Financially free at 32 – My 10 year property journey

$4k plus franking credits which will mean you get some tax back that the company has paid.

 

Thanks for the kind words! Was a little apprehensive with going public but in hindsight I'm glad I did it.

Not sure what blog I might've been referring to as I don't have one. I post occasionally on my fb page though.

 

Thanks @Terry_w, but if I have no other income apart from dividend income, then will the franking credits be of any use?

 

Yes. Money is generally useful!

 

Jack, I’ve been reading with a smile, how you have achieved so much, with a generous heart, ready to share your journey for others to be inspired! Congratulations!!
I’m 53 on Friday, can relate to your story, maybe I’m a little less sophisticated, bought the properties, sat on them forever, offloaded a couple to reduce debt, continue holding , one day after the kids finish school maybe sell one and relax?
If you don’t mind sharing where to diversify , without taking on another loan? What would you do after the kids have finished school and you still have a good business, less risky, more passive?? Thank you

 

since you have most of your properties for a while, maybe consider living off the rent as in income and never sell ?? if you sell you lose out on more capital growth and more importantly the monthly income as you retire.

if u have a 2 or more.. with minimum mortgage with them. + your supa/saving, you should be able to have a comfy life.. maybe use a calculator to work out your total income @ retirement age to see if selling is necessary.



imho the best investment without leveraging will be etf or shares if u dont mind individual shares.

 

Selling, paying CGT and investing elsewhere could still potentially result in a higher income.
Strategy: Selling Property on Retirement to buy shares

 

@Jack Chen has your investing strategy changed at all since the labor proposed franking cedits saga has come about? Are you intending to shift to etf's instead of lics or how and what have you implemented or plan to implement in the near future as risk mitigation for future government policy?

 

It might be a bit overconfident to say you are financially free. If our real estate market is a bubble and a 50% fall occurs then you would be wiped out going by your figures. Ie 5.2 million in property falls to around 2.5 million and given your debt of 2.5 million stays the same you come up with zero equity. That's not counting the 600K you have in shares (but they could fall just as much in this scenario).

 

Yeah unless you cash out of all assets and have that money in the bank it doesn’t count

 

That's not what I said. It's a perfectly reasonable proposition to point out that property is not a one way bet and that he is not necessarily 'financially free' owing so much money on assets which could go down in value.

 

No one would be financially free by taking into account what it's like that.

 

Of course they would. Just make sure they don't have that huge amount of leverage (which is a double edged sword).

 

So if house prices dropped by 50% as per your suggestion but net** rent increased by 1%, 5%, 10% etc, does it mean the investor can hold it without any issues, even will have more disposable income?

 

I am not sure why rents would go up in a economic downturn. But yes he would still get a rental return, less all the expenses and the interest he has to pay on the 2.5 million dollars in loans (and assuming he still has a job) . I would hardly call that being financially free though.

 

Here you go, OP already mentioned that his total portfolio is returning more money than the expenses. So, price drop won't impact him from servicing the portfolio as long as rent stays/increases. Anyhow, I learnt from his posts:
1. it's possible to achieve financial freedom with 10+ years of smart investment
2. frugal living could hugely contribute to the financial freedom

 

Depends if the portfolio is positive/neutral with P&I vs IO?

 

Mostly, Rent decreases during an economic downturn, you may also need to factor in a possible rent lag/long period of vacancy. What @scienceman is saying, it is always good to have good level of cash buffer, in case things goes bad.
Not to mention you may be able to pick up someone else top properties when they go busted.

 

He said it's not enough to live off (a few thousand dollars) so my point remains - he is not necessarily financially free.

 

Completely missing the point.

I'd take 3m+ of net wealth (in whatever form) with a chance of losing it through a low probability doomsday event, over a lesser number any day.