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 going to work around it:

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.”

I read recently that rising mortgage stress in Sydney in particular is being masked by the fact that people just sell their houses and take the capital gain when they can't afford to pay the mortgage anymore. They can pretend that they sold for other reasons, and no-one's the wiser because everyone seems happy. Unfortunately, that approach may not remain viable long term, and there may come a time where an increasing number of people are still in debt after selling.

Up until recently, low wages growth was offset by huge capital gains. Where will people go to "get ahead" if the capital gains also dry up? Looking elsewhere, there is always a celebration when consumer spending goes up, but it's still rising pretty slowly, and we have to factor in inflation and population growth. I suspect in many cases per capita spending is actually falling. If the floodgates of immigration remain open, a surplus of labour in an environment of depressed wages is only going to put more downward pressure on wages. The only ones who benefit are retailers, banks, property developers etc. because the pool of consumers has increased, and all employers, because increased competition for jobs means they don't need to give anyone a payrise. There's really not much to celebrate here.