Asset Rich Cash Flow Poor

Most Australians fit this category apparently.

How would you turn this around, balance the books so to speak? How long is a piece of string.....

MTR

 

Recommend that everyone that you speak to sells up.

When the @rse falls out of the market buy in.

Rents will have increased ad plenty have sold their assets.

 

Gear up when you can but most peoples faulty mindsets prevent the best course of action for them. They know better and end up with no access to cash as a result.

 

There is plenty that can be done.... iff one wants to improve their cashflow from a high asset base.

Firstly, transition some capital to cashflow assets like dividend yielding stocks, bonds or mutual funds.

Secondly, consolidate assets in order to pay down any outstanding debt and thereby improve passive cashflow position.

Thirdly, downsize PPOR. Many still live in the large family home even after becoming empty nesters. Downsizing can free up equity to use for passive income generation.

Fourth, if none of the above is palatable.... work or start a business.

There are plenty of things one can do if they have a large asset base.... but some would rather complain than act.

 

This should be fairly straight forward for people to act on. Personal development/retraining. It you're not satisfied with your situation, you're the only one that can change it. Personal responsibility.

 

When you're 20m away from Niagara Falls in a paddle boat with 1 oar, there is only so far you can turn around before the inevitable. Best to change course before you start feeling the water droplets.

 

This is my parents... kind of. They are not "asset rich" but the value of their assets does not reflect their cashflow. What they need is cashflow but most of their capital is tied up in an IP in Melbourne with a relatively low rental return. I want them to sell it and buy some lower priced but better return IPs in Adelaide. The problem is my Dad is worried about losing some of the value with CGT. Also stamp duty in SA is quite high.

The solution in their case is to sell down their Melbourne IP because it has low returns and buy in Adelaide for higher returns. This would improve their cashflow situation.

 

As long as they don't have access to the bulk of the capital base, that's a good thing.
Have seen cases where some have got off to a good start with property, achieved good gains, then they sell to realise the profits, then BAM !!!
Go on a spending spree and live it up for a while.
End up never getting back into the market and never recover.
Forced savings is the only way some can get ahead.

 

Recession proof businesses that are low cost start up.

pinkboy

 

I've been guilty of this before I knew what I was doing. Was good fun, but glad I started learning after that and got a decent plan in place.
I know plenty of people who also continually refinance and spend the equity on wedding, honeymoon, cars, holidays...

 

How much does a red light cost?

 

$125 for a hand...........blown............one

Glaze Hand Blown Pendant Lights Red, Green, Blue or Brown Glaze1 Glaze2 Glaze3 Glaze4 | The Lighting Outlet

 

Hey I'm loving those pendant lights..!

And those prices are pretty good too!

 

If jointly owned could they do a spousal sale?
If solely owned too - 50% perhaps.

 

Not sure. They are here in a week so I will ask them. At a guess I would say 50/50 TIC.

 

Sell down and another suggestion......look at Tassie market, this is the dark horse at the moment, most don't realise its moving.
The idea would be to buy a bucket load and then sell down half this would also be another way to create income streams and build more wealth.

I guess the idea of investing is all about financial freedom, no point having a great asset base that does not provide the cash flow for a good lifestyle today.

 

Did you see my latest strategy - they could sell one property, pay the CGT, and invest the proceeds in a higher yielding investment and still be earning more income than the rent after expenses.

Strategy: Selling Property on Retirement to buy shares Strategy: Selling Property on Retirement to buy shares

 

Canberra is another one that has flown under the radar, some suburbs have moved, but delayed ripple effect from Sydney, election over.
Higher price bracket than Tassie I suppose.

 

Describes us to a tee !

Is it a bad thing ?

 

You need cash flow if you want to retire
Asset values can change up, down
I guess it's dependent on your individual goal. If you manage both may make life easier