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Best method to have 4 ips paid outright ?

Discussion in 'General Property Chat' started by Drunkanbarbarian, 15th Oct, 2016.

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  1. Drunkanbarbarian

    Drunkanbarbarian Well-Known Member

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    Hi my goal is to have 4 paid off ips in the around 300k price range

    What would be the best method to get there ? #Should i accumulate like 10 then eventually sell a few off them to pay the rest off ? Or
    # put deposits on all 4 of them and pay one off then move on to the next one and also use the first ips income to help me pay of the second one and so on to the 3rd and forth ?

    What are other methods ?
    Or whats the best method you think i should use to get to my goal off 4 paid off ips ASAP ?
    maybe somone on here has a similar goal, if so please share your experience and what uve done to accomplish that goal ? Or what your doing to get there.

    Thanks
     
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  2. MTR

    MTR Well-Known Member Premium Member

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    best way to own 4 IPs outright in shorter time frame is to only buy in rising markets and as many as you can, prior to peak sell half the stock. Rinse and repeat, this strategy means you need to look outside your patch, all States
    If you buy in flat markets it will be very slow process and limiting ability to access equity. Slow and steady is not sexy, it's a myth

    Been doing this since I started and retired after 7 years...it works

    Another option look at ways of adding value ie developing 1 to 3, sell down 2, rinse and repeat. Follow those who are doing this and just learn along the way...investing on steroids

    MTR
     
  3. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    ♤♤♤This sounds good to me. Buy in a rising market, try to buy under market value (not competing with lots of other buyers) and do value adding strategies too (eg. Reno or subdivisions/add rooms perhaps).
     
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  4. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Great minds @MTR :)
     
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  5. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    There's probably no best method as it depends on your own circumstances, determination, as well as ability to take action and get results no matter what.

    Personally, I'd suggest not limiting yourself to a goal of 4 x 300k IPs.
    Instead, why not buy as much as you can service within your risk profile, then work on increasing your income to smash down the debt as fast as you can. Just keep doing this with no end goal in mind and you may find yourself there quicker than expected.

    Our current portfolio has far exceeded where I would imagine we'd be if we set goals early on.
    Action is much more important than goals, provided you know which direction you're headed.
     
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  6. euro73

    euro73 Well-Known Member Business Member

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    Exactly the strategy I employ using NRAS and dual occ.

    The first priority is to purchase what you can afford. So talk to a broker. Work out what you can do. Borrowing capacity and funds to complete are critical here. They may not tell you what you want to hear, but it will at least properly inform you about what is able to be achieved right now, for your first stage of acquisitions.

    Then , concentrate on paying down debt. Start with all non deductible debt first - PPOR, personal loans, HECS, credit cards etc... get rid of all the "bad" debt you can. That's going to lead to a dramatic improvement in borrowing capacity, so that you can add additional properties.

    This way, even if every property purchased isn't an immediate absolute winner - across a diversified portfolio you are going to do very well, especially if you continue to reinvest surplus cash flow back into the portfolio...

    Eventually, you'll be in a position where selling down some of the properties will enable you to own a number outright - providing you with a passive income.
     
    Last edited: 15th Oct, 2016
  7. See Change

    See Change Timing Lord Premium Member

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    IHMO the easiest way to get fully paid off properties is buy more , as many as you can afford , then sell and pay down the others . Easiest being not having to do work on the properties and you just sit back and watch them go up . The only thing you have to worry about is getting your timing right.

    If you look at people like Nathan Birch , Steve McKnight and recently Tony Fleming , They all started collecting their properties at a time when property investing was not a daily topic of conversation. At the bottom of a cycle . They started buying what they could afford and when theycould buy more , they did so . they worked hard and smart.

    We started our journey in the previous cycle at a time whenSydney had already boomed and brisbane was just starting to move . I read as much as I could listened to every one on the forum and after about a year , Started buying as many as we could afford . Over the next 20 months we bought 19 properties . We ended up selling all but 4 . We could have sold half and paid off the other half and had a nice retirement income that would be around about 100 K but we didn't . We wanted to aim higher . We ended up doing a development in Sydney and used much of the money to fund from the sales to fund that . Ended up with LOC's on new PPOR all paid down .

    Enter GFC and with the market in sydney in a mess ( Care of LOC ) we started buying in sydney and then a weekender . Once Sydney boomed we paid down the weekender and the cycle goes round .

