But if your nett worth is $1m and then you go out and buy a $1,000 doodad, you're technically not a millionaire anymore with a net worth of $999,000 
What/who is a Millionaire?
- Thread starter skater
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Firstly, they wouldn't give you a LOC if you couldn't make the repayments.
Secondly, it's not hard to get a $1m LOC against previously unmortgaged income producing properties, assuming they value up and produce the required repayments.
Technically I am a millionaire....but mentally I don't feel like one.....
I think being a millionaire is different for everyone. Most people think $1m is not a lot of money...but very people are worth is....even today because a lot it is debt.
My target is $7m net...with an income of 200K per annum....this what i consider to be a millionaire.
I think being a millionaire is different for everyone. Most people think $1m is not a lot of money...but very people are worth is....even today because a lot it is debt.
My target is $7m net...with an income of 200K per annum....this what i consider to be a millionaire.
Thats a lot of equity for the income!!
2.85% yield assuming no debt!
Im sure you get get 200k pa from a lot less, or get a lot more income out of the target amount!
I should elaborate.....
$10m in property gross with 70% equity and 30% borrowed ($3M)
Returns is about 5% gross...assuming 6.5% interest only...the interest bill is $185K.
Assume 30 properties with holding costs (mmgt fees, rates, insurance, etc.) at $4k per property for total of 120K.
So $185K plus $120K is about 300K.
500K is gross return minus 300k you get about 200K...
My plans is not to touch equity just the cash flow. I will use the equity for the purchasing a Merc every couple of years.
$10m in property gross with 70% equity and 30% borrowed ($3M)
Returns is about 5% gross...assuming 6.5% interest only...the interest bill is $185K.
Assume 30 properties with holding costs (mmgt fees, rates, insurance, etc.) at $4k per property for total of 120K.
So $185K plus $120K is about 300K.
500K is gross return minus 300k you get about 200K...
My plans is not to touch equity just the cash flow. I will use the equity for the purchasing a Merc every couple of years.
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That's about expected net cashflow from resi property these days. Resi property is not really a cash flow asset class. Not these days anyway.
Can you explain why you think its a low income to equity ratio?
Can you explain why you think its a low income to equity ratio?
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I dont think so. I'm saying its normal cash flow or expected from resi, not 'low'. And i'm asking him why he thinks its low.
I am not that familiar with the assets or income test for the pension, but over the weekend we were discussing the fairness of it all.
A friend's father lives in a modest house on a couple of hundred acres in rural Qld.
He can't get the pension because the assets test only allows for a certain radius of land around your PPR to be included in PPR asset calcs. Anything outside of that is considered to be non PPR asset, and if valued over whatever the threshold is, you can't get the pension.
However, a person whose PPR is a $10M Point Piper apartment like this one, or $30M Vaucluse mansion like Tahiti, can apparently get the pension because these assets are under the land content threshold.
So from what I understand, it is possible for an Australian millionaire to get the pension.
BTW, I would also argue anyone who owns outright, a $30M home, is a millionaire, but if they are on the pension, what are the chances they can get their hands on $1M cash....
A friend's father lives in a modest house on a couple of hundred acres in rural Qld.
He can't get the pension because the assets test only allows for a certain radius of land around your PPR to be included in PPR asset calcs. Anything outside of that is considered to be non PPR asset, and if valued over whatever the threshold is, you can't get the pension.
However, a person whose PPR is a $10M Point Piper apartment like this one, or $30M Vaucluse mansion like Tahiti, can apparently get the pension because these assets are under the land content threshold.
So from what I understand, it is possible for an Australian millionaire to get the pension.
BTW, I would also argue anyone who owns outright, a $30M home, is a millionaire, but if they are on the pension, what are the chances they can get their hands on $1M cash....
Hi WW,
My understanding is the legislation states the specific figure of 2 hectares (or 4.942 acres) surrounding your PPoR is excluded.
Typically farmers own more than that land area, and as such the value of the remainder of land is subject to both the asset test and also not excluded from any CGT calculations if the asset is sold....(assuming the asset is in the name of the individual).
There is no "radius" as such, which could only describe a circle. It is a defined area measurement, and that area can take the shape of an polygon.
There is no land content thresh-hold in terms of value of that prescribed 2 ha. It can be worth 100K or 100M. Makes no difference to the calculation of the pension.
One imagines the Owner to struggle somewhat with the council rates and water rates for the higher priced examples of property on the cashflow afforded from just the pension however.
Which raises another bucket of worms.......If Mr. Krock Senior had no income and owned Tahiti outright, and the house is also the (unowned) residence of his adult son and family, and the son pays all outgoings, would the paid outgoings be considered income earnt by Mr Krock senior? AFAIK, it wouldn't be.
I agree with all points.
That was my point - resi IS a low cash flow asset.
I was trying to get at asking why would you aspire to own > $7m of the stuff.
The point of this game is financial independance.
Thats from cashflow
Sash said $200k was enough.
Now figure out the easiest way to get to $200k
It probably involves resi property but it wont involve $7m+ worth!!
I voted "Other" because the I have always believed a millionaire was someone with a net worth of a million dollars. This does not seem to be an option in the poll. If you could sell all your possesions and end up with $1000000 cash in hand, you would be a millionaire.
You could have the traditional "millionaire lifestyle" as some do when they win lotto, but as they find out, money can disappear very fast.
It is very easy to be a millionaire depending on which country you live, for instance Zimbabwe. For this reason, another measure of wealth is required. A "High Net Worth Individual" is defined as someone who has investable assets of $1M US, not including PPOR. It is interesting that it is easier for some one to be a HNWI if they rent.
But at the end of the day, none of the above matters, they are just labels.
You could have the traditional "millionaire lifestyle" as some do when they win lotto, but as they find out, money can disappear very fast.
It is very easy to be a millionaire depending on which country you live, for instance Zimbabwe. For this reason, another measure of wealth is required. A "High Net Worth Individual" is defined as someone who has investable assets of $1M US, not including PPOR. It is interesting that it is easier for some one to be a HNWI if they rent.
But at the end of the day, none of the above matters, they are just labels.
I agree.
A million net worth doesn't allow you to live the life we percieve as being the millionaire lifestyle. Like Nelson Bunker Hunt said, a million ain't what it used to be.
If I took my million to Thailand or Nepal, I could live like a king for the rest of my life.
It's all relative.
