Hi All, I stumbled across this forum while googling away. I decided to sign up as I found the questions and discussions to be very informative and from "actual" experience from real people and not someone tryingt to make you sign up...and finding out that you need to pay $5000 for a booklet LOL. A quick rundown on myself and my wife. I am 43, wife is 41. We started having kids at an early age (I was 18 and she was 16 eek). We have three kids (25 - moved out, 23 and 19 who still lives with us). Worked our way into the world - started off in a housing trust working crappy jobs. Got ourselves through uni/courses and now working in corporate with a combined annual income of 230k. We've beein investing in properties for close to 7 years now. We have sold one property and one block during that period. We curdrently have 6 properties and looking to purchase a 7th one. We've invested primarily on cheaper housing as this produces good rental yield - we've invested around Adelaide (where we live). Our current nett value is about 1.8-1.9 mil with a debt of 1.29 mil. Our holding cost on our current investment portfolio is $350/fortnight (agent fee/rates/insurance etc inclusive). All loans are P&I. We've accomplished this by buying generally run down places and renovating ourselves to build equity and also increase our rental income. An example was our most recent purchse of a housing trust townhouse we bought for $167k - its a 3/1/1 up and down townhouse. It was very rundown - replaced bathroom/laundry/flooring/internal doors/paint/relandscape for less than 15k. On our first open this week, we had 7 applicants sign with another open inspection next week before making a decision. Our asking rent is $300-320/wk. A good return of 10% yiield. As mentioned, all our loans are P&I. Our goal is to buy around 8-10 properties and create positive cashflow by paying off most of our debt and gradually stop working and enjoy our older years (having a family yound, we weren't able to do things like holidays). I'm hoping to learn more from this forum and what strategies people are using to reach their own goals. Cheers
Good on you for your great achievements so far!! I'm 10 years in your future. We got to this stage (8-10 props) and found paying off the debt isn't going to be the most effective (might be a different story where you have your IP's though). You got a fair bit of travel to do yet on life's road - but start poking into other means of generating income too (we have been "trialling" comm prop trusts and shares for about 5 years now). The Y-man
Hey "The Y-Man" Cheers....hmm interesting. Are you able to elaborate on why paying off the debt wasn't the most effective way? I'm eager to know. Our goal was basically to replace our current after tax salary with rental income. It made sense to me on paper (doing numbers on excel) but would really appreciate it from someone who's been there and done it. Would be an awesome way of lookingo into the future. Also, keen for more info on Comm Propt Trusts. I tend to shy away from shares (too risky for us and we have little knowledge of it as well - we prefer to invest in something we can see rather than rely on something we cam't really control). Cheers!
Ok - the first thing is "replacing afer tax income". Once you pay everything down and are "living off rent" (LOR), you need your investments to earn your current pre-tax income. So you'll need to do your calcs to generate enough for $230k pa AFTER all holding costs (including reno's etc) - I suspect it may be about 20 IP's you'll need even if the rent was $300 pw? What's the yield after costs (without interest - i.e. in a "paid off" state)? The Y-man
Current rental income: house 1 - 400pw, annual cost $3995 house 2 - 330pw, annual cost $3350 house 3 - 335/wk, annual cost 3750 house 4 - 290/wk, annual cost $4820 house 5 - 320/wk, annual cost $3580 house 6 - 390/wk, annual cost $3780 So $2065/wk with total cost of $23277/pa (rate, insurace, agent fees etc) if paid off state. With kids moved out and just myself, wife and dog, we were aiming to have a weekly income of 1500-2000pw post tax. We currently rent ourselves and this is what we intend to do in the future. WIth no other debts, I believe it would be achievable. I am keen to see your thoughts and what other investments you would think are worth doing.
Ok, so that is significantly less than the ~$3k per week (?) you are getting from your work at the moment. Sounds like you've got most of it sorted in that case Have you costed vacancies and aforementioned reno/replacements every 7~ish years of essentials? The Y-man
We’ve learnt earlier on that we needed a buffer for emergency maintenance. So we’ve always got a buffer to cater for such events. Also, I tend to do most things myself to save money. All our renos are done by ourselves apart from plumbing and electrical work for obvious reasons.
Welcome! Have you considered posting your story so far in the Investor Stories section? I'd love to read over it!
