I worked out my end goal today... Sort of.

Something I should have done a long time ago, but anyway.

Today I worked out what I want to achieve financially. That is, 60k p.a. net cashflow from IPs (or other assets) with no PPOR debt. This is a figure in today's dollars and hasn't been adjusted for inflation.

This would allow me and my partner to work part time rather than full time (neither of us would want to stop working completely) and have a pretty damn good quality of life (holidays, reasonably good mid range cars etc)

On a household income of $150kish and two dependants. How feasible or how long might this take?

 

Good

So how many properties do you need for this?

 

60k?

Does this include the cleaner and gardener? Eating out 3x times per week?

 

$60k / 70% to allow for council, pm, insurance etc = $86k

Assuming 5% yield , $86k x 20 = 1.72m worth of property.

So that could be 10 x 172k houses, 5 x 344k houses, 1 x $1.72m house etc.

Generally less is better so that you have better quality assets. Cheaper ones are easier to buy. A balance is needed in terms of quantity, so that if one is vacant or has unexpected maintenance costs the remainder can keep it on track.

 

I'm not sure, as it's in today's dollars I feel as though I'm aiming for a moving target.

Ha, no, the other half wouldn't allow it, even if we had endless amounts of cash.

$60k net works out to be 150k after tax considering we still want to work part time. We would still get PAYG

I might need more? that's a net figure and if I get around $2 million in unencumbered assets the ATO might try and take a portion of the income they produce. Apparently that's a thing they do to people.

Thanks for the input this is all good stuff

 

Tax wouldn't be a whole heap given you're both reducing down to part time, and splitting over 2 people (hold some of the properties each)

 

You only need to think in todays dollars - property and rents will grow with inflation (hopefully more).

$60k net income is $30k each of a couple. If over the pension age there would be virtually no tax on that income. If under then the tax won't be much, and may even be nil with some planning.

 

There are a couple of large variables you also need to take into account
The principal repayments and net yield (commercial generally higher yield than residential but riskier)

 

you will most certainly need more for this.

 

This amount would be on top of the roughly 50k p.a. we would each earn, in today's dollars, if we worked three days a week instead of 5.

I don't ever want to stop working, I just want to get to a point where I can have a better balance.

 

Yep, another reason why I feel like it's a moving target.

 

In that case there would be a bit of tax - say a taxable income of about $55k each - $10.400 each in tax.

 

Totally agree. And from from someone living the dream ...

 

That may change when you wake up one morning,where you no longer have to be the boss or the worker your inbetween..50k add franking credits if you span your investments then you would have a very good life..i hope it happens..

 

Also take note of cap X....capital expenditure required to maintain income

 

This is pretty much what we're doing at the moment. We've been investing on and off for about 15 years but only bought 1 ip at a time at the beginning. Bought h&l packages in our local area, because we saw the market rising. We had varying levels of success, and lost money on the odd thing over the years like an emotional ppor purchase, currency exchange etc (probably the equivalent of having kids).

I ramped things up over the last 3-4 years because I was feeling myself getting burned out with work and really wanted to have the choice to work part time/part of the year. Nothing like fear as a motivator .

Everyone has different methods to get there. I basically followed a couple of guys I know who made millions buying at as a high yield as they could get in areas with population of 100k or more. They knew their markets, had connections, so were buying well and paying down debt. Even (shock, horror) repaying on P&I. So I followed them to an extent, moved areas to increase our income to our max, bought multiple higher yield properties and paid down debt. Made some good relationships with banks. I was very lucky when we got a ripple affect from capital city increases and I changed the structure of my loans recently (great relationship with my bank) to get my cash flow where I wanted it to be.

Anyway, to cut a long story short there are a number of ways to get there but you have to be active. I'm not a fan of buying and holding properties that you have to put money in to, not long term anyway. Talk to lots of people who have done it, and find the way that works for you. Mix and match methods because times change, markets change and so strategies also have to change over time.

These days I pick and choose when I work. I like the first couple of months at work but am glad to walk away at the end of my contract (except for missing my colleagues). I feel sorry for the guys left in the office, can't imagine how they keep going when I'm heading off for a few months of travelling or just exploring my local area. They do keep going though. I try to tell some of them how I achieved freedom but they honestly aren't interested, or think it's mad, too scary/they can't do it. Who knows? Anyway, all I can say is reach out to people who have done it. Many will say it can't be done post the lending restrictions but I know loads of oldies did it with much higher interest rates than ours, crap wages. Lots of variables involved.

PS I'm still buying

 

thanks for sharing
Some points that recinate with me

you are an active investor
and
you have a career/job where you can pick and choose, many won't have this luxury...

 

Forgot to say I have 10 ips. Sold a couple this year.

 

I would be interested in more details of your journey

 

I would also love to hear more about your story @ellejay