Our 1st equity Mil.

[on the move]

I dabbled in property in 98, did not get serious until 02. Not sure if I am getting anywhere but acquired 2 million debt in the process. To those enlightened forumites who achieved million in equity, would you be kind enough to share your strategy :
a. this one million is it purely from IPs capital growth, not include PPOR, super, or other investments.
b. do you buy -ve geared or cashflow +ve properties
c. are the properties in oz capital, regional, or small towns.
d. how long did it take to achieve the one million equity
e. how much -ve or +ve is your portfolio
Most of the success stories I read in the API are by acquiring cashflow +ve properties. I have couple -ve geared properties they are burning a big hole in my pocket but the growth are not as good as the +ve ones.
thanks in advance

 

[The Y-man]

. To those enlightened forumites who achieved million in equity, would you be kind enough to share your strategy .....

OTM,

I guess the problem with putting up targets such as "a million in equity" can be very deceiving - because for someone who might be earning $500k a year, it might be relatively easy to do. I would prefer to think it in terms of "X times your combined annual work (or self employment) income" if that makes sense.

Simply because I reckon it's just as hard (harder?) for someone earning $40k pa to get to $400k net worth as it is for someone eanring $100k pa to get to $1mill.


Cheers,

The Y-man

 

[Pete]

I dabbled in property in 98, did not get serious until 02. Not sure if I am getting anywhere but acquired 2 million debt in the process. To those enlightened forumites who achieved million in equity, would you be kind enough to share your strategy :
a. this one million is it purely from IPs capital growth, not include PPOR, super, or other investments.
b. do you buy -ve geared or cashflow +ve properties
c. are the properties in oz capital, regional, or small towns.
d. how long did it take to achieve the one million equity
e. how much -ve or +ve is your portfolio
Most of the success stories I read in the API are by acquiring cashflow +ve properties. I have couple -ve geared properties they are burning a big hole in my pocket but the growth are not as good as the +ve ones.
thanks in advance

From my perspective,
a. Yes
b. -ve geared, to date. Planning not to be in future
c. Mostly coastal just south of Perth
d. first mil <4 years. After that, much quicker
e. very -ve before tax, OK after tax

On the last point, in recent years in WA the capital growth has been >20% per annum for 5 years in plenty of places. The annual holding costs are smallish amounts but the portfolio capital growth has been staggering. It has surely created millions in equity for many, many property investors.

 

[gooram]

We have a buy and hold strategy... although right now we are just "holding" and not buying... not buying property anyway.

To date we have bought well located capital city properites purely for CG, using negative gearing. Want to continue doing this which means we need to generate income elsewhere to fund the shortfall. This will be through income producing shares, income producing business.

Due to Perth reaching it's peak right now, we feel it's a good time to consolidate, pay off debt, focus on the new business and educate ourselves in other investments, possibly other property markets too.

Other projects are a renovation, and perhaps a joint venture development in 12 months time.

Finally - we haven't quite reached 1 mill equity position, but we are very close. Expect to be there in ~12 months time. We bought our first place in 2002 so that would be 5 years.

As has already been mentioned, 4 years ago 1 million was worth twice as much as it is now, and then some... in the property market anyway.

 

[kph]

a. this one million is it purely from IPs capital growth, not include PPOR, super, or other investments.
b. do you buy -ve geared or cashflow +ve properties
c. are the properties in oz capital, regional, or small towns.
d. how long did it take to achieve the one million equity
e. how much -ve or +ve is your portfolio
Most of the success stories I read in the API are by acquiring cashflow +ve properties. I have couple -ve geared properties they are burning a big hole in my pocket but the growth are not as good as the +ve ones.
thanks in advance

a. Purely from property other than PPOR but not just ips.
b. Both, but primarily vacant land, then add new building plus land subdivision.
c. Both, but only in WA & QLD. Capital cities and mining towns. No small towns.
d. Started from scratch in 2001 and started taking it seriously in 2004. Was too busy on the ground to count up the equity, but when I did it had sailed well past the magic mil. After the novelty wore off I realised I was the same person I was before, just a bit more assured and calm about things I guess.
e. Aim to have it neutral, but lots of it is of a capital nature waiting to translate into capital profits. My challenge is to get this property monster to stop hemoraging expenses, and flow cash instead. Should take another 6 to 12 months at the outside.

