34 and retiring - Canberra focused portfolio highly CF+

Yea I've noticed the word 'retirement' seems to conjure up images of people sitting around doing nothing and getting bored. Perhaps the more appropriate terminology is financial freedom or financial independence.

I definitely won't be sitting idle. Having a passive income that covers my living expenses just allows me to do things on my terms. Nothing will be because I have to, it will be because I want to.

In the immediate future I want to spend some time pursing personal interests I've never had the time or focus to do, like surfing, diving, I want to travel more of Aus by motorbike, live in Bali for a bit, focus on my fitness, get a rottweiler or border collie, buy a tinny and do some fishing, do some community volunteering, learn how to fly a plane, spend more time with partner/friends/family etc etc. Basically there are heaps of things I can think of to keep busy. I think the more important thing is to maintain a routine, and ensure you're constantly working towards something, to have a sense of purpose.

The 50k/yr might not seem like a lot, but I've run the spreadsheets/budgets and it affords me a very comfortable lifestyle with everything I want to pursue mentioned above. Remember I don't have kids and my PPOR will be paid off. I know if I stuck it out in the rat race for a few more years I would be in a much better financial position, but honestly I'm just so over it. And there comes a point when you have to stop and think about why you're doing it in the first place - when is enough enough? My goal since I was a teenager was always financial freedom, not my career, not X number of properties. They were all just tools to get me there, and now that it's in my grasp I wanna seize it asap

That said, I've always had side hustles and no doubt after a bit of downtime I'll end up doing something on the GC or online to supplement that 50k/yr. But those decisions won't be motivated by money, it will be more about pursuing an interest or passion and challenging myself. The money will just be a bonus. At the moment my side hustle is tattooing which does quite well. More than likely I'll maintain a home studio on the GC to do the odd job here and there because I enjoy it. I've also been dabbling in forex/crypto trading which I could definitely pursue further with more time and discipline, or might have a crack at doing a reno/flip. Or if I really end up missing it all I could get into Airbnb management or rent out a room in my PPOR.

 

But surely the money that would have been attached to the loan/offset would then be parked somewhere else and that would be vulnerable

 

Bank still has first dibs

 

Nope, this has been discussed here for years.

Exactly, it's not protected.
Most mortgages and loans also have a clause that they will considered in default in case of bankrupcty or liquidation.
Banks are anything but protection if things get tough.

Nobody has dibs on unencumbered property in your control but not in your name.

I suggest people look up Terry's Tips.

 

Isn’t the discussion about protection from other parties, not so much the bank? I don’t think anyone here is foolish enough to think they can hide assets from the banks.

 

Actually it was about asset protection in relationships.
Though generally speaking the idea that my assets can't be taken from me cause I have a bank mortgage on them is very far from reality.
If you want a scorched earth outcome where no one gets much or anything at all, than yes, it could work out like that.

 

Excellent read and congratulations mate

 

This would be a good use of your skills.

The path you've taken is something I could never do - managing all those roommates would send me crazy despite the stellar returns. If you have the patience for it then it sounds like you'd excel at short term rentals.

 

Hi all, happy new year! Just at the airport heading back to Canberra (flight delays) and thought I'd give a little update on my situation.

After my original post in Oct 2020, I started thinking about some of the comments on here, mostly around my projected 50k/yr passive income being a little tight, particularly if i had kids down the track, and started thinking about how I could improve that.

So I ended up rejigging my plans and ended up holding onto all 6 properties a little longer. I saw the market started moving very quickly early 2021 and figured the capital growth would be greater than the CGT benefits of selling in different FYs.

The 4BR house in Canberra's Gungahlin which was worth 680k in Oct 2020 will now be going to auction this month and anticipated to go over 900k.

My PPOR which I bought for 1m in 2018 is now 1.5m. Crazy stuff.

With the increased equity and additional savings from work and business, my new plan involves holding onto both duplexes instead of one which was the original plan. This will provide a net pre-tax income of 65k/yr.

