How much can you make in property investing in passive income?

[oliverredding]

I want to build my sources of passive income through property investing. I'm in it for the long haul. Over a period of say 20-25 years, how much in the way of passive income could one expect to attain? Say one spent the first 15-20 years buying up properties and then 5-10 years consolidating and paying off debts (e.g. selling a few properties with increased equity to pay off debts on other properties), what's a reasonable passive cash flow range? Is $200,000 p.a. ridiculous? $300,000? $400,000? Bear in mind, I don't need passive cash flow right away. I'm willing to work hard for 20-25 years to build a successful property investment business, until I get to a point where I can make most of the business passive and happily retire on the passive cash flow.

This might come across as a very naive question (and to be fair, I am still early in my learning journey), and I realise the results will vary widely depending on numerous factors. However, I'm looking for what might be a reasonable and achievable outcome so I can start to formulate some property investment goals. All comments welcome.

[charlotte30]

Anything is possible. Depends on what the plan is. Most important point is to read/learn and make a plan. Start off with a spreadsheet detailing purchases, rental income and expenses. Then expand that over 10 years with possible scenarios. Property is not passive, your portfolio has to be managed with or without property managers. Over a 10 year time frame conservatively you will achive a gross income of over $100,000 in today's dollars. Scott Woods and Orion post regularly on this site and have very successful property portfolios.

[Anthonyacat]

I agree with the above post for the most part. But note that she refers to gross income. $100k isn't hard to get at all. $2k per week? That's less than 4 average properties in Auckland or 10 in Tokoroa. But gross income is not what's important at all, it's income after costs (including your mortgage).

The price of New Zealand property is also heavily weighted towards capital gain potential, after fifty years of above-inflation price growth people expect to continue. As such in many parts of the country right now you need to work hard to find a property with any immediate positive cashflow at all after costs.

A huge question for you to ask isn't how much you can make in property (that figure is limitless, given a lot of work and a bit of luck) but how much you need. Track your spending. A few months to start, a few years eventually. Find out how much you need to live the life you do right now, and then add a bit of fun money on top. There's no way that figure would come to $200k.

[Nick G]

The number is limitless. I have colleagues who earn upwards of $500K-1mil per year from their investments. They don't need it but they like doing what they do and some (but not all) of them are ultra driven types. There are barriers of servicing and serviceability you will need to work through as you grow. Many wealthy investors wind up working in the industry because they build up (or start with) useful skills and it's a natural step.

Anyway, start with why you're doing this and work backward.

My theory is that you always try to get to the point where you don't have to work as a bare minimum, that gives you MASSIVE flexibility with how you spend your time (if you want to) and also insures you against health issues affecting your ability to earn and employment risk.

Lets say you have a freehold home somewhere, it doesn't need to be in central Auckland, maybe in a holiday spot you like.

Then if you only have to pay say $5K per year in rates, maintenance and insurance, $15K for power/gas/internet/phone/sky/stuff, $X for car costs (which could drop right down if you play your cards right) and $X for groceries and other necessities. Where are we at? $30-40K? Also you will probably be working or consulting or have other investments, it's all very well quitting your job but all your mates will go back to work the following Monday so you have 40 hours a week to fill.

So a freehold house and $40K per year. Then the rest is more buffer, more income to enjoy life, you can pay down debt faster etc etc. At that point it's just a case of getting enough consistent and predictable net positive cashflow with good buffer and insurances in place. Once you get your head around how to build up say $20K the next $20K and more becomes a lot easier. I bought (and am developing) a single property last year that will deliver $40K in passive cashflow on 100% lending. I was able to do this because of past experience and knowledge gained.

This free property course I put together might be helpful - www.ifindproperty.co.nz/tools/property-course/
This is a good article about a balanced way to grow a portfolio - https://www.ifindproperty.co.nz/tool...p-you-succeed/

[Beano]

I want to build my sources of passive income through property investing. I'm in it for the long haul. Over a period of say 20-25 years, how much in the way of passive income could one expect to attain? Say one spent the first 15-20 years buying up properties and then 5-10 years consolidating and paying off debts (e.g. selling a few properties with increased equity to pay off debts on other properties), what's a reasonable passive cash flow range? Is $200,000 p.a. ridiculous? $300,000? $400,000? Bear in mind, I don't need passive cash flow right away. I'm willing to work hard for 20-25 years to build a successful property investment business, until I get to a point where I can make most of the business passive and happily retire on the passive cash flow.

This might come across as a very naive question (and to be fair, I am still early in my learning journey), and I realise the results will vary widely depending on numerous factors. However, I'm looking for what might be a reasonable and achievable outcome so I can start to formulate some property investment goals. All comments welcome.

How much equity do you currently have?

[oliverredding]

Hi Beano,

I haven't started my property investing journey yet. I'm merely in the process of finding out as much as I can, reading books, listening to podcasts, etc. I want to make some goals and was hoping to get some idea of what can realistically be achieved through hard work. I have some capital saved up but no equity (still renting).

