Retirement Incomes....will you be in the top 3%!

If not there, they must be close to Top 3% .

 

Curious how you ended up with so many, was it high incomes or did you buy at the right time etc?

 

Forty years lease is not ridiculous ..25 of my properties have 12-21 year leases that perpetually renew for ever (hard rachet)

 

Thought of switching your residential to commercial sash?
Hold say a few large commercials
Less to manage
The net yields from the commercial will give you much more income than residential!

 

I was following a couple of guys who made millions buying cheaper, high yielding (double digit gross) ips in places with 100k + or more population. Been following this strategy for a few years. We were earning about $110k each. Living quite frugally, we had jobs in a remote area with employer subsidised housing, so no mortgage. The houses pretty much all had growth in the boom. All of those things helped, plus just taking action.

 

Goodonya! Well done!
Refreshing to hear of another different approach to financial freedom.

 

This seems like a solid plan. Can I ask what the net rental yield, capital growth and location for your best and worst ips?

TB

 

Yeah thought about...but too much of a pain.....at times...agree it could give me more income...but the next recession it could change.....

 

Noice...I did the same. Interesting...did you manage to replace your after tax income or at least 70% of it. I think you would have....based on those numbers.

Lots of people on here talk a big game...they manage to get themselves in newspapers set up buyers agencies....mortgage broking businesses...but very few have managed to retire like you or at least have the option. So much BS out there...most are just wage slaves...what irritates me is how poorly some people service their customers and when . ... one gets criticism and they get all huffy and puffy.

 

Yes agree...some have 20+ IPs and generate $110K+ CF and some may hold 2+ IPs and generate similar incomes.
I suppose it is irrelevant how many but at the end of the day what asset base one owns, LVR, and what CF+ generates, or what is the net worth and income, Investment Return.
There are many ways to invest into IP....
Neighbour just sold a house, bought land at $3.5M in 2010, built a house for around $2M-$2.5M, recently sold 710K over the reserve price of $8M, sold for $8,710,000.00
So some will even make couple of millions from their PPOR.
Many ways to skin the cat, is that how the saying goes?
Just be careful how you interpret information presented.
One lady owns one IP worth $15M in cash, another owns 9 IPs at 95% LVR, so be aware sometimes about numbers of IPs....need to understand the overall figure I guess!

 

I track a number of KPIs but the only three I focus on are:

1. Net Worth at end of every Quarter. This one is key as Assets and Liabilities/Loans can go up and/or down.
2. SMSF Balance at end of every Quarter. As we are in pension phase, this one is key as it will show if we could possibly run out of Super funds
3. Excess Lifestyle Cash (not counting our cash reserves). If this keeps going up that is a good sign

 

LVR is below 50% but as you know, cash flow goes up and down. I'm doing 3 subdivide and builds, hope to make $100k (conservative) to $150k net each next year. That seems to be the way to turbo charge paying down of debt and reinvesting.

Agree, way too much media self promotion of people who haven't achieved anything yet.

 

I've got a block of 2 units bought for $130k each 2 years ago. Comparables selling for $230k. Rent is $310& $320pw. Expenses say $4.5k allowing for maintenance slush fund. Zero vacancy. So about 11% yield.Plan to build a garage and sleepout on the back of each. To increase yield and equity.

Bought a house for $210k 3 years ago. Agent valuation with a paint and staging $430k. Rented for $460 pw. Will repaint and rent again at $480. Plan to build a house on the back. Build cost $250k max. Will rent $400 pw and(2 bed) sell around $400k.

3 bed house bought for $179k 3 years ago. Rents for $380 (long term tenant). Valued $350k. Long term hold, will eventually build a 3 bed on the back and subdivide. All of these are in Hawkes Bay NZ.

Bought a house in Nelson, NZ 5 years ago. Pp $399k. Rent $400pw so rubbish yield. Now valued at $520. I've built in the corner a 2 bed for $240k incl services. Will subdivide next year and sell new build around $470k.

Bought in Hoppers Crossing, Vic 3 years ago. Pp $440k sold for $550k. Can't remember the rental yield but it was woeful, hence flipped it when market peaked.

I've got some US properties bought for high yield and potential growth (due to point in the cycle). Same strategy, if they don't grow it doesn't matter because the yield means the tenant is paying down my debt relatively quickly. I sold 2 in Atlanta last year that had double digit yield. I've posted those numbers in another thread but bought for $60k USD and $80k USD about 2 years ago. Both rented for $1k USD pm or just above. Sold with no fees to another investor this year for $100k & $105k USD.

I made money on every house I bought except for a reno project I bought a few years back. Didn't have time to do the reno so paid tradies, had a number of expensive issues come up. Bought for $179k sold about $260k. Lots of losses to carry forward on that property.

Bought a PPOR in Vic a few years back. Emotional buy, didn't look at the house properly when we bought it. Discovered a few issues incl. non stop freeway noise (open home was at the weekend lol). Just about got out money back on sale or slight loss.

 

@ellejay thanks so much for sharing. Did you buy in NZ while living in Australia?

Your strategy sounds interesting and I'd love to learn more about buying high yield properties - we usually hear about capital growth but I think yield can be a better strategy sometimes esp when considering things like transaction costs, cgt, etc. Also like that you're subdividing and adding more rooms etc - these things are getting difficult to do in the Melb market. Do you recommend any resources (or PC threads!) for learning more about these strategies?

 

@ellejay great results !

 

Yep that will definitely work. The key is decent yield plus good growth. Most people just focus on yield.

Don't know about about NZ but in Oz the GST required via the margin scheme can be a pain. It can kill your profits. So what I am doing is replacing the older properties with newer ones which have equity built in. I hold for 5 years and think about disposing them as no GST is payable. Some have 200k plus in equity once built.

Just this FY year have disposed of a house in Werribee ...paid 130k... Sold for 426k. Just settled on OTP land...bought for 148k ...under contract for 230k....no interest payments for over 2years whilst it grew. In the process of replacing with newer properties now...in Melbourne at the moment for that exact reason.

 

I'm just looking into GST and think you're right. So I could keep the ones I build, sell older ones to pay down debt. Hold for 5 years then sell? I'm just building one in NZ that has about $200k equity. After subdivision could sell the existing house and keep the new one for 5 years.

 

I bought some while living in NZ and some while living in Aus.
Keep reading this forum and asking questions. Go to Melbourne meets ups. Sash seems to be making it work in Melbourne.

 

Thanks for sharing @ellejay I'm definitely intending to keep reading

@sash you mention up thread about selling down cheaper IPs and buying in higher socio-eco areas to ease tenant issues, I'd love to hear more about this.
I lucked out with my first IP (recently sold) - it was near-new, with rarely any vacancies and excellent tenants.
I'm already daydreaming about what properties to buy etc once our plan to get a new ppor is settled...

I'm in my mid-thirties, so it's interesting to read people's strategies as they near retirement age. Personally I'm saving and using most of my cash for property - I don't know much about Super and it worries me what Govt could do in thirty years' time with it - but everyone keeps saying to throw 25k pa into it so I might start doing that from next year [as protection in case of divorce, lawsuits, etc]. Once we max out our serviceability we plan to get shares and then a loc against them to buy more property. But these plans are on the backburner for a bit because am trying to upgrade ppor, which is trickier (logistics and financing/price wise) than expected.

 

Two schools of thought here.

I belong to the second school. While in accumulation phase, always live in the worst property in your portfolio (even better if it is on a large block of land). Why :- because tenants and the Government are helping you accumulate.

Then, in pension phase, live in the best property in your portfolio. Why:- you have made it and you no longer need help any more.

Just a thought.