When can you quit your job and go full time in IP

Having a clear plan is really important.
You do need to set a figure that your chasing. The point is it can be achieved in many ways.
Say for example you want a passive income of say 60K. You may achiieve it by;

Paying off a 600K comercial property returning 10%
How do you pay it off? With income generated and capital gains from other properties.

Pay of 850k worth of residential property earning 7% in the same way.

Owning the motgages on 3,000,000 worth of positive cash flow property that retuns a net profit of 2%.

Any combination of the above.

Note I have been very simplistic…

Banks require more than just equity. They are also looking for income when they approve loans. So you can only borrow, if you leave your job, if you can show another income.

Again simplistic.
I’m very interested in others ideas re strategies.

MJK

Vluu

It is not hard to get aloan without a job, but it is hard to get a GOOD loan! I would get an ABN number now, so that you could get a good low doc loan. Some of these need 2 years self employment history, which they prove by the date of ABN registration.

You could use the $300,000 as security if it was a term deposit. But why? You could just use this a deposits and borrow the rest.

Terryw
[email protected]

Hi vluu27,

I am no expert because I am just in the process but one thing I have learned is that you cannot afford to give up your job until you have at least 3 months worth of expenses in the bank and your positive cashflow is greater than your expenses each month. How you acheive that is really up to you. Have you read and played Rob Kiyosaki’s “Positive Cashflow Games” This will give you a great understanding.

Good Luck!

Hi all. Good question. MJKMJK, using your examlpe of $60,000 passive income, if someone had paid off $850,000 worth of property and was living off the rent, would the bank/s still lend out more money for further investing?? I thought that they may have considered you too rent reliant.

Cheers

Marty

Hi vluu27,

The issue may be that the banks are lending to an individual. If you are looking at doing property investment full time would there be benefits in establishing a (limited) company? You then have a company bank account that holds this $300,000, plus all the properties you own. Obviously there will be the paper work and legal issues to sort out with this arrangement. Anyone have a comment on this structure?

Cheers

Adam
[8D]

Maximus
Once youve set up your passive income stay at work another year or two and buy several more properties then leave work. Once youve got the loan its yours. What do you think ?
Also its areally good point about having a good relationship with your banker/broker. Buy the time someone has achieved passive income through property they should have a good relationship with at least one banker/broker.

MJK

Hey Phillipe,
How did you come to the idea that a limited company was the best option ?
As to the amount of money that is a great way to start. As to where it will take you …that will depend on your gumption and drive.

Enjoy
AD [:0)]
(Andrew)

“Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved.”

Hey Andrew, thanks for responding. I came to the conclusion that a limited company would be the best way forward really just from listening to people that have done well in IP as well as a few books, I have a reltively high income and thought that it would be the smartest move for tax purposes as well. I am 26, completely ignorant but having just sold the first IP in Sydney which I did when I was 22, I am completely open to the suggestions and ideas of those who know better. Any help would be graciously accepted. Phillipe

Hey there Vluu

No matter how good you think u are at maintaining your debt, the main banks seem to still want blood out of a stone…

Unless you hav a full time job, or a business number more then 2 years old its very hard, no matter what ur circumstances are… i did exactly the same thing 3 months ago, i re financed all my places, had about $240K of play money to use, and just thought i could stroll into a bank and say, here is 20 % deposit to cover ur bums, lend me the rest…. (i had this “crazy” idea of buying 5-8 more places)

still needed group certificates, still needed work history, and still needed work, even though my loan repayments were about 50 % of my gross rental income… i got declined….

i had to buy the places outrite.. which i didnt want to do…

2 years ago i bought a unit in Worrawong, past Wollongong, cost $71 K, rented at $125 pw, and the repayments on 80 % loan were about $65 pw interest only… that was not enough for the lender… i STILL needed a job…

doesnt make sense, and its not fair sometimes… (70% of my work is casual by choice – banks still wont touch me lol)

My suggestion is, as mentioned by other ppl, get an ABN asap, get as much property as you can while ur still working and then decide about quitting working… its funny how after u get a 25 or 30 year loan u never get bothered again about work or even if ur in the same job….
go figure…

All the best!

Jason

Hiya again,

Food for thought.

I know of a gentlemen who stopped working @ 29 yo, owns 3IP’s & lives in a caravan park along a beautiful coast line. He also has a loving partner & 2 kids ( 1 boy 1 girl ). There sole income is the 3IP’s ( ~ $600 less taxes ), I am yet to see a happier family group.

He borrowed for his first IP @ 19, now @ 36 he still has no intentions of being employed, he is a qualified non – practising solicitor & his wife is a naturapath. There 9yo boy will excel in surfing & 7yo daughter will excel in dancing.

I did however ask ” what if you get asked by the owner to leave the caravan park one day “, his reply was ” if we can be happy here we can be happy anywheres “.

My thoughts are:
Basically, life is so simple.
Happiness is made to be shared.

Michael
just be