2 years - 5 properties, portfolio worth 3.1M

Also, what is your end goal - develop a passive income stream so you can retire?

 

Readdict, you mentioned PM is 7.7% all inclusion, would you mind let me know which agent you are using as My research is around 12 % all inclusion.
Thanks

 

I'll pm you the details.

 

Goal is still being carved. I started with the objective of having passive income but now keen in moving towards development projects and adopt that as fulltime work at some point. Let's see, not thinking very long atm and taking one step at a time.

 

Haven't thought yet. Buyer's agent could suit, but not a broker.

 

Very good. Will be great if you can keep us posted on your success/results and future endeavours.

 

So true from my personal experience.

 

An update :

Settled on my 7th property last week. Purchase price 413K and rented this week for $700 per week in Townsville. Settling on 8th next month. Now, the next target is to do JV with a developer in regional QLD who has been a pursuing me for a while. If this goes well, I would like to try splitters/subdivision projects myself going forward.

 

Congrats! What is your current buffer for when interest rates keep rising and possibly being stuck with 2nd-third tier lenders?

 

Did you see the yield?

 

Yes I did, 5.6-6.4% gross yield.

From OP's information given:
Total gross rent: 91k rent, lets be generous, give it 100k rent, divided by 4= 480 rent.
House x 4 at 350,000
Income per house:
$2080 per month

Monthly Expenses:
7.7% PM: $147.84
P&I interest @3.54: $1032.5
Rates insurance: $166
Repairs for > 40 year old houses, lets be generous: $83
Total expense: $1428.5

Pretax Monthly profit: $652

Annual: 7824

Net yield: 2.2%

 

I think you are mistaken.

 

I don't mind being wrong at all, I like crunching my numbers and comparing to how people see it/very happy for you to poke holes in my number crunching, I learn from that.
I worked back from 5.6-6.4% gross and 91k gross rent.

Income per house:
$3033per month

Monthly Expenses:
7.7% PM: $233.54
P&I interest @3.54: $1218
Rates insurance: $166
Repairs for > 40 year old houses, lets be generous: $83
Total expense: $1700.54

Pretax Monthly profit: $1332

Annual: 15,989

Net yield: 3.87%

70% LVR OF 3.1 mil means 2.17 mil of debt, westpac's calculator shows its 117,516 in P&I.
Again OP has mentioned its 91k in gross rent.
Maybe thats why your bank has shown negative gearing in their calculation(OP said he doesnt know why hes under negative gearing, as all his properties are old?)

Very happy for OP if hes has net positive cash flow, he went hard and made it work, but from the information he has given, it doesn't add up.

 

Glad that you did some numbers and definitely they don't stack up as it has got missing info.

With 8th purchase getting completed in June, less than 70% LVR with 4.7M portfolio value and 185K+ gross rent. I think you picked different numbers from different posts when the situation kept changing.

Not all PM are @7.7%, not all properties are > 40 years old, not all are P&I.

 

Don't think you can build portfolios using only first tier lender. I personally do not care who the lender is as long as they help me achieve what I am after(each to his own here).

In terms of buffer, the most recent settlement would give me 10K surplus in my pocket after all expenses at current interest rate(interest only). I am happy for it to be squeezed it to zero so a 10K buffer for this one. As long as a property is not costing me to hold it, I am okay.

 

Nice, I think you have big cojones! Hope you have locked in a long I/O period.

And what is it you are trying to achieve here? Legit question*

 

Yes, 5 years IO for last 3 deals which are touching gross yields around 8%

Capital Growth

 

@REAddict. Speaking from personal experience on these kinds of lending numbers, I suggest making sure that you have sufficient coverage for when IO goes to PI. Together with a higher interest rate environment, that can get painful quickly. With the transaction costs involved in property, having to sell in order to make principal payments can eat a lot of your paper gains. No-one wants to be a forced seller of RIPs.

And don't rely on being able to refi to another IO period either. Lending policies change and what may be possible today may not be possible tomorrow...

There is a potential world out there where IRs rise, prices drop and access to lending tightens, all at the same time. While it may not be the most likely outcome, it is still nice to know you can handle it without getting wiped out, given the value of your current equity position. While I'm sure you know what you're doing (nothing ventured, nothing gained etc), don't underestimate the value of sleeping well at night, as well as protecting what you have gained. Just my 2c...

 

Well played!

Quick one for you @Terry_w :

Will all these trusts do anything in terms of asset protection if the said potential world by HiEquity mentioned happens, or does the trusts not matter other than fulfilling OP's creative way of borrowing?

 

Well done. 5 years would give you some breathing space as compared to all the properties on P&I!