澳洲Australia property Investment Path Ideas ??? | Sydney


在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo


Hi

Just wondering if anyone can help with some investment directions for my closest friends. They are in their mid-30 now with a plan to retire in 10-15 years (if possible).

A brief background about the couple (mid 30):

Salary: husband $107K per year
Wife: $106K per year

Super: Husband $60K
Wife $200K (as work constributes 17% and compulsary 7%)

PPOR: Value 1.4M (paid off)
Investment properties (5): Loan 1.9M Value: 2.6M
Income on investment properties: 1800$ per week.


Shares: 30K (paid off)

Currently, the properties are negative grear. Should they continue to buy more properties or should they try to put more extra money into shares. If the suggestion is shares, is it now a good time to buy ?

Many thanks in advance for your suggestions.

Helen  

评论
Helen,

IMHO vital missing info - how much do they need to live on at the minimum level of lifestyle they are after (no frills, no extras) - i.e. food, clothing, utilities (they already have shelter)

Cheers,

The Y-man  

评论
helen_l99 said: ↑
Supper: Husband $60K...Click to expand...
Hmmmm - what about the other meals? :eek::D

The Y-man  

评论
Hi Y-Man

Their lifestyle is quite simple. They can easily live on 40K-50K per year (given that PPOR is completely paid off). Should they start getting more shares from now on to get that income ?

They have only one kid though

Thanks.  

评论
helen_l99 said: ↑
Should they start getting more shares from now on to get that income ?

.Click to expand...
I assume they have almost $290k of exposure in shares - that's a fair proportion already....

The Y-man  

评论
Hi Y-Man

Not really 290K share. More specifically, it's only 90K (Husband 60K, share: 30K).

The wife super is fixed formulae based. It is calculated based on the number of years that she works, the current salary, age factor, ... As such, it doesnot fluctuate with shares.

Also, they can't access their super until they are 60 or 65 which is 30 years from now and 30 years is a long time. I don't think that they want to work for that long. As such, an exists strategy is needed. I have my own exist strategy, but it does not work for them (I think) .

Helen  

评论
helen_l99 said: ↑
The wife supper is fixed formulae based. It is calculated based on the number of years that she works, the current salary, age factor, ... As such, it doesnot fluctuate with shares.

Also, they can't access their supper until they are 60 or 65 which is 30 years from now and 30 years is a long time. I don't think that they want to work for that long. As such, an exists strategy is needed. I have my own exist strategy, but it does not work for them (I think) .

HelenClick to expand...
I thought it was just a typo in the first post. Seems like a long time to wait for a meal :eek::D

Your friends are in a good position.
How negatively geared are they, or when do they project that they will become neutral/positively geared?  

评论
Ops: super ... Thanks for pointing out.

Maybe another 4-5 years until neutral or positively greared if they dont buy any more (negative greared stuff)!!!  

评论
pay down debt, look at the share market again in 12 months time.

its too volatile at the moment IMHO.  

评论
helen_l99 said: ↑
The wife super is fixed formulae based. It is calculated based on the number of years that she works, the current salary, age factor, ... As such, it doesnot fluctuate with shares.Click to expand...
Oooooooooo.....defined benefit.....droooool......

The Y-man  

评论
Helen,

Couple of basic housekeeping things first:

1. does their term life and perm disability insurance cover $1M per person? If one of them meets an intimely end, at least half the loans will be paid off in a time of crisis.

2. do they have income protection insurance? Runnign a -ve gear portfolio means needing to cover the loan repayments in times of being unable to work thru injury etc.


Cheers,

The Y-man  

评论
1.4mil paid off ppor? Get an 1120K LOC on it and use that as deposits on another 5 houses. Give those 5 years before getting 80% loc's on those and margin that into shares.  

评论
helen_l99 said: ↑
PPOR: Value 1.4MClick to expand...
helen_l99 said: ↑
Their lifestyle is quite simple.Click to expand...
Are you sure?  

评论
helen_l99 said: ↑
Ops: super ... Thanks for pointing out.

Maybe another 4-5 years until neutral or positively greared if they dont buy any more (negative greared stuff)!!!Click to expand...
This year's FCF on the IPs:
(Rent - Interest - Hold Costs + depreciation ) * 0.6
(90 - 1900*(0.07 - 0.015) + 1300*0.025) * 0.6
= -23k

So yup, around 6 years til neutral CF, longer if rates rise.
But it's all about cf vs growth......

I agree with others that the share market isn't necessarily going anywhere in a hurry.....nevertheless, if they take out a margin loan at a conservative 50% LVR, fully franked divs might cover their interest pmts.

