Inspiration for those who think they can't from Taku Ekanayake

Ok.. yes, of course. Thats what I said. Got it in one.

You guys keep on drinking the cool aid if you like. . That's your prerogative. I dont have any issue with what you believe to be true. But I await a response to a very simple question... how? If that's unreasonable and you cant distinguish how that is a completely separate conversation to " 6 properties, well done.." dont know what to tell you.

 

Why do I get the feeling the answer will start with the letter N and end in RAS?

 

Nah all you have to do is get in the magazine article and make 1m net rental income your goal and with that mindset you are half way there!

Seriously though the delusion around this place sometimes is funny

 

Tell us @DaveM - after all you were personally involved in this particular portfolio, how does this investor, or any other similar young investor reading this, who is on a modest mid level income and with a secondary income source, get to $1Million passive by their mid 30's?

That began as my question. It remains my question...

You're all happy to have a dig, but not one of you has anything to offer by way of a response...

 

OK serious answer. Most likely way is by starting a successful business, greatly increasing income, and then investing that income into other businesses, commercial real estate, shares. Residential rental properties at 200-300k a pop wont get you to $1m, with or without schemes like NRAS.

 

Business is the answer but it's easier to get a loan for a house

 

He did congratulate him. He is pointing out the obvious that the goal of 1m is ridiculous

 

Great results @Taku Ekanayake, you have done well and are doing very well. Would you mind sharing what your next steps are going to be?
I read another 4 properties by next year this time, this would propably be close to another million in debt or close too assuming from the portfolio you have purchased prior and strategy so far.
First up I have no idea how much you earn, so perhaps you can service very high interest rates, but if it's not, curious how you move forward.
Currently you have around 1.6m debt and positive cashflow is great.
I believe through rough calculations your debt rates are around 4.2%?

If interest rates go up 1%. That would pretty much wipe out the cashflow you have now which is good that you have it to begin with. At an increase of 2%, would see you in negative territory. Are you servicing interest only or P&I?

Intersted in how to keep moving forward. Cheers.

 

So what if 1m is a ridiculous goal? If you look back at the position where @Taku Ekanayake started, what he has achieved in the timeframe he has achieved it is ridiculous. If we wound back the clock and @Taku Ekanayake started a thread stating his goal was to be exactly where he is now, in the timeframe he achived it, I am sure that @euro73 could have done a near identical post, with all the same assumptions, proving it would be impossible.

I see thread after thread where @euro73 details exactly what people will not be able to achieve (and then spruiking NRAS to prove it is superior to every other investment strategy). Why? What is the point of all of this "reality"? I don't get it. Why spend all that energy tell people what they can't do? What does it actually achieve?

 

Hold on...the RBA cash rate sat at 17% for what... 3 months? Jan 1990 - March 1990? Then fell to 12% by Jan 1991?

Then fell to 7.5% by Jan 1992?

Then fell to 5.75% by July 1992?

Then fell to 4.75% by July 1993?

Rose to 7.5% by Dec 1994, stayed there until July 1996,

then fell to 5% by July 1997

reached 6.25% by dec 2000

Fell to 5% by August 2001 and didnt reach 7% again until Feb 2008

And has sat at mid 4's or less since 2010

http://www.rba.gov.au/statistics/cash-rate/



Your personal financial circumstances are important to your story, but not to THE story. Bank lending policies from 1990-2015 are what are relevant to the story , versus bank lending policies from 2016 onwards .

Between 1990 and 2015, did you and your generation accumulate your portfolio during a period of almost uninterrupted rate cuts?

The data says YES. The 17% argument that you roll out on occasion... respectfully, time and sentiment has afforded it a mythical status which just doesn't withstand scrutiny. Talk about broken records... It was 26 years ago, and it lasted a few months. get over it. The economy did- 26 years years ago. By 1991 the cash rate was 12%. By 1992 it was 7.5%. It never rose above 7.5% again. For all but 2 of the past 26 years you have enjoyed phenomenally low rates.

Between 1990-2015, did you or did your generation of investors enjoy a period of almost uninterrupted capital growth?

Categorically, the answer is YES

Between 1990--2015 did the capital growth surge when rates were cut, plateau when rates were raised modestly, and ceorrect when rates were raised aggressively?

categorically, the answer is YES




Between 1990-2015 did Australian median income increased at the fastest pace ever?
Categorically, the answer is YES





Your generation had every possible advantage. Cheaper money. Higher LVR's. Loosening Credit. Increasing incomes. FTB A and B ( even if you personally didnt get it - millions did, and the banks accept is as untaxed income for servicing)

In the end, the simplest measurement is this. If your income, assets, liabilities. LVR etc were the same in Jan 2015 as they were in Jan 2016 - could you borrow more money in June 2015 or Jan 2016?

You know as well as I do that lender calcs ( except a few) treated you far better then , than they would treat you today.

So how you can argue that this new generation faces far no greater hurdles than yours did, doesnt make any sense. They face higher entry prices. They face stricter credit. They face lower wage growth. They face diminishing borrowing capacity. And they have no prospect of seeing the cash rate fall from 17% to 1.5% .

And if you and yours couldn't get to $1Mil in 25 years, how are these new ones going to do it in less than 10?

