"Money doesn't make you happy. I now have $50 million but I was just as happy when I had $48 million."
Arnold Schwarzenegger
Yearly earnings
- Thread starter want2bewealthy
- Start date
"Money doesn't make you happy. I now have $50 million but I was just as happy when I had $48 million."
Arnold Schwarzenegger
Quote of the day!
This is simply an urban myth and a mentality adopted by those who have nothing and think the rich are unhappy (not saying you think this way, but it sounds as though you might
).The reality is that disgustingly rich folk are no less happy or no more happy that you or I.
They have a bloody great lifestyle though, and I know what I'd prefer.
This is simply an urban myth and a mentality adopted by those who have nothing and think the rich are unhappy (not saying you think this way, but it sounds as though you might
The reality is that disgustingly rich folk are no less happy or no more happy that you or I.
They have a bloody great lifestyle though, and I know what I'd prefer.
Yeah, I realise that. Wasn't the intention though.
It was more to do with the hours worked to get to that stage. I'd prefer to have a boring middle class life but have time to spend with family and friends rather than slaving away to earn the big dollars at the expense of personal relationships.
Going back to the OP tho ... the figure provided for the passive income would mean 4 fully paid for IP's (assuming $300/wk rent less running costs).
Great in theory - but how would someone on $55,000/yr own 4 fully paid IP's unless they bought 6 of them 20 years ago and sold 2 to pay out the debt of the other 4? So, how would they finance the purchase of 6 IP's on $55,000/yr - or less 20 years previous - especially if they had a PPOR mortgage and family?
The way it is written makes it seem an "overnight" success - this is far from reality.
Big on hype - short on process
Great in theory - but how would someone on $55,000/yr own 4 fully paid IP's unless they bought 6 of them 20 years ago and sold 2 to pay out the debt of the other 4? So, how would they finance the purchase of 6 IP's on $55,000/yr - or less 20 years previous - especially if they had a PPOR mortgage and family?
The way it is written makes it seem an "overnight" success - this is far from reality.
Big on hype - short on process
I agree, could you share how you have achieved this want2bewealthy? The fact you are receiving over $10,000 back from the ATO indicates your IP's may be negatively geared also? Paying off a PPOR and several investment properties whilst earning $55k per year sounds like quite an achievement.
I haven't paid off any IP's and cannot note where I write that I did? Typical SS'ers.. I'm saying I've managed to achieve the wealth I have all on a low income (this is the highest salary I've been on yet mind you) I bought my first property while making $500p/w and am proud of it, too I've done nothing special when compared to some other young guns apart from believing in myself, wanting it bad enough and sacrificing for the future and know others have been known to acquire more in less time etc etc but they are not me and I wouldn't have it any other way.
I receive around $67,000 net in rents, minus PM fees, costs and bank interest is negative CF. Yes, thats why I receive a tax return, (well done SS!)
Maybe you need it a little clearer, I earn $55k gross, pay 12 in tax, then my rentals net a further $66k. Capital growth of around $130k and tax refund of $10k = $249k
My personal costs per year: Mortgage -$17k, Interest costs & fees for rental properties -$68k
Grand total =$164,000p/a after expenses. To earn $164,000 in a pay-cheque would actually equal around $96,000 after tax. So it's almost equivalent of earning $300,000 and being taxed at 50% to reduce your take home pay to $150,000. If the assets are sold then investors are only taxed on 50% of the gain ($300,000 capital gain would net $225,000) (WITHOUT deductions mind you)
In a further 4 years time we sell 1x investment property that will pay out our mortgage and have $600k in available (IP) equity (not including our home). At age 35 that completes the first goal of optional financial freedom (the same as a 67 year old couple with paid out mortgage and 500k in Super) so not a bad feat. From there we take a year holiday, then go back to work and acquire more assets as we wish.
I wish all you lower income earners all the best on your personal journeys and will be coming back once we reach our first goal in a few years time. Keep an eye out!
Ciao'
I'm saying I've managed to achieve the wealth I have all on a low income (this is the highest salary I've been on yet mind you) I bought my first property while making $500p/w and am proud of it, too I've done nothing special when compared to some other young guns apart from believing in myself, wanting it bad enough and sacrificing for the future and know others have been known to acquire more in less time etc etc but they are not me and I wouldn't have it any other way.I receive around $67,000 net in rents, minus PM fees, costs and bank interest is negative CF. Yes, thats why I receive a tax return, (well done SS!
