Metropole/Momentum Wealth/Binvested

You would have to set up LOCs on properties before you quit work. You can then use this to pay for the interest on the loans.

You will be receiving rents anyway so there should be not more tax to pay but less as the interest on the loans would be increasing and deductions increasing (assuming set up correct).

Another strategy is to just pay off the main residence and then keep storing excess cash into the offset accounts instead of paying down loans then you use the cash to pay down loans and to supplement living costs until the rents increase.

 

ATM I'm setup like the second way, but eventually when I have enough cash in offsets I would start paying tax as I would be positively geared ?

 

Any cash in investment offset accounts would mean less interest which means more income which means more tax.

 

S

so basically upon retirement you will pay the tax no matter what if your drawing an income ? Unless you use equity to live off/ but then it won't be tax deduction loan

 

Depends.
But I would rather make an income and pay tax than be on a govt pension and eat Maggi noodles...

 

You must pay tax on income, but each person gets a tax free threshold of around $20k. When you reach a certain age this becomes $30k approx. Property may still have some non cash deductions from depreciation such as for building works which will reduce tax a bit.

I am writing a post about the 4 different living off equity strategies and and will post next week.

 

Sounds good ! Look forward to reading them

 

And if your being the big spender you can lash out and put a tin of tuna on top!!! (Did this during uni years)..

 

The more I read about "property experts", the more I realise that we need to become our own experts. After all, what constitutes being an expert? How many properties does one need to qualify? How much $$$? And what qualifies one?? At the end of the day, we just need to spend lots of time researching, asking questions, and learning through making informed decisions. Experience is the best teacher.

 

http://australianpropertyforum.com/topic/10077322/1/

 

So people keep saying, but surely not to the same level as the modelling used by some of these guys (Momentum Wealth, Empower Wealth)? Has anyone given it a good crack and wants to share their work?

 

I had someone from Momentum Wealth shows me their tool a long time ago (skype chat). It was an excel doc with Macros - it might have improved a lot now, but doesn't mean you can't have a go yourself. There should also be providers that sell this kind of docs pre-made.

 

Interesting. As I understand it Momentum Wealth didn't always charge and arm and a leg for a 'portfolio plan', so I wonder if they are doing something more complex now they offer this (rather expensive) product. Maybe, maybe not.

When I spoke with them they did mention accounting for time-limited events (income changes for having then raising children, etc) different investment approaches (buy-hold, development, etc) which is certainly more complex than I could set up on Excel. I could probably handle a simple projection of capital growth, but adding all the complexities of when a new IP would be acquired and adding this to the model outcomes? Not to mention changes in income/expenses at certain times in the model... Waaay beyond me! I would love to have that model tho! Even more than I'd like to have someone do it for me - that way you could tweak every detail and see how it affected things.

It's funny though - two me there are two aspects of this modelling/advice: one is having a projection of where you will be at in 10+yr time, the other is sound advice on what your best move right now is. The former is really 'interesting' and probably gets a lot of people excited (myself included), but really it is the latter that actually matters. Ie if you assume that the action you are taking right now is the best possible one, then it doesn't really matter where you will be in 5, 10, 20yrs, as knowing that theoretically still wouldn't change your current action, it would just give you a warm fuzzy feeling and some reassurance.

 

@theperthurbanist can always have a go by creating each scenario manually- it will give you an overview. Knowing where you'll be in 10+ years can be exciting...not. The rough projection I made back then showed that with the way i was going (work, save money, increase super etc) will get me working until I'm 60 and ran out of money 15 years later. Hence why I start investing... not sure if it will work out but i do hope so!

 

Hi @Terry_w , just wondering, if you happened to write that post with 4 equity strategies. Can you please share the link if you did write it
Thanks!

 

Hard to remember now - that was 4 years ago.

It might be this one:

5 Living Off Equity Strategies to Speed up Retirement 5 Living Off Equity Strategies to Speed up Retirement

 

Its great to revisit these old threads, started 2015

My how things have changed today

 

I think a good way to do it is in other strategies Buy shares with LOC, for authenticity I wili use business's I suggested at the time ALL and BAP they were giving 4% yeild but growing @ 10 -20% p/a. now they are paying 30% and 10% p/a dividends, so if equally weighted would give you twice the desired extra income now if you used 300k of LOC and kept 100k spare., But that is all trivial because your 300k loan will have produced $1.7 million worth of ownership in great businesses. Others I mentioned like ALU, APX, PPH to illustrate why investing based on past yeild suck, were giving low/no yield at the time, but have had greater growth would be worth $3m now and begiving a 10% yeild on your LOC and still give you $30k income now.

 

My viewpoint:

Forecasting is a prediction.
To me, if you have $100,000 to invest, the first thing the property companies should tell you is 'there is no best strategy'/'the strategy we are presenting to you will not be the one that makes you the most$'.

Because if you think about it, 'the beststrategy' is:

1. Hard to measure
2. Statistically improbable to achieve

E.g. for you to get the literal best capital growth percentage property growth in the nation, you would have to pick the correct suburb out of the 15,000 odd, the correct market (house versus unit) and correct point to sell. You might as well put it all on the Melbourne Cup horserace bet with those odds.


No, the better question is, which of the property companies strategy would produce the better result, whilst factoring in the probability to achieve this.

Small Is The New Big Pty Ltd (rooming houses basically) has been discussed on this forum and is a good example of a strategy that:

• Produces good results
• But PropertyChat members complain it is really hard to achieve (low probability)

I have said before, a good property company should either:

• Be open about their past performance, OR
• Have some stake in the process

Thanks,