buying my first property in cash. am I missing anything?

Discussion in 'Investment Strategy' started by IP or not, 10th Apr, 2020.

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  1. IP or not

    IP or not New Member

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    I am single in my mid 30s and have about 600k in my stock portfolio.
    I have always wanted to buy a property for myself and not have to worry about paying rent or monthly mortgage.
    The reason I started investing in stocks was only because I wanted to buy my home in cash because I have always wanted to live a rent-free and debt-free life.
    I am thinking of selling 500k of my stock and buy a 1 or 2 bed room apartment to live in. (I don't care about capital growth or anything like that as I am looking for a place to live in for the next 10 or so years.)

    However, now that I have enough cash to buy a property I want, I am not sure if it will be a wise decision to sell 90% of my stock and to buy a property in cash to live in.

    what do you guys all think?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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  3. Trainee

    Trainee Well-Known Member

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    Do you have enough on top of this to retire?

    You should care about capital growth, unless you have another way to reach your financial goals.

    if you honestly dont like debt, think about what would happen if you bought this and lost your job. Compared to taking a 80% loan and fully offset it.

    zero debt doesnt equal safe.
     
    Last edited: 10th Apr, 2020
  4. IP or not

    IP or not New Member

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    I have 1 year worth of expenses saved up in my bank and my job is pretty stable so I am not really worrying about losing a job. even if I do, I think I can find a job before using up all of my savings in the bank.

    my next goal is trying to increase my superannuation to 1m and I think this should cover for my retirement.

    Given my present circumstances, would it be wise to buy home outright?
     
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  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    borrow money when u dont need it

    basic risk management, emotion often gets in the way of logic

    Ideally with an IO loan

    stick left over into offset

    Challenge Buffer, or opportunity war chest

    NIL Interest payable !

    Please see specific credit, tax and equties trend advice

    ta
    rolf
     
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  6. Trainee

    Trainee Well-Known Member

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    Not in my opinion, but your thoughts are alien to me.
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    thats because one mind set is driven largely by data the other primarily by emotion

    There is no " right", just whats right for the individual once the understand their "programs"

    ta
    rolf
     
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  8. Trainee

    Trainee Well-Known Member

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    IF you never lose your job, your goal is $1m at 60 and live in a smaller unit for life?

    But if you ever have a family, want a bigger place, want more for retirement, want to retire earlier?
     
  9. Mel Morgan

    Mel Morgan Sydney Property Manager Business Member

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    What happens after 10 years when you want to upgrade? If you haven't had CG, will you have saved enough in the meanwhile?
     
  10. Willy

    Willy Well-Known Member

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    Do you really want to be selling 90% of a stock portfolio in a major downturn?
     
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  11. Fargo

    Fargo Well-Known Member

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    If you dont think your shares will earn you more than a 2 % p/a sell them. Remembering you may only have 400 k instead of 500 k after CGT. You could take a loan and only pay 3%, and use opportune times to sell some shares to pay the loan, or pay the home off over 4 or 10 years so that you get your capital at a lower tax rate and $ value of your share portfolio is some what maintained. Alternatively you could sell your shares buy a house unconditionally and perhaps get a discount, then take a loan and buy some shares again with a tax deductable loan which may some what negate CGT on the sale, the taxed saved could buy more shares.
     
  12. Omnidragon

    Omnidragon Well-Known Member

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    Probably lose money though
     
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Cash out lender options are almost as rare as a pork chop at a synagogue.

    Mac was a great option until about 7 mths ago, and have progressively cut options

    WBC 2 years ago did a 90 % no LMI medico 2.5 cash out, now 100 k is tough

    CBA used to be ok to 800 k or so but also recently cut back to 300

    Many lenders now want a planners letter, which means a full SOA, which isnt necc a bad thing

    ta
    rolf
     
  14. Omnidragon

    Omnidragon Well-Known Member

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    In some places in Asia you can cash out up to 50-60% LVR no questions asked on serviceability ever
     
  15. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Pre GFC 70 no doc was regular fare

    ta

    rolf
     
  16. Omnidragon

    Omnidragon Well-Known Member

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    In Aust? Crap I was in uni. Omg I’m so angry