How I Make $51,260 Passive Income at 27 | Australian Real Estate Investor
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- čas přidán 25. 08. 2024
- Revealing how you can create passive income through Property Investment in Australia! It's all about having choices and creating financial independence.
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I've uploaded a 2023 update to this video. Check it out to see how we've faired through the interest rate rises 😬
40 now, and everything is paid for. Fortunately, I had a college economics teacher who taught me a lesson when I was 18 years old. That lesson was: you can't buy something else for every purchase you make. Having multiple sources of income is prudent, as is living within your means. I have a 13-year-old vehicle because it is all I need, I like it, and I can do whatever I want with it. My net worth is $4 million, and I can pay my bills without stress, but I don't live like I have that. I have no complaints.
I fully agree; I'm 56 years old and recently retired with approximately 1.2 million in outside retirement funds, no debt, and very few dollars in retirement funds in comparison to my portfolio balance over the last three years. To be honest, the financial advisor's role can only be ignored, not dismissed. Therefore do your research to get a reputable one and that should be any individuals main route into the market.
Vey accurate from your POV, It really isn’t about how much you save, it’s about how you manage your money. Whether you work to earn income or invest, it still boils down to income vs expenses, so yeah you may look into investment advisors for a strategy that suits your goals
wow ,that’s stirring! Do you mind connecting me to your advisor please. I desperately need one to diversified my portfolio.
Catherine Morrison Evans’ is my portfolio-coach, I found her on Bloomberg where she was featured, I looked up her name on the internet. Fortunately I came across her site and reached out to her, you can verify her yourself.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
In my opinion, a housing market crash is imminent due to the high number of individuals who purchased homes above the asking price despite the low interest rates. These buyers find themselves in precarious situations as housing prices decline, leaving them without any equity. If they become unable to afford their homes, foreclosure becomes a likely outcome. Even attempting to sell would not yield any profits. This scenario is expected to impact a significant number of people, particularly in light of the anticipated surge in layoffs and the rapid increase in the cost of living.
You know Many ppl are choosing AMZN as their "Stock of the yr" I agree it has a chance to be. But my question is what stocks can be the next APPL in terms of growth for the next decade? I have $250k ready money to invest for long term gains, and my goal is to retire comfortably rich.
While some investors may see opportunities in market downturns, it's crucial to approach investment decisions with caution and careful research. Recessions can be challenging times for businesses, and not all companies may recover in the same way or at the same pace. Diversification, thorough analysis, and understanding one's risk tolerance are essential components of any investment strategy.
Additionally, short-term trading strategies, such as trying to capitalize on market volatility, can be risky and may not be suitable for all investors. Timing the market consistently is notoriously difficult, and short-term price movements can be unpredictable.
It's always recommended to consult with financial professionals and do thorough research before making any investment decisions. Each investor's situation is unique, and what works for one person may not be suitable for another...
Which Financial professional Do you work with or is best suitable to work with, You seem to be doing well in this ?
Financial professionals like John Desmond Heppolette often bring a wealth of knowledge and experience to the table, helping clients develop and implement sound financial strategies tailored to their specific needs and goals. It's crucial for individuals to recognize the importance of seeking expert advice, particularly when it comes to managing investments and mitigating risks.
Just had a strategy session with Luke today. Very honest and knowledgeable. Thanks again Luke. Will be recommending you :)
Thank you for sharing your thoughtful content…for
putting it out there with the passion that many of us need and strive for. I'm starting to listen to you
almost every morning....
There are a lot of Strategies to make tongue wetting profit especially in a down market, but such Sophisticated trades can only be carried out by proper market experts...Thats why its an innovative suggestion to look out for Financial Advisors like kevin scott werner....,,,
@@user-df5ut9mq3q Very true, I diversified my 77K portfolio across multiple market with the aid of kevin scott werner & I have been able to generate over 433k in net profit across high dividend yield stocks, ETF and bonds in few months.
@@TedLoren-qf9sx very impressive,how can i get in touch with kevin scott werner ?
@@user-sx4qr5ez6e google him up on the web with his name. he's quite popular for his services. he can work with anyone irrespective of where you're located. you can communicate with him....
Great video, like the tranparency a lot (the numbers!)
Thanks Thomas!
Such a great video, you explain things in a way that doesn't confuse or overcomplicate. Looking forward to more of your content.
Appreciate it and thanks for watching!
