Exit Strategies?

Hello forum friends,
I have been investing over the last 9 yes and have been able to acquire 10 properties in Sydney and parts of QLD. We are now starting to think that it is time to change gears and look at getting out. My question is how? How would you do it or how have you done it already.
The basic idea at the moment is to pay the biggest debt down first and proceed down the line in order of debt size. Others include small development to generate cash flow or subdivision etc to squash debt. After all is said and done we would continue to invest although work would be on out terms.
I'm interested to hear your ideas guys.
Thanks and regards
Michael

 

By getting out do you mean sell?

Think
- tax
- income
- future performance potential
- Land tax minimisation

Any CGT exempt because of main residence status?
Could sell and move into an investment?
Sell one per tax year?
What will you do with proceeds?

 

Is the reason you need to "get out", to realize your gains, or increase your cash flow?
We are in a similar investing position and timeline, but will hold all our properties as they will generate more cash than we need.
If you have to sell some to increase cash flow instantly, personally, I'd sell the least possible to give the least amount of cash flow required, and let the rest keep working for you.

 

I'm not planning on selling down, just paying debt and living off rent. By getting out I was referring to the rat race . I should have been more clear!

 

Sounds a little similar to me, having a sold portfolio then looking to reduce debt to increase cash flow to LOR (among other things),and do this via subdivision /development deals to pay down chunks of debt. Am i understanding right?

 

Lovely.. Reminds me of a late 1990s song 'Slave to the Wage' from the band Placebo

"All it takes is one decision, alot of guts, a little vision to wave your worries and cares goodbye...Its a maze for rats, to try"

 

I did it about 9 years ago and husband has recently gone from full time to part time, have our 2 developments to complete this year and then DH is out completely, but we will still continue to develop

If you have enough income from rents to provide lifestyle then just do it, if you need to work out some tax strategies put it past a good accountant. If you don't have enough income then perhaps sell down while Syd market is still hot, yes you pay tax but only you know what will work. Have a plan and execute

I am sure Terryw has some excellent ideas in this area, but without knowing all your details difficult to provide meaningful information

mtr

 

Why pay down debt? Just build up cash in offset accounts as you can then exit sooner.

 

Hi Terry
but if he want out now then if rents don't provide enough income then selling down would be the only option? other than using equity?.
unless there are other income stream?. I suppose dependent on time frame.?.

Super strategies? throwing it out there, I am always interested in ways to reduce tax

mtr

 

Hi MTR

It depends. If a person has saved up cash in an offset account this could be used to supplement the rent. As time passes the rents will increase and less reliance on the offsets will be needed. A form of living off equity, but not borrowing to do so. Borrowing to live on would not be deductible.

An alternative is to live off rents entirely and borrow to pay the interest - which would be capitalising interest and should be deductible if it is done for cashflow reasons.

Both are living off equity variations but more tax effective.

 

What it would be like to have enough IP's to get out of the rat race.. *sigh*.... LOL

 

Youll get there mate. Just keep on. Sure beats working till 68 and retiring on the poverty line. That's insanity imo especially if your young and can avoid that.

 

Keep working it, but if you want to move faster you may need to look outside the square.

I see you are from Sydney, did you jump in, I hope so

 

I do too. Certainly would of given his equity a massive boost to get more ips.

 

I just find it difficult to understand how much money you could possibly save when most of the properties are negatively geared and debt would be substantial if largish portfolio, it would be minor in the scheme of things surely??.

Perhaps I don't get this concept??, but who saves when you are an aggressive investor, don't you keep ploughing money into the deals to make more money to grow portfolio/cash flow.

Selling down is different, for example if you doubled your money in the Syd, Melb booming market then you have serious chunks of money and you reduce debt substantially and increase cashflow in a short timeframe.

MTR

 

There are plenty of investors out there with large sums of cash around. Some have a IP with the loan fully offset for example. They don't buy another for various reasons - some logical such as they may think the market too hot now, some illogical such as not getting around to it!.

Some of these people could retire immediately or much sooner than expected but either don't know this or they may want to keep working cause they enjoy it.

 

OK.
They don't even know they can retire? What the hell's that about?? Some people I believe are also fearful of giving up their day job, I have met a few, fearful that there wont be enough money for lifestyle.

MTR

 

I knew a public servant, with a guaranteed pension of 80% of his final salary for life, who worked an extra 8 years because he was scared of making the decision. He kept putting it off and before he knew it 8 years had passed.

 

There is a third reason.... if I quit my day job and stay at home, I may set a bad example to my kids. They will think that when they grow up they can make money by staying at home.

 

How are they going to know you're at home when they are at school?