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Asset Rich Cash Flow Poor

Discussion in 'General Property Chat' started by MTR, 20th Sep, 2016.

  1. MTR

    MTR Well-Known Member Premium Member

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    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:)
     
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  2. Scott No Mates

    Scott No Mates Well-Known Member

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    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.
     
  3. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    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.
     
  4. Indifference

    Indifference Well-Known Member

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    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.
     
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  5. Azazel

    Azazel Well-Known Member

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    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.
     
  6. Leo2413

    Leo2413 Well-Known Member Premium Member

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    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.
     
  7. Perthguy

    Perthguy Well-Known Member

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    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.
     
  8. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    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.
     
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  9. pinkboy

    pinkboy Well-Known Member Premium Member

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    Recession proof businesses that are low cost start up.

    pinkboy
     
  10. Azazel

    Azazel Well-Known Member

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    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...
     
  11. Scott No Mates

    Scott No Mates Well-Known Member

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    How much does a red light cost?
     
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  12. Big Will

    Big Will Well-Known Member

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  13. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Hey I'm loving those pendant lights..!

    And those prices are pretty good too!
     
  14. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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

    Perthguy Well-Known Member

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

    MTR Well-Known Member Premium Member

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    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.
     
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  17. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    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
     
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  18. Azazel

    Azazel Well-Known Member

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    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.
     
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  19. Tonibell

    Tonibell Well-Known Member

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    Describes us to a tee !

    Is it a bad thing ?
     
  20. MTR

    MTR Well-Known Member Premium Member

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    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