How to Optimise Cashflow?

Most people wont retire young using buy and hold strategy

 

It's a discretionary trust..

 

Bump

Cash flow today is king/queen...…

More options to increase cash flow ????

Airbnb
Rent by the room
Maximise your land, ie develop
Granny flat
Cash cows US

 

There's always a balance which I'm sure you're all over.

I've increased my cashflow significantly in the last 12 months (which I keep re-investing), however when it comes to buying a PPOR, I still need the deposit.

It's the rent-vesting conundrum. You have a higher networth, however if I don't liquidate, I'm still looking at ghetto property. Relying on my partner to purchase our PPOR.

As above, my focus for cash-flow is business. It's the lesson I learn over-and-over-and-over again. Yet to meet a truly successful property investor that didn't run some sort of business, whether selling shoelaces or developing property.

 

You could buy a ppor that is an 'add value deal'. So yes, you are getting a good ppor at the expense of liquidating some other assets but after you add value you should be able to further create equity in your PPOR.

I'd agree. Investing in RE using BnH for most people means they are at the whims of the CG gods. Nothing wrong with that and many have made a lot of money doing this over the long term. But when you can use real estate through some kind of a business model, you have much more control to build wealth and the potential is limitless. Though it doesn't meet most people's risk profile. Higher risk, higher rewards.

 

So.. no quarterly admin work if you hold shares in a trust?

 

Yes, agree active investor over passive, not set and forget.

 

Hi Sash,
I find it very hard to generalise about structures and in particular trusts. Some trusts like SMSF trusts do have NSW land tax thresholds, and you are right in QLD other trusts have lower thresholds too. In addition if you plan to keep IPs forever than initial plan of buying even one in QLD trust may not be sufficient to minimise land tax. Some trusts may be set up with vesting date say 80 years some have no vesting date...so tax implications there...so there are too many issues to generalise.
IMO, it really needs to be put into perspective trusts, it really depends on personal circumstance too. Say if a person if worth $1M, 10M and another worth $100M AND/OR have family members....then it really changes things.
I know friends who bought in personal names OTP in NSW and sold later, yet in their situation it would have been better to buy in trusts...many other reasons too...tax...dissolution of one child's marriage...estate planning...protection of equity growth...many reasons based on personal situation and circumstances.
Paperwork IMHO, is the cost of doing this RE investing business, for me, that's all.

So for cash flow, I like to run businesses, create other passive incomes, and then to reinvest into asset classes for CG+.
I think once a very wealthy Italian family was asked how they preserved their wealth, over various periods, wars, government confiscations and politics, and the three things they stated were:
1. RE and land
2. Gold
3. Artwork (various sorts)
So for me in some small way I try to imitate that.

 

Agree...a lot of people I know set-up trusts without understanding the pros and cons.

Some on here got caught out.....I prefer to keep my affairs simple.

Trusts are great when you can distribute to people who don't have a lot of income...but they can also be costly to maintain.

 

Lots of reference to the Trusts and land tax.
In 2015, I collected all land tax threshold information. It might be still relevant.
Land Tax 2015

 

You can distribute to me .I am not costly to maintain

 

Nah mate it should be the other way around.

 

Thanks devank, you are a champ!
The only thing I dislike is how each state manipulates their revenues...
Even though QLD seems most generous their land tax thresholds are not CPI-ed, at least for my last 18 years...so we can only plan so much, right?
I remember I only had one IP in WA and yet land tax crept up there too....or for some trusts...
So like with inflation and valuations land tax is a great tool for state governments to manipulate - depending how much they want to take - hence once any tax is introduced it then can be manipulated upon the need....food for thought!