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how could i make the most income from property(s) worth S1 million

Discussion in 'General Property Chat' started by justine77, 24th Sep, 2015.

  1. justine77

    justine77 Well-Known Member

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    How could i make the most income from property(s) worth S1 million

    In a country town if i bought 10 properties for 100000 each that rented for 240 a week high yeild , then i'd have working on 50 weeks a year 108000 a year and the tenth property to live in if thats what i wanted to do for some financial income. I"d be quite far from my family and friends though it might be worth it for a few years if it will get me some financial peace.

    in a better suburb i could buy 3 apartments for 1 million live in one and rent the other two out for aobut 350 each a week which over 50 weeks a year is some 35000 income.

    Is this correct
    how much to i leave aside for costs and what are the costs please.

    Is there other information i can consider please.
     
  2. neK

    neK Well-Known Member

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  3. TMNT

    TMNT Well-Known Member

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    show me a place that has $100k properties renting for $240 per week that isnt serviced/student accom, and doesnt have $6k per year body corp, that has a population of more then 200

    And ill buy;)
     
    Last edited: 24th Sep, 2015
  4. tobe

    tobe Well-Known Member

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    somewhere between 20 and 40% of rent goes to costs, depending on the age of the property, whether it has body corp etc.
    the rule of thumb is 5 paid off 'average' houses gives you an average income, as rent is generally 25% of average income, and costs take up the fifth house's rent.
     
  5. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    10 x 100k properties will likely have multiple letting costs, tenant issues, vacancies, repair and maintenance costs, insurance costs/issues, emotional stress issues if you have problem tenants or experience property damage/vandalism, and more...

    Is your 1 mil capital base going to increase over time too?
    Less likely with the 100k properties.
     
  6. euro73

    euro73 Well-Known Member Business Member

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    Is the $1 Million available in cash, and do you work? If so, and depending on your income, you could consider up to 10 x NRAS

    $1million could be divided into 10 x 100K. Each 100K deposit would be used to fund 20% deposit + stamp duty + 10K buffer for a 350-400K NRAS approved property

    Each NRAS property will produce @ 18-20K of deductible losses ( 9-10K from pre tax cash loss, and 9-10K from depreciation)

    Each NRAS will also produce an after tax result of @ 8-10K CF+ after accounting for neg gearing and the NRAS credit.

    A person earning 200K per annum or more would see the maximum benefit from this strategy. ( 10 properties) as it is most effective when combined with neg gearing. For example, by earning 200K, and generating 180K + in deductible losses, your 200K of taxable income would be reduced to below 20K , which essentially makes the entire 200K salary amount tax free ( after lodging your annual return and receiving all your tax back )

    Then, in addition, you'd receive the tax free NRAS incentives, would would contribute @ 80-100K of additional tax free income, for a total after tax income of 280-300K.

    If you were to save 200K of that per annum, you'd have a fairly handy pool of money at the end of 10 years. Sell of 2 or 3 of the properties at that point, pay down the rest of the debt on the remaining properties, and you'll have 7 or 8 completely unencumbered properties generating a pretty healthy income, from there on.

    Of course, if your taxable income is less than 200K, adjust the approach to suit. For example, on 100K I'd consider 4 x NRAS only, as that would maximise the cash flow for 100K . Under that scenario, you could perhaps invest 400K into 4 x 100K amounts to be used towards this, and invest the other 600K elsewhere.
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Dont

    if u are after the biggest return for dollar

    business all day, every day

    ta
    rolf
     
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  8. bob shovel

    bob shovel Well-Known Member

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    Is this based on the amount o.p is starting with or based on the current property market and apra hoohaa?

    Or just in general business returns more?
     
  9. TMNT

    TMNT Well-Known Member

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    Businesses always return more period. Thats if its purhcased at market value and assuming things staybthe same

    Roi return from 25 to 100% !

    You cant get that from properry. But businesses have a metric crapload of other risk compared to real estate
     
  10. sanj

    sanj Well-Known Member

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    While i agree with the comments re business it isnt for everyone.

    Re the OP though if youre looking for maximum income and have $1m look at commercial properties instead. You'll have more in your pocket and a hell of a lot less to do than if you had 10 cheapies
     
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  11. sanj

    sanj Well-Known Member

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    2 pretty big assumptions there, as we've seen from @Bayview being open and honest with all of us it can often go the other way.

    At the same time though returns can be spectacular. A friend of mine invested a low 6 figure sum in what was a growing small business in perth a few years ago, last year alone he received many multiples of his investment in dividends and his shares are worth well into the 7 figures. Not bad for a 3 year investment!

    You simply cant make returns like that buying and holding property and waiting for it to grow in value. In the above example youre talking returns of around 25% PER MONTH in income, let alone the massive growth in value of the shares. A rare and extreme example but certainly shows the potential upside. Alternatively that initial investment could be worth zero today which wouldnt happen with property
     
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  12. sanj

    sanj Well-Known Member

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    I dont know if ive said it before but i think @Bayview has done us all a big favour in sharing his learnings and ups and downs re his store as many people dont realise the potential pitfalls of business.

    We dont see eye to eye at times but i definitely respect this about him
     
    Last edited: 25th Sep, 2015
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  13. TMNT

    TMNT Well-Known Member

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    Yes i agree.

    When he bought it he was so confident of spetacular returns and retirement (no offence bv) but i did say to him either via email or phone. Be careful man!!!i wouldnt do a business that i had no idea about. Let alone relyijg on existing staff. In fact i thought he was crazy. So my suspicions did eventuate.

    Businesses arent easy and csrry carry high riskm but i admire people for giving it a shot. On your deathbed youll have no regrets!
     
  14. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    agreed

    neither is investing ..........

    or getting off the couch

    I guess im blessed to have lots of self employed mentors and clients ( many of which i learn lots from).

    Success isnt for everyone but is available to "all"

    ta
    rolf
     
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  15. sanj

    sanj Well-Known Member

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    I agree, im surrounded by people who give things a go all the time too so for me it's an entirely natural thing.

    It's inherently a lot riskier than basic buy and hold property investing though, thats surely undeniable.

    I love it though, there's a reason i havent bought something purely to rent out in many years now, much nicer returns available elsewhere.
     
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