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How much income do I need to generate for +100 properties?

Discussion in 'Property Finance' started by Taku Ekanayake, 5th Sep, 2015.

  1. Taku Ekanayake

    Taku Ekanayake Well-Known Member

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    Hey guys,

    Hoping you can help, as this will help me ascertain my income goals.
    If a person wanted to build a portfolio of +100 properties, at 80% LVR, and continue to keep buying properties:
    • What income would he/she have to be generating from either their PAYG income or own business, for lenders to continue to loan them cash?
    • Do banks/lenders favour cash savings or equity in existing property, to use as a deposit?
    • At what point do I have to start reducing my debt?
    • What sort of yield would the overall portfolio have to be generating?

    I've been told by a few people the figure would be around $150K - $180K p.a.
    Is there a golden figure?


    Cheers,

    Taku
     
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  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    100 x $200k renting for $300pw or 100 x $650k renting for $600pw?
     
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  3. Coota9

    Coota9 Well-Known Member Premium Member

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    Good luck trying to get finance for that size portfolio at the moment
    100 Properties @ 300k each..Only 30 Million Debto_Oo_O Chicken feed!!
     
  4. Taku Ekanayake

    Taku Ekanayake Well-Known Member

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    Good point @D.T., thanks for raising that up.
    I'd say more around the first scenario:
    100 x $250-$350K

    Not sure what sort of yield though, that's one of the questions I'm trying to find out.

    Cheers,

    Taku
     
  5. Taku Ekanayake

    Taku Ekanayake Well-Known Member

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    But it's been done before, and it'll be done again, on numerous occasions.
    So it must be possible.
     
  6. Coota9

    Coota9 Well-Known Member Premium Member

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    Agreed it may still be possible to achieve this size portfolio but and there is a big BUT getting finance would be a massive hurdle.
    Would be interested to see a real life simulation on a purchase plan done by a few of the Brokers and see what the borrowing capacity would max out at..
    Examples of maybe a high DINK couple on say 250K combined
     
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  7. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Depends on how long you'd expect it to take also.
    The faster you want to do it, the higher your income would need to be.
    If you wanted to do it right away, your example would need at lease 6 mil for the 20% deposits, then costs, then enough extra cash flow/capital for lenders to be happy.
     
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  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Too one sided a strategy I'd suggest

    7 figures plus

    Build some form of business I guess

    Most of my clients with really large dollar portfolios havent Done so from payg jobs, usually from investing profits of a business

    Ta
    Rolf
     
  9. Taku Ekanayake

    Taku Ekanayake Well-Known Member

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    Thanks for the feedback @Rolf Latham
    True… I'm sure it would be incredibly rare for someone to do this from purely a PAYG income stream.
    Although are you suggesting it would require $1million gross income from PAYG to get there?
     
  10. Taku Ekanayake

    Taku Ekanayake Well-Known Member

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    That would be awesome.
     
  11. D.T.

    D.T. Adelaide Property Manager Business Member

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    I think there's lots of variables involved, especially the timeframe it's done within. Eg if properties had gone up, this would become new equity and therefore new deposits for new properties. From your work/biz/rental income, you may also be able to recycle some debt and reuse it again.

    So if you're saying within 10 yrs, you'd probably need extremely good luck / contacts / income.

    Or if you're saying over a lifetime, a little less so.
     
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  12. Taku Ekanayake

    Taku Ekanayake Well-Known Member

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    Very true. And I thought this question would come with it many variables, so it would be difficult to get a definitive answer.
    It would be within a timeframe of 10-15 years.
     
  13. Coota9

    Coota9 Well-Known Member Premium Member

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    I think though you could do a base line for this example and include-

    PAYG Income Increase +4%
    Property Growth +6% PA
    Ave Property Price 350K
    Ave Yield 5%

    List would include depreciation benefits etc into calculation also.
     
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  14. D.T.

    D.T. Adelaide Property Manager Business Member

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    Coota - in an ideal scenario you'd be able to enter those things as variables into a function.

    Calling @devank the elite data modeler
     
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  15. Baker

    Baker Well-Known Member

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    Actually, that would be an interesting exercise.
     
  16. Coota9

    Coota9 Well-Known Member Premium Member

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    Agreed that there would be many many variables but think it would be interesting to see.

    Hopefully with all the great PC minds here someone will smash it out...unlike this blokeo_O

     
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  17. Taku Ekanayake

    Taku Ekanayake Well-Known Member

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    I just LOL'd so hard - this can't be real can it???!
     
  18. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    I'm going to give this thread a nomination for the, "Most open ended question to answer of the year," award.

    Depending on how the solution is implemented, the answer is somewhere between $0 and "A lot".
     
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  19. FireDragon

    FireDragon Well-Known Member

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    I would probably concentrate on the amount of passive income instead of the number of properties. For example, if the goal is to generate 300K net passive, does it matter if it comes from 10 properties or 100 properties?
     
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  20. AndrewTDP

    AndrewTDP Urban Planning Consultant Business Member

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    Buy a 50 room motel and you're halfway there!