NRAS and income vs growth

with 33 properties and over 18 years . 15 properties is not 33 properties 18 years is not 4 years. Qualify things

So do I. My portfolio grew by over $1 Million in the last 12 months . Again- you just assume no growth because a property has an NRAS eligibility. I assume no growth as part of my worst case planning. As I have said over and over - I get growth, but I plan for none.

Like I suggested earlier - put your energies into something you know something about, that might actually add some value to the readers here

 

OK....lets end the argument we are essentially doing the same thing...just in a different way....either case same results and same constraints.

 

That's right. Your model was the preferred pre APRA model. Worked really well for you. Wont work for next gen investors. Mine will prove to be the preferred post APRA model for next gen investors, but holds little appeal to those with mature portfolio's, like you.

Again - this isnt about NRAS - its about debt reduction. Dual Occ will do the same thing. @ connor's strategy may also do the same thing - if he ever elaborates on it . And there may be other ideas that will work... But you guys have to stop thinking this is about NRAS . You're missing the point.

Let me explain why I was an advocate for NRAS for the past few years;

1. Highest yield possible for 10 years, which is where the debt reduction has its biggest effect. Waiting 18 years to srat reducing debt was again, effective pre APRA - but much earlier debt reduction is now required, post APRA.
2. Was available in a wide variety of locations, at a wide variety of price points - so could be used by just about anyone - even those with 250-300K budgets.

I am moving into Dual Occ now that NRAS is done. I waited to do Dual occ because the cash flow isnt quite as strong in the first 10 years ( close, but not quite - just quietly though, wouldn't Dual Occ/Dual NRAS knock the cash flow socks off you though????? ) and the price points cant be done at 250-300K, and it cant be done in as many locations.

Dual Occ income is superior after Year 11, but I want the maximum debt reduction during the first 10 years. Make hay while the sun shines, as they say...

Unfortunately, many LGA's/councils don't allow it around Australia. So while the numbers are almost as good as NRAS - the product availability is not as wide and the entry point is not as cheap. But its the next best thing..and that is that , moving forward in 2017.

Each product "type" - NRAS and Dual Occ... compliment the same strategy though - Debt Reduction. They are just logical progressions.

And debt reduction compliments portfolio building.
And portfolio building leads to passive income creation .
And the post topic is "can or will you retire on property alone?"

Sliante

 

Actually Im at @ 5 Million equity . I retired 2 million of debt last year. But I already had significant equity from an unencumbered PPOR and from several of those crappy NRAS deals you hate, shooting up in value rather quickly

 

From a serviceability perspective, wouldn't dual occupancy be better than nras? More lenders to use?

I'm also interested to see how dual occupancy or NRAS would benefit someone at the beginning of a portfolio and without a ppor. Cash flow isn't as needed during the accumulation phase.

 

That is correct.....you need equity to keep buying...without it you can't grow.

The issue with NRAS deals is 90% are not great CG prospects. The 10% that are okay...the ones which have grown were in growth markets like Sydney where property has performed irregardless of whether it was NRAS or not.

 

Dual occs can suffer low valuations. Best check with your mortgage broker as to how different lenders treat the property and the income.

Back in the day when it was easy to get credit and capital growth was strong, investors were buying negatively geared property after negatively geared property. It was quite a lot of work to reach max borrowing capacity and even then there were options such as low doc loans.

Now credit is much harder to get, borrowing capacities are limited and capital growth is predicted to be lower. The idea with cash producing IPs is that the additional rental income will help with serviceability so that our new investor does not reach max borrowing capacity after 2 or 3 properties. Higher cashflow works better with non-deductible debt and debt recycling strategies. It is not as effective for deductible debt. Although, a type of debt recycling could be used with an IP to buy listed securities such as a high yield ETF. That way you would get rent and capital growth from the IP and dividend payments and capital growth from the ETF.

Just check with your mortgage broker about high yielding residential because my understanding is that some lenders cap yield.

