Building Portfolio on Average Income, Reality or Illusion?

Discussion in 'The Buying & Selling Process' started by Realist35, 22nd Oct, 2016.

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  1. sash

    sash Well-Known Member

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    What are the numbers like?
     
  2. Realist35

    Realist35 Well-Known Member

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    How can I add a poll to an already created thread?
     
  3. Beano

    Beano Well-Known Member

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    The 29 properties i brought have a weighted net average yield of 6.5pc
     
  4. sash

    sash Well-Known Member

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    very nice...what % are residential...I am taking you still holding a lot of residential...my gross on my value of my portfolio is like 4.2% (actual gross not on bought values).

    I know lots of commercial getting 8-10% with expenses paid.
     
  5. Beano

    Beano Well-Known Member

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    Not much in residential ...about $250k pa worth of net rents ...could pretty well disregard this income in the big picture
     
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  6. sash

    sash Well-Known Member

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    Wow $250k net rents in resi very good...bit agree commercial is much more.....
     
  7. Beano

    Beano Well-Known Member

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    Yes those numbers are correct for commercial but for land only commercial (lessors interest) ...that is only 6.5pc but note there is no expenses except rental valuation cost every 7 to 12 years . ...rent is generally paid a year in advance
     
  8. sash

    sash Well-Known Member

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    Wow nice...
     
  9. euro73

    euro73 Well-Known Member Business Member

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    You sound logical and sensible and amazing!!! :)
     
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  10. euro73

    euro73 Well-Known Member Business Member

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    Are you promoting sports shoes?
     
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  11. sash

    sash Well-Known Member

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    Mate...you are in a different league to us mortals. ;) What I am doing is chump change compared to likes of you.

    Leasing the land which the commercial property is sitting on is pure genius!:)


    No just different flavour of NRAS. ;)
     
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  12. MissSwiss

    MissSwiss Active Member

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    +1 for number 9 especially. I'm 30 years old, having my second child. The first one gave me issues, and the second one might too (more so because I'm the mother AND the higher income earner).
     
  13. Beano

    Beano Well-Known Member

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    I should have discovered this earlier!
     
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  14. sash

    sash Well-Known Member

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    Went the Thursday city even....well...my ambitious friend @Taku Ekanayake is planning for the 6th and 7th properties...very nice...who said it is more difficult to do it....nice work champ that will be 7 within 3 years if you do I by late next year!
     
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  15. Taku Ekanayake

    Taku Ekanayake Well-Known Member

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    cheers sash. definitely pushing for it - just gotta spot the right deals!
     
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  16. Noobert

    Noobert Well-Known Member

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    @sash I read your old somersoft post as well, and thanks for those posts.
    How do you address vacancies and/or softening rents? A big concern for me is high vacancies or large drop in rents affecting my ability to hold a portfolio over tougher times with an average salary.
     
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  17. Beano

    Beano Well-Known Member

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    Diverse portfolio with a high net yield
     
  18. Noobert

    Noobert Well-Known Member

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    Thanks @Beano, do you mean diversifying with other investment vehicles such as shares? or do you mean having more diverse properties - if so what would these be? Would duplexes be one of these, or do you mean something more like rooming houses?

    Thanks :)
     
  19. Beano

    Beano Well-Known Member

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    What you need is income that reacts differently to changes in economic conditions ....hence it is all of the above and more ...
    Usually about 50 different sources of income is enough
     
  20. euro73

    euro73 Well-Known Member Business Member

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    This is why NRAS is so smart.
    1. You are renting the property at a 20% discount, so you have a price advantage vs your competition.
    2. You are able to generate strong CF+ , tax free surplus amounts of @ 10K each year for up to 10 years. This is based on 4%(ish) I/O . You can lock these sorts of rates in for 5 years at the moment, using fixed rates, meaning these surpluses can be all but guaranteed for at least 5 years.
    3. There are redundancies built in - for example, the NRAS credit increases each year, indexed to rental CPI . So does the rent. So does the income test for eligible tenants. And there's also this little beauty - which is often overlooked but in my opinion is a huge plus ; you still get 100% of the NRAS credit ( currently valued at $11048 tax free dollars) even if a property is vacant for up to 13 weeks ( 91 days) And you get a pro rata amount if the property is vacant for between 92 days and 182 days ( 26 weeks) You can only lose the credit for the year if the property is vacant for more than 182 days (6 months). Given the fact you are able to offer your property ( which is brand new by the way) at least 20% cheaper than your competition , the chances of ever having more than 182 vacancy is incredibly remote. Not impossible I guess... but as close to impossible as you can get.
    4. The surpluses you generate can be used to reduce other debt, which further improves cash flow and therefore your ability to hold the portfolio as it matures... and the debt reduction also creates equity and improves borrowing capacity.

    In other words, it's just smart investing to have at least one of these as a foundation to any new portfolio, in this credit environment.
     
    Last edited: 8th Nov, 2016
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