My intention to LOE

why is it that many investors are impressed with the size of the debt, reminds me of those magazines I used to read. Seriously don't you need to look at the big picture.... LVR and equity is not cash, equity values change all the time and banks confirm this by valuing properties and generally conservatively. If you can not retire from 14M in property using cash flow then you are seriously need to look at why? makes very little sense, the point of investing in any asset class is to achieve financial freedom, at least that is what I thought.

 

MTR..on bluechips if you can grow it quickly i.e. 7-10% say over 3 years...work that out in equity.

That translates to something like 3-4m in equity. Sure you will need to sell down at some point...but if you take a strategic view the debt levels could be short term. You just have to be careful at this point in the cycle as depending on the market the horse has bolted.

The thing it to ensure you are not caught out.

 

Lol sash I never said I had $14m. Without exposing even more sensitive info, it's more than $10 and less than $14 put it that way.

MTR, the answer to your question is simple. I borrowed to the hilt after each purchase to keep growing the portfolio...sometimes at 95-97%. Ah those where the days....when equity ruled.

I also bought properties that are a little more blue chip than the typical Logan/Ipswich/Mt Druitt and Elizabeth type properties fancied by most on this site. Not that you can't make good money from these either.

Therefore the ready returns on the properties I've bought is lower. The cap growth has compensated for this but yeah, perhaps I would've been better having 30 Mt Druitts. Still I wouldn't change a thing and my only regrets are the blue chip bargains I didn't buy. You could say my investing style is similar to Michael Yardney, Chris Gray and Warren Buffett. Slow, subpar cashflow wise but stable with growth predictions that deliver.

 

Ok here is the is the 64k question...how long did it take you to get to $3m ..I would envisage it to be under 7 years? Correct?

 

Lacrim - why so worried about putting details - you are relatively anonymous unless that is your real name.

 

My post was based on few assumptions.

1) Portfolio $14m
2) OP age mid 40s

In one the previous post OP mentioned he has approx $3m accessible before he/she pulls the pin.

So I assumed that would take him to say 80% LVR. So currently he is around 58% lvr sitting at equity of $5.8million.

Secondly, OP has mentioned most of his purchases are inner-middle ring suburbs so they are not speculative investments (aka mining town). So that was sensible and worth praising.

I am sure there are other investment vehicles OP can use to retire comfortably with $5m equity. But who are we do tell them that their approach is flawed and what has worked for them so far will not work in future? If they wish to hold on to the $14m portfolio so they have a big asset base compounding for them then why not.

Cheers,
Oracle.

 

OK. Gross value currently at $11 and hope to get to $12.5 in a couple of years PROVIDED Brisbane performs as most hope it will and Sydney by and large defies gravity and achieves some modest growth. Debt is $7m.

The $3m cashout is derived from going up to 80% (of $12.5) if/when I feel the time is right. Hope this quashes all the speculation. I always said I INTENDED to LOE in 2 years. Reality might go against me but I'm an optimist.

Sash, I got to $3m gross assets inside 7 years I guess - but through a combo of growth and borrowing heavily when I had enough equity to go again.

 

I am out of this thread I don't like smoke and mirrors, smacks of BS ......slightly better than Logan and blue chip...right, says it all....

 

Well Kudos...you has the cahones to pull it off... did something similar but different property profile to yours as you have indicated more Blue Chip. But you have done extremely well not many people can do it!

 

I've got nothing to prove MTR - only created this thread trying to solve a few problems with structuring. I'm not interested in laying out my personal financial details...where my properties are with addresses, rent earned, values and amount owing to brag or appease the doubters - my privacy is more important. Perhaps I'm a little paranoid - I think its wise to an extent in context.

 

OK Lacrim. MTR does have a point....

Not questioning you but are you able to share some of what you have done? Like where you bought..just suburbs..approx cost of purchase and what they are worth now. A few examples would be nice?

I like my privacy too....but some on this forum query and pick apart everything you say but will not share details about their stuff. Not saying you but certain individuals...

 

Total of 16 props - most in Syd followed by Bris and a couple elsewhere. Have a few in inner west of Syd, some in East and yes, even a couple in Western and SW Syd.

Rest in Bris Metro, one in GC and one in Adelaide.

Suburbs and purchase price is where I draw the line Sash - anyone with Pricefinder or RP Data can either shortlist or zone in on who the buyer is (I know I can...and have). Then onto the white pages or linkedin, facebook etc to identify what they do for a living and where they live if they're listed. I don't think people realise how easy it is to be identified - perhaps they want to be?

 

You guys don't need to know what properties he has to be able to answer his questions.

There's people with more properties than me who are clueless and people with less properties who are awesome, stop using it as a measuring stick guys.

 

Caveat: Perhaps I would reveal more if I can get myself to one of the meetups but not online.

Anyway appreciate if we can pls get back on topic - this isn't the how many properties do you have and what's your net worth poll.

 

This will end in tears!!

 

OK where are you in Sydney..would love to swap stories...

Now back on topic you have covered yourself via your strategies well :

1. move to one of my IPs (permanently) by mid 2017
2. recycle the debt on that IP so the (then) non-deductible mortgage is effectively zero
3. simultaneously reval the IPs and top up all the loans to facilitate a large LOC/cashout in November 2017
4. quit my job in Dec 2017 (or perhaps stay in the job for another 12 months to trial LOE)
5. live off the extracted funds - should theoretically get us through the next 20 yrs depending on economic conditions. I guesstimate by the end of that period I may be able to fully LOR. I don't intend to sell any properties now or then.

Here are my concerns:

1. How much do you need to live on? Have you worked out where that is going to come from it is simply in just rents. The reason I ask is because I am grappling with this at some point I will have the same issue. I don't think rents are stable income as say dividends...you can have a savings pool to subsidise your shortfalls

2. Have you got super? If so can we draw down more to meet lifesyle needs before super kicks in.

3. I truly believe you will need to sell down at some point...someone else on the forum tried it and they in the end did have to reduce deblt.

4. Your idea of quitting in Dec is brilliant as you are still half into the financial year. So you will get back tax next return

5. What modelling have you done to ensure that income will last have you done a best case, worst case, and mid growth scenarios for property.

6. Have you considered selling down say 25% and putting proceeds into shares paying dividends. I believe your debt levels are too high ...should interest rates rise 2%...you will be up for 140-150k in extra repayments per annum.

Things to ponder...

 

1. Sell all properties.
2. With the $3mil cash, purchase a solid ETF such as VAS.
3. Live happily ever after on $200k p/a forever with no toilets to unblock, no tenants to take to tribunal etc.


pinkboy

 

And no bloody land tax!

 

Tempting guys but aren't I just swapping land tax for income tax?

And realistically I'd never relinquish my fate to a fund manager/s. For example, the unit price for VAS is $66 plus at present. In 2010, it was....$63. So I'd go through the toil of selling 16 props and move into a diff asset class with (so far) virtually no growth, just so I can draw down 5%? Better the devil you know than the devil you don't.

 

Don't forget the benefit of franked dividends. You could earn up to about $90k in fully franked dividends and not pay any tax. A discretionary trust holding them could also provide more tax flexibility.