QLD 16 Property Purchases in 2 Years -- wth!!

Interested to know how he did it...

 

Did you even watch the video? He doesn't even have 3 properties yet. He says he's about to get his 3rd. He's been helping friends and family buy which is where the 16 comes from.

 

I bought 16 properties. When i was playing monopoly back in the day.

 

Some new property "investors" worry me. Last year I knew nothing about the property market and had no interest in buying property. Now I have discovered it combined with a dose of FOMO. I want to own 10 fully cash flow positive (covers principle payments as well) properties in the next two years. Property is easy money and a quick way to make money.

 

Did you get into commercial property like Hotels too?

 

FOMO at the back end of 2020 sparked my interest in property investing aswell. I also wanna build out a portfolio like yourself, and many others have on this forum also. Gl with 10 mate! On a 75k year income, a more modest a 2-2.5m asset base, CF'ing @ 4.5-5% is more realistic for me to supplement and later replace my income.

I've been lurking / getting educated and your local knowledge of Perth & Rockingham surrounds have been 10/10.

I over capitalised and coudlnt pay the street repairs bill and lost everything.

 

Anyone who's bought anything in the last two years looks like a genius. Gurus like PK who are selling the dream look like the biggest geniuses of them all. He's probably gotten more clients in the last year than he ever has in the years before combined

 

Heck , we bought 19 properties in under two years .

no big deal compared to some around .

cliff

 

Watched alot of PK vids, he seems knowledgeable and has a very non-sensical / balanced view towards the economy & real estate. I imagine hes done well for himself, selling his course @ 5k pp, good on him. Hes built out a 10 property portfolio already, so i think the opinons / views he gives, should carry alot of weight, coz hes gone out and done it.

 

Farout, well done.

In the words of Dave Ramsey, whats your household income?

 

my business

cliff

 

Yes but how many had hotels on them ?

 

I think this depends if you got the Angel Islington or Park Lane.

Personally I really loved buying up that Orange/Red Corner. Everytime someone got out of jail.... thanks for coming!

 

You'd do well investing in Logan with that philosophy...

 

We got three IPs in three months, turned our PPOR into an IP last week and now rentvesting.
We are excited to keep building out the portfolio! Another 6 months and we will go again!

 

Interested to know how rentvesting is going as we are currently in 2 minds about it. We have outgrown our home and not sure if we buy a new home with 350k mortgage
Or
Buy 2 IP and keep our home as IP and rent a bigger home

 

These type of portfolios may sound great, but they are very dangerous.

Issue when theres little debt education put through it.

Here's an example:

• 13 properties, worth $4.2million (assuming paper vals work), with a 5.5% yield = $231k gross. $3.6mill in debt, avg interest rate at 6% = $216k
• Net cash flow before expenses: 15k positive
• Expenses: PM $15k, Rates: $25k, Taxes: $10k, Water/others/repairs/etc: $40k = $90k
• Net c/f= -$75k p.a. or ~6k per month
• $240k household income, $15k p/m net.

2023 hits and half the debt rolls over to P&I with NO refi options left, another ~$3k per month expensed out. 2023 hits and rates creep up another 1% = ~$4k out monthly

This person is left with next to NIL c/f left to fund their living.

Put simply, these buyers executing a 'buy and hold', 'buy as much as possible', with 80% LTVs and low buffers are the ones in the most risky position.

Their education doesnt tell them the above though - it tells them that:
- They are the top 1% of investors - lol.
- They have A LOT of wealth. Realistically, if they sold all of this in 2023, they'd barely get their money back after fees.

These borrowers have been SMASHED in 2022 from c/f hits. The rental increases are NOT enough to cover HIGH LTV debt backed portfolios and a +3% rate rise.

We have done half dozen personal loans since october...One common theme...All of them have debt profiles that are too far. The problem is a personal loan isn't large enough to stem the tide for all that long - it buys you a few months. Investor centric areas MAY bear the brunt of market falls in 2023 given the weakness of the debt profiles that hold them.

If you want this type of portfolio, here's some key things to remember:
- Drop your LTVs, its one of the biggest risk mitigants. If releveraging, consider your overall LTV position of your portfolio.
- Have enough BUFFER funds to cover P&I repayments, and your cash flow gap, for at least 12-18 months. If you dont have this, STORE your capital in LIQUID investments that can cover your gap.

What a property portfolio looks like:
- Average LTV around 50-70% over time, ~4-5% yield, fewer assets, mix of P&I budgeted debt, and if going to non-mainstream banks - a risk management plan behind it.

 

Thanks for putting this our there

 

Wealth is net assets. Cashflow is how you survive.

A 'big' portfolio (gross assets) is only potential wealth, works only if you can survive until you get net assets out of it, and even then, sudden cashflow drops can still kill you (like, rate rises?). That's why you need buffers, and the bigger the gross assets, the bigger a buffer you need. Partly for this reason, as the portfolio gets bigger, investors become more conservative (i.e. lower LVRs, more offset balances).

For the average person, having 'millions' in property or 'many' properties is so unbelievable that they mistake it for a good thing.

 

I'm with Redom.
Especially in a rising interest rate environment like this one you definitely need to have a strong yield with a risk management plan in place.

ie : If Interest rates go up, wages stay similar a decent chunk of Australia, especially these property investors will face HUGE cashflow pressures.

While I am looking to pull the trigger on a purchase soon - I have stress tested our ability to live on one income (kids coming soon!) and handle a 10% Interest rate from a Cashflow perspective. (Don't know if the banks will allow much refis at that point) though