 

Whether another 4 properties generates another million in debt entirely depends on the cost of the properties and the size of deposits. I have seen a property in Adelaide recently for around the $100k mark returning around $200 pw rent. 4 of this type of property (including stamps etc) would generate less than $500k debt but would generate another $41k rent gross. We can all guess what @Taku Ekanayake will do next and probably all be wrong.

 

Rubbish. 6 properties and 1.5 Million debt, in 2 years? Solid work, but hardly a big deal.

$1 million passive income though... you bet I'm calling that out. If he'd said 100K, different story completely.

This is where you and I see things differently. I show people what they CAN do. You think Im showing what they CANNOT do. Very , very wrong. See, I dont operate in the areas of myth , or hyperbole, or lalaland. I dont offer ribbons or trophies to everyone who turned up. I live in realityland, where numbers that wouldnt work even at 1% assessment rates and $500K incomes should not be applauded with positive reinforcement and ribbons or trophies... They should be questioned. corrected. recalibrated. .... Just the facts, Jack.

You might not like it, or understand it - and I guess I can understand it.... I mean, I've only been posting about the benefits of debt reduction for a few years , and am always very skinny on the detail when I do post, and how the concept can HELP rather than HINDER..... but yeah, I can understand how you or others mightn't have had sufficient opportunity to apply the same scrutiny to what I post, that you all seem to get so upset about me applying to others... and how you may have concluded that the positive solutions I write about are actually unsupportive, critical, negative and offer no value whatsoever for those wanting to navigate post 2016 lending.

Yes,the more I think about it , the more I recognise that the complete lack of any real "meat on the bones" with any of my posts is really annoying, isnt it? I see what you mean now....

I'll just join everyone else and post fluffy, feel good stuff that doesnt challenge anyone in any way, and wait for the tooth fairy and santa claus

 

And there you go with the essay's again. Seriously, who actually reads all that!

So you agree, interest rates were well over 10% for at least a year. AND on top of that NO JOBS. You can make light of it all you want, but it was real & many people were wiped out. Try keeping up the mortgage payments with no income & sky high interest rates.

And here you go again with all the "you & your generation". You are almost as bad as the GenY's who accuse the Baby Boomers of buying all the properties. As I said, I'm only 10 years older.

You are putting words into my mouth. I never said they face no greater hurdles. They face different hurdles. What they are experiencing right now, may or may not be the same hurdles they will face in 10 years time. I also said that neither you or I have a crystal ball. You don't know what the economy will be in the future, so you can't say for certain that any of those events are reality long term. They are the CURRENT reality.

Seriously! I NEVER aimed that high & I'm sure that most don't. Again, re-read my last post & you will see that there is only ONE who is aiming that high. Most are aiming for $100k indexed to inflation.

 

All the guy did was state his goal in a sentence and didn't say exactly how or even if he thought it was highly possible. Just a goal, and not like he's hardcore marketing to everyone that it can be achieved if you 'follow him'. Way too much has been made of it, and at best for no great reason and at worst..well...we won't go there.

 

You saying Santa ain't real?

 

What he has achieved is quite good but hardly the same as the goal of 1m in the time frame.

Euro has explained why it is unacheiveable and you are being delusional

 

Hope your happy with yourself @Player

 

@Taku Ekanayake , heard you on 2GB earlier this arvo. Good stuff.

 

How much did an average Sydney house cost in 1990 or 1991? 180K?
10% on 180K is 18K per annum.

How much are average Sydney houses now? $1 Million @ 4%(ish) is 40K.

Im not making light of it. The same risk exists today, but with far higher levels of debt. There is nothing special about the risk back then simply because the rates were higher. That was more than counter balanced by prices that were less than 1/5 of today's prices.

The fact remains - from the 90's to the noughties, people investing in resi real estate were able to work within an exceptional set of favourable borrowing circumstances that the next generation wont be.

Ok, I'll refer to "you and your generation" as the "pre APRA generation" instead... I fall into the "you and your" by the way. ie. Those who built the substantial part of their portfolio pre APRA, is what I mean by "you and your"

PRE and POST APRA borrowing rules is my point. There are those who bought with the generous rules. There are those coming next who wont be the recipients of such generous rules. They need to play the game differently.

And its that ONE that I am questioning. Where did I ever jump on anyone in this thread who said 100K? Go back to the beginning of the thread. I simply asked... HOW? Specfically, in relation to $1Million. Not 100K. Not 200K. Not even 300K. I asked about $1Million.
Everyone jumped on me for doing so... flew off on tangents about this and that... I keep attempting to bring the conversation back to "how do you get to $1MILLION passive" ?

geez,,, we all know 100K is achievable.... 80-100K is relatively easy to achieve, actually.

Again..I havent queried 10 years anywhere in any of my comments. The claim was $1Million by the age of 36. Thats 8 years.

My query was, and remains- $1Million in 8 years from resi ...how? Its not, 100K in 10 years,? or 15 years, or 20 years? Its $1 million in 8 years from resi- how?

All the side shows along the way have belonged to everyone else. I havent waivered from this core question.

 

Euro did not explain why it is unacheiveable. He made up some assumptions, applied them to a predetermined scenario and decided, based on that modelling that it would not be possible. Modelling is only as good as the assumptions fed into the model. If the assumptions are wrong the conclusion is wrong. I never said that 1m is achievable. What am I being delusional about?