As the old saying goes…
Well nearly everything.
My properties have been going bananas lately and are the main reason for the big bump in my net worth this month.
Lets take a look
Two out of three have gone up in value and one has gone down ever so slightly.
I know gearing cuts both ways, but man oh man when your assets go up it almost feels like cheating. In the last two months my properties have gone up by more than $30K! How long would it take you to add $30K to your net worth? I have literally spent all no more than 3 hours in the last 2 months checking rent and on the phone with the agent etc to keep these assets running. And in turn they have generate over $30K towards my net worth.
This is how real money is made people!
Assets generating you wealth all day every day. Even when you sleep.
I like to think of every dollar in my net worth as little employees going out there earning me more money. It’s an addictive thought. The more you have the more you earn. The more you earn, the more little soldiers you can deploy to the field to bring you more of their wealth building brethren.
But as I’ve mention before…Gearing cuts both ways.
As easy as it was for me to gain $30K, it will equally as easy for me to lose $30K in a market slump or downturn.
But I will continue to enjoy this victory this month and prepare as much as I can for the eventual downturn that occurs in every market sooner or later.
[wp_charts title=”linechart” type=”line” align=”alignleft” width = “100%” datasets=”-36000,-36000, -32000,-7000,20000,32000,45000,65000,83254,130000, 187910, 229010″ labels=”1-Jan-2011,1-Jul-2011,1-Jan-2012,1-Jul-2012,1-Jan-2013,1-Jul-2013,1-Jan-2014,1-Jul-2014,1-Jan-2015,1-Jul-2015,1-Jan-2016,1-Jul-2016″]
|Date||Rolling NetWorth||$ Change||% Change||Notes|
|1-Jan-2012||-$32,000||$4,000||0.00%||Started Full-time work late Nov|
|1-Jan-2013||$20,000||$52,000||0.00%||Built property and recieved FHOG ($21,000)|
|1-Jan-2015||$83,254||$38,254||85.01%||Bought second IP|
|18-Mar-2015||$122,128||-$1,587||-1.28%||Paid for holiday|
|15-Apr-2015||$125,906||$3,778||3.09%||Withdrew equity from property|
|12-Jul-2015||$159,904||$7,000||4.58%||Paid 4K off HECS Debt|
|31-Sep-2015||$170,110||$2,205||1.31%||Car went out of Portfolio, Bought IP 3, Super went up and one IP went up|
|31-Oct-2015||$171,376||$1,265||0.74%||Big bills. Not much saved.|
|30-Nov-2015||$173,263||$1,887||1.10%||Super went down slightly|
|31-Dec-2015||$186,910||$13,648||7.88%||IP went up in value|
|12-Jan-2016||$187,910||$1,000||0.54%||Some big bills|
|1-Mar-2016||$191,410||$1,500||0.79%||Didn’t save very well|
|1-May-2016||$182,410||-$11,000||-5.69%||Two IP’s went down.|
|1-Jun-2016||$211,010||$28,600||15.68%||All 3 IP’s went up and super was updated|
|1-Jul-2016||$229,010||$18,000||8.53%||IP’s revalued with 2 out of three going up|
Great work on the blog, I have enjoyed reading it so far. Just a question on your net worth tracking. Why do you not include the mortgage on the properties as part of the tracking? If the IPs are worth $230k but your mortgages are $190k (for example) then would you not show your net worth to be $40k? Net worth is a calculation of assets minus liabilities.
Great question mate.
I do calculate my my properties by what they are worth minus the debt attached to them. This has been a common question actually and in my next net worth update I’ll include my debt in the post to clear it up for everyone.
So when I say I have around $150K in real estate, I actually mean I control around $910K worth of properties and have around $735K of debt attached to them. Which gives me a LVR (loan to value ratio) of around 80% which is where my risk tolerance level is.
Cheers for the comment
Once you said that, all the numbers just made sense to me.
Keep up the great work.
Congrats for the great work you’re doing on this blog. I’ve been following Mr. Money Mustache and Mad Fientist for a while, but unfortunately many things doesn’t apply for Australia. However, your posts are very easy to read and full of relevant content for aussie residents like me on the path of FI.
I would love to read more your thoughts on super (choosing a super fund, investment strategy, SMSF). I understand that you’re not keen on salary sacrifice super, but is it because you won’t be able to access this money before you reach 65? and although it offers tax advantages, you would rather invest this money on your own? Having a general idea of how do you see super working with your FI goals would be great!
Two other blog posts I would love to read around here:
1.- FI with a partner: If your partner eventually gets into FI, how would you make it work? Advantages/Disadvantages on working together in a single portfolio.
2.- Choosing an IP: How’s your process of choosing an IP and how its being improving with your three IP buys? You’re pro “buy in the country side” kinda investor. Do you do this remotely? Any thoughts on the impact of an eventual bubble burst (if there’s really a “bubble”) on these properties?
Keep up the FIRE!
Sorry for the late reply.
Thank you for the kind words and I hope you can continue to get something out of my blog 🙂
I have been getting a few requests lately about not enough posts to do with Super. I plan to make one outlining some popular funds and the pros and cons of each.
I posted a FIRE calculator last month (if you hadn’t seen it) and it illustrates my preference about salary sacrificing.
In a nutshell, I will 100% salary sacrifice later in life once I have reached my Pre Super number. But until I have reached it I don’t see the point in adding to Super if you can’t access it before 65.
I like your suggestions for new posts. I will consider them next time I write.
Great job! In Western Australia and mine is doing the opposite. With zero work they all going down. All part of cycles and why you should always diversify.