But in these uncertain times, it helps to contemplate your weighting in all asset classes. Gold, shares, property, cash, own business are all appropriate. They all have derivatives that can be leveraged......but determining the split is where the hard work is.

I calculate their current after tax free cash flow as around 30k if their living costs are 50k.  

评论
WinstonWolfe : I'd like to know more about how you calculated the current cash flow ... Can you please explain more, thanks.

Helen  

评论
helen_l99 said: ↑
WinstonWolfe : I'd like to know more about how you calculated the current cash flow ... Can you please explain more, thanks.

HelenClick to expand...
How does this look......
In deriving 30k, I may have overestimated tax because I didn't split taxable income between the two partners. This is back of envelope stuff and obviously sensitive to hold costs, depreciation, interest rates.

Income : wages - super + rent + share divs
107+106-9.6-9.6+90+1.2=285k
Super is quarantined.

Expenditure : COL + interest + IP hold costs b4 interest
50 + 7%* 1900 + 1.6% * 2600 = 226k

Pre Tax CF 59k
Non Cash Deds IP depreciation = 2.5% * 30% * 2600 = 20k
Taxable Income : pre tax cf + COL - non cash deds
59+50-20 = 89
Tax 89 * 0.2 = 18

After Tax FCF = 59-18= 41  

评论
dtraeger2k said: ↑
1.4mil paid off ppor? Get an 1120K LOC on it and use that as deposits on another 5 houses. Give those 5 years before getting 80% loc's on those and margin that into shares.Click to expand...
Or leverage it 70% into a positive cash flow CIP over $3m. At that point you're getting into territory where some good, securely leased deals can be found.

Just another option - there are many options that could be considered here - it's an excellent financial position. To me the portfolio looks a little light on in shares for example but that's with my goggles on.

The key point here is IMO, what is this couple good at and comfortable with?

How do they feel about their shares? Do they have confidence or fear with that asset class?

What about their RIPs? Are they fully comfortable with their experiences there and feel confident of their path forward in that direction?

What about CIPs? Does getting up to speed in that asset class get their juices flowing or is it all just too hard / not interested / they don't have the time?

Opportunity is everywhere in all those areas and more. Replicating what you're good at and enjoy is much more likely to be a better path than trying to do something you don't like and are ultimately afraid of deep down, just to diworsify or because someone says you should get into it.

They should just follow their own instincts and interests... continuing a straight RIP strategy for example with the right properties could well yield them the results they are seeking within the timeframe mentioned, assuming they can continue paying down some debt in the meantime, as they have with their PPOR.  

评论
Hi Everyone

Thanks you very much everyone for all the useful comments. I just feel that even though they don't do anything anymore, they might still be able to get to their desired result in 10-15 years. Say for every year now, they can save 50K => 4-5 years: neutral. After that, they can save even 100K/year or more and collect money from the rent. And another 5-10 years, that should be enough (for simple lifestyle).

Even 10 years from now, their super balance should be 500-600K in today's money.

But anyway, will they be able to get to the destination quicker if they continue to buy more properties. Personally, I think 5 (+1) properties is more than enough ... We need to leave others to the rest of the population.

Thanks again everyone.  

评论
helen_l99 said: ↑
Personally, I think 5 (+1) properties is more than enough ... We need to leave others to the rest of the population.Click to expand...
You must be new to the forum. Welcome.  

评论
helen_l99 said: ↑
Thanks you very much everyone for all the useful comments. I just feel that even though they don't do anything anymore, they might still be able to get to their desired result in 10-15 years. Say for every year now, they can save 50K => 4-5 years: neutral. After that, they can save even 100K/year or more and collect money from the rent. And another 5-10 years, that should be enough (for simple lifestyle).Click to expand...
Yes, I would guess that 10 years give or take, selling 1 of the properties could probably wipe out most if not all the IP loans, and they could pretty much live off the rent from the remaining propoerties?

The Y-man  

Property Investment

Australia property Selling Hints | Sydney

澳大利亚Hi folks I recall ready somewhere about what are some simple tricks for making your place more attractive during a home open. Im seriously thinking of selling my little pad and want to maximise my efforts. Any hints greatly appreciated. 评论 ...

Property Investment

Australia property Re-zoning | Sydney

澳大利亚What would the chances of a NSW Local Council allowing a community titled development (homes, community buildings, etc) on an area zoned Protected Agricultural land? Does anyone have experience in this area? Looking at the local council LEP, ...