Edited 28 Aug 2017 14:18, 4 years ago, edited by don_dunstan

Ten percent yield sounds a bit high for Sydney nowadays, doesn't it? Especially with rising lending rates on investment loans and low rent growth.

I have read his story before in Domain I seem to recall most of his properties are in regional areas, Brisbane and Adelaide. Still, ten percent after costs is very high now-days, I'm guessing if he actually threw his books open for scrutiny it wouldn't be that high. And that's an important point too - you're taking his word for what he says - at no time does he actually show the reporter the figures or allow independent verification.

I'm not sure if you can get an insurance policy to cover lost revenue from a simple vacancy, but it is a tax deduction anyway. A debt of $1.3M for $20k nett annually. I think he'd be better off just getting a job that paid a bit more, because like someone at Deloitte said, "this thing's gonna blow". Also, I recently heard people with mortgage offset accounts could have a problem in the event of crisis relating to the government's debt guarantee. Something about not all of it being covered because the guarantee is only for $250,000 per person. With million dollar mortgages, this will be a problem.

Absolutely right, he's in an incredibly high-risk strategy for $20,000 p/a with the possibility of (maybe) being able to grind down that debt into some reasonable equity over time and become a paid-up interstate absentee landlord. A couple of long-term vacancies could ruin him if he doesn't have the financial reserves to cover the loss of rent.

The part of the article that is the most alarming is the fact that he recognises his high-risk acquisition strategies are going to be crimped by tougher financial rules in the future but that he'll well prepared for that and he is prepared to work around that:

His goal is at least 50 investment properties and a passive income of at least $200,000 a year. “I definitely know finance will be hard,” he said. “There are always options. [There will be] more rules they put in place, you’ve got to find ways around.”

Edited 28 Aug 2017 13:58, 4 years ago, edited by don_dunstan

Ten percent yield sounds a bit high for Sydney nowadays, doesn't it? Especially with rising lending rates on investment loans and low rent growth.

I have read his story before in Domain I seem to recall most of his properties are in regional areas, Brisbane and Adelaide. Still, ten percent after costs is very high now-days, I'm guessing if he actually threw his books open for scrutiny it wouldn't be that high. And that's an important point too - you're taking his word for what he says - at no time does he actually show the reporter the figures or allow independent verification.

I'm not sure if you can get an insurance policy to cover lost revenue from a simple vacancy, but it is a tax deduction anyway. A debt of $1.3M for $20k nett annually. I think he'd be better off just getting a job that paid a bit more, because like someone at Deloitte said, "this thing's gonna blow". Also, I recently heard people with mortgage offset accounts could have a problem in the event of crisis relating to the government's debt guarantee. Something about not all of it being covered because the guarantee is only for $250,000 per person. With million dollar mortgages, this will be a problem.

Absolutely right, he's in an incredibly high-risk strategy for $20,000 p/a with the possibility of (maybe) being able to grind down that debt into some reasonable equity over time and become an interstate absentee landlord. A couple of long-term vacancies could ruin him if he doesn't have the financial reserves to cover the loss of rent.

The part of the article that is the most alarming is the fact that he recognises his high-risk acquisition strategies are going to be crimped by tougher financial rules in the future but that he'll well prepared for that and he is prepared to work around that:

His goal is at least 50 investment properties and a passive income of at least $200,000 a year. “I definitely know finance will be hard,” he said. “There are always options. [There will be] more rules they put in place, you’ve got to find ways around.”