34 and retiring - Canberra focused portfolio highly CF+

Didn't read it fully but well done retiring.

 

This is a great story OP. Congratulations!

I was about to create a post to ask the PC crowd if anyone had any experience with renting to people individually. I just got in to the ACT market and was contemplating renting the house as individual rooms.

Is there a special agreement you have to sign with each flatmate?

 

It seems like some minor changes have occurred since 3rd of March: https://www.legalaidact.org.au/site...lications/Occupancy_Agreements_02-03-2021.pdf

 

will u be getting a bigger bike on the GC?

Cool story

 

It's called an Occupancy Agreement in the ACT, there doesn't seem to be a standard one available, just have a look on Google you will find some ACT Occupancy Agreement Guidelines which will help you write your own, or you can adapt the standard Tenancy Agreement.

@boganfromlogan my avatar is of my old iron 883, currently have an all black vrod

 

quite hard to have a mid life crisis when you have a Harley in garage already!! Perhaps you should make it all chrome?

 

What would be the must have areas to include other than the standard item (rent, notice, utilities, deposit)?

 

Condition of room/common areas, house rules, cleaning roster/expectations.

 

Thanks Ads for your post - it's really interesting. I had never though of renting out individual rooms.

Could you please comment a little about how you financed the portfolio? Structures, what worked, who was helpful, do you think you think you could do this is today's climate?

I'm in Canberra and really interested in what you've done here.

 

Each purchase was financed separately with a 20% deposit to avoid LMI, everything in my name for tax reasons. Was able to save the deposits by house hacking, living relatively cheaply with no other debt or HECS, salary increases from my main job, as well as the extra income generated from each subsequent property purchase.

I also used various tax strategies right from the start to get my tax bill right down which also helped propel things quicker - eg prepaying all loans and expenses 1 year in advance, stamp duty deductions in the ACT (big one), higher depreciation since they were all relatively new and the duplexes have double of everything, 0% tax variation with the ATO so my salary isn't taxed each pay, all purchases on credit card to help with cash flow, offset attached to main residence, etc.

The house I built was financed privately through family at standard interest rates just to avoid the hassle of going through the banks for construction. Since they were getting f-all interest rates through term deposits this was a win/win. All formally documented for tax/legal purposes.

Getting finance for the share housing setups is doable with the right broker. There was always a lot of back and forth with the banks (I only stuck with the major lenders). We often found it easier to provide a single Tenancy Agreement signed by all tenants and present it that way, rather than multiple agreements for each tenant. We then provided a rental ledger which matched up with all the bank deposits coming in from different tenants at different times. Everything also recorded in tax returns so could be verified and the banks were happy with that. They would only take a % of the rental income though not the full amount.

 

Thank you Ads, much appreciated that's really helpful. Real mixture of strategies including family finance, tax variation, cash flow management etc. Food for thought.

 

i always thought the best asset protection is having loans against each property/offsets??? I will probably get shot down for saying this
Effective and costs zip

 

Do you think this is something that can be managed remotely from Brisbane? Or is the plan to have someone locally manage that for you?

 

BTW, great story.... retiring young

 

I think it's the opposite. An unecumbered property is best protected. NSA.
Loans always have strings, and arms.

 

I covered this in my previous posts but generally speaking if you want to do this kind of share house thing you're better off managing it yourself. I haven't run the numbers but I would suspect the higher costs of appointing a PM would eat away at the higher yield anyway. Since there's a higher turnover with this kind of setup you'd have to factor in the constant re-let/advertising fees, increased vacancies, higher maintenance and cleaning expenses which could otherwise be done yourself, etc.

The duplex I'm planning to keep which will be my main income source will be converted to a standard rental and handed over to a property manager. Happy to take the lower yield for less stress.

 

My only comment is if you’ve achieved this much my the age of 34 ( great work ) you’ll get bored doing nothing and if you want to do much 1000/ wk isn’t going to enable you to do much .

I’ve know a few people who’ve retired early , on the forum and off the forum and friends of friends and can’t remember one who’s stayed retired

What do you want to spend your time doing ?

That’s the most important thing you want to be thinking about at the moment .

When your working hard , the thought of chilling out and doing nothing is attractive but it doesn’t seem to last that long .

Cliff

 

My theory is if property has loan fully drawn, why would anyone go for you, they wont get anything??

 

Exactly, blow it all on the divorce lawyer and you're killing two birds with the one stone.

This is how you beat the system.

 

Yes this is correct

No this isn't correct. You will get some extra protection if the bank is holding your property as security