Target: $200k income in 12years! Possible?

[mitch50]

Firstly thanks to all the great posts on here there is really some great info available.

I’m about to embark on the IP path to wealth creation and my first step has been to create a goal which is “I would like to have a passive income of $200k before tax in 12 years time from property”. Part of me thinks it's very ambitious and another part says throw the number out there, aim high and give it a crack! The reason for 12 years is that I would like to hit that target by the time I’m 50.

My starting position is pretty good: I have a PPOR with around $700k equity, earn a good salary and am trying to develop a strategy to get there but need some help defining it for the current economic climate and the next 12 years, (which i get the feeling won’t be the same as the last 12years!).

I would love to hear your suggestions for the best strategy to get there.

Thanks
Mitch

 

[HotRod]

Making bold goals like that is the way to go.

You'll be surprised what you can do compared what you might do.

We had a goal of $200K in 10 years at July 2012 and completely blasted that out of the water.

 

[vaughan]

To get $200k income you'll need $4M in the bank earning 5% interest. Do you think it's possible to leverage $700k by 6x in 12 years doing anything legal?

I agree that the next 12 years won't be the same as the last 12 years. I found a 1995 copy of Jan Somer's property book a couple of nights ago and it's full of graphs going up, up, up projecting way off into the future to 2005. It was nearly right.

 

[wategos]

Based on 5% return you'll need 4 Million .. so starting from scratch about 20K per month saved compounding. Even at an unlikely 10% compounding you'd need to save 14K per month.

 

[jackbak]

I'd buy $4million worth of quality IP's and based on historical averages they should have doubled in 12 years giving you at least $4million in equity. Definitely achievable but nothings certain - as you say, the next 12 years may not be the same as the previous 12 years....

Good luck in your endeavors!

 

[devank]

700K equity can give you (20% deposit + 5% cost) for about 2.8 Mil worth of IPs.
So if you buy 400K x 7 IPs = 2.8 Mil.
Hopefully in 12 years time your IPs double so that you can sell 4, pay off the other 3 and also upgrade your home. At 5% return you are looking at 140K in this scenario.

You can always pay the MI and go for 95% LVR

 

[mattnz]

I'd buy $4million worth of quality IP's and based on historical averages they should have doubled in 12 years giving you at least $4million in equity. Definitely achievable but nothings certain - as you say, the next 12 years may not be the same as the previous 12 years....

Good luck in your endeavors!

I'm expecting to do that within about a 5 year period. A combination of developing for lump sum payments and investing in high yield markets like USA.

 

[Peter_Tersteeg]

It's possible to acheive but I've only seen a few people do it through property investment, and they certainly weren't passive about it.

I can think of other ways of achieving $200k income in far less than 12 years through business.

 

[Fifth]

Possible? Yes.

 

[Truly Exotic]

its good to see you have a goal,

whether realistic or not, be prepared to work hard and take risks,

it certainly wont fall in your lap, unless you win lotto!

but good for you for trying!

 

[oracle]

Is that $200K in today's dollars?

Because with all the money printing that has been going on I think we will see hyper inflation sometime within the next 12 years and then your $200K won't be worth as much as it is today.

Is it possible to earn $200K passive in 12 years?..I think so. The key will be how quickly you find an edge/winning strategy that works for you which you can keep repeating until you reach your goal.

Cheers,
Oracle.

 

[matto_]

Welcome.

You are in a great place to start.

How do you see that 200k being generated - ie LOE, LOR?

This will have a bearing on what steps you take.

 

[The Y-man]

Firstly thanks to all the great posts on here there is really some great info available.

I’m about to embark on the IP path to wealth creation and my first step has been to create a goal which is “I would like to have a passive income of $200k before tax in 12 years time from property”. Part of me thinks it's very ambitious and another part says throw the number out there, aim high and give it a crack! The reason for 12 years is that I would like to hit that target by the time I’m 50.

