What does it really take to earn $100k PA Passive Income

[see_change]

but it will take longer, we're here for a good time , not a long time

huge stock market crashes might only once every 20 years or longer. Alot of today's investors might be pushing up daisies when the next one hits.

Not sure about you . My dad's just had his 89th birthday . Mum was a cradle snatcher , she's 91 . They have started slowing down physically a bit in the last 2-3 years , but mentally they're both sharp as a tack . Mum's been on the internet for over 20 years

They've just moved from their house to a 3 bed room unit . I told dad last year , he shouldn't be going up on the roof to clean the gutters in his late 80's and he was complaining about a sore back when he relaid the brick side path ac couple of years ago ?.

They've had a good time and a long time .

I plan to do the same .

I expect that I will see at least one if not two major economic reversals while i'm still investing . Anyone who doesn't plan for those is foolish. We've been through two since we bought our first property 25 years ago.

We have several friends who have lived for the moment , and they will not be able to maintain their current lifestyle when they retire .

Cliff

 

[ellejay]

Not sure about you . My dad's just had his 89th birthday . Mum was a cradle snatcher , she's 91 . They have started slowing down physically a bit in the last 2-3 years , but mentally they're both sharp as a tack . Mum's been on the internet for over 20 years
They've just moved from their house to a 3 bed room unit . I told dad last year , he shouldn't be going up on the roof to clean the gutters in his late 80's and he was complaining about a sore back when he relaid the brick side path ac couple of years ago ?.
They've had a good time and a long time .
I plan to do the same .
I expect that I will see at least one if not two major economic reversals while i'm still investing . Anyone who doesn't plan for those is foolish. We've been through two since we bought our first property 25 years ago.
We have several friends who have lived for the moment , and they will not be able to maintain their current lifestyle when they retire .

Cliff

Yes living well beyond our 70s would mean we'd only have super to live on, having spent the rest. Unless we buy some more properties...

 

[HomePage]

Those who lost on a diverse base of shares during the GFC only did so because they sold them. During the GFC, dividend yields only took a minor hit and then came back strong. People focus too much on a dropping asset value and not the income it produces (or will produce), get scared and sell. You have to be braver than that.

 

[skater]

But, seriously I reckon it would have taken skater the better part of 20 years to achieve what she said. Not criticising but I think shares may have done the job quicker. Again I stress I am not criticising.

Hehe, don't know anything about shares, so I'll stick with something I know.

No, not 20 years! We were in the USA when 9/11 happened. We had just closed the doors on our Business & we took the kids on a holiday with what little funds were left over. That was 2001! When we got back, we moved into a rental in Sydney. We DID have a home that was to be our PPOR at that stage, and one IP, both with a high LVR, but Hubby got a great job further away, so we left the PPOR tenanted. Never did move into it!

So, we really started again at the tail end of 2001. Unlike China & some others, we have never looked for high value property with low yields. We've got a bit here & a bit there combined with the Western Sydney stock & some Campbelltown stock. Not one property has had a yield of less than 7% on purchase price, (except for a couple of recent purchases) and many have been 10% or more. So...even with 100% finance on purchase price, they were cf+, add in CG and rental increases & all I can say is

We did listen to noise about trusts at one stage & bought a few into a trust. Big mistake! One that we're still paying for today. We sold two out of it back to our own names as the holding costs were killing us. Now it only loses a small amount & we have one due to hit the market on 15th November that will pay us back a goodly sum of what the trust owes us & it will no longer cost us money. As it's in a loss, there will be no CGT, but a very nice CG. The sale of that property alone will pay off a couple of others, but we might buy something else instead.

Although Hubby has the go-ahead to retire, he's staying working for the time being. Unless the boss annoys him too much, then he'll say his goodbye's.

 

[VYBerlinaV8]

China you are the only person I've met who has claimed $3.5m in unencumbered assets/cash is needed to provide a $100k income stream. That is a pitiful return

It's safe, though.

When I retire I'll move some equity into shares, but mainly to improve cashflow so I can build a steadily growing cash buffer. As I get older, my risk tolerance reduces.

 

[Jaggannath]

I have been investing since 1994 ( so 20 years) but we built it up slowly, and only had 1 house for 3 years, then 1 more for another 2 years, then 1 more after 5 years (so three after 10 years) then as the first two became positive geared, we added another one and so on.
With 9 properties we now make about $1000/year after costs and are still adding houses. I am confident we still have another 15 years before retirement, but it is SO SLOW most people give up !
When i tell people about it, they say " i can't wait that long !"

