Early and Wealthy Retirement – Part 5.


This is the LVR graph, for the left brain people, I think it’s left brain. You can see the spikes when you’re buying properties, your LVRs go higher but over time you want that to continue down and remain below the 60%. People like phone book numbers, so in the back of the program your property worth 500,000 now, in 10 years time, 2021, worth a million dollars, you can see that your portfolio is doubling every 10 years on each property. Your line of credit stays constant as one so that’s why we put it in as 50 years so we need to capture that debt in your FIDO.

In 2026 when we start drawing on this portfolio, 140,000, we’ve factored in $70,000 for the shortfall so you actually have to draw down $210,000. That’s your portfolio value. This line was pretty much on the previous graph, that’s on your independence tab, so when you get your FIDO from your property mentor. LVR 39%, that’s the equity, how much you can borrow, equity increase. You can see over time, even drawing down 3% inflation each year, drawing these amounts, LVR’s coming down.

Also illustrated in the summary graph, so you can see when you’re accumulating properties your debts higher than your equity. This is ideally what you want to see, your portfolio value accelerating away with your equity, away from your red debt line and this is the amount that you’re withdrawing, the little dotted line, quite small compared to your portfolio value.

Like I said diversify around the country because you capitalize on different markets where your property’s growing other markets are a bit flat. These are the stages we talk about. The accumulation stage, so while you’re buying properties, you can see the spikes in your LVR going higher. Then you consolidate, you need to sit there at some stage and wait for your properties to grow and that takes time. Then when you get to the end you harvest, so you’ve got your portfolio size. You know you can start drawing on that equity.

Check more about -> Early and Wealthy Retirement – Part 6.