Early 50s noob investors

That is interesting.....a lot of people are doing it.

I for one plan to be truly more passive by moving more to ETFs....

 

Awesome.
How many developments did you do again?
On an average income?

Playing it cool makes for a good story though.

Am also looking at ETFs. Great place to park surplus income.

 

There are a lot of experts who will tell you that real estate investing is passive. You just have to hire a property manager.

I am NOT an expert but I have found our little portfolio of IPs NOT to be passive as say shares

 

Experts told me that too. They even said they could find the properties for me. AMAZING!

After stepping in and firing the first real-estate agents. Evicting all the dodgy tenants. Learning how to do minor maintenance, and project manage builders. My 'passive' investments finally turned a dollar.

A good friend of mine also has a panel of experts advising him. Bought a half dozen positive geared properties. I think he is ready to quit his work on his whopping minus $12k profit after paying for broken water heaters, gutter repairs, and missed rental payments. A true passive property investor through-and-through.

 

You may want look at what this young bloke did.

Sydney man reveals key to buying four properties in four years

AS for me...been there and done that....have nutin to prove...a lot of people who know you find you and interesting study.....I guess all those Dymphna dovotees...are great for socials...don't know about makin money though....

 

So:
$1.75M portfolio.
$1.45M costs including stamps etc.
$300k difference from val.
Basically the uplift of his 2015 Maroubra unit.

@74% LVR on val.
$1.295M
$455k difference from val.
$455 -$300k = $155k. Max estimate of money he put in, or uplift from units (probably all from the Maroubra one).

$55k on his first place. He must have bought at 95% LVR or borrowed from mum and dad.

$155k-$55k. He saved max $100k in 4 years?

He was earning $45k when he got his first place. No mention of current income post uni degree at CBA. He also works a second job.

To borrow $1M+. His income must be $100k+?

He is buying apartments. Low rent. Little uplift potential in a falling apartment market. He must be at or just below capacity on his PayG.

Then:
"He’s also set to launch his own buyer’s agency, ESTRO Property, to help other investors get a foot on the property ladder — and he’s already eyeing off a fifth property he hopes to buy in the near future."

*que engine starting*

Maybe he'll tell you being wealthy is easy too. Just buy low yield properties in flat market.

If there was a point you were making. It went over my head.

You say you have nothing to prove. Why avoid answering the questions on what it really took to build your portfolio.

 

Hola ******. Paciencia hijo mío ... todas las cosas buenas vienen a las personas que son pacientes.

Maybe but he has similar capital to you at his age.... pretty impressive...

As for me...I have done about 7 House and Land packages over the last few years..I would not call them developments as such. Most were well under 350k (including land). My income is high...similar to you...maybe a bit more...but it seems you and your partner would have much more.

As for me...lets say I had a small windfall...can elaborate....at our next meet-up.

At a high level my portfolio is in the low 8 figures....and at around 36% LVR. I was planning to sell more properties but windfall got in the way.

I get close to 480k in rents and after expenses...I have about 100-130k positive income depending on vacancies, renos etc.

The plan for next year or so is to build 2 more house and land with about 60% margin...and sell a block of land whcih has gone up 100k. By that time I will have a larger 8 figure portfolio....but with 30% LVR. From then on...I plan to sell another 4-6 properties over 3 years..at which point my LVR will be somewhere between 10-20% LVR with income over 180k.

I also plan to use some of the excess to build out a ETF portfolio....target is $1m in the next few years...and the way my super is going I am probably going to hit $1m or over by 60m. Another 45-50k income...this will be in addition to any ETF portfolio...I establish

Care to tell me what you are doin'. Last time you had a failed boarding house in the Eastern suburbs...and working on a new venture. I don't like these sort of things...too much time and headaches....as a matter of fact I am finding even my holdings are a headache...thus starting to change the mix of my investments...but I am luckier than most as I have made my money....by being patient over 20 years.....more money than I can spend.....well I established 2 credit cards..one for property expenses and one for personal spend...and it seems I struggle to spend more than 3-4k per month on myself. So I guess I am already FAT (EL GORDO) FIRED (look it up hijo).

