Journey so far - $75k salary (average), 5 years, 10 properties
- Thread starter Simon L
- Start date
Do you think things would have been different if you took the blacktown ip and granny flay out of the equation. Did that make a big impact to increasing cash flow and equity pull? Could you still have bought do many in Logan without that buy and granny build? Just wondering how that would have affected you not having that step
Super post Simon - pleasure meeting you at the last SS meet too. Kudos!
Amazing work, dedication and insight in all of the above.
Interested in your risk management strategies, a few were touched.
As a finance person, I'm a little bit cautious about 'more properties = less risk' argument, regardless of the cash flow associated with the product.
I can definitely see the logic for tenancy related risks, but it doesn't encapsulate the 'portfolio' risk element from having a larger debt exposure (which is where the bigger risks and potentially disastrous risks lie).
I assume your lending for IPs3-10 is largely with Macq, NAB, AMP, Adelaide, etc. Given the changes that have happened of late, it may be very difficult for you to extend I/O terms if they fall due now. It will also be difficult to release equity too, at least with these lenders. Given the aggressive accumulation strategy, i assume LMI would have been a good friend to you.
Hypothetically speaking, if lending market conditions remain like this for the next 2-3 years, 2-2.5m in debt rolling over to P/I. That'd be a $4,500 increase in monthly expenses, which is your entire post tax income. That ends up being close to your entire yearly post tax salary, and if conditions continued for another 2-3 years, it would impact the other 1-2ish mill in your portfolio...
Of course its not a certain chance of happening, but it may be a risk worth noting for future aggressive investors and should be partly incorporated into planning elements.
At the same time as noting the above, with so much equity built up over 5 years, you'll have plenty of options and 'get outs' if this did happen, and be well up as a result of your dedication, hard work and passion!
Amazing work, dedication and insight in all of the above.
Interested in your risk management strategies, a few were touched.
As a finance person, I'm a little bit cautious about 'more properties = less risk' argument, regardless of the cash flow associated with the product.
I can definitely see the logic for tenancy related risks, but it doesn't encapsulate the 'portfolio' risk element from having a larger debt exposure (which is where the bigger risks and potentially disastrous risks lie).
I assume your lending for IPs3-10 is largely with Macq, NAB, AMP, Adelaide, etc. Given the changes that have happened of late, it may be very difficult for you to extend I/O terms if they fall due now. It will also be difficult to release equity too, at least with these lenders. Given the aggressive accumulation strategy, i assume LMI would have been a good friend to you.
Hypothetically speaking, if lending market conditions remain like this for the next 2-3 years, 2-2.5m in debt rolling over to P/I. That'd be a $4,500 increase in monthly expenses, which is your entire post tax income. That ends up being close to your entire yearly post tax salary, and if conditions continued for another 2-3 years, it would impact the other 1-2ish mill in your portfolio...
Of course its not a certain chance of happening, but it may be a risk worth noting for future aggressive investors and should be partly incorporated into planning elements.
At the same time as noting the above, with so much equity built up over 5 years, you'll have plenty of options and 'get outs' if this did happen, and be well up as a result of your dedication, hard work and passion!
Fantastic stuff! You have a great mentality!
Do you see the recent restrictions on investor lending impacting on your strategy moving forward?
Do you see the recent restrictions on investor lending impacting on your strategy moving forward?
Well done on getting out there - great results on all of your properties.
How have you determined your CMV ?
With the most recent purchase you are showing 16% growth straight up.
With the Logan purchases in 2013 you are showing 50% in 2 years.
On some of the earlier purchases you approach 100% growth in 4 years.
Are you attributing this to your purchasing prowess , a renovation, market growth ?
They are fantastic figures if you can actually sell for that.
Given buying and selling costs I always feel "underwater" with purchases at the start and have always looked at an early reno to feel secure that I could get my money back if needed.
Spot on ....Simon has done excellent work on acquiring the portfolio...he has done things very fast.
