Who here has actually achieved financial freedom from Real Estate alone?

[Rixter]

Daniel G,
Yes, it can be done. We "escaped" in nine years. Bought our first IP in 1997 and I quit my day job 2 years ago in 2006 age 55. Now just LOE and live life as we please. It takes about $70K nett to keep us in beer. Nothing but residential IPs. Mostly houses and units. Never did anything else but invest in and renovate resi property. No shares. No seminars. No developments. No books written. Followed a combo of "the Jan plan" (buy and hold and wait) "the old Spann plan" (buy, renovate & hold and work the banks REAL hard.) We were focussed for those 9 years. No footy. No golf. Renovate and paint on weekends and day-job during the week. I assure you it can be done. We were impatient and I had a goal and I wasn't giving up. I wanted my own freakin' life !!! If you loaf along it could take you "years". ...and my honest opinion ( after 10 years of observation) is most prop. investors will never "escape". They just don't have the hunger.
Read books, be smart but play dumb, and be the one who asks all the stupid questions !
LL

Congratulations & well done LL.. A very inspirational post. Thank you for sharing. Can you share with us how many properties you acquired, portfolio value then, and portfolio debt by the time 2006 came round??

 

[landlubber]

Mary-Sue .. PM me with some details of "where you are on your journey."

Rixter, Happy to share finer details by PM on mutual basis. For public consumption ... IPs number "more than 20 and less than 50". ..all bought within last 11 years or so. Value is "more than 10 and less than 20M". LVR has been discussed on other posts, but currently we use about 50% LVR and have available about 70%LVR ...so we're really "cashed up" LOC wise at the moment. We revalued the whole shebang in early 2008.

LL

 

[Aaron Sice]

okay LL i'm green over here....

exactly where i want to be in 10y time.

 

[GoAnna!]

We were impatient and I had a goal and I wasn't giving up. I wanted my own freakin' life !!! If you loaf along it could take you "years". ...and my honest opinion ( after 10 years of observation) is most prop. investors will never "escape". They just don't have the hunger.
LL

Hi LL I could not agree more about the hunger. Not succeeding was never an option for me. Obstacles were just another thing to climb over or walk around not a reason to stop.

I think the only real question in my mind was "How do I do it?" not "CAN I do it?"

 

[fokas]

I personally have found Michael Yardney's book: 'How to grow a multi-million dollar portfolio - in your spare time' fantastic at teasing my mind to think outside the square of what is achievable.
I learnt quite a few things about investing that I had never considered before reading it.
Not sure if you've read it but you might find it useful.

 

[HiEquity]

Mary-Sue .. PM me with some details of "where you are on your journey."

Rixter, Happy to share finer details by PM on mutual basis. For public consumption ... IPs number "more than 20 and less than 50". ..all bought within last 11 years or so. Value is "more than 10 and less than 20M". LVR has been discussed on other posts, but currently we use about 50% LVR and have available about 70%LVR ...so we're really "cashed up" LOC wise at the moment. We revalued the whole shebang in early 2008.

LL

A fantastic and inspirational result!

Thank you for sharing - just the kick in the backside I needed! We have been asking ourselves "how much is enough?" and would be about a third of the way to your position after about 7 years and have been toying with the idea of stopping. That wouldn't give us the lifestyle and security we would like but it would give me more time with the kids while they're young so it's not an easy decision by any means.

The only answer really for us however is to keep going (for a number of reasons) as tempting as it may be to drop out now - I feel we are "over the hill" in terms of LVR and serviceability so it shouldn't take too much longer to get the rest of the way there. I like the position you outline here - I reckon that would be "enough" for us - at least for me to stop this wage slave thing...

Thanks again!

 

[landlubber]

..exactly where i want to be in 10y time.

Glad to hear it Bluecard. Here's a free, simple but I found so effective tip. Take a piece of card about business card size, and write on it, as best you can, your goal. Mine said (exact words) "Goal no1. My income from investments is to exceed my costs and expenses by minimum of A$100K not including salary. Must be there by 55". When I wrote it 10 or so years ago, you can see I was thinking cash-flow and I honestly coudn't see how I was going to do it. Then I started learning about the LOE world and bingo!

Here's the tip ..leave the card in your wallet WITH your folding money (and in my case all the Bunnings dockets). Every chance you can, read it. Read it, Read it. When the journey gets you down..read it. It's impossible to read that card too much.

Next ..it's your goal, nobody elses, so no need to show anybody but you that card.

But don't expect the "card" to go and do it. You're the one who has to take the action. The card juts get's you hungry, that worked for me.
LL

 

[Player]

Nice technique LL.

Repetition is the mother of all skill and the constant reciting of your goal cements the intent into your sub-conscious mind. This brings the RAS (reticular activating system) into play and the hidden opportunities that were there all along, suddenly become more apparent.