KEvin

 

[asdf]

Most newbies who have made the million mark would've cracked it in the recent bullish WA run. Keeping or maintaining it will be the key or springboarding to their next investments. I would imagine most would be bleeding on the cash outflow front. Resi IPs simply cost too much to hold, especially when you run 100% loans on new IPs. You're lucky to get 3% NET returns on capital growth investments so how you'd service 7.5% interest, I never know. I reckon if I lose my job, I'd be on the streets begging just to pay the pesky shire rates and water bills.

 

[Rixter]

Most newbies who have made the million mark would've cracked it in the recent bullish WA run. Keeping or maintaining it will be the key or springboarding to their next investments. I would imagine most would be bleeding on the cash outflow front. Resi IPs simply cost too much to hold, especially when you run 100% loans on new IPs. You're lucky to get 3% NET returns on capital growth investments so how you'd service 7.5% interest, I never know.

The smart ones bought in before the boom and before the newbies jumped on board.

By the time it hit the papers and other media commentary the smarter ones have their asset bases set in place moved on elsewhere.

 

[on the move]

Guys, thank you very much for sharing you strategy. Much appreciated. Too bad I do not have IPs in WA !

 

[Pete]

Guys, thank you very much for sharing you strategy. Much appreciated. Too bad I do not have IPs in WA !

If you do not participate in this WA boom it doesn't matter. Invest when you can and repeat. Time & sensible investing will see to your success.

 

[gooram]

The smart ones bought in before the boom and before the newbies jumped on board.

By the time it hit the papers and commentary the smarter ones have their asset bases set in place moved on elsewhere.

Little bit presumptuous...

Are you saying that you predicted the start of the WA boom, and that you've also predicted the end of the boom?

I would say alot of investors were buying when they could afford to, as they will continue to do, rather than stocking up for the 100 year boom. Aren't you an advocate for time in the market rather than timing the market?

There was 45% growth in the last year alone, if you "jumped on board" just 12 months ago you'd be pretty happy right now.

 

[Rixter]

Are you saying that you predicted the start of the WA boom, and that you've also predicted the end of the boom?

I dont think anyone can crystal ball and predict the start and end to a boom. Can you?

The smarter ones find it a lot easier to analyse when its off the boil and do the opposite to what the majority are doing at that time. What do you think?

I would say alot of investors were buying when they could afford to, as they will continue to do, rather than stocking up for the 100 year boom. Aren't you an advocate for time in the market rather than timing the market?

I agree an investor should be purchasing when & where they can afford to. It would be financial suicide not to.

Yes I am an advocate for time in the market but thats just one of many strategies - not the be all and end all to property investing.

There was 45% growth in the last year alone, if you "jumped on board" just 12 months ago you'd be pretty happy right now.

Yes I agree a nice return indeed but as asdf stated not too healthy from the level of cashflow hemorage.

No where as nice as a healthy 200%-300% CG return ....... plus higher rental yield - wouldnt't you agree?

 

[gooram]

The smarter ones find it a lot easier to analyse when its off the boil and do the opposite to what the majority are doing at that time. What do you think?

Not necessarily, again, this time last year the market was HOT, investors were buying up, and the market still gained 45% in 12 months. If you walked away from Perth and decided to buy in Melbourne or Brisbane instead you would be kicking yourself now.
I realise that there are markets within markets, so I suppose there are always opportunities whatever the median prices indicate, so this is not always true.

Yes I agree a nice return indeed but as asdf stated not too healthy from the level of cashflow hemorage.

No where as nice as a healthy 200%-300% CG return ....... plus higher rental yield - wouldnt't you agree?

Can't really argue with that now can I But what timeframe are we talking about? You have to compare apples with apples.

I agree that cashflow in such a market is shocking, however if you can afford the negative cashflow, it is well worth it for the capital gain. A 300k house that grows in value by 140k and costs you 10k pa to hold is an exceptional investment for your first buy.

There's all sorts of investment strategies and investment stages. Some are focused on cashflow right now, some are focused on growth. If you don't have the cashflow to support negative gearing then obviously buying and holding in Perth right over the last few years is not for you.

I guess I took offense to you separating newbies from "smart" investors. Some new investors would have jumped on board last year because of good research and not because today tonight told them that Perth was booming.
Of course you can't discount years of experience, but you also can't assume that everyone buying in Perth at the moment doesn't know what they're doing and simply jumping on the bandwagon because they got a payrise and have some magical equity.

 

[Rixter]

If you walked away from Perth and decided to buy in Melbourne or Brisbane instead you would be kicking yourself now.

What if you walked away with your Perth asset base holdings still in place?

Can't really argue with that now can I But what timeframe are we talking about?

When property was off the boil.

