Best method to have 4 ips paid outright ?

well , if that's you're view point you're probably correct , maybe you don't know when a " crazy boom " is going to happen .

I don't know exactly when a " crazy boom " is going to happen , BUT I've got a pretty good idea on which city it's going to happen in next in relation to other cities .

What has happened in Sydney wasn't a crazy boom . It's a regular event in every capital city in Australia and they tend to follow the same pattern in each cycle . If you don't think it's a regular event you won't look for it and you won't see it coming so you won't be able to take advantage of it ....

Cliff

 

Which city do you think will happen next ?

 

Brisvegas.

 

Brisbane in genreal, or just innner city ring ?

 

The problem with this is that unless you have some very strong income it will actually take a long time to pay down that amount of debt. You are talking about ~$1.5m in debt. assuming a timeframe of 10 years you would need to pay down 150k/yr. how are you going to stump up that kind of capital while also paying interest, holding costs, your own accomodation, living expenses etc etc. even over 20yrs you still need to pay 75k off the principal each year which is a solid effort. For me this is why I would prefer a strategy which At least partly relies on capital growth as well as manufactured equity.

 

In general. Plenty of people are relying solely on south east qld to boom which is more than 40km from the city

 

Inner city has already started moving . My personal experience is that it's easier to hold a larger number of properties if you buy in places with higher yields . Makes it easier to hold a larger number of properties and in terms of capital gains percentage wise you can also do better in outer areas

I posted my strategy in this thread and , as posted there , we've just bought another property recently .

Spot on .

That was my conclusion . In 2013 we sat down and looked at whether we just concentrated paying off what we had in our super fund and purely restricting our ambitions to that , but reviewing what we 'd done in the past , realized that was going to put a significant cap on what we could do , so we committed to buying another " Tranch " of properties . We ended up buying mainly in Brisbane but also one in adelaide and a couple of higher returning properties in Launsceston . We didn't buy those to generate cash flow to pay down others , but rather sell others to pay them down and use the higher return for income moving forwards .

Cliff

 

Further to that .

The properties we've bought in Brisbane in current cycle have gone up by around 350 k , and that's before the markets really started moving .

Cliff

 

No BS one of our IPs in Brisbane bought just under 2 years ago has gone up over 300k. The land value alone is 90k more now than the price we paid for the house back then.

 

Are you basing this on the valuation used for the rates ?

We purchased a 3 pack in 2013 at less that the land valuation on the rates at the time - this valuation has grown at a rapid rate since then. The buildings would be worth at least a further 50% of the land. We contemplated challenging the valuation (and had a SS thread on whether we should) but concluded it might be in our interest to leave it high.

As a result I don't pay too much attention to the value on the rates.

 

That's what a lot of the WWII migrants did. Slow and steady. Pay down the debt asap to reduce the interest and repeat. With hindsight they would have made a lot more $$$ by leveraging and purchasing more properties and then selling them off etc. At the same time a lot of those people can sleep easy at night and have set themselves up for retirement. I know of a few ex-posters on here who got greedy and purchased half a dozen houses but couldn't afford to hold them so they ended up with nothing.

Personally my plan to get and most importantly HOLD 4 IP's is by firstly increasing my salary, paying down PPOR debt, purchasing properties with future potential, and also purchasing properties that have decent yields/low holding costs. High risk= high reward but personally I never want to get too greedy and always want to have buffers in place. Australia has been 25+ years without a recession, parts of Australia have been getting double digit CG so it's easy to get complacent- Just look at Perth.

 

No haven't done a formal valuation yet but 2 houses down which is inferior to our lot in land size, interior and overall aspect sold for a high price so we're basing it of that comparable. There are also other comparables in the area some inferior and some superior to our lot which also support our conclusion so we're not just basing it on 1 sale, though not valuation based but the direct comparable sales action is most of the time a very compelling piece of data.

 

You do have a point about paying off the the 1.5 mil debt , so you think its better to accumulate a few and hold them for a cycle then sell a few to buy the rest out right ?

 

OK, got it !

I'm hopeless at comparables.

 

Even then people still get it wrong depending on the location,the only way it has worked for us is time,and holding everything then cycle after cycle and let the values do what they do..

 

That's my preference , but other people do things differently .

Cliff

 

Don't discount the fact that tenants will help pay a chunk out of that also.

 

In reality we have rarely held properties we've sold for a whole cycle . More like half a cycle or under . That when most of the growth occurs and so far we've managed to pick our times well .

Last peak in Sydney was 2003 and we bought from 2009 to 2013 . Sold last year and this year .

Last peak in Brisbane was around 2008 - 9 , and we've bought from 2013 -16 .

Cliff

 

hi cliff, probably a silly question, but when you say peak, is this a reference to a peak in price or a peak in % growth?

 

Peak ..... top at the end of a major boom . Sometimes it can be open to interpretation and some places will continue to more up more gradually ( the nicer places ) . Sometimes you will have mini booms between the major booms .

Cliff