I'd be sniffing around commercial in established commodity towns, patiently waiting for those who went into the cricket match without a wicket keeper........and have trouble refinancing. Should be some nice yields when commodities pick up.
What would YOU do with $1m
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Take it with me on my property shopping trip to the USA on Tuesday. Leverage it into $5M of CF+ commercial property.
Yields about 10% on NNN leases, mortgage about 6% (on 80% of purchase price), so cashflow profit 5.2% on $5M = $260K pa.
Yep, that'd do nicely. Hubby could quit work.
Hey, I'm loving this mindset, Trace.
I think we'll be seeing figures like that here in Aus before long.
Problem is; getting an 80% lend on a comm property in Aus will be very, very difficult. I think most lenders are down to around 60% LVR's now on comm.
Would this also apply in the USA right now, Trace?
Yesterday, the RBA virtually admitted a second quarter of neg growth coming up in Aus.
This would all but guarantee;
1. more rate cuts (next Tues),
2. more businesses going under,
3. more vacant comm properties that will be very low in value without a tenant to prop up the value, and
4. more comm landlords who need to sell their comm properties under stress due to other financial difficulties impacting on their comm position.
Where do I sign up? I've always wanted to be a minion...
No, it wouldn't, fortunately.
LVRs are higher on commercial than residential here (I've just arrived in the USA today - er yesterday - er whenever...) On a particularly good deal, you may even get 90% for a commercial buy and hold. On a resi buy and hold, as a foreign national I can't get more than 70% at the outside and probably only 60%, which is one of several reasons why I'm looking at commercial rather than resi.
No, it wouldn't, fortunately.
On a resi buy and hold, as a foreign national I can't get more than 70% at the outside and probably only 60%, which is one of several reasons why I'm looking at commercial rather than resi.
I hope it all goes well for you Tracey.
If anyone can pull it off with DD and determination, it would be you.
Would be interested in the general vibe there currently.
Some American friends don't seem too perturbed at all, though that excludes car industry and wall st folk.
how do you borrow another $5mill from $1mill?
Fill the pool up with $1 coins and spend my weekends bathing in it.
What else!? lol
What else!? lol
IF a lender will give you 80% of the property/ies purchase price, then...
1M = 20%DEPOSIT
5M = 80%MORTGAGE
6M = 100%
I've got a friend in a similar situation who won $1mill. I was daydreaming what I would do with the money too. I'd pay off my mortgages and retire off the rent. Then I started daydreaming what I'd do in there situation. I don't think they'd have any idea how to set themselves up for life. Easy come, easy go. My uncle won a huge lottery in Sydney too that would have set him up for life. He p'd it up and died a broke man. I've learnt money definately doesn't make you happy. You've just got to enjoy your journey.
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no - the deposit in this case is 16.6%, mortgage 83.3 %.
so after purchase costs a 13% drop in property prices would wipe out your million.
It's not about purchase costs, jaycee... If you use $1M as a 20% deposit, you can borrow 80% (or 4 times your deposit), which is $4M, getting you a $5M property.
I think what a lot of people do in this situation is assume that because they have $1 mill that they are a millionaire and start to live like one.
Technically, they are a millionaire, but the income behind the million doesn't match up. So, in practice, the aren't really worth a million at all.
Unless they can elevate their income level to that of a true millionaire who can continue to fund that lifestyle, or invest the million and live only off the interest, they soon run out of cash.
For example; they'll buy a $100k boat, a $100k car, $500k house etc, but you then have to maintain these things.
If their income before the windfall was say, $100k or less, then they are heading for trouble.
I'd invest half and live on the rest until it runs out, then live off equity.
$290k - pay off current mortgage
$550k - buy new PPOR and related expenses
$100k - Invest in new property
$60k - A nice holiday around the world for me and my family.
The first three would put me at were I am now aiming for 10-20yrs time, It would set us up for life - because the investment income could generate more investments and DH's income would also contribute to this, until retirement - but all other income would be solely dedicated to maintaining a GOOD lifestyle.
The problem with dreaming about this kind of stuff though - I don't buy lottery tickets.
$550k - buy new PPOR and related expenses
$100k - Invest in new property
$60k - A nice holiday around the world for me and my family.
The first three would put me at were I am now aiming for 10-20yrs time, It would set us up for life - because the investment income could generate more investments and DH's income would also contribute to this, until retirement - but all other income would be solely dedicated to maintaining a GOOD lifestyle.
The problem with dreaming about this kind of stuff though - I don't buy lottery tickets.
pay the PPOR mortgage off.
eradicate all non-deductible debt.
leverage the rest into CF+ properties across a few states.
take a well-deserved holiday.
eradicate all non-deductible debt.
leverage the rest into CF+ properties across a few states.
take a well-deserved holiday.
Lambroghini Gallardo 560-4
jokes aside I would buy properties as quick as I could reno them
1m gives you about 16 250k houses @ %95, incl legal/stamp/light reno/holding costs for 6months.
60k * 16 = 960k.
Use the 40k left over for random expenses between the houses 40k / 16 = 2.5k per house for "hot water system exploding" type expenses.
try and get them all done within 12m, refinance, retire
jokes aside I would buy properties as quick as I could reno them
1m gives you about 16 250k houses @ %95, incl legal/stamp/light reno/holding costs for 6months.
60k * 16 = 960k.
Use the 40k left over for random expenses between the houses 40k / 16 = 2.5k per house for "hot water system exploding" type expenses.
try and get them all done within 12m, refinance, retire
