A race to $100K p.a. passive income - Commercial, resi, equities, dual ocs...?

i have read it as he can borrow 400k + 800k equity release.

whatever the case - you can pull out latent equity in resi IPS more easily when combined with the income servicing of the new CIP purchase. 65% is the banks senior position on a quality CIP.

 

Graft & corruption

 

OK, I just read he can borrow $400k + $800k. Nothing more.

 

whatever residual equity you have forms the deposit for the next deal. once you have a track record, a lender will happily jump on board with you.

increased income + increased borrowing capacity + latent equity + pulling the trigger on the right deals = leads to explosions in net worth over time

 

3-5% return from Shares/ETF, isn't it too low? I thought it's around 10% as per the screenshot below.

 

I can't buy in at 1991 prices so what are the chances of getting these returns today? All that info is doing rubbing Gen X, Y & Z's nose in it - see what you could have bought with $10K before you were born?

 

Join pump & dump group on twitter and launch your exploration company looking for platinum in WA with head office in Subiaco, WA ... and you are set for life... keep exploring for rest of your life and it will also let you live your nomad life style with more than $100k passive income as you won't be doing the digging ... all you need to do is BS on presentation and twitter.... ... all my opinion not an advise.. !

 

That's non-sense... ask Peter Thornhill and he will explains better then me with his own experience .. !

 

where did you get your screenshot?

there is a difference in capital gain and dividend returns. Go to sharesight - it's free. Plug in whatever stock you would like to investigate. I picked 2 samples below. Just dividends alone is > 5%.

If you have more than $2m unencumbered in shares giving you 5%pa dividend ... then you get $100k. Simplistic calculation - I won't go to the tax portion.

 

From here. How Have Australian Shares Performed In The Last 30 Years | Canstar

Sorry i didn't clarify, I was referring to ETFs/ Index and total returns, not just dividends.

 

Not sure if i understand what do you mean.

Above returns are 30 years avg total index returns and any reason to think we will not have same returns in future. I think risk is there in all investments.

 

You might have misunderstood. I have based this on 4% rule.

See definition below...but black swan events can affect this if you do not have the right balance...a lot of people got hit hard in 2008 with their super and stocks.

Four Percent Rule

 

Correct. However better use of capital than leaving it in off-set.
If you have more to leverage and buy additional stock, then yes of course that is a solid long term investment. Money lending is short-term. The ones I met already have a dozen developments going at once. This is just another venture for them.

Surprised you were getting so low. On smaller amounts you charge establishment fee, and line fee. Would add up to circa 11-12%.

Alternatively 2nd mortgage at 24%. I myself have taken loans at these amounts recently. It's great to tie you over, and on the grand scheme of things, interest is chump change when used in the correct way.

Risk comes down to your own profile. Can always lend more if you take bigger risk as more businesses would land in your net. I prefer a smaller safer net.

 

Thanks to all who have posted and apologies for the slow reply. I didn't realise this thread got a bump. There is a lot to look into which will keep me busy.

 

It's could actually be worse than that. I may only be able to get $800K in total but to be honest that could be pushed a lot harder and I haven't even looked into it yet. My broker just did a back of the envelope calc and said I could borrow another $800K or so for a resi property. I could potentially push it higher my maxing out the equity release with my main bank and then finding another lender who may allow me to push the limits a bit more. Who knows what will happen with the potential new lending restrictions so I'll have to reassess when that comes through.

 

I might do some more research on this. It definitely looks attractive but I could imagine you could get burnt with that as well. Hence the requirement to be an experienced investor..... I'm sure there are plenty of sharks floating around!

 

Yep

From what I understand some people have already got burnt but building the wrong thing in the wrong place

Cliff

 

I really am scratching my head why would you complicate things like NDIS...that involves a lot of mucking around.

In this market you could just build a House and Land and in 12 months it will be worth north of 200k....I shake my head! WTF!?? Better still 2-3 of these and you are done....

 

For the headache you take lending to developers … you might as well go up the capital stack and take on equity risk. Lending is not only Short term - it is for SMALL pools of capital in which case you are looking at a very passive strategy as part of a professional lending syndicate.

Once you have chunky capital to deploy… the returns from lending simply don’t stack up in a rising market like today’s (and it is a fairly boring business to be in).

with our commercial developments, we can routinely double the purchase price with a repositioning strategy (which translates to 300-400% return on equity).

I also hate the fact that like shares - banks don’t place any value on loans as an asset for
Purposes of borrowing.

As your portfolio grows, ICR debt cover, LVR, Wale & net income become so critical to maintaining access to cheap debt .. so all our capital is focused on value add and income generating hard assets.