Can this set me up for life?

Hi All.
Long time follower, first post.

Looking to sell a property to developers. This would leave me in the position below.

PPOR $1.1 mil mortgage free.

Approx $350,000 in the bank.

I am 43 years old and would like to set myself up with this sale. Could hold on to property and achieve more but finances are very tough.


Currently earn $80,000 per year and wife earns $55,000. Wife would look to stop work after sale. Would like to retire on $150,000/yr in approx 15years. Looking for ideas on how to make this possible.

 

How are finances tough? Your finances look very good to me.

 

Haven’t sold property yet. Currently have large mortgage and investment loan. Finances will be good when property sold but need to make the best decision for the future. Could wait a few years and potentially sell for more but would make those few years tough.

 

Ah I misread your post. What's the value of your IP and how much are you owing approx?

 

Seems hard from where you are now. But I think if you started a successful business with the 350k you could.

 

Impossible to know because you don't say your net position after the sale of the development site.

 

Do you really need this much?

if you invest with a 4% return you would need $3,750,000 in unencumbered assets other than your home to get a pretax income of $150,000 per year - based on todays values. That would mean saving $250,000 per year assuming no capital growth.

 

My thought is that he can decide to eat into his capital too - no need to still have the $3.75 mill remaining when they die. So he doesn't really need to have $3.75m unencumbered, they could retire on less and still be able to draw down $150kpa.

 

But as his equity gets less and less, his CF will eventually (if he lives long enough) become peanuts.

 

Leo2413. Net position after sale is the position given in original post.

 

Excluding ppor, 350k?

 

This is a good point. It is difficult to plan ahead though unless you know when you will die. You would need to make an assumption such as 100 years old to get your money to last. After than age you could go on the pension.

Also it is possible to get a reverse mortgage at some point or to sell the main residence and downgrade to a cheaper one or rent at some point even.

 

Investment property is the one selling to developers. Loan is just under $600,000. Current offer is $2,000,000. Have recently purchased New PPOR for $900,000. Until then investment was PPOR.

 

Correct Leo.

Could hold investment and I think it could possibly increase another $500,000 in the next few years. Trying to weigh that up with current lifestyle as have 3 kids 16-8 and lifestyle is very restricted.

 

Need to crunch the numbers on capital gains tax for the deal. If your wife was gonna cease work it may well be in your interest to date the contract in July rather than pre-June 30 if you do take the deal. Also you would get another 12 months to pay the tax. So seek professional advice before you sign any contracts would be my thinking.

 

Hi Terry

Thanks for the reply. I possibly don’t need that much income but would like to have freedom in retirement. Was just looking for opinions on weather the position was able to set us up. 2 mill is worst case scenario at the moment. Feel like I may be able to price up slightly after further negotiations.

 

Well with a 350k net position... to get to 150k passive income.. will take a lot of work mate. Especially in a 15 year time frame. Essentially as others have said, you'll need to hit that critical equity mass of 3mil plus unencumbered not including ppor.

 

Probably nil CGT.

 

Thanks Foxy that makes sense. Have crunched numbers for capital gain, commission and other expenses. First post assumes worst case plus allowing $50,000 for any expenses not accounted for.
Am just curious to see what people suggest. Some very clever people on this site and I am sure there will be suggestions I have never thought of. My feeling is I need to hold out for a higher price.

 

Will be a small amount of capital gains as have also ran a business from a portion of the property but that is a whole new post. Will seek further advice on best options for that when decision is made in what to sell for.