My Strategy - Any Good:)?

As Jess has outlined, if you are able to hold - do so.... especially if you havent owned it long and it hasnt had time to mature yet....

The 330-360K budget you have quoted - You will find it difficult , if not near impossible to get into a dual occ at that price ...NRAS may be possible ....

Who/which lender has told you 330-360K is your capacity?

To your broader question, would an extra 10K tax free cash flow be useful to you? My guess is yes.....

 

I heard dual offers around 7% yield, wouldn't a cheapie with a granny flat offer somewhat similiar results? I'm not sure how easier it is to find dual occupancy for sale.

 

You could try that.... It would need to be very cheap to stay under 360K total, as a granny flat will cost you 80-100K to add to it.

 

Hey guys,

I've never actually thought clearly about my end goal.. until now. End goal, as in financial independence, net equity etc.

I'm thinking now of reaching financial independence within the next 15 years. I would be very happy if my partner and I have a fully paid off PPOR and an income of 100k per year (before tax). Now I'm thinking how to get there.

Would this make sense:

1. Pay off PPOR
2. Buy 5x IP's, 500k each. IO loans at 5%, 88% loans.
- Total value: 2.5M
- Loan: 2.2M
- Equity: 300k
- Total buying costs (stamp duty etc.): 125k
3. Say in 15 years all 4 IP's double in value, which I hope would be the worst case scenario.
- Total value: 5M
- Loan: 2.2M
- Equity: 2.8M
- LVR: 56%
4. In 15 years sell all IP's and after CGT I'm left with $2.1M.
5. Buy shares, index funds etc. With around 5% in dividends I'll be getting 105k per year.

Now my main question: Does this make sense?

Thanks a lot guys!

 

What about inflation?

Do you want $100k pa in today's money or in 15 years time?

 

Oops, forgot about inflation

100k in 15 years please.

Actually, I'm thinking I might have been too conservative with my assumption of house prices only doubling in 15 years so that might compensate the inflation?

For house prices to double in value over 15 years, the average annual growth would have to be 4.8%. From my memory average house value growth over the last 30 years was 7%.

 

Certainly don't have all that cash unfortunately.

I'm just trying to get my head around what would take to reach my goal.

 

100pc agree ...the key is the cashflow with a move towards more passive property investments
As the property portfolio becomes larger you don't have time (and you don't want to work on them) to do too much physical work on them
I don't beleive you will ever get tired of the paperwork side of the investments (but that could be due to making money ...not certain if it will be so much fun if we were losing money lol)

Been tempted many times to buy trophy properties ( large commercial office buildings and shopping centres you could show off ) but my mentor (who had purchased over 1k of properties. .currently working on a 60+ subdivision ) warned me off them. (And wisely i avoided them ) ...stuck with the bread and butter BORING ones

My advice ...
1; Stick to good cashflow properties
2; Avoid properties (if possible) that require work and maintenance or become obsolete.
3; Reduce debt
4; stay ahead of your paperwork
5; pass this advice on to your children

 

OMG! Yes you do! I HATE the paperwork. But I do it anyway.

 

There is a ole saying...if you hunt trophies...you maybe become a trophy one day also...

 

Same here, semi retired on higher yield cheapies. I've been able to buy 3 this year and just going through dd on number 4. Couldn't do this if I'd started off with lower yielding expensive properties. More importantly for me the majority of the properties covered all costs on p&I so I didn't need to put in my own money over the years (great for lifestyle) and I added to equity without relying on growth. I pick up temporary work contracts, apply for finance and buy while working then take a few months off. As for property doubling or better in 15 years, good luck because it doesn't automatically happen (markets can be flat for 10+ years).

 

If working on a property eg reno can increase your equity quickly I'm happy to do it. In the early days we increased many properties equity by up to $50K by doing 5 week full reno's. This ave us money to buy again.

I don't know anyone who likes the paperwork. I just finished my 2016 tax paperwork. Hate it. It's not difficult, just boring. One of the necessities of owning property. I was a bit anal at the start, wanting to pay all the bills myself. Now I let the agents pay them. I've got better things to do. Keep paperwork to a minimum.

Don't get too caught up in having it exactly right. Things will change. When I started someone said to me as a general statement "you can't just go around collecting properties" Oh no! I thought, that's what I'm doing. I knew I had to buy for cashflow (because I was 50 and wanted to retire) but I had no plan. Things change and so will your plan. Get in there.

 

Yes that's a good way to do it as your Mr Right (property) does not appear everyday.

 

Ha ha i must be odd then. .. the more i make the more i like paperwork. ...really looking forward to seeing my monthly financial accounts Nov to january i have a few new tenants and increases kicking in)
2018 will be an interesting year with 24 tenants seven/eight rent reviews! (Not certain if the tenants are looking forward to it)

 

I would have the most ugliest, boring property portfolio of all the PC readers..no shiney Trump towers to show off ..no westfield shopping malls, no houses in point piper ...!

 

But you make money!

 

I love fugly....easier to turn into swans...

 

We could buy Westfields shares if we want to own a shiny shopping mall.

 

They are a lot of work ...my mentor brought one ...and moaned and groaned about it all the time ....nice to show off as a trophy property ....terrible to manage