Adios....hijo.....

Voy a tumbarme al sol y disfrutar de mi botín.

 

Hire a chef, masseuse, get a PT, get into sports cars... mate i havent even started in how to up your spending and increase your life.

 

Yeah...it is low because I have not spent the 10-20k in travel yearly...due to my work not been able to do this....but get what ya mean....this should double when I start goin' business class...

Nah sports car screams....man with mid life crisis......though a noice SUV or sedan won't go astray...I have a 2 year old Mazda which I paid cash.....likening it even more....as it is easier to park in congested Sydney.....

 

I like this strategy/suggestion from @SatayKing, in addition you may also have some lics/ etfs which could help the compounding effect.

It is not a get rich quick scheme by any means!

 

A dual occ will get you there easily. Less than 12 years.

Here's an example of what I mean. P/Price 590K. Stamp Duty 5K . Allow 3K for legals, depreciation report, building inspection. Call it @600K

You have stated that you have 160K cash. Deploy 20% towards deposit (118K ) + 5K stamp duty + 3K for a total deployment of 126K. Call it @ 130K to allow for some modest construction interest

Borrow 80% of 590K. ie 472K. Borrow it P&I @ 4.2% ish.
Repayments would be @ $2308.16 per month, or $27,697.92 pr annum
Property Management, rates, insurances etc will run @ 5.5 - 6K per annum. Call it 6K
Total Expenses will therefore be @ 33.7K per annum

Rental Income of $680 per week means you can generate $35,360 per annum in rental income . With vacancy rates nearing 1% in Orange, it's likely you'd be at full, or nearly full occupancy year round.
So you'd be running CF+ by @$1660 per annum ie $35,360 coming in. $33,697.92 going out
You'd also have some pretty handy depreciation that would generate another 4.5-5.5K of after tax cash flow as well, leaving you @ 6-7K CF+... Lets call it 6K to be at the conservative end. That 6K can be reinvested towards debt reduction against the 472K debt.

But the really powerful thing you have at your disposal is being debt free on your PPOR, which frees you up to save well. You have said you currently save @ 18.5K per annum or thereabouts. So If you were to make extra mortgage repayments using that 18.5K plus the 6K the property was generating , you'd pay down the 472K in 11 years and 5 months .

Even if there was ZERO capital growth you'd have turned 130K into a 600K asset in less than 12 years.
Even if there was ZERO rental growth you would have exceeded your goal of adding another 30K to your income.

But if there was a 30% increase to rents in that time you would be generating @ 46K per annum - minus outgoings and taxes. If there was a 40% increase to rents in that time you would be generating 49.5K per annum minus outgoings and taxes...

Now.... SMSF makes this entire scenario even more interesting ...... one of these inside super and one outside super starts to get pretty interesting for your cash flow .....but that's a conversation to have with a financial planner . Sadly, most planners are not FOR property, because property isnt an approved financial product . This means they are generally actively AGAINST property and would prefer to sell you something from their dealer group approved product list. There's nothing wrong with that if you prefer weaker results over time. So if you decided to engage a planner, you would need to make sure that whatever planner you work with, they aren't anti property .

 

Nah.... just need 2 cash cows paid off.... which is relatively easy for anyone to do in 20 years...and quite achievable in less than 15 years if you are PPOR mortgage free and can make some extra repayments using the money that used to be spent on the PPOR mortgage. Ive just demonstrated above how it can be done for 1 property in 11 years and 5 months. 2 properties really isnt that much different. And thats especially true in the scenario above where there is a significant amount of additional money being deployed towards maximising superannuation ...so if that exact status quo continued and 1 dual occ was purchased via SMSF and 1 was purchased conventionally outside super, I would suggest 2 cash cows costing @ 1.2 Million would get you a significantly better than 60K income stream ( especially if one of them was purchased by an SMSF vehicle and enjoys tax free treatment of the income ) quite easily with 11 years and 5 months ... it's simple dividend reinvestment using leverage and property. Outperforms whats possible with shares using a conventional dividend reinvestment plan because you cant access this kind of leverage with shares, typically. So you really don't need to spend $3Million for a 60K income if you concentrate on high yield resi property( such as a dual occ) and reinvesting that yield back into debt reduction . Important to note that SMSF purchases of resi property may be at risk of extinction in a post Labour Govt so something like this would need to have the trigger pulled kinda quickly....

