Can or Will you retire on property alone?

Discussion in 'Investment Strategy' started by MTR, 29th Jan, 2017.

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  1. Perthguy

    Perthguy Well-Known Member

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    I had the 'never sell' mentality until I sold my first I.P... then my second :p
     
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  2. Perthguy

    Perthguy Well-Known Member

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    Depends if they have super or not. Combining renovations, developing to retain and super, I am pretty close to being able to retire today on property. I'm having too much fun to stop now though. What would I do? ;)

    By the time I am ready to retire I reckon I could wipe out all my debts by selling down properties, leaving enough to live on rent supplemented by super.

    I know it's not property alone but how many people really just have property, no super and no other investments?
     
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  3. Scott No Mates

    Scott No Mates Well-Known Member

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    I know a few, who even withdrew their super for more property.
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I have seen many do that. And in 80s they keep paying tax when they didnt have to .. . For 11 years.......

    Property alone is one strategy and very limited. Once you are aged 65 the options end and they often leave property with major tax liabilities on death they ignored.

    There is no rule book.
     
  5. Sackie

    Sackie Well-Known Member

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    Addicted to chunks of cash comin in eh..:p
     
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  6. Scott No Mates

    Scott No Mates Well-Known Member

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    Couldn't be closer to the truth. Not only death but also loss of mental capacity (and are now asset rich and intestate).
     
  7. Perthguy

    Perthguy Well-Known Member

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    Bad news.

    Ouch! I wasn't planning on touching my super untilI need it. It's going well!

    True, but it is a lot of fun. It is also amazing for wealth creation if you are prepared to get your hand dirty. I have made more from property in the last 10 years than I have from my wage.
     
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  8. TAJ

    TAJ Well-Known Member

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    Thanks for this post, I feel it sums it up perfectly.
    3 unencumbered properties returning conservatively $1000 p/w passive income is a good head start for retirees, especially if they have no other debt. Couple this with Super and possibly other asset class investments provides for happy days.
     
  9. Terry_w

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

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    At 3% yield, after costs but before tax, how much property would you need for this?

    = $1.733 mil in unencumbered property.

    Very possible.
     
  10. Lacrim

    Lacrim Well-Known Member

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    $3000 pw = $2200 after expenses...then you get taxed on it. By the time that's done its almost $1600 pw. Allowing for vacancies that equates to about $80K a year.

    So in general, you could almost halve the amount of gross rent you get from resi. That's why I'm not a big fan of the LOR model.
     
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  11. TAJ

    TAJ Well-Known Member

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    I was saying that receiving $1000 nett from 3 properties (not $1000 per property) coupled with Super and other asset investment dividends is a healthy start for retirees.
    This is per week.
     
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  12. MTR

    MTR Well-Known Member

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    I will throw the cat amongst the pigeons for similar returns .....buy .....buy 12 Properties in USA market @ $30k each. $360,000 USD and you will make similar net returns, but significantly less capital required

    However with currency play today you will require $468,000 AUD, still much lower capital base

    One other difference you will be buying into a rising market today..... cash flow and CG
     
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  13. Beano

    Beano Well-Known Member

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    I googled the Lor model and think she is ok
    www.modelmayhem.com/FeliciteLor
    I do not know why you are not a big fan of her :)
     
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  14. Perthguy

    Perthguy Well-Known Member

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    I am not a big fan of LOR either. But LOR + super could work fine for me. I am pretty sure it will work well. If not, I have the option of selling down the IPs one at a time and coverting the funds to a mix of LICs and ETFs.

    That said, the retirement calculators are saying I will likely have more super than I need for my target income, so rent would be a bonus.
     
  15. Scott No Mates

    Scott No Mates Well-Known Member

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    I better retire a few years ago then? :rolleyes:
     
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  16. Lacrim

    Lacrim Well-Known Member

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    Are you planning on consuming the super balance as you age as well or just live off the returns...and preserve the capital?

    And the problem with the selling/ETFs/LICS route is you'd sell down, incur about a quarter of the sale price in CGT, then invest what's left to get a fairly stable and fuss free, but measly, 4% return.

    There's no free lunch is there, and any which way you look there's a downside - even if you have a reasonable bucket of wealth.
     
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  17. Perthguy

    Perthguy Well-Known Member

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    I am planning on spending it all. I have no need to preserve the capital.
     
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  18. Jack Chen

    Jack Chen Well-Known Member

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    Why only 4% return? BKI for instance is 6.9% grossed up (as at May 2018)
     
  19. Nodrog

    Nodrog Well-Known Member

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    Regardless of the income from property vs shares I found the biggest issue is all the baggage that comes with owning property. This mightn’t seem much of an issue when young (perhaps even enjoyable for some) but as one ages it can increasingly become more and more of a burden.

    A tax free Super pension is an incredible thing when you can get your hands on it. But it’s also possible to earn around $96K in fully franked dividends outside of Super without paying any tax. And unlike property there’s nothing to do at all except enjoy spending the income.

    PS: We finally just recently sold our last IP (previously owned many). All income from share dividends now, heaven at last.
     
    Last edited: 24th Jun, 2018
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  20. SatayKing

    SatayKing Well-Known Member

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    What is this thing called IP? Don't recall encountering one.
     
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