Journey so far - $75k salary (average), 5 years, 10 properties

[sash]

Yes...managing FEAR and GREED are the same coin just on different sides...

I see all these people jumping in seeing everyone who made money...this requires patience and planning. Jumping without thinking now in the Sydney market is dangerous.

In anycase who am I to give advice.. I just bought another one to add to my collection. That is now 3 this year...yet I still end of with an LVR between 30-40%....

I like what I do....but a time will come to say good bye and play even more with property.

The property portfolio will hit over 30 in the next 2-3 years if all goes well. I am a fan of cash flow to pay for lifestyle. I have hit about a 100k CF+...but it is not stable as it has ups and downs...I need to hit 150-180k net to have $120k per year. That is probably only 2-5 years out.

One of my mentors early in life posed that question? Why do people lose their money, their fortune, their businesses, etc...? Then he said for two reasons, FEAR or GREED.
So a fine balance is required in the wealth building journey, where the equity creation and protection would be the key (having lower LVRs and money buffers is vital there!).
Yes, I agree Sash, so for me I prefer to play a bit of Monopoly game, where I bought anything first (limited knowledge but wished to accumulate), then I sold and adjusted few (the few lemons which did not perform well say in the 7 years - doing it now), then bought few premium (put on few hotels in better areas with renovations).
I find I can deal with paperwork better, have less IPs now but more worthwhile, adding value, or being able to redevelop, or just help family members to invest, or add more by being really picky!
Also, I prefer to deal with less insurance claims, not that I had any (fingers crossed) as mentioned by the thread person above (I admire these young guns being able to deal with so many challenges and such high LVRs).
But you are right, I am so risk adverse, as my LVRs makes me sleep comfortably at night...., perhaps it's just me, I could never bring myself to such exposure?
I agree with your calculations, they are quite close to our situation, yet we still wish to continue to work (well, we work for profit not a job), why retire, if we like what we do, right????
Have been approved just recently for $millions to draw down, yet I am unsure at this stage how I will progress? I think I will start one child off (has a deposit, works and studies so may loan some amount). In addition, I am unsure whether to invest further into SMSF, as the uncertainty remains there, so perhaps just cleaning and adding to portfolio, will be the way to go?
Having IPs in number of entities, with lower LVRs, permits those choices now!
I know I need to revisit the estate planning of things, so thus so many things to do, right, the more we have the more work there is (I am not complaining actually I realise how fortunate I am having those choices in life!).
So I just hope those young ones add the finance and equity creation and time to their strategy, as capital protection should be the key (as you pointed out many have millions invested with huge LVRs so I hope they have buffers in place and can sleep well at night???).

 

[nucence]

Great post/thread Simon, Thanks for sharing your story!

 

[MIW]

In anycase who am I to give advice.. I just bought another one to add to my collection. That is now 3 this year...yet I still end of with an LVR between 30-40%....

I like what I do....but a time will come to say good bye and play even more with property.

The property portfolio will hit over 30 in the next 2-3 years if all goes well. I am a fan of cash flow to pay for lifestyle. I have hit about a 100k CF+...but it is not stable as it has ups and downs...I need to hit 150-180k net to have $120k per year. That is probably only 2-5 years out.

I like what I do too! And you right in retirement we plan to do some more maintenance down the track so still keeping with it.....
I do not have that many IPs but I am already generating around $125K net, in addition allowing 30% for maintenance each year and being on around 26% LVR, however some IPs are in SMSF so no access to it yet.
However, spouse will be able to TTR next year, so allowing to build more into SMSF. If the laws stay the way they are the tax benefits in SMSF after 60 will permit more cash-flow, as large portion will then become tax free.
Sash, it seems you are continuing increasing your portfolio, but I am unsure whether to increase the SMSF further (SMSF LVR is around 20%, have been given preapproval of $1mill in further funds)?
In additional individually have been given a substantial amount too, so for now I am just resting with running the business and concentrating on EOTY matters.
I am unsure why your CF is unstable, because of frequent tenant changes, and the variance is so much greater because of more IPs?
I like long contracts, some I have for 2 years even, so my variance is much smaller in fluctuations....
So would you build SMSF even further, unknowing whether they will make changes there????

 

[sash]

I don't have a SMSF...as I said previously...I don't trust the gubbermint....they will keep changing the rules. As I am 12 years from access super at 60...a lot of changes could happen. I am already contributing 30k pa into super...so will let it do its own thing.

