just say someone says that their goal is to have 5 million dollars worth of property in however many years – does that mean that they will own all of that straight out? or still have mortgages on it?
its just that ive heard many people talk like this when discussing goals and i wasnt sure.
…. probably with 6 milliions of debt LOL..
kerenday,
As god of money says.
You basically go for say 5 million in property value, but own very little. You hope for that thing in the past called capital gains to make you money, eg if it goes up 10% then you make 500,000 dollars. All very theoretical, assuming you are not putting in money to hold etc.
k i was just curious cos i was reading a blog and they said they wanted to have 10 million dollars worth of RE. and i wasnt sure if they meant owned outright or not.
thanks
i remember wondering how all those highly geared property gurus featured in magazines a few years back were coping when interest rates were pushing towards 10%. Any that survived would be doing ok now i guess.
What I would be looking at is cash flow.
If you own 5 million dollars worth of property you want to look at income. say 100,000 a year income would be at say 5% yield an equity of $2 million. So you could have 3 million debt and 6 million worth of property and earn $100,000 a year from it and have $200,000 p/a to help pay the interest charges of $210,000 a year based on 7% p/a.jazz77 wrote:i remember wondering how all those highly geared property gurus featured in magazines a few years back were coping when interest rates were pushing towards 10%. Any that survived would be doing ok now i guess.
They lock in interest rates at a lower interest rate. I remember paying 6.5% interest in 1995 honeymoon rate and having it jump to 10.5% in 1996 when the honeymoon was over.
karenday wrote:just say someone says that their goal is to have 5 million dollars worth of property in however many years – does that mean that they will own all of that straight out? or still have mortgages on it?its just that ive heard many people talk like this when discussing goals and i wasnt sure.
I think when most people say this they are just talking about having a property portfolio worth $5mil. However, as said above, there is no financial freedom in having a $5mil portfolio with $5mil worth of debt. That would mean that nothing has been achieved.
My short term goal is to have $3mil of equity: $1mil to pay off my house (if I choose), $1mil to put in the bank/funds etc and live off the interest (if I choose) and $1mil to continue playing around in property (if I choose). That's when I will relax and know that it is all just fun and games.
Cheers
K
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