Join Australia's most dynamic and respected property investment community

Working backwards

Discussion in 'General Property Chat' started by MJS1034, 13th Sep, 2015.

  1. MJS1034

    MJS1034 Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    113
    Location:
    Sunshine Coast
    Hi everyone,

    After reading people's stories on this forum I have gained an enormous amount of invaluable knowledge that will help me build my property portfolio.

    One of the things I've learnt is the way to achieve your goal is to work backwards on how to get there.

    My goal in my property investment journey is to have 100k passive income by the time I'm 40 (currently 24).

    Is there a formula or a way to work backwards on how to get there?

    Cheers

    Mitch
     
    dan_89 likes this.
  2. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,580
    Location:
    Sydney or NSW or Australia
    Use the pv or fv formulas in Excel
     
  3. monalisa

    monalisa Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    314
    Location:
    Sydney
    Hi Mitch

    @MsAli and I started at around 24.

    On your journey don't be swayed by the number of properties alone.

    From experience, the best thing you can do now is sit down with a good broker and work out your servicing based on your income, assets and liabilities. Some will look at it from a transactional point of view - go with someone who is able to help you with "your" goals :) good luck!
     
    Last edited: 13th Sep, 2015
    TheGreenLeaf, Befuddled and MJS1034 like this.
  4. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,521
    Location:
    Sydney
    I don't believe in working backwards, otherwise it's likely your only going to do the minimum of what you have to to get to your goal.
    Circumstances change all the time and stuff out of your control like APRA can affect your well made plans.
    Personally, I believe it's best to do the absolute best you can right now and you get there when you get there.
    If you make the right moves, by putting in your best efforts right now, you should reach your fin goals closer to 30 than 40.
     
    Leo2413, Pins, Tranquilo and 4 others like this.
  5. Natedog

    Natedog Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    273
    Location:
    Melbourne
    To have $100k net income from property you would need somewhere between $2-2.5 mil worth of IP with no debt.

    OR $4 mil worth with $ 1.5 - 2mil debt etc

    So based on your 16 year timeframe if you could accumulate approx 2mil worth of IP in the next 5 years (using debt) and then allowing the following 11 years of growth in rent and CG, you could definitely give the $100k income goal a good crack!

    Very generalised I know.....
     
    MJS1034 likes this.
  6. Befuddled

    Befuddled Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    251
    Location:
    Sydney
    What about inflation? You'll probably need 150k by then to have the equivalent of 100k in today's terms
     
  7. willair

    willair Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    1,717
    Location:
    Brisbane..
    Might be a bit hard working the hindsight bias,unless you have made a lot of mistakes inbetween and with personal evolution you missed all the arrows of causality that come with investing..

    I don't know of any free formulas out there ,with the fanfare of experts out there selling dreams, for a small $$$$ fee they can teach you the skills required until ASIC puts them into a 4 walled cell with a lifer with a different idea on sex,but from experience most successes looking back while going forward you have too accept one limitations,understand unseen probability and risk,and every one of our successes were and still are caused by a very few slim windows of opportunity by understanding statistics without logic,and understand one simple item only a very small minority from what i have seen over my entire life will evolve into the self funded stage..

    Or read a post by a gentleman called "Handyandy" in the Investor-Psychology section ,, have your goals expanded over time,,that is one of the most honest upfront post with no inbetweens
    i have read in a long time straight from the gut..welcome to the site and good luck..

    Have your goals expanded over time?
     
    EN710, MJS1034 and wylie like this.
  8. MJS1034

    MJS1034 Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    113
    Location:
    Sunshine Coast
    Thank you all for the replies. I do agree with @Ace in the Hole in saying that setting a goal may limit the ceiling my portfolio can build to.

    The plan from here is to keep gaining knowledge from the more experienced investors on this forum and buy as much CG property as I can whilst making sure I maximise my borrowing capacity by having my loans set up correctly with my broker.

    :D
     
  9. legallyblonde

    legallyblonde Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    686
    Location:
    TAS
    In my mind the accumulation time frame is relatively short.. My income goal is in todays dollars... Then hopefully rents/values can exceed inflation.So it should keep the maths a little easier. It is something that can always be reassessed at a later date.