    Now we've bought more in Brisbane and adelaide and we're waiting for the market to go up further . Again we will sell down . We will probably keep some , but some will go into super and some into reno's / improvements on our PPOR and weekender . So one cycle further down the line we're millions of dollars better off .

    Cliff
     
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  8. ellejay

    ellejay Well-Known Member

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    Get your salary as high as possible and buy as many ips as you can manage. I try to buy a couple a year, aiming for 5 this year. Look internationally if you can to find the best deals. Save like crazy, don't waste money. Have a cash buffer to protect your assets if the unexpected happens. Pay down debt...voila.
     
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  9. hash_investor

    hash_investor Well-Known Member

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    Best way to buy 4 paid off IPs is to buy two dual occ. They will be cheaper than 4 but will provide rent equal to 4.

    I am not a fan of selling your IPs because of CGT. If you are looking to have paid off IPs then pay off the debt. Simple.

    Everyone does it once in their life hence they all will be inexperienced. Dont follow advices blindly because your situation in unique.

    Just pay the deposit on 4 ips and pay off the debt.
     
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  10. Drunkanbarbarian

    Drunkanbarbarian Well-Known Member

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    Whats NRAS ?
     
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  11. Stoffo

    Stoffo Well-Known Member

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    Study, work hard, get a second job, stay single and be to busy to go out and spend money, live at home with mum and dad, cry poor for as long as possible :rolleyes:
    Going without in the short term can be a big step up in the long run.
    Buy an IP, when possible/affordable buy more
    If you can improve the property do so
    If any one property goes up considerably "cash in" and buy 2 more elsewhere.
    Will take you no time o_O
     
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  12. Perthguy

    Perthguy Well-Known Member

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    The build 3 sell 2 keep 1 strategy is appealing to me. Except I would look at building in a rising market and hold around 2 years before selling to pick up some capital gains. If this is working well, why stop at 4? ;)
     
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  13. wombat777

    wombat777 Well-Known Member Premium Member

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    This is the strategy I hope to be able to pull off ...

    I have two IPs each worth (average) approx $350k. My current plan is to start developing one of my properties in the next 1-2 years ( build 4 townhouses ). Once the first is done should have $3k cashflow per month if I hold them ( after property management, insurance, rates and then adding in tax deductions due to depreciation of the new dwellings ).

    Estimate to be able to then extract $500k equity from the developed properties to put towards developing the second site ( 6-8 units ). Guessing a 2022 timeframe for a second project to start.

    If I can implement this strategy, foreseeable to have $2M-$3M equity (a guess) from the two modest sites within 10 years, although yet to run any numbers for any scenarios for the second site. Add in the equity I should have on my PPOR by then and I would guess be sitting at total $4M to $5M equity within 10 years and total LVR in the 50 to 60% range (guess).
     
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  14. Drunkanbarbarian

    Drunkanbarbarian Well-Known Member

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    Dual occ as in build granny flats at the back ?
    Also i like your style of thinking, this is also my sytle of thinking
    Have you done this your self ? As in paid off ips ? Using snow ball effect
     
  15. Drunkanbarbarian

    Drunkanbarbarian Well-Known Member

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    What would be the fastest way in genreal

    Put 4 deposits on and work like an insane madman and just pay em off one after the other put em on a hit list ?
     
  16. hash_investor

    hash_investor Well-Known Member

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    Dual occ as in duplex. Single or double title. You are buying for cash flow not cg.

    And yes I believe in paying off a few ips and on my way on it. What I do does not matter for you because we have different earning powers and plans. I plan to be able to retire soon and my strategy executes my plan.
     
  17. Perthguy

    Perthguy Well-Known Member

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    I modelled this in excel once. In scenario 1 I paid them off one at a time and used the rent from the first one to help pay off the rest etc. In scenario 2, I paid an equal amount off each property each month. From memory, there was not a lot of difference between the 2.
     
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  18. hash_investor

    hash_investor Well-Known Member

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    Wow... need to learn some modeling from you.
     
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  19. Perthguy

    Perthguy Well-Known Member

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    It's really not difficult.
     
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  20. Drunkanbarbarian

    Drunkanbarbarian Well-Known Member

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    Oh serious , i was thinking the snowball effect would be more effective