Grow Capital First

It would be fair to assume someone with such a high passive income would hold at lease some form of commercial property, unless he is secretly NB.

 

Yes it is about that as there a various additions (depreciation) and deductions to reach this number.
Tax is based on many things like the country the income is generated in eg NZ 28% HK15% and also the end beneficiary who has the lower taxation rate and future benefit of the surplus imputation credits

 

Yes mainly commercial
No developments
No renovations
No flips
Just hold

 

One hundred K plus can easily turn into $50k negative if you lose a tenant or two plus you also need to reduce principal from the profit too!
When you are making no money (due to no tenant) that is when the Real Estate agent will ask to improve the premise for the next tenant and the next tenant will ask for free rent and a contribution to their fitout ....hence $100k pa is far too small

 

It's not any skill when the bulk of the properties have been purchased with 10% loan (in the 1990's) and the interest rates are now 4%
Your profit has gone from a 2.5% margin (Yield 12.5% Cost 10%) to 8.5% plus (12.5%-4%) Bingo profit goes up 3.4 times before rent rises ....no magic skills from me!

 

Still its ****ing impressive. Not everyone can achieve that given they had the means too.

Congrats. I want to be your student

 

Is that for yourself or for your family ? Lifestyle can sometimes be a luxury - for me i know i can lower my lifestyle and live on less than a 1-1.5k a month. i went from going overseas 7-8 times first/business class last three years to europe etc to just eating toasted bread and jam or salad for dinner.

 

Its family, children's education/uni etc, living abroad and giving them a leg up.

We also pay for ongoing renovations we have a period home costs a fortune to maintain, we just got pool installed.

We also now rent a home in Melbourne and spend time in both States as daughter now lives in Melb.

You cant take it with you and everyone has different goals whatever suits.

We also know there are some on this forum who reached financial freedom live a great life with much less. All to their own.

MTR

 

Curious why you would "need to reduce the principle"? Would you not keep this revolving, and with growth in be underlying property value in any case not need to reduce?

Also I see any paying off of principle as making a payment to to yourself. I don't view that as an expense.

 

Nice. Those were the days. Before my time im afraid, but good opportunities are always out there ...

 

@Beano,

To say that what you have achieved is "not any skill" is unnecessarily humble. 1.4m net pa in income is certainly not fortuitous happenstance.

I suspect this ranks numero uno in the Somersoft / PChat community.

Immensely impressive and extraordinarily well done!!

Regards,
Greg

 

yup - everyone needs to live a little - i just wear more when it is cold in melbourne rather than on the heater and my dog does the same to save some $$

 

nope... Handyandy... Cabramatta King

 

1: principal With commercial properties the banks insist on principal repayment until it reaches a "safety" level for the bank. This can be about 45% LVR this generally has to be reached prior to the end of the lease. When the portfolio has a good spread of tenants that regularly renew then a lower WALT (weighted average lease term) is acceptable and principal reduction are not required.
A new valuation from a registered valuer and/or a new or renewed lease also may allow principal payments to be suspended
Residential the banks update the values without the need for a registered valuation so principal payments are easier to suspend
Yes I treat these as payments to me not as a expense so don't mind making them

 

Got it.

Most of my properties don't require payment of principle (all are residential). I guess though if you see no other investments around then paying of a loan is always a "can't go wrong" type place to put your money.

 

Yes correct
I actually asked the bank how they calculated the security two months ago and the spreedsheet they sent was very interesting
Residential they periodically updated themselves using e valuation
Commercial using the registered valuation i had submitted
Some were over 20 years old
They said if i was willing to get new valuations they would adjust their valuation
But note we have to use one of their bank approved "panel valuers".
So there are 2 ways of getting money out of the commercial properties. Earlier principal payments and new valuations

 

@Beano
Out of curiosity, how many properties have you collected in your portfolio to generate 1.9m passive income?
Btw, congratulation on such an accomplishment.

 

And another question - are you now full time "retired" and living the good life?

 

@big max way to many questions to ask if only @Beano willing to share a lot more.
I can be his apprentice

 

11 Commercial 37 Residentials