 

Some have this issue , yes. Its all about putting the deals together properly. Most dual occs are done under one roof rather than detached. More a dual key product than a dual occ product, really. Valuers tend to value them as one large 5 or 6 bed dwelling on a per M2 basis... and usually dont make allowances for the extra kitchen, wet areas, fire rated walls etc... and this is why the vals often end up 30-40-50K under .

Ive just had several valuers go through my Bathurst and Orange dual occs , which Im releasing next week, and all are on the money with cat 2 and 3 ratings. Thats GOLD for new stock valuations. Why? Because I do things right - just like I did with NRAS.

4 bedders in the area are selling mid -high 400's

11 Coates Drive Kelso NSW 2795 - House for Sale #124795294 - realestate.com.au
8 Federation Drive Kelso NSW 2795 - House for Sale #124445858 - realestate.com.au
71 Ashworth Drive Kelso NSW 2795 - House for Sale #124551574 - realestate.com.au
24 Barker Circuit Kelso NSW 2795 - House for Sale #124558910 - realestate.com.au
11 McGill Close Kelso NSW 2795 - House for Sale #124661814 - realestate.com.au
73 Graham Drive Kelso NSW 2795 - House for Sale #124259698 - realestate.com.au
56 Ashworth Drive Kelso NSW 2795 - House for Sale #123280110 - realestate.com.au

5 bedders in the area are selling low - mid 600's

6A Negundo Place Kelso NSW 2795 - House for Sale #124586018 - realestate.com.au


Im doing 4 bed + 1 bed detached, at 530K, on 650-750M2 lots. I would argue they have a good 50-80K equity in them at settlement, in addition to the excellent cash flow.

Lenders are all OK with 2 on 1 title. No issues at all. Most lenders will cap yield at 6% . But thats still better than 4% available on most vanilla deals

 

s

I have the advantage of being able to create equity by removing debt, not just by getting growth
I have the added advantage of being more likely to be able to harvest that equity as I have less debt, and therefore improved borrowing capacity

 

And that's why 90% of my deals were in Sydney , or Wollongong . Lots of my clients have made lots of money - growth and cash flow. Its a real shame your opinion was tainted by what other people were doing ...I have been doing great deals for my clients. You could have done very well out of it .

Anyway, its on to dual occ now, in keeping the end goal - building a portfolio to deliver debt reduction and passive income without having to sell anything.

 

That is great going Euro retiring $2m worth of debt each year ...I am only retiring $1.15m of debt (principal) each year. (Paying $500k of tax is a killer)
It will be another decade before i can retire $2m each year !

 

@euro73 This is something I've been wondering over the years - you've done 350 + NRAS properties correct? Where are all the raving reviews and customers? Can someone testify they have used you over the past 4 years and it's been sucessful? I want to hear their story and their numbers, from their mouth. On paper your theory sounds good, but has anyone successfully applied it?

 

@LibGS has written about this I think

 

Yes. I have bought 5 NRAS properties with Euro's help. He is a decent guy, really knows his product, both in terms of loans and NRAS. I have 2 lower priced properties in Orange and they will be about $7500 CF+ each after tax, combine that with some modest capital growth over 10 years and it will be ok. NRAS works, if you buy the right product.

 

I've purchased 6 NRAS using @euro73 's services, and referred a number of friends and family. All are very happy. My 6 NRAS are around $60,000 cash flow positive after all expenses and tax. @euro73 has a brilliant mind, inexhaustible patience and is absolutely a subject matter expert in the property field.

 

More references located at the this link: Euro73

 

Gee I'm feeling all flattered and stuff.. Thanks all

 

I think the key is that NRAS has been done well (as per your examples) and NRAS has been done very badly... some examples in Perth that were not done by @euro73 are terrible!

 

Sure, same goes for a lot of H+L, OTP units, anything brand new really, NRAS or not

 

Have not read it all, but this is my perspective on it.... as per title of thread NRAS and income vs growth......Growth and timing the market will always be the clear winner over cash flow. $10K pa versus doubling your money in 2 years, for example Syd or Melb market.