We could not do the 'quick' solutions as we were busy raising a family and paying down our own mortgage (still paying it off BTW) and had no time or interest in reno's etc that everyone seems to talk about.
It is boring but if you stick at it, it will work. But I agree, most people want the quick fix, the easy way, the instant millionaire formula and waste money doing courses and chasing 'easy' dreams.
But our 9 properties are in a range of great areas, and will make a good deal of money when sold for land value even if the house is old on it, and they pretty much pay for themselves now. We built new in many (but not all ) of them so the houses will not be more than 20-30 years old (which by capital city standards is not old) and we maintain them well and paint and repair them as if they were our own home.
So the rental income may not be the answer, but in 15 years time we can sell four or five to cover costs and pay down the loans, own five outright and then live off the income - approx $80K clear a year indexed to rents. And we can then top it up with our super that we have saved (with the compulsory saving)

Works for me and its just chugged along in the background. Like watching grass grow though...

I sometimes feel this approach is undervalued at Somersoft.

 

[D.T.]

I sometimes feel this approach is undervalued at Somersoft.

It's because we're all Gen y's

 

[handyandy]

Purchase $800k of property in the USA.

Is giving us a nice $100k pa completely passive as the US end does everything.

Problem is that the $800k had to be cash - no loans in the USA.

Added bonus is that it's a currency play. Bought at parity or above now down to 88cents.

Cheers

 

[chindonly]

I sometimes feel this approach is undervalued at Somersoft.

I would have thought many people here are in very similar situations and following an almost identical strategy. Or something very similar.

We are doing almost exactly the same thing, but only half way to the 9 IPs.

For many, its the only way they can do it.

 

[Big Will]

I sometimes feel this approach is undervalued at Somersoft.

I am using this strategy, slow and steady wins the race. Also I would like to sleep at night and have an enjoyable lifestyle both now and in the future.

 

[Gargamel]

Purchase $800k of property in the USA.

Is giving us a nice $100k pa completely passive as the US end does everything.

Problem is that the $800k had to be cash - no loans in the USA.

Added bonus is that it's a currency play. Bought at parity or above now down to 88cents.

Cheers

What is the management overhead of this arrangement? Is it commercial or do you have relatives there managing things?

 

[The Y-man]

Retirement planning isn't sexy, until you get to retirement. All of a sudden you are very glad you had a plan and implemented it.

Hmmm.... I had no idea retirement could affect your sex life. Learn something new every day.

The Y-man

 

[handyandy]

I pay 6% management fees.

We have county taxes that now run out at nearly $2000 per property.

Insurance at roughly $700 per property.

Maintenance costs running at about $20k

Properties rent out for $14400 pa

We have 12 rip's. Beginning of the year we bought the 12th with money earned over there.

Accounting overheads are about $4k pa.

Cheers

 

[Deltaberry]

Yea America certainly does seem like good value still, despite having run a lot past few years.

 

[pieman]

Not sure about you . My dad's just had his 89th birthday . Mum was a cradle snatcher , she's 91 . They have started slowing down physically a bit in the last 2-3 years , but mentally they're both sharp as a tack . Mum's been on the internet for over 20 years

Cliff

Sounds like my folks. You need a bloody lot of coin when you live to your 90's and your self funded.
Defined benefit government super was great but no wonder they got rid of it. The old man must have pulled 2m+ from us tax payers from a system setup for peolple who retired then died

 

[HomePage]

You need a bloody lot of coin when you live to your 90's and your self funded.

You probably don't need as much more than you think. If you live entirely off dividends or net rents, which both generally increase with inflation, you don't need to touch your capital base - ever.

 

[WattleIdo]

I am using this strategy, slow and steady wins the race. Also I would like to sleep at night and have an enjoyable lifestyle both now and in the future.

Me too. Plus, I just don't have enough time (work and veg)to be buying properties every year or more. I don't want too many tenants - I already have so much responsibility.
At first I wondered if I'd ever make it but I can see it all starting to fall into place. Still a way to go though.

 

[see_change]

Sounds like my folks. You need a bloody lot of coin when you live to your 90's and your self funded.
Defined benefit government super was great but no wonder they got rid of it. The old man must have pulled 2m+ from us tax payers from a system setup for peolple who retired then died

That's why I want a fully paid of properties and live on the rent .

Indexed pension

CLiff

 

[datto]

Skater, sounds like you done really well for under 15 years of investing.

Sea Change, all I can say is wow. There must be good genes at work with all that longevity.

 

[pieman]

You probably don't need as much more than you think. If you live entirely off dividends or net rents, which both generally increase with inflation, you don't need to touch your capital base - ever.

I'm Thinking 3m of fully paid off shares and ip's, so probably a fair amount to most peolple