I terms of income what I mean is it will vary from month to month. Some months I might get 8.5k net...other months 6k...and some months even 12k net. I have a lot of cash which I can stabilise this variance....but will keep going.

The other option is to sell 30% my portfolio and have 120-180k net easily.

I like what I do too! And you right in retirement we plan to do some more maintenance down the track so still keeping with it.....
I do not have that many IPs but I am already generating around $125K net, in addition allowing 30% for maintenance each year and being on around 26% LVR, however some IPs are in SMSF so no access to it yet.
However, spouse will be able to TTR next year, so allowing to build more into SMSF. If the laws stay the way they are the tax benefits in SMSF after 60 will permit more cash-flow, as large portion will then become tax free.
Sash, it seems you are continuing increasing your portfolio, but I am unsure whether to increase the SMSF further (SMSF LVR is around 20%, have been given preapproval of $1mill in further funds)?
In additional individually have been given a substantial amount too, so for now I am just resting with running the business and concentrating on EOTY matters.
I am unsure why your CF is unstable, because of frequent tenant changes, and the variance is so much greater because of more IPs?
I like long contracts, some I have for 2 years even, so my variance is much smaller in fluctuations....
So would you build SMSF even further, unknowing whether they will make changes there????

 

[MIW]

I don't have a SMSF...as I said previously...I don't trust the gubbermint....they will keep changing the rules. As I am 12 years from access super at 60...a lot of changes could happen. I am already contributing 30k pa into super...so will let it do its own thing.

I terms of income what I mean is it will vary from month to month. Some months I might get 8.5k net...other months 6k...and some months even 12k net. I have a lot of cash which I can stabilise this variance....but will keep going.

The other option is to sell 30% my portfolio and have 120-180k net easily.

I wouldn't sell unless you wish to exit as Rixter????
At those LVRs the portfolio maintains itself, you can even add, then before quitting (if that's what you will wish to do) pull out lots to do as you like...
You are doing fine so you will know what to do.
We have had our SMSF since 1995 and have been fortunate by earning on one stock 30 times it's value, so we have purchased sometime ago, before borrowing was permitted 3 IP for cash, since then, doubling has occurred, rents increased, and now added more IPs, being 20%LVR. So naturally, we have that option, so as I see it why not utilise it anyway, as my approach is, worry when it happens, but when I have no control over it why should I lose health and sleep over it!
In addition why pay 15% tax generating 6 digit income pa, let's borrow a little and grow the asset base instead, why not?
I do not like to mention my age but I am close to yours so I too have a few years to go but hubby can utilise it soon....
I suppose being close to that age makes sense to utilise the portfolio there, but you are right I have my hesitations about the constant changes to SMSF rules....

 

[Tyrones]

Hey Simon,

Awesome post and thanks for sharing an inspiring story.

Just curious, what are your goals for the next 5 years? Reason why I ask is what happens once you reach this current stage in your property journey. I'm still a newbie and trying to set my goals. I didn't think it would be that hard, and I'm getting inspiration from others.

Thanks

-Tyrone

 

[Simon L]

Hi Tyrones,

It's hard for me to tell you my exact goals for the next 5 years as I personally work better on having short term goals and long term milestones instead. Its great to say "I'll have 30 properties, $10mil portfolio in 5 years and retired with $100k net passive income" but the reality is markets, the economy, personal situations/mindset, opportunities etc change constantly which may mean I can end up with 100 properties within that same timeframe.

That said my next milestone is having the choice of not needing to work which I will achieve in the next 5 years (not retire though as I do enjoy working so probably follow some property related business/venture)

Personally, drive has been more important than actual goals - how badly do you want to quit your job, or become a full-time developer or live in a debt free waterfront house etc and how passionate are you about property as a vehicle to get you there?

My goal until 31 Dec 2015 is to have at least another 2 properties under my belt which I am on track to achieve assuming I can work around the current APRA changes and there are no major economic/market shifts. As mentioned earlier, I may also sell the 2 Sydney properties this year depending on how markets are going.

I am also getting married in November so I am up for a busy 6 months!

Hey Simon,

Awesome post and thanks for sharing an inspiring story.

Just curious, what are your goals for the next 5 years? Reason why I ask is what happens once you reach this current stage in your property journey. I'm still a newbie and trying to set my goals. I didn't think it would be that hard, and I'm getting inspiration from others.

Thanks

-Tyrone