As you (Redom) point out....keeping the portfolio...is important.
Based on on what information gleaned:
1. The current total debts is 2.8m odd on 4.5% I/O that is $126k in repayments. Stress testing at a IR of 7.5% PI till increase the debt level to 224k plus other expenses assuming 5.5k per property that will take you to 290k in expenses. You rent is 200k pa plus 6ok from income after tax. If this situation eventuated how will you cover a 60k (30k expense increase + 30k for livin)g per annum short fall?
2. Do you feel that investing in just one area Logan is a good idea? When assessing finance risk it may go against you?
3. How much of a buffer do you have given the storm clouds in the horizon.
Don't want to take the wind from your sails...but I too have large portfolio...over 24 properties and counting....but you need to put risk mitigation procedures in place. ...you may have already done that...if you have a 200k banked...then you are sweet...
Regards
Shashi
As you (Redom) point out....keeping the portfolio...is important.
Based on on what information gleaned:
1. The current total debts is 2.8m odd on 4.5% I/O that is $126k in repayments. Stress testing at a IR of 7.5% PI till increase the debt level to 224k plus other expenses assuming 5.5k per property that will take you to 290k in expenses. You rent is 200k pa plus 6ok from income after tax. If this situation eventuated how will you cover a 60k (30k expense increase + 30k for livin)g per annum short fall?
2. Do you feel that investing in just one area Logan is a good idea? When assessing finance risk it may go against you?
3. How much of a buffer do you have given the storm clouds in the horizon.
Don't want to take the wind from your sails...but I too have large portfolio...over 24 properties and counting....but you need to put risk mitigation procedures in place. ...you may have already done that...if you have a 200k banked...then you are sweet...
Regards
Shashi
Super post Simon - pleasure meeting you at the last SS meet too. Kudos!
Amazing work, dedication and insight in all of the above.
Interested in your risk management strategies, a few were touched.
As a finance person, I'm a little bit cautious about 'more properties = less risk' argument, regardless of the cash flow associated with the product.
I can definitely see the logic for tenancy related risks, but it doesn't encapsulate the 'portfolio' risk element from having a larger debt exposure (which is where the bigger risks and potentially disastrous risks lie).
I assume your lending for IPs3-10 is largely with Macq, NAB, AMP, Adelaide, etc. Given the changes that have happened of late, it may be very difficult for you to extend I/O terms if they fall due now. It will also be difficult to release equity too, at least with these lenders. Given the aggressive accumulation strategy, i assume LMI would have been a good friend to you.
Hypothetically speaking, if lending market conditions remain like this for the next 2-3 years, 2-2.5m in debt rolling over to P/I. That'd be a $4,500 increase in monthly expenses, which is your entire post tax income. That ends up being close to your entire yearly post tax salary, and if conditions continued for another 2-3 years, it would impact the other 1-2ish mill in your portfolio...
Of course its not a certain chance of happening, but it may be a risk worth noting for future aggressive investors and should be partly incorporated into planning elements.
At the same time as noting the above, with so much equity built up over 5 years, you'll have plenty of options and 'get outs' if this did happen, and be well up as a result of your dedication, hard work and passion!
Not at this stage as prices have really moved on the peninsula
Hi Mugen,
various BDM/Account management roles over the years in a number of industries.
Hi Bob,
Last time I pulled equity over a year ago from Blacktown was when it was valued at $600k from memory so still a bit left in that. I'd like to keep it that way as I may look at selling it in the short term and its currently a good little earner cashflow wise.
All of my properties are looking after themselves financially except for the newer ones playing catchup after some minor renos.
I think I may have had more funds to purchase in Sydney or Logan without Blacktown as a bit of money went into renovating the existing house and the granny flat build. Glad I did it though.
Hi Redom,
Great meeting you that night as well.
You raise some excellent points and I do have a fairly decent cash buffer in place in case things go sideways. I have most of my current debt with WBC and CBA and have just touched on Mac and NAB.
