.... but as LAA says, growth may not be great long term.....

 

[Bazza]

Hi Doxa,

Please read Brenda Irwin's story - 20 IP's in 5 years http://www.somersoft.com/forums/showthread.php?t=8756

I believe it is all about finding (or creating) CF+ properties (which are rare these days).

Cheers,

Bazza

 

[tubs]

Over the last 5 years, buying in mining towns with very +ve geared properties would have achieved this result.

 

[wish-ga]

"Next deposit?" They don't need to save a deposit for each property! Cool stuff huh?

Equity in 1st property, usually own home. This means it is worth more than you paid & you have paid off a chunk. The bank sees you are worth $50k on paper. They don't expect a deposit. You just need to show you have the cashflow to service loan beyond what renting it covers (maintain property/insure etc).

So each additional property does not need a chunk of money down. And THAT is the reason they say the 1st is the hardest... and the shock to the system of living on 3 min noodles.

{welcome to the site}

 

[DavidMc]

I find many of these stories are possible as they've started with a fully owned PPOR worth $500k or $600k.

Borrow 80% and buy a handful of places using 5% deposits keeping some funds leftover to service the cashflow for the next 15 years.

 

[our obsession]

Doxa5:

Is that possible? How they service all mortgages , expenses, blah, blah,blah.
Where from is the money for next deposit?
Please explain !!!!!!!

We built our first IP (regional city; Bendigo) in 2002. My workplace had just closed down, we had some money saved and one income-about the $25,000 p/yr.

Within 12 months we had enough equity in that IP to cream off more money to build again; (well, it was fun, and no one said we couldn't do it again).

So we did, 12 months later the first IP had enough equity again to buy an established IP in a small rural town, positive cashflow straight away)..

Hadn't even touched the good equity in the 2nd IP we had built (Bendigo again-'cos we like the place). I had sorta bungled a little and locked in a fixed 5 yr loan....thought then we better find a clever mortgage broker and get some information..

Did that, got an absolute ripping mortgage broker, (Kristine from Melbourne), learnt a few things and asked a lot of questions and off we went shopping for a couple more...(courtesy of our initial IP equity still!)

Got a good lot of equity in the 2nd IP we built, still to play with... plus the little old IP we bought in a one horse town, plus equity in the other 2 IP's bought in another regional city....so off we go shopping/building again.

We try to use as much equity as possible acquired in the IP's we already have...to fund the next IP costs and deposits (if there is any deposit), they are all costing us buggar all to hold apart from an odd hot water service or airconditioner-but consider that an investment in an investment...

....and so it goes on for us...very much still in acquiring/building of assets stage but the thing is you can do anything you set your mind to...I think our last year assessable? spell? wage and salary income was $37,000 ish.

We are enjoying ourselves immensely, life is very very good to us, and us to it!

Forgive me about the roughshod sort of rundown on figures, numbers don't do much for me, nor I for mathematics , I only found out in the last few days I don't have six fingers on one hand, who knew!!?

PS We do not have a PPOR, we rent an old farmhouse for $20 p/w...so one day we will need to buy one I guess? The Mister and I haven't decided ...

 

[skater]

Like the others have said, yes it is possible, even easy. The key is the timeframe that they bought the properties in. There is little in the way of cf+ properties around at the moment, however only a few years ago they were a plenty. This is a few that we have bought. Don't hold them all now, but they are real figures.

1) 3 bed brick home SW Sydney $90k, Rent $185pw

2) 3 bed concrete block home Tassie $28k, Rent $105pw

3) 3 bed brick home, Tassie $59k, Rent $135pw

4) 3 bed ex-housing dept, NSW Regional $25k, Rent $135pw

5) 4 bed brick home, NSW Regional $90k, Rent $210pw

6) block of 4, 2 bed units, NSW Regional $225k, Rent $520pw

7) Small 3 bed ex-housing dept, Vic Regional $67k, Rent $135pw

 

[GIDDO]

From time to time, two commercial TV stations (both 6.30pm) show us few single ladys with two or more kids on $35k p.a, as a very successfull property investors. She (They) started investing 2 years ago and already have 9 investment propertys (8, if she was little bit lazy).
.........
Thanks - Doxa

Others have explained how it could be done in theory.

I have often noticed however that with these stories, the currrent affairs shows don't often mention how much equity the investors have in their portfolios.

It is easy to have $1m worth of properties and only have maybe $80.000 of equity.

These means that these single mother investors have positioned themselves to make money; but have not atually made any yet (and may not either).

Cheers

 

[firstmillion]

Like the others have said, yes it is possible, even easy. The key is the timeframe that they bought the properties in. There is little in the way of cf+ properties around at the moment, however only a few years ago they were a plenty. This is a few that we have bought. Don't hold them all now, but they are real figures.

1) 3 bed brick home SW Sydney $90k, Rent $185pw

2) 3 bed concrete block home Tassie $28k, Rent $105pw

3) 3 bed brick home, Tassie $59k, Rent $135pw

4) 3 bed ex-housing dept, NSW Regional $25k, Rent $135pw

5) 4 bed brick home, NSW Regional $90k, Rent $210pw

6) block of 4, 2 bed units, NSW Regional $225k, Rent $520pw

7) Small 3 bed ex-housing dept, Vic Regional $67k, Rent $135pw

This looks like lot of cash flow +ve properties. How hv these done in terms of capital growth ?

cheers

 

[skater]

This looks like lot of cash flow +ve properties. How hv these done in terms of capital growth ?

cheers

Brilliant!

1) Now valued at around $240k

2) Sold for $45k, should have held it for another year as it doubled in that time.

3) Sold for $157k

4) Sold for $65k

5) Now valued at around $130k

6) Now valued at around $300k

7) Now valued at around $140k

 

[firstmillion]

Brilliant!

1) Now valued at around $240k

2) Sold for $45k, should have held it for another year as it doubled in that time.

3) Sold for $157k

4) Sold for $65k

5) Now valued at around $130k

6) Now valued at around $300k

7) Now valued at around $140k

Too brilliant...what are the approx timelines in which u hv acieved so much of growth ? Did u do any renos or extensions ?

 

[skater]

Did u do any renos or extensions ?

Heaps, but none on those properties. The first one was purchased in 1996? We didn't do anything for a few years, then we got serious around 2000-2001. Can't remember exact dates.