Very interesting watching a year later. Two points. Interest rates are now double which likely has turned the entire portfolio into cash negative doubling interest payments. Also another point you didn’t take into account the tax paid on any positive cash flow which is likely in the 49% income tax bracket given it’s on top of your regular income as well. So in reality before rises you were making 15k a year after tax but now would be essentially losing a lot and pushing rent up to try cover and also negative gearing. Not taking into account the thousands of hours of effort. This is why many choose to just do Index funds for passive investing as it’s so much easier imo with less stress and Yoyo from interest etc
If only you could leverage as much for index funds as you can property. I just applied for NAB Equity Builder and they'll only lend me around $160k. Meanwhile I have pre-approval to borrow $1 mil for property. I'd much rather buy index funds but with more leverage available and this country's obsession with propping up prices I'd probably be doing myself a disservice if I don't invest in property
@@bgrossman but isn’t really worth the risk of leveraging when you could just put away a few k a month for the next 20 years and compound that with zero risk? Many would think not. You alrdy have a property purchase to live in so that hedges you as well across all your “money” areas as your technically in property as well
I used to do index funds. There are pros and cons to both. I found index funds to be awful from a tax perspective (though I didn't do ETF's which I heard are a bit more tax effective, mine was a managed fund). I decided to take the leap into real estate and my first house was bought cheap, and renovated. It was hard work, but it paid off. I was lucky with timing and locked in a low interest rate (still locked in). The house also increased significantly in value as it's in a good location. I made about 100% return on investment, and knew that real estate was the only way to go for me. I think you're overestimating how much effort goes into real estate investing. The real work is finding opportunity and the right deal. Managing them is easy. You're correct about the interest rates though - many people will come off fixed rates soon and will really feel the pain. This is why it is important to understand your 'worst case' scenario and do the math to ensure you are not over-leveraging. Nice insights!
@@Techpower888 fair comments. Like anything financial it’s always slightly different for everyone. Just remember tho for everyone that property worked there’s another bunch it didn’t. For a layman who wants easy effort investment you can’t beat an ETF index fund. Just don’t cash out then tax isn’t an issue. Also if it’s Investinf for life maxing out super contributions at 27500 tax free and then cashing out super oneday tax free is pretty amazing deal in aus
This was a super helpful insight, appreciate the quality! Nice work mate.
Lol loved that outro. Congrats on the Bub!
You’re smashing it mate, well done and thanks for sharing
Haha thanks mate!
Love the breakdown mate. and CONGRATS on the new member to the family!!
Thanks mate! We're loving life as new parents!!
Seeing all the numbers was so fascinating, thanks for sharing!
Oh.. finally another oz money creator. Subbed.
So glad to find your channel. Brisbane parents here looking to use our equity to begin our passive income journey :)
Yay - thanks Jessy! It's an exciting (and sometimes slow) journey but absolutely worth it!!
i house hacked for 5 years in port melbourne, best decision ever and made a few good friends along the way!
Be interesting to see how many of these guys can retain any of it in hard times.. anyone with a decent job and credit rating can do this in boom times.
Congrats on your baby boy! God bless, great vids
Congratulations on your baby boy and your journey. Great videos
Thanks Minnie! Appreciate it
At the time of this video, interest repayments was $1643 weekly, what is this looking like now with the current interest rates?
Thanks for the info luke really helpful
i actually learned somthing thanks alot this really will help me with my journey
Congrats on the family addition!
Cheers Nick! We're enjoying being parents (even with the lack of sleep haha)
Thanks for the video!
that's nice , you said everything really clearly 🎉
Great presentation, Land tax?
None at the moment but with the new QLD changes could be looking at an extra 5k per year
It is absurd to believe with current costs that you will spend approx $1000/year on maintenance per lot. This is especially true with the unit block. I believe you stated it is a one home/three unit complex; this means there is 4x oven/stoves, 4x air-con (at bare minimum in Coffs), 4x potential for any breakages or electrical failures. Not to mention the fact that the complex looks circa early 80's if not older. Trades are not cheap in 2023. And if the property you self manage is a short term accommodation or multi-person place, there is a much higher potential for deterioration and maintenance requirements. It is a great achievement to have created this business. However, it should certainly be asterisked with the amount of risk involved. This includes tenancy issues. You say you pay the lowest for insurance. Does this include landlord insurance? Because, especially in a locale such as Coffs Harbour which has a higher tendency toward unemployment and some social issues, poor tenants can be an issue. Plus, those units would not attract top tier tenants themselves. It may be that you are one tenancy issue from a >$10-20,000 loss. I wish you luck, but the maintenance and risk profile of some of those properties is high
What about Land Tax?
Diversify across personal names, trusts and across states. So no land tax
Did you take into consideration the money you put into the property? The deposit? You need to say "How much that would have generated in term deposit" and then you will get your total true value .
