{"id":13399,"date":"2017-08-20T01:00:22","date_gmt":"2017-08-19T15:00:22","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=13399"},"modified":"2017-08-20T01:00:22","modified_gmt":"2017-08-19T15:00:22","slug":"how-many-is-enough-margaret-lomas","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/how-many-is-enough-margaret-lomas\/","title":{"rendered":"How many is enough? – Margaret Lomas"},"content":{"rendered":"

Margaret Lomas<\/strong> will tell us that she has a portfolio of 40 plus properties but how many do you need to retire.\u00a0 Margaret say \u201cnot that many\u201d but you might be surprised with the number she nominates.
\nTranscript :<\/strong>
\nKevin:<\/b>\u00a0 A question I\u2019m asked so often is \u201cHow many properties do I need in my portfolio to retire?\u201d I know this is a question that my guest has had to answer on a number of occasions too. Margaret Lomas from Destiny Financial Solutions.
\nHi, Margaret.
\nMargaret:<\/b>\u00a0 Hi there. How are you going?
\nKevin:<\/b>\u00a0 Good. Nice to be talking to again.
\nHow do you answer that question, when someone asks you, Margaret?
\nMargaret:<\/b>\u00a0 The difficult thing for a lot of people is that that they feel that the spruiker is talking about unlimited numbers of property, and whenever they read those investment magazines, they see expose\u0312s of people who have bought 20 and 25 properties, and they think, \u201cOh my gosh. That\u2019s what I need to be able to retire on a good income for the rest of my life.\u201d
\nBut in fact, you don\u2019t need that many. We\u2019ve done a little bit of an analysis on this back at Destiny and discovered that really, if you could put together a portfolio of seven properties, you would be living a pretty comfortable retirement, and if you could put together a portfolio of say, ten, then pretty much that\u2019s all you really need.
\nKevin:<\/b>\u00a0 I guess it depends on how much cash flow you\u2019re getting from those properties as well, Margaret, doesn\u2019t it?
\nMargaret:<\/b>\u00a0 Well, see this is the thing. It\u2019s really unreasonable to think that everybody can go out there and pop 20 or 25 properties into their portfolio, even though we have a pretty low cash rate at the moment and a lot of properties are at least evenly geared. There\u2019s still that chance that that could go up, and if you have too many properties in your portfolio at that time, it could cause extreme cash flow issues for you and you might be forced into the sale of them.
\nWhen I first started my portfolio\u2026 And I know that I\u2019m sitting here talking from a position of having 40 properties, but for me, it\u2019s been built over a very long period of time, and it was more about the\u2026 I guess I got a bit addicted to buying property for a little while there.
\nBut when you buy your first one, it\u2019s likely to be a good year or two between the first and the second. Not a lot of people can buy any more than one in the first one. And one of the things that I really want investors to understand is that in that first five to six years, it\u2019s all about the build phase.
\nIt\u2019s likely that if you\u2019re going to buy seven properties, it might take you five, seven, and even eight years to put together those seven. And as you\u2019re doing that, the first property that you\u2019ve bought, by year seven, is more than likely to have started to become a little bit positive cash flow or at least evenly geared, if it was negatively geared to begin with, and it makes it a bit easier for you to keep adding to that portfolio. As those properties grow in value, as the rental returns go up, then you usually find that they cost less for you to hold and it\u2019s easier to add to that portfolio.
\nBut in those first five to seven years, it\u2019s almost a like game of one step forward, one backward, because acquisition costs in Australia are fairly high. So, you tend to eat into your equity with costs, rather than with more equity that will grow for you, and you take a bit of a step backward.
\nFor many people who are building their portfolios, after having bought five or six properties, they start to think \u201cIt doesn\u2019t seem like I\u2019m getting anywhere. My portfolio isn\u2019t growing. When it does grow a bit, I tend to go backwards.\u201d
\nBut it\u2019s really the second seven to eight years that become the phase where you\u2019re actually starting to see the growth.
\nKevin:<\/b>\u00a0 So, Margaret, it\u2019s pretty much steady as she goes at the start of your career?
\nMargaret:<\/b>\u00a0 I don\u2019t want people to think that this is magic and that you can buy a property and bang, you suddenly become wealthy. Anyone who\u2019s invested in Sydney in the last three years might be thinking that, because Sydney\u2019s just gone through a fabulous growth phase.
\nInterestingly enough, Kevin, I was having a look at the figures the other day, and I did a little calculation on the 12-year growth from 2005 between the median house price in Sydney and the median house price in Adelaide, and guess what I found?
\nKevin:<\/b>\u00a0 What? What did you find?
\nMargaret:<\/b>\u00a0 I found that the median house price in 2005 in Sydney, when you measure it against the median house price in Sydney in July 2017, had grown 78%. The median house in Adelaide, in the same period, had actually grown 112%.
\nKevin:<\/b>\u00a0 Wow.
\nMargaret:<\/b>\u00a0 The difference is that Sydney had a big bang for three years, but they had nothing pretty much for the nine years before that, whereas Adelaide does a little bit every year, and it\u2019s the compounding growth that counts.
\nThe big lesson from those figures, is that, you might think it\u2019s taking too long. You might think that you\u2019re not getting anywhere because as you get that equity, you\u2019re borrowing back for your costs from the next property. But if you can sit on something for 12 to 15 years and let your portfolio grow, and as long as you bought well and used the 20 questions to make sure you\u2019re buying property in areas that have really good signs of growth, you\u2019ll find that once you get up around that 12- to 13-year mark, you\u2019re going to start to really see some things happening. You\u2019ll have a nice wide base of properties, and as they all start going up, you\u2019ll be adding to your network in large chunks, rather than in those little amounts that you saw at the very beginning.
\nKevin:<\/b>\u00a0 Interesting to hear to talk there about those 20 questions. That was the podcast that you and I did some years ago: \u201cMargaret Lomas\u2019s 20 must-ask questions <\/a>for every property investor.\u201d What I\u2019ll do Margaret, is put a link back to that because we\u2019ve still got that in our files.
\nMargaret:<\/b>\u00a0 That\u2019s a great idea because people still think they can buy any property and as long as they hold it long enough, it\u2019ll perform. And it probably will. But what you really want is to buy the right kind of property, so that over the long term it performs really well, better than your money could have performed in any other kind of asset. And you can only do that by buying properties with those strong growth drivers.
\nKevin:<\/b>\u00a0 Okay, in the text version of this interview, just scroll down to where Margaret did mention the 20 questions. I\u2019ll put a live link there that\u2019ll take you straight to Margaret\u2019s podcast where she and I talk about those questions.
\nHey, Margaret, always great catching up with you. Thank you so much for your time.
\nMargaret:<\/b>\u00a0 No problem. I\u2019ll see you next time.
\n20 Must-Ask Questions \u2013 Margaret Lomas<\/a>
\n 
\n <\/p>\n","protected":false},"excerpt":{"rendered":"

Margaret Lomas will tell us that she has a portfolio of 40 plus properties but how many do you need to retire.\u00a0 Margaret say \u201cnot that many\u201d but you might be surprised with the number she nominates. 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