A 300k house that grows in value by 140k and costs you 10k pa to hold is an exceptional investment for your first buy.

I agree, not just for your first one either. Sure beats working for it!

I guess I took offense to you separating newbies from "smart" investors. Some new investors would have jumped on board last year because of good research and not because today tonight told them that Perth was booming.
Of course you can't discount years of experience, but you also can't assume that everyone buying in Perth at the moment doesn't know what they're doing and simply jumping on the bandwagon because they got a payrise and have some magical equity.

No need to take offense. It was a generalist statement, not directed towards anyone personally.

 

[agent007]

what happens once you've spent the extra borrowings on loan repayments and the property hasn't appreciated in value?
Jamie.

Some years ago someone I don't remember asked me a similar question. At that time my answer was and still is:

If the worse worse worse happens and I loose it all and become penyless and broke... but hang on, Isn't that our current position???. So, nothing would have changed. The difference is that I'd had fun all along the way and you don't

Cheers,
James.

 

[kph]

Guys, thank you very much for sharing you strategy. Much appreciated. Too bad I do not have IPs in WA !

I'm still buying in WA

Like a junkie hooked on smack ......I just can't help myself....

Kevin

 

[gooram]

I'm still buying in WA

Like a junkie on smack ......I just can't help myself....

Kevin

Are you buying regional or metro?

I'd be interested in the details of your latest hit if you care to share.

 

[Pete]

I'm still buying in WA

Like a junkie on smack ......I just can't help myself....

Kevin

I'm a bit the same, Kev. My latest "hit", gooram, is a place in my favoured coastal strip north of Mandurah. Just out REIWA figures (to end of September 2006) show a five year compounding capital growth rate on Golden Bay houses of 24.2% and adjacent Singleton at 25.5%. And I still think they are good value!

Beachfront houses are still selling for well under M$1. For example a recent place at Golden Bay was asking 799k and the highest price ever for a GB place seems to be M$1 in the recent quarter. These suburbs are within an hour of Perth & soon to have a suburban rail connection to town - due 2007. Mandurah is forecast to be Australia's highest growth region in percentage terms for housing in Australia in the next generation. The WA economy is super strong and looks like staying that way for some time.

Can you imagine buying beachfront property within an hour of Brisbane, Sydney or Melbourne for under M$1? For under M$2? For under M$3?

That is why I took another hit.

regards,

 

[kph]

Are you buying regional or metro?

I'd be interested in the details of your latest hit if you care to share.

Hi Goo...
Buying in regional as well as metro.
Karratha is a no brainer for the next 5 yrs ( which compliments the space between my ears..)
A
ttended a closed Landcorp info session on Monday. Three big miners were there detailing their housing requirements asap. They require 200 each min. Total housing requirement in the Pilbara is 1000 needed yesterday.

I don't look at the place in terms of a mining boom. Its an ongoing expansion phase that will take 10+ yrs to complete.

Offer on a 3 bed apartment in Central Perth today.
Its a lifestyle/convenience purchase...not a speccy flipper.
Completion due late 2008/2009.

Depending on who you speak to, the market has either died in the b*m or is still red hot. Confusing times.....

KEvin

 

[kph]

I'm a bit the same, Kev. My latest "hit", gooram, is a place in my favoured coastal strip north of Mandurah. Just out REIWA figures (to end of September 2006) show a five year compounding capital growth rate on Golden Bay houses of 24.2% and adjacent Singleton at 25.5%. And I still think they are good value!

Beachfront houses are still selling for well under M$1. For example a recent place at Golden Bay was asking 799k and the highest price ever for a GB place seems to be M$1 in the recent quarter. These suburbs are within an hour of Perth & soon to have a suburban rail connection to town - due 2007. Mandurah is forecast to be Australia's highest growth region in percentage terms for housing in Australia in the next generation. The WA economy is super strong and looks like staying that way for some time.

Can you imagine buying beachfront property within an hour of Brisbane, Sydney or Melbourne for under M$1? For under M$2? For under M$3?

That is why I took another hit.

regards,

Good on you Pete,
Good to see someone putting their money where their mouth is.
I reckon places like Singleton/Golden Bay will come into their own once there is a bit more infrastructure in place,the train line is completed, and Amarillo gets off the ground.
Its the closest coastal point from Amarillo.
We're going to find out soon anyway, as one of ours in Singleton is due for handover before Christmas.

We are also taking a good hard look at that inglobo parcel which is good for 142 lots down that way.

Congratulations on your purchase !!

KEvin

 

[redwing]

Too Expensive for me in Perth nowadays and poor yields to boot..