How to make easy money from property...

Agree Big Will, there's a lot of cash flow rich people on here as well (assuming they've migrated from SS). I could rattle off quite a few names that are clearing over a million pa in cash flow from their property assets. Admitedly, one of them is Commercial...

Oh, and has anyone spotted Nathan Birch over here yet?

 

Michael and Will, I do agree with you both, all I am saying is that most here are with holding paper wealth for now

 

I agree! But that's all about what stage you're at in your investment journey. Even my extremely modest portfolio is pertty much neutral, but I intend to progressively turn it positive over the next decade or so to allow me to retire off it in my mid-50's. I'm not pitching for anything near as exciting as some of the investors here but my current portfolio is now a decent base on which to build my yield. All new purchases from here will have cash flow as a primary concern given I now have a very solid quality property base. Time to get "dirty" in the high yielding space, never thought I'd say that!! Reno to hold or reno to flip for CF purposes. Don't risk the foundation portfolio.

Cheers,
Michael.

 

That would be my next stage Michael, get good growth behind me first then look at the serviceability side. That balancing act

 

Hi Michael,

Will you consider adding commercial property and or shares to boast your yields now that you have established your foundation?

 

Agree completely @MichaelW - and I know you walk the talk of long term Buy and hold. The numbers are good and the averages work long term. It is good but requires patience. I think I have just had too many conversations with Jonny come lately Sydney wannabe investors who all think they should pile in now to be ensured of quick double digit growth forever with zero risk. That obviously isnt you and wasnt what you were saying.

 

Thanks Michael. I understand and agree.

4% acquisition? Well, the stamp duty in NSW on $1,000,000 is about $40,800. Qld would be almost identical. Vic would be $56,477. Add some conveyancing etc. for another $2-3,000 making NSW/QLD about $43,000, or 4.3% of purchase price. http://www.realestate.com.au/blog/stamp-duty-calculator/

I realised I missed out land tax too in the calculation, but it's harder to quantify as a general element of the equation.

The 3.3% was the quote you used as an average for Sydney. But I agree that most investors would probably see it as an unusually low - and probably unviable - average.

Thanks again - it was fun to do the calculations.
Robert

 

The quickest way to get rich is to hold how to get rich seminars

 

That's the very basic & boring principle I used over the past 15 years to build the multi-million portfolio we hold around Australia today.
1. Buy.
2. Go to sleep for 12 months.
3. Wake up & analyse CG & CF performance.
4. If 3 looks favourable, Buy & go back to sleep for 12 months.
5. Rinse & repeat previous steps.
6. Wake up 10-15 years from starting out and think crikey where did all that wealth come from.

 

This sounds so simple, and it really is.

Just rinse & repeat 5, 10, 20 times, or whatever your number is, and before you know it, you've got a property worth several millions of dollars & tons of nice juicy equity. In fact as time goes on, it gets even simpler and could look more like this.
1) Buy, buy, buy
2) Wait
3) Buy, buy, buy, buy, buy
And so on......

 

I will correct myself:

Step 1: Buy
Step 2: Wait (if necessary)
Step 3: See step 1.

 

That is why "boring" buy, hold, rinse and repeat can be sexy in property

 

Great contributions everybody! Rixter, Skater, everyone!!

Jingo, good question. Personally I'm a bit shares risk averse after being margin called through the GFC. I know I shouldn't be, but I am. Commercial is also a bit too risky for me. I like good old fashioned boring buy and hold residential properties in high demand areas. Here's my personal contribution to the steps involved discussion:

Step 1. Buy
Step 2. Let
Step 3. Forget...

Cheers,
Michael

 

Great post. Couple of points.

Rarely do investors start with $200k cash deposit for their first IP. It's usually a much smaller deposit and leveraged out over time, (the repeating step 3)

In my case that was $4k... A pretty massive IRR over the time I've held the IPs.

However during 2007/08 with higher interest rates and low growth it was difficult to hold the properties and hold my nerve ( I'll be forever grateful to SS during this time). Working out the 'averages' during that time was pretty dismal.

Now while the properties hold their own, it's another step entirely replacing my income. More waiting.

 

Hey Michael, do you mind me asking who you use to do your depreciation? 50k Depreciation on 450k build cost is really good!

 

Sure, Scott from the forum who posts as The Depreciator is the guy I used and his team are exceptional. Here's his website.

Cheers,
Michael

 

I am buy and hold, through and through. Can I add a few 'spices' to that pot thought? For me, it looks more like:

Buy
Wait
Guerilla light reno between tenants
Equity Release
Buy, buy, buy
Wait, reno, wait #2, reno #2

Rinse & repeat at scale.

 

Thanks for that Michael I will give them a call. I have to say your thread about Mona Vale build is inspiring. It got me to do things too. I will be building in Northern beaches too.

 

Wow mate, that's fantastic! I'd love to know where? PM me if you don't want to go public, but that's really inspiring!

Dee Why perhaps? Or maybe further North...

Cheers,
Michael