A bit like when you've just bought a new/different car or are focusing on a new purchase. You tend to see that model (and your colour choice) everywhere around you on the roads. Where were they before? You weren't focusing on looking for them, so could not see them.

Works similarly with our goals. I also use visualisation to good effect.

 

[landlubber]

.. would be about a third of the way to your position after about 7 years and have been toying with the idea of stopping.

HiEquity, Each of our journeys is different. We raised four kids on one income and were "stretched" all of our lives into our 40s. But we HAD bought our own home and we used the equity in that to get us started. If you are a third of the way, then you've done the hard yards. I can tell you, the bigger you get, the easier it gets. When your loans exceed a few M you can get the banks to listen ...just a little. As the portfolio grows, it accelerates as you only need a small increase in value to give you the equity to"get the next one". We've bought seven more houses/units (for LOC cash) since I quit my job. And this year the bank actually took me & wife for lunch at Xmas. Now that's a first !!

LL

 

[want2bewealthy]

Glad to hear it Bluecard. Here's a free, simple but I found so effective tip. Take a piece of card about business card size, and write on it, as best you can, your goal. Mine said (exact words) "Goal no1. My income from investments is to exceed my costs and expenses by minimum of A$100K not including salary. Must be there by 55". When I wrote it 10 or so years ago, you can see I was thinking cash-flow and I honestly coudn't see how I was going to do it. Then I started learning about the LOE world and bingo!

Here's the tip ..leave the card in your wallet WITH your folding money (and in my case all the Bunnings dockets). Every chance you can, read it. Read it, Read it. When the journey gets you down..read it. It's impossible to read that card too much.

Next ..it's your goal, nobody elses, so no need to show anybody but you that card.

But don't expect the "card" to go and do it. You're the one who has to take the action. The card juts get's you hungry, that worked for me.
LL

Ahhh whaddya know, someone who uses LOE as a strategy, amazing.

My LOE thread didnt go down too well, its my (for now) chosen strategy and a very good one in my opinion, well done and more power to you, just goes to show if your portfolio is large enough time will work its magic and you have an ever increasing income stream without having to sell your assets and avoiding CGT along the way.

 

[evand]

Congratulations Landlubber on a great achievement. I have to say your timing couldn't have been better.

You buying started at the beginning and finished at the end of the largest property price boom in Australia's history. Great stuff.

I too benefited greatly from the 'great boom' as have many on the forum and retired early. Uisng a combination of equity, shares and business.

I was much too lazy, or busy making money elsewhere, to worry about renoes or any value adding. I just try to buy at the right time and let the cycle do its thing.


If starting to buy now (or recently) i would say the journey to LOE would take much, much longer. All the same, congrats.

 

[landlubber]

.. someone who uses LOE as a strategy

W2bw, Guilty as charged with LOE & sorry if I missed your thread. Just for the record I think LOE is the ONLY strategy that makes any sense in the Oz market if you want to "escape" fast. Living off rents either needs a very long period from start to "escape" or a very, very modest lifestyle with low cost of living. The selling costs plus the CGT are killers. Then the gross yields are too low. Even if you own them outright. Then the holding costs ( rates, insurance, repairs etc) are too high and eat into your yield. Put it all together and LOE is the only way to go. It's the ONLY way the numbers make sense.
LL

 

[redwing]

I'm still thinking about a LOR (living Off Rents) sscenario now with the ability to capitalise interest in your LOC, but then again at this stage of the game maybe I'm still tax focused

Great to see those that have retired using property

Geez Mary-Sue, the Whole World, how many members and lurkers do you think Somersoft has

 

[farmilor]

Geez Mary-Sue, the Whole World, how many members and lurkers do you think Somersoft has

I'm going with 8704

Some really good reads in here ............ should get the wife to read these also

 

[want2bewealthy]

W2bw, Guilty as charged with LOE & sorry if I missed your thread. Just for the record I think LOE is the ONLY strategy that makes any sense in the Oz market if you want to "escape" fast. Living off rents either needs a very long period from start to "escape" or a very, very modest lifestyle with low cost of living. The selling costs plus the CGT are killers. Then the gross yields are too low. Even if you own them outright. Then the holding costs ( rates, insurance, repairs etc) are too high and eat into your yield. Put it all together and LOE is the only way to go. It's the ONLY way the numbers make sense.
LL

Thats exactly my thoughts too LL, Thanks for your input.