Grateful for your insight
Hey Luke, can you describe what your strategy was like going into these properties? E.g 88% LVR minimum, interest only always etc.
Give you’ve got pretty substantial positive cashflow, I’m assuming you’ve paid down quite a bit of debt too. What was your strategy like for this? Was it this way from day 1?
Cheers!
Congrats on Acer and the portfolio!
Thanks! Asa and Mum are doing really well
Would this even be possible today with interest rates being high and the average cost of a house either one story or two being between $500-1Mil+? lets say i work a 9-5 and earn $80k.
Just curiously, how much tax did you have to pay on income of $175k, and did you have any land tax?
Compassion is a great organisation, my two were from them :) You guys are smart and caring!!! Cute little family :) Your motivating me as a single investor.
Such a sweet comment! Thank you and wish you all the best in your investment journey :)
How do you start a portfolio? Did you have help from bank of mum and dad initially?
We started our portfolio by saving $66,000 in cash for our first deposit. Then leveraged to buy our first property at 93% LVR. Renovating the house while we lived in it and rented out extra bedrooms to cover the entire mortgage. Everything snowballed from there as we refinanced the debt & saved cash for our next investment purchase.
All that profit has been wiped out with a couple rate rises. Better buying dividend yielding shares and property trusts.
How does this stack up with interest rates at 6.5%?
Hey mate, can you recommend any investment savvy property tax specialists in Brisbane?
Incredibly well made video and answered so many of my questions. I'm 20 years old and looking to get into real estate after I build up enough liquidity, I live in Sydney NSW and the prices here are astronomical to enter the market (possible but would take a lot longer). Would you say it is better to go for a cheaper apartment/unit or complex in QLD which I may receive less annually but have the opportunity to purchase with relative ease, or try and get a comparatively more expensive but greater ROI home in Sydney? The whole property investment compels me to purchase in Sydney solely due to the fact that I live here but I can sense a greater property growth in some areas within QLD.
Also I know this was uploaded a while ago, but congratulations on being parents!
Very informational! Subscribed
Thanks for watching!
land tax?
Hey mate congrats on the portfolio and you your child. Your videos are super informative..
What tax would you have to pay on the outcome amount $37,054?
I’m assuming it wouldn’t be tax free? I’d personally consider the amount after paying outcome taxes the total income generated.
Tax Effect treatment depends on the holding entities and distribution. A ballpark tax figure would be to use standard marginal rates or simply take 25% off the top. We're not living off this income at this point (rather we're re-investing these funds) so less important at this point in time for us.
7% of $175,000 is around $12,000. How come the management fee is only $7,000
Great Question! We self manage our first property :)
And have a great management fee % at 6.6% incl gst for our 3rd property
True. Its started. Who will invest in it for the next 5 years where its obvious that interest rates only gonna go up or stay at a high level. Sorry under 5% rate is over.
thats insane. I've learned a lot
So good!
Hi Luke, just stumbled on this video and realised it was a year old. What is the current net income of those same properties?
With interest rates gone up so much I wonder how these are doing.
Hi Luke awesome vid. I am want to buy my first investment property but im not sure about the current interest rates? ... do you think for a first time investor is wise to enter now
Thanks mate. Entering the market is a personal decision! You need to ensure you find the Right property, for the right price, in the right location. You also need to understand your strategy, cashflows and risk
Solid buffer - how much equity did you put down for each property?
We put 500k equity down on the unit block. And then 20% deposit for the other properties
Hi Luke, do you buy these properties on your personal name or through a property trust?
We use a mix personal names and trust structures depending on the property
@@lukewiles1 can you do a video where you give away everything and try do it from nothing? i.e. $0 - great youtube idea. Also, no bias from money of bank of mum and dad or relatives; could be fun and would be entertaining
mind sharing all those property, and you are living one.
what's your starting fund?
Started with a 66k deposit
@@lukewiles1 was that 5% or 10% for property?
@JimTMD 5% plus closing costs and reno budget for our first property. Then we were able to buy each property with a 20% deposit after that by refinancing
I am still confused with refinancing as in you will be back in the debt from the beginning and cashout the part of "repayment" and buy another property, was that correct? - probably not suitable for me
I just stepped into the market with all government schemes lol and i dont even have a clue how to get the homebuyer 25% back under my name .@@lukewiles1
How is the principal so low?
Half of the loans are interest only, and the other half are P&I
I take it that the key is to buy with a large cash deposit so that the interest doesn't eat up all of your cash flow?
Our strategy has been more to hold property through cycles, which includes both equity growth and rental increases over time. Therefore bringing in more passive income
Investing in real estate can be a good way to generate passive income using the equity you have in your home. It's important to do thorough research and consider factors such as location, market trends, potential rental income, and expenses associated with property ownership.