My starting position is pretty good: I have a PPOR with around $700k equity, earn a good salary and am trying to develop a strategy to get there but need some help defining it for the current economic climate and the next 12 years, (which i get the feeling won’t be the same as the last 12years!).

I would love to hear your suggestions for the best strategy to get there.

Thanks
Mitch

Great target.

The best strategy is your own

If there is one thing I learnt over my past 12 years - there is no one size or even XS,S,M,L,XL, XXL sizes fitsl all strategy.

But the important next step in any stratgey is start doing.

How much per month can you put aside (I mean, if you are currently earning $650,000 pa and only need $1,000 per month to live, then lot of problems cut out for you )

The Y-man

 

[Of The Vultures]

The best strategy is your own

I too am starting to realise that it's horses for courses. I had no idea how many strategies existed in property investment until I started reading everything and anything property related. I've come to the conclusion that diversifying might work for some but it tends to pull me in too many different directions. All eggs in one basket and then watch that basket like a hawk!

Anyway, back on topic, I think it's a great goal to have and good to hear it's not unachievable. I don't have a dollar figure in mind myself... perhaps I should.

 

[chindonly]

Yes it would be possible, but a stretch.

Assuming it is $200k in future dollars, not the Net Present value.

Work it out backwards - start with your goal, assess the investment assets required in 12 yrs and the expected rate of return.

Don't forget to include any other investments such as Super and shares and how they might also grow over that period.

I have a spreadsheet with similar long-term goals, and have set targets to reach each year. Needs fine tuning every now and then, but seems to be working well.

 

[Indifference]

......

My starting position is pretty good: I have a PPOR with around $700k equity, earn a good salary and am trying to develop a strategy to get there but need some help defining it for the current economic climate and the next 12 years, (which i get the feeling won’t be the same as the last 12years!).

I would love to hear your suggestions for the best strategy to get there.

Thanks
Mitch

Firstly, how much can you contribute to your net worth each year? $0, $50K, $100K, more ???

Secondly, using an 8% return (Ie. commercial property for instance), then you could realize $200K from as little as $2.5 M....

Hypothetical scenario: take just 350K of PPOR as initial investment, with CPI of 2.5%, tax rate 15%, compounding return of 7%, contribution of $100K /yr, then you will reach the $2.5M target in ~12 years which at 8% return gives you your desired income.....

See how many variables have already been introduced in this simplified hypothetical scenario?

So, is it possible to get $200K /yr in 12 yrs starting with $700K? Yep!

So, what can you contribute per annum, what averaged CPI do you "project", what tax rate will apply to you, what return are you aiming for, are you willing to "downgrade" your PPOR to get there??? Many questions.....

Only you have the answers, but based on your answers to the above and many other things not even mentioned at this stage, will determine what viable options are available to achieve your goal.

 

[HiEquity]

$200k net of costs in today's dollars pre tax? Starting with $700k equity and presumably good serviceability?

Of course it's possible. People have made far more than this in the past and will do so again. I strongly suggest you browse through this forum for the stories of people who have actually achieved similar goals (or better) and the strategies they employed to do so. Ignore those who haven't...

The theme I get from these stories is to buy properties that pay you for the pleasure of owing them rather than being a drag on your finances. I only wish these stories were around 12 years ago!

Whether or not you actually do achieve your goal is almost entirely up to you... and what you are prepared to both give up and put at risk.

 

[alexlee]

The lack of experience is the main issue. I mean, what have you been doing (or not doing) for the last 15 years?

 

[jackbak]

The lack of experience is the main issue. I mean, what have you been doing (or not doing) for the last 15 years?

It's an issue but not the main issue, can learn a lot in 6 months if he's hungry for it!

 

[dryath]

For those of you who have this spreadsheet? - anyone care to link it up for the rest of us? =)

Have just been mucking around making one, but figure i'm probably gonna forget some stuff/do it wrong