Property multi-millionaire's secret to earning $200,000 passive income every year: 'Within reach'
For many Australians, the dream of earning $200,000 annually in passive income through property investment feels elusive. But with careful planning, patience, and a clear strategy, it’s a goal within reach.
By combining the steady growth of residential property with the high yields of commercial real estate, investors can build a robust portfolio over 10 to 15 years. This is not about get-rich-quick schemes; it’s about making informed, strategic choices.
RELATED
-
Unexpected way Aussies built $5.3 million property portfolio after 'priced out' of Sydney market
-
Coles worker exposes $40 per hour supermarket job that millions can do: 'Cruisy'
-
Centrelink, myGov, Medicare warning after Aussie's out-of-the-blue phone call: ‘Disgrace’
The Roadmap to $200,000 Passive Income
Years 0-2: Starting With Residential Property
The journey begins with a residential property purchase. Imagine buying a property for $700,000, securing a 90 per cent Loan-to-Value Ratio (LVR), and saving $70,000 for the deposit.
Residential properties are familiar and stable, making them ideal for first-time investors. Over the next two years, with an average annual growth rate of 7.5 per cent, that property appreciates to over $800,000. Meanwhile, consistent savings of $20,000 annually further enhance your financial position.
Years 3-6: Scaling Up the Residential Portfolio
By Year 3, the first property’s value has climbed to nearly $900,000. Leveraging 90 per cent of the equity growth, minus the remaining debt, provides the capital for a second property purchase.
Coupled with $60,000 in savings, this allows for the acquisition of a $900,000 property. With two properties compounding in value, your portfolio starts to build significant momentum.
Years 7-8: Transition to Commercial Real Estate
The pivotal shift comes around Year 7 or 8 when your portfolio exceeds $1.5 million. This is the moment to transition into the commercial market, where cash flow takes centre stage.
Selling one residential property or leveraging portfolio equity enables the purchase of a $2 million commercial property.
With a 30 per cent deposit ($600,000) and a 70 per cent loan ($1.4 million), the property generates a 7.5 per cent net rental yield. This translates to $150,000 in annual income, with $60,000 remaining after mortgage costs at an interest rate of 6.5 per cent.
Years 9-10: Reinvesting for Growth
By Year 10, reinvesting equity and income from the first commercial property positions you to acquire a second. This compounding growth steadily brings the $200,000 passive income goal closer.