Congratulations Luke 🍼
Thank you!
I don't understand how banks could even begin to give you these loans. You can not service these loans if things go wrong. Also what deposits did you put down?
Roughly 5% for our first deposit. Then 20% for our other deposits. We're good savers and I'm an accountant by trade. So banks were happy to lend us the money
Where does your Qld Land tax and water charges sit?
Below land tax thresholds due to structuring / planing and water usage is paid by tenants with supply being included under rates
@@lukewiles1 Good work on the land tax then (assuming it's a joint loan?), that would save you thousands per year.
@@ChristopherMayhew my wife and I have built our portfolio together. Definitely helps :)
I would almost bet my left nut that property 2 lil’ QLDer is now bringing you in at least 540pw. Late to the party 🙋♂️ I know but another ripper vid Luke.
Dear luke your acuracy is bewildering, I have a product I would like you to review how can we DM you
great.
Soooooo...you basically just own an asset worth 5,000,000 with a low interest rate mortgage that is mostly paid off to get a return of 37054 which is a 0.7% per annum return of the underlying asset?
Fantastic, why didn't I think of that, all i need now is around 4 million dollars with current interest rates and i'll be set enjoying that sweet sweet 0.7% return!
The house and 3 units was 1.4million. That loan at 6% interest only is 84,000 before rates, insurance etc 🙄 i don't get your situation... How can it make money
Less debt to value and higher rents improves this significantly
@@lukewiles1 i guess that is just luck with market timing. Without a big cash deposit the maths doesn't work. Even if you have equity elsewhere pulling that just means paying mortgage on that money too
@candoit123 you need to put some money down to make money. You can't have everything at 80% or 100% LVRs. In this case, we put 500k equity down for the unit block
What are your thoughts on North Queensland Luke? :)
I like large regional locations with multiple industries! North QLD has some major regional locations with potential like Cairns, Townsville, Mackay. These purchases would be more cashflow focused then growth.
@@lukewiles1 thanks Luke. I actually picked up a house last October in Townsville. It's not quite cashflow positive (Bushland Beach on the northern side) after interest and principle but hopefully will get there soon. We hoped to move there but our circumstances changed and unsure to keep it or not. Paid $400,000 probably worth 450 to 480 now.
I'm at 60K net with 3 properties
Now what I want to know is what are the numbers when interest rates hit 6% like in NZ???
I'm in Australia. Assuming interest rates increased to 6% and there was no uplift in capital value or rents. Our cashflow would be neutral based on our current debt. However, we've fixed a lot of our loans for the next 2 to 3 years at sub 3% interest rates
Can we get an update post 8 interest rate rises? 😂
☠️
Hi Luke, well done in getting to where you are. I am sure it will only grow :). Just wondering if the portfolio is still positive net or neutral or negative? At time of recording this was during low interest rate I believe? Thank you :)
Still positively geared 😌
Amazing mate!! good on you, smashing it!! congrats on the Bub! what's your plan for consolidation? Will you switch all assets to P & I later down the track or sell down assets to own others outright? cheers mate
Cheers Tim! Appreciate it. Our plan is: we currently have half of the portfolio on P&I. We'll continue to purchase cashflow assets with 2/3rd Teir Lenders (we've exhausted 1st Tier. e.g. CBA) and grow the portfolio's cashflow (e.g. Block Of Unit, Duplex, House Reno + Add Granny Flat). Then slowly pay down the debt over the next 10 years+. No plans to ever sell down, unless we wanted to make a major life change or a property was too high maintenance.
@@lukewiles1 wow awesome mate!! Sounds like a well thought out plan! Without getting too detailed, are those cashflow plays going to be more regional now that you have some great blue chip brissy assets? Thanks for being so transparent with your with your journey, really helps up and comers like me understand the nitty gritty parts of property investment that some other resources don’t deep dive into!! So Thankyou!
@@timhickey8491 plans are always changing but we're pretty sure about how we want to move forward! It will likely either be house (which needs renovating) + auxiliary dwelling in Brisbane OR a regional location in North QLD / Mid NSW / South Aus. Glad you get value out of the videos!
Love it mate! Just came across your Chanel and this was very helpful with cash flow. I’m just learning about investing and preparing to buy my first investment property. I’m living in Melbourne but from toowoomba, QLD. Thoughts about either?
Hey Luke, without gong into details for property 1 and house hacking.. is renting out rooms and covering overheads such as electricity/internet something you would suggests as a viable option? We have a house with granny flat we will rent out and potentially rent the rooms of the house in the future, the yields being much higher for the later versus renting to a sole person/family.
