quote=Scott No Mates]Rus is this a case of 'who diess with the most toys wins' regardless of the fact that you will also be the one with the most debe (ie net asset value = $0)?
SNM[/quote]

I don't know where you get that idea from. I've never been interested in "toys". My motto is more to do with having quality of life.

I have a very relaxed lifestyle and I like to travel and socialise. My wife and I participate in charity work, sing in a community choir and we visit our friends and relatives more often than most people do.

We use property investing as a vehicle to financial freedom and my strategy involves building a large portfolio, which means having a large amount of debt.

I guess it looks like I'm taking risks, but I've always made sure I have a decent cash buffer available.

When it comes to helping others with IPs, I talk about what I've learned and then I refer them to experts in finance and property for good advice.

I'm using the Kevin Young system and following in the footsteps of the many Investors Club millionaires, because I know they will never steer me wrong. They have a lot more to lose than I do, so I keep in touch with them and learn from what they learn.

I'm not really qualified to enter the debate on this subject, comparing shares to property. I just really believe in property. I'm glad there are others here who do their homework and crunch the numbers.

By the way, I'm able to borrow another $200,000, which means that with a LVR of 80% I could get a $1M property if I wanted. How can I borrow so much? It's because some lenders will look at the value and type of property owned and count a percentage of capital growth as income. That's how confident the lenders are that property is a good investment.

Thanks for your other comments. I'm aware of how LMI works and I've done the calculations on my capitalising interest, but I'll make sure I know what the lenders will let me can get away with.

Cheers,
Rus

Hello again

I regret posting anything here because I hate getting into discussions with negative people. I was only trying to help, while you (foundation) seem to be determined to put everyone off property investing. I’m sure you think you’re helping people too, but I feel you might be scaring them off.

So that people don’t think I’ve been lying, please let me expand on my details:

"The Investors Club has helped us to get very profitable assets and the right finance to be able to retire early." It's true that I’m able to retire, but I haven't retired yet. I'm not sure if I ever will. You have to do something, and, if you can, you do things you enjoy.

I’ve always done things that I enjoy and things that I’m good at and it’s been working so far. I've been a part time musician most of my life and I'm now 40.

I’ve also been a self-employed tradesman (window tinting) for the last 15 years and earlier this year I stopped advertising and stopped subcontracting to other businesses.  I still have a few existing clients, but it’s only about 1 day per week. I spend a lot more time with my wife and it’s great!

I still sing and play music and I'll continue to do that for as long as I can. I only make about $600 per week as a musician.

I also help people get investment properties, because That's What I Enjoy Doing.

As it says on my web page, we get a small part of the commissions from TIC, but that's not the reason to be a Support Member. We do it because, we get to meet new friends with common interests, we help them achieve goals and we learn more in the process.

The times when I've helped a friend get some IPs and they suddenly realise the potential of their portfolio, that's a magic moment. What a great feeling when their accountant says they could "cheat the system" and retire early. Much better than sitting around crunching numbers and being pessimistic about property values.

I respect your knowledge and time, but I obviously don’t share your view on future growth. Your main gripe seems to be about affordability and I can see your point. Unfortunately it will continue to get harder and people will need to rethink their options if they want to have their own house.

If you go to a city in Europe and knock on the door of a house, you will usually find that it's owned by more than one person and often tenanted by more than one family. That's one of the ways they get around the issue of affordability. Now, don't quote me on that, coz I haven’t done the research… I heard it from a professional property researcher.

"How much debt you got Russ?" Currently, my debt is about $940,000 so I pay about $80,000 per year in interest and of course there are other expenses. The rents add up to about $66,000 and the rest of the shortfall gradually comes from a line-of-credit account which has a limit of… can't remember, but it's enough to cover a few years of negative gearing. So, I’m supposed to pay the interest on that line-of-credit, but I don’t… I let it compound. Very naughty, but my accountant helped me do that. She has a bunch of IPs too.

Some of my properties are positively geared, but overall I'm negative by quite a bit. So, as long as my (very conservative) mortgage broker says I’m doing fine, then I’ll choose to believe him. After all, he has more investment properties than I do.

Now, let’s consider the capital growth and the fact that my tax rate has dropped to almost zero % thanks to my clever accountant. I’ve found that my portfolio grows in value by at least $120,000 per year. So, by refinancing every couple of years, I’ll never go backwards. How else can you make that sort of passive “income” with low risk and minimal input of time?

In ten years time, my debt on those IPs will still be the same and the rents will have risen to cover the interest payments and other expenses. And if history repeats, which it tends to do, they’ll be worth twice as much and I’ll be a multi-millionaire. Also, I’ll be providing jobs and housing that the government will continue to thank me for.

I’m getting another IP soon. Probably a half $1M unit at the Gold Coast, or maybe in Sydney or Melbourne, because the prices are really starting to move in those places. That will take my debt up a bit more, but it will also take my portfolio growth up to a nice level.

What will I do then? Hmm… I’ll continue to do what I enjoy doing… play music, buy more IPs and help others do the same. You have to do something to keep busy or you just wither and die.

The best time to invest in property is NOW. You just need to overcome some fears and make the decision to do it. (Now I sound like a life coach.)

As for “taking on more debt than they could hope to repay”; Why repay it, when after 5 to 10 years the rents will increase to cover the interest payments, etc? Also, the property will be worth twice as much and you can use that equity to get more IPs. I guess you don’t like the idea of having a big debt hanging around. Well, I don’t like the idea of having to work until I’m over 50. When I go, I’ll leave a bit debt, but I’ll also leave a much bigger property portfolio and I will have had a great time enjoying my financial freedom.

Forgive me if I'm too optimistic for you.

Thanks for your time and please don’t pull this apart and tell me that I’m misguided. As I said, I’m only speaking from experience and from talking to people that are making it happen. We aren’t all experts in property research or finance, so we let the experts do the work for us, to help us make informed decisions.

Check back with me in 5 to 10 years so we can compare our results.

Have a good day,

Rus