Hey Luke, do you think you could make a video on granny flats. How the process works, Costs involved, Hidden costs involved, General rules, Build time frames, rules on renting them out etc. I've been watching you videos for a long time now and love your Granny flat strategy. Some sites are offering them for under $50k and some are around $200k. Im a bit lost to be honest with you.
Rate cuts this year are no less or more likely than they were from the 1at RBA meeting. An increase and a decrease are in my option equally likely. At best 1 drop this year if inflation comes down suddenly. But I've personally expected nil cuts this year, possibly 1 or 2 up maybe 1 down, but they don't have to go up or down by 25 basis points. Yes it's a blunt object for a nuanced issue. And good advise on the buffer zone on interest margins.
Long term subscriber Luke, are you saying that you are comfortable with affording 10% interest on your $5m portfolio? This would mean that you can comfortably sustain $500K in interest each year? Granted you have a reasonable amount of equity but if you were to owe $3.5m at 10% you need to be comfortable being able to pay back $350k interest with after tax $. Even if you only owed $1m in interest only debt that's budgeting $100K in after tax $. Do you have an interest rate where it becomes untenable? If only we could be back at the 3% mark we'd all be cash flow positive.
Hey David. That's right! That's roughly what our debt position on the portfolio is at $3.5m on a $5.5 - $6m portfolio. Gross income on the portfolio is circa $260k and we would need to sustain the deficit with funds sitting in offset account / active income earnings. Note: the total value of the portfolio includes our PPOR. The untenable number would be super dependent on the market because at 10% interest rates we'd be seeing rents skyrocketing. So you'd likely only need to hold out a few years and then bump up rents to offset increased repayements. All about balance cashflow and growth and holding property that you can afford to hold on to over long period of time to see compound growth / debt be inflated away
Thanks for clarifying Luke. Maintaining a war chest to ride out the hard times makes a lot of sense. Thanks for being so open and transparent. Do you use offset accounts for each investment property or do you use all of the funds to maximise the offset against your PPOR to minimise the non deductible interest against your home? Any chance of this becoming a video?
As a young Brisbane local it’s awesome to have more relevant property/finance content. Keep it up dude.
thanks mate - great to hear!
Interest rates won’t come down
Thanks for your ongoing content Luke, great to see your growth to 15k :) congrats!!
thankyou thankyou !
Hey Luke, do you think you could make a video on granny flats. How the process works, Costs involved, Hidden costs involved, General rules, Build time frames, rules on renting them out etc.
I've been watching you videos for a long time now and love your Granny flat strategy. Some sites are offering them for under $50k and some are around $200k. Im a bit lost to be honest with you.
I'll add this too the list! We've purchased a bunch of sites with GF potential and existing granny flats, so can do a video on this soon.=
Rate cuts this year are no less or more likely than they were from the 1at RBA meeting. An increase and a decrease are in my option equally likely. At best 1 drop this year if inflation comes down suddenly. But I've personally expected nil cuts this year, possibly 1 or 2 up maybe 1 down, but they don't have to go up or down by 25 basis points. Yes it's a blunt object for a nuanced issue. And good advise on the buffer zone on interest margins.
yeah agreed - Bit of a guessing game but don't expect major fluctuations either way in the next 12months
6:30 Property is a long-term game! 💯% I hope people really listen to this. Thanks Luke for running such a great Channel!
100% good to have a balanced approach! Appreciate the kinds words
Leverage and be happy
Long term subscriber Luke, are you saying that you are comfortable with affording 10% interest on your $5m portfolio? This would mean that you can comfortably sustain $500K in interest each year?
Granted you have a reasonable amount of equity but if you were to owe $3.5m at 10% you need to be comfortable being able to pay back $350k interest with after tax $.
Even if you only owed $1m in interest only debt that's budgeting $100K in after tax $.
Do you have an interest rate where it becomes untenable? If only we could be back at the 3% mark we'd all be cash flow positive.
Hey David. That's right! That's roughly what our debt position on the portfolio is at $3.5m on a $5.5 - $6m portfolio. Gross income on the portfolio is circa $260k and we would need to sustain the deficit with funds sitting in offset account / active income earnings. Note: the total value of the portfolio includes our PPOR.
The untenable number would be super dependent on the market because at 10% interest rates we'd be seeing rents skyrocketing. So you'd likely only need to hold out a few years and then bump up rents to offset increased repayements.
All about balance cashflow and growth and holding property that you can afford to hold on to over long period of time to see compound growth / debt be inflated away
Thanks for clarifying Luke. Maintaining a war chest to ride out the hard times makes a lot of sense. Thanks for being so open and transparent.
Do you use offset accounts for each investment property or do you use all of the funds to maximise the offset against your PPOR to minimise the non deductible interest against your home?
Any chance of this becoming a video?
Why no eye brows
Mate 😂😂😂😂😂😂😂 this video is about property investment, not eyebrows….
@sydney8382 they are a bit eye catching. be honest
i have an auto immune condition called alopecia areata. taken the beard too :(
@@lukewiles1 sorry about that, thought it was for style, keep up the great videos mate, always engaging and learning heaps 👍
@@sydney8382 no stress! I may have just had a really bad barber hahahaha. I've only had the condition the last 12months,