Are all your loans interest only?
About half of our loans are interest only and half are p&i
20 tonne jack, raised a whole house yourself, didn’t document it on CZcams?
That would’ve been the best CZcams video to make!
Relevelling the big old queenslander, was one of our first big projects! Lost opportunity haha
@@lukewiles1 did you take any photos if not video?
I’m keen to see how it was done.
Was it raising the house or just leveling it?
You management fee is only 4.2%, it’s bite unrealistic .
we self manage one of our properties hence why the % is much lower. Otherwise we pay 6 to 8% management fees
Hey Luke .. u mentioned that the PM charge u 7% per week .
So I was wondering why do u pay extra for maintenance?
I was thinking that the PM fees is inclusive of any taps change , leakage , wiring change etc ??
This circa 7% only covers management. Landlords are required to cover the cost of maintenance and repairs
It’s not passive if you have to manage the properties …
my mum gives me 5$ a week and thats basically passive income
Hi
Hi
would like to of seen what the tax man makes of the math.
I'm a chartered accountant, it's all above board
Except that you are comparing pretax income and saying it can pay for your living expenses which are by definition post tax. Perhaps include the depreciation schedule and tax expense. Hopefully you are doing OK with the increase in interest rates.
how to get 100000 passive income but per month
Easy... have lots of money to begin with
Well nobody can afford to rent any more so the ponzi scheme is runnig out of new investors, so down comes the house of cards. Ill get the popcorn.
You realize property is largely an owner occupied market? And if no-one can afford rent anymore this means there's demand for rentals pushing up rental prices?
@@lukewiles1 i do, but that doesn't stop speculation, as if their value is not tied to their utility or cost, but it can go to the moon, and it depends on always having more investors ready to pay more, with the expectation of guaranteed capital gains. However when the average income can nolonger afford the average house, you have cut your potential investors to foreigners and multimillionaires, ehixh is a muxh smaller pool. Whats more if the government takes any steps to help renters, that cuts out many of the investors too. And what hapens when the re is no new investors in a scheme where the product is worth way, way less than what it's being sold for? Look up what a ponzi scheme is, and what happens at the end. The last investors get wiped first.
@@morganoox3838 except that there is about circa 190,000 new migrants coming into the country for this year alone, which is expected to grow onwards... so plenty of demand unfortunately as opposed to short supply of new homes fuelled by lack of planning and shortage of skilled builders/trade workers.
Great Content! We run a faith-based channel that focuses on AirBnB rentals as passive income and believe our content aligns well with your audience. Let's explore collaboration opportunities that resonate with both our communities.
u named ur kid after a pc?
Nah it's spelt Asa and is old biblical name
The stock market has been a really tough one this past months, but I watched an interview on CNBC where the anchor ‘Jim Cramer’ kept mentioning "...KARINA MATTIS...". This prompted me to get in touch with her, and from October 2021 till now we have been working together, and I can now boast of $540k in my trading portfolio.
Good one, working with her also helped accumulate up to 350k in my trading portfolio.
I am a beginner and I am hoping to start with $93,000. I hope this is not too small to start with because my dream is to attain my financial goals within a short period of time.
Sure you can start with that amount and even less. With a proper financial guidance, you can build a small amount to a larger sum.
Seeing the name Karina Mattis made me stop to read your comment. I can attest to the fact that getting in touch with Ms. Karina during the pandemic was how I was able to scale through the crazy stock downtrend and this helped saved my finance
I just looked up this person KARINA MATTIS out of curiosity, and surprisingly she seems proficient. I thought this was just some overrated BS, I appreciate this.
lol you guys understand how over exposed you are?
I'll let you know how we go haha
@@lukewiles1 good luck bro!
They’ll be considerably wealthy by retirement age.
@@OilBaron100 if they can continue to make repayments :D
@cococlips8021 because its all debt
holy mackeral.
less than $1000 per week - Before tax!!
for owning 5m worth of property.
up to your eyeballs in debt.
new baby.
spent your 20s labouring and exposing yourself to Funes, dust, lead paint and asbestos. scrimping and penny pinching and saving.
you might be stuffed if rates rise. I'm sure it's work to maintain a portfolio - it's not truly passive.
good luck to you mate.
I'm more of a glass half full guy myself!
In your 20’s is the best time to do that kind of thing. It’s much more difficult to do it in your 40’s, when you have kids.
Who is this clown?
5,000,000 invested in Ares capital gives you 400,000 a year......
We still have debt on our portfolio. Gross yield would be closer to 200k