[Don't believe the Hype]

As previously stated there is no one size fits all answer to this question... There are far too many variable to answer your question.

How about you build your plan, publish it here for input?

[Beano]

Hi Beano,

I haven't started my property investing journey yet. I'm merely in the process of finding out as much as I can, reading books, listening to podcasts, etc. I want to make some goals and was hoping to get some idea of what can realistically be achieved through hard work. I have some capital saved up but no equity (still renting).

We all started at zero .
My mate got to $13m in 25years (purchased over 1k properties) ...i got nowhere near that

[ScottSI]

I think the actual question you need to answer is how much do you in passive income. That is the only thing that really matters not what you can do. Don't make up some wishy washy music video crap either - what do you really need, as it isn't how much money you have in the bank that matters it is what you did with your time on the planet that counts.

So set your self some number you are happy with eg. $3000 pw less income tax & mortgage free home and work back from that.

Getting to 5 figures a week in under 10 years is doable with lots of hard work.

[Beano]

I want to build my sources of passive income through property investing. I'm in it for the long haul. Over a period of say 20-25 years, how much in the way of passive income could one expect to attain? Say one spent the first 15-20 years buying up properties and then 5-10 years consolidating and paying off debts (e.g. selling a few properties with increased equity to pay off debts on other properties), what's a reasonable passive cash flow range? Is $200,000 p.a. ridiculous? $300,000? $400,000? Bear in mind, I don't need passive cash flow right away. I'm willing to work hard for 20-25 years to build a successful property investment business, until I get to a point where I can make most of the business passive and happily retire on the passive cash flow.

This might come across as a very naive question (and to be fair, I am still early in my learning journey), and I realise the results will vary widely depending on numerous factors. However, I'm looking for what might be a reasonable and achievable outcome so I can start to formulate some property investment goals. All comments welcome.

If you give me a starting deposit and numbers for any further capital you can put in I will do a spreadsheet based on a recent purchase

[Don't believe the Hype]

If you give me a starting deposit and numbers for any further capital you can put in I will do a spreadsheet based on a recent purchase

oliverredding - this offer from beano is one I recommend you take up. You could do a lot worse that have beano provide you some direction.

[oliverredding]

If you give me a starting deposit and numbers for any further capital you can put in I will do a spreadsheet based on a recent purchase

Thanks Beano. I have around 80-90k in savings. Depending on the property, I could put that all into a deposit, or hold some of it back for capitalisation. I'm trying to save between 10 and 20k per year.

My ideal plan would be to make my first purchase a 'home', not an 'investment property', at least as far as the law is concerned, as then I can use my kiwisaver funds (which are included in the number above - about half of the total). I may also be able to get government grants as a first home buyer if I purchase within their rules, although these can be restrictive so I'm not counting on those funds.

I would then do one of two things: either stay living in the house I bought and look for a way to add cash flow or equity e.g. building a granny flat, renting a room or something; or move out after 6 months into cheaper rental accommodation and turn my 'home' into a rental. Would have to do some numbers analysis to work out what the best approach would be.

Anyway, would be glad of any assistance you can provide.

[oliverredding]

As previously stated there is no one size fits all answer to this question... There are far too many variable to answer your question.

How about you build your plan, publish it here for input?

Thanks Don't believe the Hype. When I have formulated a more detailed plan, I may well post it here for input. At the moment, I'm just trying to gather as much info as possible, before setting some goals and nutting out a plan to achieve them.

Loosely though, I was planning on buying a home to start with utilising kiwisaver funds and (hopefully) government grants, as well as my own savings (all up around 80-90k). I would try to add equity and/or cashflow to my home, while saving for another deposit. Once I have enough equity and savings to get another house, I buy one and turn that into a rental. I plan to essentially rinse and repeat this process of buy, add equity, refinance, and buy again until I get to around 10 - 20 properties within the space of about 15 years.

Then I stop buying and try to pay off my debts, maybe selling a few properties to pay down the loans on others. After 20-25 years, I'd like to be at a point where my debt threshold is relatively low, and I have enough cash flow coming in to retire comfortably. I'm not wanting any lush lifestyle, just enough to provide for my wife, future kids, enjoy some travel and to not have to work again. Of course a few luxuries would be nice too! I reckon 200k p.a. would be enough, but why not shoot for 300 just to be sure?

[Lovethiscountry]

If you are prepared to do the hard work than have a chat to ScottSI. He has achieved great things and was offering advice one on one for an hourly fee. I went to an evening where he shared is thoughts at the Devonport ANZ bank a while back and was most impressed, Yes property investing can do what you want but it is important to go about it the right way
.

[Davo36]

We all started at zero .
My mate got to $13m in 25years (purchased over 1k properties) ...i got nowhere near that

That's 250 properties per year, or 5 a week. Are you sure about that?