Why Do Most Investors Stop Purchasing After Two Properties??

[oc1]

Oh and a multi-million dollar portfolio is not very impressive when you have a multi-million dollar loan.

Exactly. With resi property I'd rather $2m worth of property with little or no debt than $7m worth of property with $5m of debt. It's fine (i guess) to keep on buying, but at each stage you are incresing your risk with each additional loan. Even if you are cashflow neutral it's still a big risk. I'd hate to be very sensitive to interest rate movements.

I remember a little while ago one prominent forumite being sad with only "4 mortgages" You'd think this was the last thing you'd be worried about.

I'd rather live of the rents with a smaller portfolio as soon as possible than having a large portfolio with a large loan hoping for this to occur at some future date (while hoping the portfolio is still intact ).

 

[Deltaberry]

and then the social isolation gets you. It can be daunting if you are not really determined. Some of this can be cultural too I think. Other than that all of the above (other posts) can be true too.

Certainly a very cultural thing. See it very less among Asian communities because people respect others who have made something of themselves.

 

[Deltaberry]

Exactly. With resi property I'd rather $2m worth of property with little or no debt than $7m worth of property with $5m of debt. It's fine (i guess) to keep on buying, but at each stage you are incresing your risk with each additional loan. Even if you are cashflow neutral it's still a big risk. I'd hate to be very sensitive to interest rate movements.

I remember a little while ago one prominent forumite being sad with only "4 mortgages" You'd think this was the last thing you'd be worried about.

I'd rather live of the rents with a smaller portfolio as soon as possible than having a large portfolio with a large loan hoping for this to occur at some future date (while hoping the portfolio is still intact ).

I guess that wasn't exactly what I meant.

I was meant to say, if you have a $2m portfolio with $1.9m debt then that's not very cool.

But if ou have a $7m portfolio wiht $5m debt, that might be okay, depending on what your yield/growth prospects are.

At the end of the day part of it is a numbers game so without further numbers the two examples you give may not be comparable - I'm not generalising anything about debt.

 

[Rixter]

Hi Rick,

Any ideas where to find these details in greater depth? ie. how many people own 7, 8, 9, etc?
Would be very interesting!

Yes it would be interesting...those figures quoted were from the ATO website so maybe a more extensive look there will provide later figures.

 

[Rixter]

I guess that wasn't exactly what I meant.

I was meant to say, if you have a $2m portfolio with $1.9m debt then that's not very cool.

But if ou have a $7m portfolio wiht $5m debt, that might be okay, depending on what your yield/growth prospects are.

At the end of the day part of it is a numbers game so without further numbers the two examples you give may not be comparable - I'm not generalising anything about debt.

As with most investments one's level of investment will always be based around each investor's individual risk profile. We are all different which make life interesting.

 

[devank]

Hi Rick,

Any ideas where to find these details in greater depth? ie. how many people own 7, 8, 9, etc?
Would be very interesting!

People with more than 3 or so may have trusts or company set ups. Each set up would lodge thier own tax return. So I'm not sure how that is handled.

 

[jaycee]

So how do investors build multi $million property portfolio's on average and below incomes

If they can do it why cant others ?

Beacuse they don't wanbt to ?

What are you trying to say but purposesly not saying except in cryuptic short sentences ? LOL

Do you think eveyrone SHOULD invest in residential property ? If so, why ?

 

[Rixter]

Beacuse they don't wanbt to ?

Or maybe dont 'believe they can.

What are you trying to say but purposesly not saying except in cryuptic short sentences ? LOL

Sit down on the couch and tell me what you think Im saying.

Do you think eveyrone SHOULD invest in residential property ? If so, why ?

Yeah that would increase my portfolio just nicely

 

[Deltaberry]

As with most investments one's level of investment will always be based around each investor's individual risk profile. We are all different which make life interesting.

If you have a $7m portfolio that makes $3m profit per year, you'd have to be pretty risk-averse not to borrow $6.9m at 10% to fund it.

 

[Rixter]

Once you've hit your passive income stream target/goal IMHO there's no point leveraging further.

 

[not happy]

Beacuse they don't wanbt to ?

What are you trying to say but purposesly not saying except in cryuptic short sentences ? LOL

Do you think eveyrone SHOULD invest in residential property ? If so, why ?

Why must you continually try to start an argument where there was none?

I was enjoying this thread until I read this piece of diatribe.

 

[JohnHenry]

I guess that the financing part is overwhelming,

eg. creating and managing more than one LOC account in conjunction with loan account is complex already in terms of personal loan interest.

 

[Deltaberry]

I don't have a set passive income target. Just want to see how far it can go.

Ted Turner's father once said to his son, his biggest mistake in life was setting his goals too low, which were:

- to own a mansion
- to have his own boat
- not have to go to work

He got there pretty quickly.

 

[Deltaberry]

Why must you continually try to start an argument where there was none?

I was enjoying this thread until I read this piece of diatribe.

How are you not happy?

 

[Rixter]

I don't have a set passive income target. Just want to see how far it can go.

If one doesnt have a destination how will one know when they have arrived?

 

[Deltaberry]

If one doesnt have a destination how will one know when they have arrived?

You don't so you keep going

 

[wobbycarly]

I guess that the financing part is overwhelming,

eg. creating and managing more than one LOC account in conjunction with loan account is complex already in terms of personal loan interest.

Why would this be so hard? I've seen your other threads, and I think you've overcomplicated your accounts, unless you have some ownership/legal structures that require such complexity.

We have 1 offset/transaction account that collects all our incomings - rents, salaries, etc. (This offsets our PPOR - if you don't have non-deductible debt offset it against some other loan).

We pay whatever we can on credit card, pay that off in full from the offset every month, and all our interest payments come out of this offset account, too.

We have 5 loans, and this is simple! Another loan wouldn't add any additional complexity.

PS. Don't want to derail this thread, but this would have to be the LEAST of reasons to prevent an additional purchase.

 

[Dan_p]

Perhaps some of it is the pressure from friends and family. You know how in the beginning you are really excited about getting one and your friends and family give you the "good on you for having a go" .

But then as you learn more and see some real potential and buy another they start to question you "are you sure you know what you're doing", "that's a bit risky isn't it?".

Then if you persevere and go for number three, well, "who do you think you are?", " getting a bit up yourself aren't you?", ""you one of those rich landlords now are ya?".This has been our experience.

and then the social isolation gets you. It can be daunting if you are not really determined. Some of this can be cultural too I think. Other than that all of the above (other posts) can be true too.

I have noticed the same things from certain family members and we are at the two ips and ppor stage. We are learning to be a bit more selective with our conversations we hold with certain people now.

 

[Rixter]

You don't so you keep going

Whats the point if one keeps aimlessly going on There's no goal to chase thus motivation becomes an issue. How do you keep motivation up?

 

[Dan_p]

I guess that wasn't exactly what I meant.

I was meant to say, if you have a $2m portfolio with $1.9m debt then that's not very cool.

But if ou have a $7m portfolio wiht $5m debt, that might be okay, depending on what your yield/growth prospects are.

At the end of the day part of it is a numbers game so without further numbers the two examples you give may not be comparable - I'm not generalising anything about debt.

During your early acquisition phase surely you must be leveraged quite high?