What is more important
The number of properties you own or what your net worth is.
I read an article in the API mag of a man who bought x properties in one year but his gearing over the lot was about 90% – so on paper he has 1.7 million dollars of property but in reality his net value or bottom line is a different storey.
What are your opinions to this.
D
Hello all. Long time no speak(been a year or so since my last message i think).
On this i think a determining factor is the servicability of that 1.7m of property. If he is forking out 100grand/pa of his own money to pay the interest on that property then i feel he isnt in such a good position. but if the property is sustaining itself comfortably then i reckon i would be happy to be him.
If it sustains itself then he has done well to acquire that property(even with minimal equity) and stands in a good position to benefit quite well from capital growth in the long term with a highly leveraged position.
The leverage he gains from this property i feel puts him in a better position than one who has has a high net worth but in not as leveraged position (one again assuming the property “comfortably/safely” covers it’s costs).
Regards
David
If property is growing stongly then it would be best to hold as much as youcan a quickly as you can. The net worth will come automatically.
But in reality, you have to be comfortable servicing the loans and also need to allow a buffer for interest rate increases etc.
Terryw
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Originally posted by wealth4life:What is more important
The number of properties you own or what your net worth is.
I read an article in the API mag of a man who bought x properties in one year but his gearing over the lot was about 90% – so on paper he has 1.7 million dollars of property but in reality his net value or bottom line is a different storey.
What are your opinions to this.
D
What are we comparing the above story to?
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorThanks Redwing – some times i see or hear of stories where people own large numbers of properties but when you do the numbers on SOME of them their financial position wasn’t that great.
I attended a seminar 2 years ago where the presenter gave a talk on focusing on your target $ ie; work out exactly how much you want before you try to get there. Like using a street directory.
His view from experience was that there are so many people trying to succeed when they don’t really know how much they are goaling for.
One person in the audience said they owned 16 properties, he asked them what was their financial target and they couldn’t answer him, he said “you may have already arrived at your destination and you didn’t know it”
Wow!!! it was very very powerful.
The point;
All i hear is how many xxxxx we own and i feel that it seems to be more of a competition on numbers of properties rather than on fin/performance.
Peter Spann works a lot on the goal dollar ammount, thats why his new book focuses on 10 million and not owning 100 properties, if you get my drift. It’s sort of like what would you rather have 20 town houses or 10 houses.
D
G’day all’
affordability is the name of the game.
Having read a recent post from “wealth4life” my beliefs are simular.
I own one dual occ. I believe it’s in a top location.When I first started out investing, I bought one bedroom units. Plus a serviced apartment. All of them were a complete waste of time.
Houses in top locations only please.I’m now looking for another top location dual occ. It can be in any major capital city. This will be my number two investment property.
I only intend to have three top dual occ s.Shares for ever.
bruham.
The number of properties you own or what your net worth is?
too many factors that could be factored in I think to answer honestly..
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorAs Steve says, “are you a property collector or a property investor?”
I remember reading about one old widow who owned only two properties, her very modest PPoR that she’d been in for the past 70 years, and a rather staid building in the middle of the Brisbane CBD, which she inherited from her husband when he died, which he owned freehold for the past 70 years also. So, 2 props, owned outright, and worth about 1.0 MM and 13.0 MM respectively.
Then of course at the other end of the spectrum, there was the up and coming investor who just put a 5% deposit on a skanky block of 50 flats…..well….bedsits really….worth in total 1.0 MM.
Now both of these two characters stand up at some property seminar and summarise their position. The first stands up and says she owns her own house and one IP, and is written off as a newbie or small fish, yet has 14.0 MM of solid equity producing more than 1.0 MM in nett rent per annum. The second guys stands up and says he controls about 50 properties, and everyone assumes he’s an absolute guru, yet he’s just starting out with about 50K in equity with bugger all rent, and constantly squabbling with losers to pay what little they are required to do.
The number of properties owned by an investor, IMO, has never been any guide or barometer of the investors ability or level of competency.
I’m back and thanks for the posts especially yours Dazzling, i’m with you.
D
Hi,
My goal is to build net worth. I can use leverage to get there and on my leverage I control cashflow (affordability) and captial growth (location) and risk (location, property type, median value, etc)I try to keep it simple too!
Mat
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