)Maybe you need it a little clearer, I earn $55k gross, pay 12 in tax, then my rentals net a further $66k. Capital growth of around $130k and tax refund of $10k = $249k
My personal costs per year: Mortgage -$17k, Interest costs & fees for rental properties -$68k
Grand total =$164,000p/a after expenses. To earn $164,000 in a pay-cheque would actually equal around $96,000 after tax. So it's almost equivalent of earning $300,000 and being taxed at 50% to reduce your take home pay to $150,000. If the assets are sold then investors are only taxed on 50% of the gain ($300,000 capital gain would net $225,000) (WITHOUT deductions mind you)
In a further 4 years time we sell 1x investment property that will pay out our mortgage and have $600k in available (IP) equity (not including our home). At age 35 that completes the first goal of optional financial freedom (the same as a 67 year old couple with paid out mortgage and 500k in Super) so not a bad feat. From there we take a year holiday, then go back to work and acquire more assets as we wish.
I wish all you lower income earners all the best on your personal journeys and will be coming back once we reach our first goal in a few years time. Keep an eye out!
Ciao'
I haven't paid off any IP's and cannot note where I write that I did? Typical SS'ers..
You didn't - I said "assuming" as $60,000 rental income would indicate 4 fully paid IP's at $300/pw return.
Or 8 IP's at $150/pw return after mortgage payments etc.
Just wondering about more facts rather than just the end result.
Your post was a little confusing. You keep saying 'net', however I wonder if you mean gross.
I read this as.... you receive $66k in rent gross, out of that you pay $68k in interest and & fees. You also get about $10k back on tax.
So you're about $8k a year better off and you have some nice capital gains for the future.
This man clearly does not know that having a wife is the largest extravagance and indulgence a man can have. He should not consider himself frugal.
Wow, you've managed to outdo yourself, which is no mean feat
sad
ta
rolf
OK, as long as tongue is firmly in cheek, this is the funniest thing I've read all day!
But having a family (kids) is even MORE extravagant by that measure!
So...boiling all of that data down even further...looking at cashflows vs capital gains in a property world....
If you didn't have property...this would be it....$ 43K p.a. in the hand.
Ignoring the capital growth, your cashflow total is $ 34 K p.a. in the hand.
Boiling that down further, you are literally spending $ 9 K p.a. to buy a ticket in the capital gains lottery of property life.
If the CG comes thru, you're onto a winner !! If it doesn't, and it flatlines, you haven't lost much, probably worth a try. If it goes backwards, you've simply got to hang on and keep making payments and cross your fingers and hope for improvements later on down the track.
This seems to be the modus operandi of the vast majority of residential property investors. Cashflow to keep playing the game and hoping for that big CG period to come through looks like the key to the game !!
If you didn't have property...this would be it....$ 43K p.a. in the hand.
Ignoring the capital growth, your cashflow total is $ 34 K p.a. in the hand.
Boiling that down further, you are literally spending $ 9 K p.a. to buy a ticket in the capital gains lottery of property life.
If the CG comes thru, you're onto a winner !! If it doesn't, and it flatlines, you haven't lost much, probably worth a try. If it goes backwards, you've simply got to hang on and keep making payments and cross your fingers and hope for improvements later on down the track.
This seems to be the modus operandi of the vast majority of residential property investors. Cashflow to keep playing the game and hoping for that big CG period to come through looks like the key to the game !!
Dazz,
That is effectively the Jan Somers formula for success ...
That is effectively the Jan Somers formula for success ...
"This seems to be the modus operandi of the vast majority of residential property investors. Cashflow to keep playing the game and hoping for that big CG period to come through looks like the key to the game"
Still new here so I dont want to offend, but isn't this what we are all mostly trying to achieve through property? Through historical CG's
Plus I get what your saying want2bewealthy, as the rental income is counted towards your total income when applying for the next property, and that's how you have been able to keep buying? through interest only loans and cashflow neutral/positive properties
Just my 1c...
John.
Still new here so I dont want to offend, but isn't this what we are all mostly trying to achieve through property? Through historical CG's
Plus I get what your saying want2bewealthy, as the rental income is counted towards your total income when applying for the next property, and that's how you have been able to keep buying? through interest only loans and cashflow neutral/positive properties
Just my 1c...
John.
Most people might indeed be trying to do that but most people also ultimately fall short imo. I happen to agree with Dazz, simple buy and holds are not the best way for wealth building imo, at least not in the current market. Naturally there are some who make it work and do so very well but imo it doesn't work as planned for most
sanj, would you please elaborate where you feel people fall short? What do you think can take people there as opposed to what can stall the progression? What does it take for one to "get there" in your opinion? Which category of people do you suggest don't have it work as planned? - As I feel this is a pretty broad statement to make...Just curious to find out.
Understood about buy and holds not being the only and the best way to build wealth, but as far as I can tell (apart from Dazz), a lot of people start with resi buy and holds and then move on to CIP's and developments.