Some of my purchases have been 20% but most have been 10 - 12% initial deposits.
I am also not planning to hold on to properties forever like some suggest and will sell once I feel the market is ripe to do so, but would agree that getting in at low prices has been a good buffer for mitigating *some* risk.
I will investigate where my I/O terms are at present and impacts/risk associated with each lender.
Thanks
Great meeting you that night as well.
You raise some excellent points and I do have a fairly decent cash buffer in place in case things go sideways. I have most of my current debt with WBC and CBA and have just touched on Mac and NAB.
Some of my purchases have been 20% but most have been 10 - 12% initial deposits.
I am also not planning to hold on to properties forever like some suggest and will sell once I feel the market is ripe to do so, but would agree that getting in at low prices has been a good buffer for mitigating *some* risk.
I will investigate where my I/O terms are at present and impacts/risk associated with each lender.
Thanks
Super post Simon - pleasure meeting you at the last SS meet too. Kudos!
Amazing work, dedication and insight in all of the above.
Interested in your risk management strategies, a few were touched.
As a finance person, I'm a little bit cautious about 'more properties = less risk' argument, regardless of the cash flow associated with the product.
I can definitely see the logic for tenancy related risks, but it doesn't encapsulate the 'portfolio' risk element from having a larger debt exposure (which is where the bigger risks and potentially disastrous risks lie).
I assume your lending for IPs3-10 is largely with Macq, NAB, AMP, Adelaide, etc. Given the changes that have happened of late, it may be very difficult for you to extend I/O terms if they fall due now. It will also be difficult to release equity too, at least with these lenders. Given the aggressive accumulation strategy, i assume LMI would have been a good friend to you.
Hypothetically speaking, if lending market conditions remain like this for the next 2-3 years, 2-2.5m in debt rolling over to P/I. That'd be a $4,500 increase in monthly expenses, which is your entire post tax income. That ends up being close to your entire yearly post tax salary, and if conditions continued for another 2-3 years, it would impact the other 1-2ish mill in your portfolio...
Of course its not a certain chance of happening, but it may be a risk worth noting for future aggressive investors and should be partly incorporated into planning elements.
At the same time as noting the above, with so much equity built up over 5 years, you'll have plenty of options and 'get outs' if this did happen, and be well up as a result of your dedication, hard work and passion!
Yes it is definitely something I am considering at the moment and will impact me strategically in the near future. As for now, the best I can do is sort out the next 90 days through preapprovals and go from there as well as keeping a close eye on what each bank is doing.
I am choosing not to strip as much equity as I can from my portfolio as I feel I'm stepping into unchartered waters with the banks at this stage.
Hi Tonibell,
CMV has been calculated through a combo of most recent comparables through Pricefinder and what the banks have recently valued them at.
For many of my purchases, they have been bought significantly cheaper than what they could have sold for had they been on the market or have been left on the market for very long.
For example, 6 of my purchases have been mortgagees, 1 was a divorce court order, and the most recent purchase was the vendor requiring a quick sale to fund a separate purchase already under contract.
Apart from my Sydney properties, I have provided very little in terms of renovations - at most $3k on each property to bring them up to a rentable standard so buying BMV and market growth has contributed most to CMV.
CMV has been calculated through a combo of most recent comparables through Pricefinder and what the banks have recently valued them at.
For many of my purchases, they have been bought significantly cheaper than what they could have sold for had they been on the market or have been left on the market for very long.
For example, 6 of my purchases have been mortgagees, 1 was a divorce court order, and the most recent purchase was the vendor requiring a quick sale to fund a separate purchase already under contract.
Apart from my Sydney properties, I have provided very little in terms of renovations - at most $3k on each property to bring them up to a rentable standard so buying BMV and market growth has contributed most to CMV.
Hi befuddled,
I came close to maxing the $600k QLD threshold in my own name (allowing room for land growth) and moved onto corporate trusts from there