After studying property investment almost full time here and with numerous different books over the past 2 years I think the same thing,
Back in the late 80's and early 90's there were CF+ properties to be had everywhere and the living off rents strategy was a good one if you were dedicated enough to purchase alot of property but this day in age the CG LOE strategy is much better IMO provided you have a substantial portfolio, then the low doc/no doc strategy can be utilised for increasing your portfolio if need be while you dont sell any of your assets and begin the next year with more equity than you left off with after taking your income the year before,

some years we might see stagnant growth so a part of my strategy is to have substantial equity to 'prepare' for the worst case scenario, whats the worst that could happen, I might have to get a job for a little while until things take off again, whats so bad about that? everyone else dedicates their whole lives to work and dont even give it a second though believing that 'hard work' is the way to get ahead then retire with nothing and wonder what went wrong, Im sure if worse came to worst I could handle working for a year or two.

 

[evand]

Resi property wasnt cashflow + until the 2nd half of the 90s after property going no where in price for most, if not all of the 90's and rents caught up.

You have to remember net yields are related to current interest rates and both were generally higher in the 90s.

I remember reading a newspaper article about gross yields being 10% in outer Sydney, Mt Druitt in 1998!! That was a result of a decade of stagnant or falling prices and rising yields.

If we have a repeat of the stagnant decade of the 90s growth wise (as property prices had to catch its breath after the late 80s boom and i can see that being the case again) you might have to work for more than a couple of years.

Thats exactly my thoughts too LL, Thanks for your input.

After studying property investment almost full time here and with numerous different books over the past 2 years I think the same thing,
Back in the late 80's and early 90's there were CF+ properties to be had everywhere and the living off rents strategy was a good one if you were dedicated enough to purchase alot of property but this day in age the CG LOE strategy is much better IMO provided you have a substantial portfolio, then the low doc/no doc strategy can be utilised for increasing your portfolio if need be while you dont sell any of your assets and begin the next year with more equity than you left off with after taking your income the year before,

some years we might see stagnant growth so a part of my strategy is to have substantial equity to 'prepare' for the worst case scenario, whats the worst that could happen, I might have to get a job for a little while until things take off again, whats so bad about that? everyone else dedicates their whole lives to work and dont even give it a second though believing that 'hard work' is the way to get ahead then retire with nothing and wonder what went wrong, Im sure if worse came to worst I could handle working for a year or two.

 

[landlubber]

If starting to buy now (or recently) i would say the journey to LOE would take much, much longer.

Greetings Evand, Admittedly with our 20-20 hindsight the last cycle was a good one. no debate there. But, right now, and I hate predicting, but if you look at the house price graphs, I'd say, cycle wise, we're about somewhere in the "early 1990's". Stock market has tanked, housing has peaked and retreating some, IRs are coming down, IP prices are going nowhere, the rental market is tight as a drum and hence rents are rising. Would it have been a good time to buy in 1993/4? Now..add to that a general shortage of dwellings, councils that won't approve medium density developments, high immigration, the world instability that makes Oz just a great place to live ...I could go on ..but with just a bit of optimism I can see the next cycle forming. How good will it be? Only time will tell....

The trick is "start young" ( I didn't, that's why I went like hell) and then it doesn't really matter does it ? My kids are IP investing already. Starting in their 20's they are well ahead of me at that age. Give 'em two property cycles ( say 20 years ) and they'll be able to "escape" in their 40's if that's what they want.

LL

 

[Lamingtons]

Congrats Landlubber, you need to start your own thread.

"How i went from x to y properties and now living off LOE.."!

 

[Witzl]

Another congrats from me LL....
I'm aiming to retire by 40, which is 13 years away now, using the LOE strategy. Mg gf and I now have two IPs, and are buying the 3rd in the next two months, and will be buying more and more as our growing equity allows us.

.. I do have a question though: You mentioned that you think we are in the "early 1990s" when compared to the previous boom.... is that with a melbourne centric view, or a general overall view?

I ask because myself and my gf are gearing up into sydney property, which has been dead flat since 2003 - so its hard to think that sydney will have another 6-7 years of flat property prices, when it's been flat for 5 years already.

Again - well done to you!

 

[Xenia]

Hi, it's interesting that a couple of others have already said what caught my eye immediately.

The words 'I don't want to be rich'.

The two have been very kind in their comments to you.

$70000 p.a. passive income means about 1.3M net worth fully invested.

Someone saving 20000 p.a. takes 10 years to accummulate 200000. One lifetime = about 30 years of work.

Take away about 400000 for PPOR

The normal 50000 p.a. worker will never make it.

My 'advice' if I can term it that way is STRIKE THOSE WORDS OFF YOUR VOCABULARY IMMEDIATELY. Try saying 'My net worth is 1M in .......'

In many ways you're in an enviable position because you've begun your journey. Enjoy it. I'll bet you make it too.

KY

I'm glad you said it KY! It dosen't cost anything to dream and plan so why not think big all the way.

If you are going to invest time and energy in developing yourself in being a property entreprenuer why not go for $100 million or more, why settle for just one!