Can or Will you retire on property alone?

If you are running a decent business, $50K extra income is nothing.

For example, revenue of $5M, net margin 20%, profit $1M. So, $50K is 5% of cash cow.

Or, revenue of $20M, net margin 15%, profit $3M. So, $50K is a drop in the ocean.

IMHO, very doable.

 

and very nice

 

You're comparing apples with oranges. I am talking about PAYG income earners in accumulation phase, post APRA

There arent many forum readers earning 1-3 million per year , and if there are, they arent likely trying to figure out how to retire from income from resi property.

However you choose to make your argument, the fact remains that for someone starting out today and hoping to retire from resi property income, servicing requirements are far stricter than pre APRA, so either significantly more income is required , or significant debt reduction is required. 50K salary increase may be a drop in the ocean to you , but not to most. And that's 50K per million of debt by the way...so its 100K extra required for 2 million, 150K extra required for 3 million, 200K extra required for 4 million etc....

 

I had a business colleague who had a turnover of $30M at a net margin of 30%.

Now, that was VERY NICE. Even I was in awe (and jealous)

 

My apologies, I thought you were addressing me when you wrote:

But, if you are really talking about PAYG income earners, then we are in agreement.

IMHO, they had no chance pre-APRA; that hasn't improved post-APRA.

 

Nice profit. I look at that and think it must have been a lot of work? I doubt that money made itself

 

Reads well.

But where are these $500k dual occupancies returning $31k?

 

It was bloody hard work.

But, as Malcom said "Life wasn't meant to be easy".

 

I did that calculation ...yeah its pretty poor ...just 18pc on equity. ..plus a salary of $100k

 

But us PC have better margins ...over 50pc
Just not $30m+ rentals ...well not me ..maybe other PC investors !

 

No chance? Really? OK, well we don't draw $100k from property, but it IS over $80k, which will rise over time as there are still a lot of doors left in the portfolio. The ground work of this was done on a very low income. Granted, it wasn't easy....it was damn hard, but if we had a normal, even median salary during that time, so much more could have been achieved.

 

Where do beginners find a business that makes money? They don't fall out of the sky, and land in our laps. Beginners with no connections wont know where to get started, how to go about it. They may not even know there is a better way than the "get a job, save a bit and retire onto a pension".

So no, not a case at all that "Everyone" can do it.

 

I don't think beginners on below median salaries have much chance these days, post APRA. There are plenty of threads on PC discussing whether Australia is in the same financial situation as we were in the past 30 years. Consensus says no. Those who have already benefitted from their properties doubling in value once or twice had that boost which makes it far easier than those starting in the current climate where we are expecting a long period of very low growth.

 

I don't know anyone who is living 100% off their property income:

1. Some I know are renting, are still working or are on the Aged Pension;
2. Others I know own their PPOR (some in conjunction with a bank), are still working or are on the Aged Pension;
3. Others I know own their PPOR and 1 or 2 IPs (some in conjunction with banks), are still working or are on the Aged Pension;
4. A few supplement their Super pension with the Aged Pension;
5. A couple are like us and live on our self-funded pension.

Our property portfolio is negatively geared as we are focussed on CG. Even when we restructure in a few years time, it will be cashflow neutral or slightly positive at worst .

As I stated earlier, our strategy for property is CG, not income. This increase in net worth is tax free (until we sell when we hopefully never will).

Our income comes from our SMSF which is also tax free. I know everyone is different but we didn't work our butts off for 35 years to retire on $35K, $60K, $80K or even $100K. None of these would cut it for us. We need double these numbers .

Totally agree. Like you, we worked hard, took calculated risks, went without for years, ... We would never have ended up where we have on a salary.

That is why I am so passionate about starting/owning a cash cow or cashflow generating business.

Yes, it is hard work; yes, it is risky/high risk but, if one does it right (like all great things in life), the benefits/rewards outweigh the sacrifices/pain.

I just wished someone pointed this out to me 40 years ago. Instead I had to fumble around for 20 to 30 years and slowly work it out over the last 20 years.

 

Did you even look at the post that I was replying to, before you leapt in?
Here it is......

The OP said "No chance pre-APRA". My response was that I DID do it pre-APRA.

 

You seem to be very focused on beginners. Everyone is a beginner at some stage, including the OP who wrote the post. Achieving anything takes work, so no, a business, or a property portfolio won't fall out of the sky and land in your lap. You have to take action, make mistakes, learn & make sacrifices. You need a certain hunger to even look for options in the first place, unless you've been lucky enough to be brought up in a family that invests or has a business mindset.

 

This is the difference. We were broke. When we bought something it had to pay it's way from day 1. We had no options other than to focus on cashflow, even if it was positive by only $10pw, it brought $$ into the household. If it didn't, we just couldn't buy it. As the equity grew, that was re-invested into more & the cashflow increased over time.

 

I just mapped out a step by step strategy to get anyone there...