But rather than paying off all debt against those properties, I worked out it was better to borrow as much as I could before quitting my job, and invest my cash elsewhere. So ended up purchasing a knockdown in Qld with a co-investor, and about to start construction on 4x NDIS apartments. This should be completed this year and will provide a 9-10% net return. Total cost was 700k for the block, and around 2.6m for the build. All cash. My share of the project is 20% and once tenanted by the end of this year will provide me a net return of around 60k/yr.

So together with the two duplexes ill be on around 125k/yr passive income (pre-tax) which is a lot more comfortable. Can still afford to purchase a decent PPOR on the GC cash and get a small place for my mum cash.

So that's the updated plan! And to be honest it wouldn't have happened were it not for this forum and the information available, particularly some of the stuff around the NDIS. Still on track to quit my government job in the next few months and move to the GC around July. The main thing holding me up is needing to tie up some other loose ends in Cbr.

 

Great read, if you were to start this strategy all over again (i.e as a young grad), what suburb in Canberra would you buy?

Did you ever have any awkward tension that you were the property owner, and the tenants lived under the same roof? I'd imagine you wouldn't go around advertising to your flatmates that they are paying your mortgage?

 

I've always liked the Gungahlin area to invest in as well as live. It's newer (more depreciation), smaller blocks (less land tax and maintenance), and plenty of transport, shops, jobs, etc nearby. It's grown significantly since I moved here in 2012 and I still see plenty of potential. I vaguely recall reading something a couple years ago about Gungahlin being the fastest growing suburb/area in the country. And last year Crace had the 2nd highest median price rise since 2011 Australia wide.

There are still plenty of decent buys around and long term you can't go wrong. Around Gungahlin and Harrison there are quite a few dual income properties (4BR houses with a 1 or 2BR apartment above the garage), or even triple income with a commercial premises on the ground floor (very high rates though). If you can get your hands on something like that those types of properties make great cash cows, even more so if rented room by room.

As for awkward tension with tenants in my own home, when I first started out I lived with a couple of tenants that I treated as mates first and tenants second. Although we had a lot of fun and lived together for a few years, yea it did get a little awkard when I had to wear my landlord's hat and talk money or cleaning. But never had any major issues. I personally now think it's better to keep the relationship a bit more distant and professional. So the 3 guys im currently living with are all friendly but we mostly just do our own thing and don't socialise together etc, which in turn makes it easier to manage if needed. That said, I'm pretty easy going and respect their space and the occupancy agreement. If ever someone did feel uncomfortable living with an owner then they just wouldn't move in to begin with. On the flip side a lot of people probably find it more appealing to live with an owner, particularly someone who takes pride in their house and maintains a certain standard (just dont be controlling), vs a neglected sharehouse with an absent landlord and tenants coming and going all the time.

I have no issues talking about property or money to my tenants if they're genuinely interested, but most aren't and are just happy to pay their rent.

 

Interesting, thanks for taking the time to write that. I am in a similar situation to you in 2013 in the ACT so I might consider this.

Last question- did you seek legal advice before offering a tenant an Occupancy Agreement? I would imagine the most difficult part to this strategy would be the compliance and ensuring that you are following all the correct regulation. Worst case situation is a heavy fine for not following the regulation. I'd also be worried about not obtaining insurance if I was not living there, and renting each room out.

cheers,

 

No, in the ACT occupancy agreements are very flexible, they just have to adhere to certain general principles which I'll link below. As long as you do that it will be fine. I've had my agreement upheld in the ACAT numerous times, and have provided to Terri Scheer for 2 or 3 claims with no issues. It doesnt need to be long and complicated, mines 2 pages. Google ACT Occupancy Agreements there are a lot of good resources out there, or you can start with the Standard Tenancy Agreement as a template and trim all the fat from that.

Have a read of this:
https://www.legalaidact.org.au/site...ons/Occupancy_Agreements-2_September_2021.pdf