 

Thank you - this was a really interesting response. I like facts and figures.

 

I do too.... the maths are the maths. It's pretty simple, logical stuff

 

$600k for Orange with a population less than 40k? You didn't consider a case where the growth was NEGATIVE...

 

Orange is booming. As is Bathurst. As are several other regionals ....

It has proven itself to be THE most stable real estate market anywhere in the country for the past 20 years. Just ONE year of negative price growth in 20 years. That's as stable as it gets.
Probably a good idea to know what you are commenting on before commenting ...
.
It's always easy to be a critic. Much harder to offer something of value. And I noticed you didn't offer an alternative...

 

Regional towns can do well but are risky and at those price points they come with even higher risk. The way you put it sounds like Orange is a hidden gem that many investors missed for the last 20 years. A critic without an alternative suggestion won't make it null and void.

 

Orange is a hidden gem . My clients and I are doing very well there .

The problem with your argument is that it’s generic. Regionals aren’t higher risk . “Some” regionals may be higher risk , but it’s like saying non banks are riskier - when we know many have lower arrears rates and more conservative policies than majors . So nuance matters . Context matters......especially when the regional in question has proven itself more stable than any other real estate market in the country . That’s not some markets - that’s ANY other market .

You’ll notice I am always careful to provide that context , rather than saying all regionals are performing that well. Whereas Your criticism is unfortunately based on unsophisticated, generic , one size fits all assumptions not supported by facts . So for me at least - they dont hold water

Most importantly though - I provided a detailed response - one that actually answered the question ..... something missing from your first and second efforts.

But that being said - I like Orange .... you needn’t feel the same . But have a reason for it that’s a little bettter than generic ... “regionals are risky” doesn’t really cut it.

 

I'll leave it to the OP to do his DD. $600k for Orange with less than 40k population, I am sure your are correct.

 

I think you'll find the population has grown by 3 - 4,000 in the past 3 years or so - at least. Thats just a guess, but we will have to wait for the next census to know for sure.......but what we do know is that 45% of all regional construction in NSW has occurred in North Orange in the past 2 years - that equates to @ 250 -300 new houses being built per year, and they are pretty much all 4 bedders. We also know that while this building boom has been happening, vacancy rates have fallen from 3% to 1.3%... so the dots are pretty easy to connect. For those who appreciate more direct information - it obviously ain't investors building all those houses , in other words. If it was, vacancy rates would be climbing not falling . And with hundreds of new Govt jobs starting there in the next couple of years, hundreds of new medical jobs also starting there in the next couple of years, a new medical school starting there in 2021 with hundreds of new jobs , and a new gold mine opening right now that will likely expand to several hundred jobs at least - if not a few thousand...over the next few years - again, the dots are easy to connect. Just 400 or so people per year adds 1% to the population. That's like 50,000 arriving in SYD or MEL. And there's barely any registered land available to build on, and barely any properties available to rent . They are building record numbers of homes right now and cant get close to keeping up. Unemployment rate is 3.8%. Vacancy rate 1.3%. Hundreds of jobs to come - and they are all mining, medical and Government jobs. . Acute shortage or properties to buy or rent. Now, if that doesn't connect the dots for you, I dont know what would

Here's what I'm talking about ...

Quick thinking: Visa applications from regional employers to be fast-tracked

Homes shortage sees sellers achieving strong prices as demand exceeds supply

Tips for who’ll rise up the 2019 property ladder - Propertyology

Market review – Orange NSW, December 2018.

Propertyology

Still booming: Orange tops list of regional centres for property investors

Is this location Australia’s most consistent property market? - Propertyology

Orange economy thriving at every turn - Orange City Council

https://www.centralwesterndaily.com...7Tj7qdcMAafUyIc0KVdVndN45FmA0r1WJ13e_D6unsTeo

https://www.facebook.com/watch/?v=973151899557278