Not sure what strategy to go with

As you know, one can leverage, using property as security, to buy shares.

I respectively disagree.

My personal view is that one should buy (and hold) both during accumulation phase. Shares for income (best in Super) and property for growth (using leverage) so that when one pulls up stump, one can live on their share income and enjoy the growth from their properties.

There are a lot of people who overload on property, find out their portfolio is sheet for income, sell down some of their portfolio (destroying some of their net worth) and buy shares for passive income.

I am not a fan of destroying net worth .

 

I respectfully disagree.

Shares are (typically) more more volatile than property but both asset classes have associated risks.

When one understand these risks, they can mitigate against them.

Buying the “right” shares and they will always be in demand.

Please provide evidence that supports this.

Rubbish.

It is well known that shares typically yield 4% to 5% income per year. Even higher when one adds back dividend imputation. And the income is totally passive.

Property might provide income of 2% to 4% but one typically loses 30+% of that gross income in expenses (rates, maintenance, renovations, PM fees, land tax, higher accounting fees, …). And property income is certainly NOT passive.

Now you are being silly .

That 119 years included WW1, the Great Depression, WW2, Korea War, Vietnam War, Oil Crisis, GFC, …

Please provide evidence of 119 years of property returns.

And I know people who lost their shirts in the property markets. I believe we will see more in the next few years.

I trust your Super is not investing in shares. Maybe it is fully invested in cash?

 

I can see the power of shares held in super. Let`s say you go 50% VTS and 50% VAS. Assuming you compound the dividends, an average of 6%/year return, pay / credit taxes and contribute $25k per year, if you start at $0 at 25, at 60yo you`ll have $2.8M. No bad to me. You can live tax free on the interests $168k / year. Not massive considering the inflation but if the wifey does the same we start talking some "serious" money while preserving the capital. This is assuming the tax free threshold gets increased and there are no major changes to the super scheme.

 

Thank you[/QUOTE]


Hi Henrietta, you've already achieved what many here are trying to achieve using property. Well done. Sincerely.

Property is great during accumulation phase (due to leverage, tax deductions & providing both CG & yield) however tends to deliver yields that can be matched or exceeded by other asset classes, hence the split views & comments. Also, there are different property types & investment strategies.

For example, Residential versus Commercial, or, Buy/Hold versus Buy/manufacture CG/sell.

Therefore, your age, goals, investment motivations, other assets are all very relevant. Many people sell off or sell down real estate at some point to diversify into other asset classes.... so why Property? What do you see property providing you?

 

Good morning.
So another year has passed and we are still sitting undecided and waiting….
I have contacted new accountant in hope to resolve our investment strategy dilemma and he suggested we set up unit trust to buy the investment property.

So now I am even more confused….
What’s your view on this? Is that beneficial to us?

Situation is still the same.Couple mid 40s , Ppor no loan worth 2mil in Sydney. Cash 2mil.Husband $250k-$300k min, wife $40k soon 0 due to personal reasons.
2 teen kids, spending money around 7-8k a month.

I am thinking purchasing a next door house outright or with loan within few weeks( for sale $2mil asking). Should we take a loan and negative gear because of husband’s salary and put $ into offset or buy outright in my name as easier? Ppty older style worth 2mil rent only $1000-$1200 but I am thinking may be valuable in near future as both our ppty and this one are over 600m2 and zoning r2located 15 min from well known Sydney beach. For now I would rent out, then offer to kids to live in if needed. I have no interest to move into that house in future so considering CGT implications as well. Planning on holding it only we are not experienced with developing ourselves. Maybe one day

The other option I am thinking is to get max loan based on both salaries and buy a house at around 3,5-4mil near beach in Sydney and to rent it out. Later on in maybe 10-15 years to sell current house and move into this one due to CGT implications.


Any ideas? Especially with offer for next door as auction coming soon.

Thank you in advance.

 

See what loan you can get and buy next door. Left over money u can still invest further when time is right or just leave it in the offset til opportunity comes up. That’s if you’re happy with your current house and location.
Otherwise you can buy the better house near the beach and have the perfect ppor if that’s what you want.

 

Hi there,

It's hard to know what you should do with those clues.

What I would ask however, is whether you want to be saying one year from now, that you still have not bought a property. How would this make you feel?

An accountant can advise on trusts, CGT and structures, but they wont advise on how to invest the money. You need to do that yourself, or with a financial planner.

In terms of buying your neighbour: without knowing the specifics, this is almost always a good idea. A very strategic purchase from your perspective, and it is helpful to have contiguous land/properties.

 

What about using your cash, say 1.4 mil of it to purchase a positively geared, multi-tenanted commercial property in metro? There is still some risk but could set you up for life and the rent will pay for the mortgage on its own

 

Dollar cost average into an index fund such as Vas (Australian shares) to generate an income stream.
Consider setting up a family trust. The income generated from the index fund can be streamed to you tax efficiently as you won’t be working.

Income generated would be around 4%. On 2 mil = $80,000 p/a.

 

Please direct me to this metro commercial prop for 1.4mil

 

I think if you never bought commercial before, it's better to use a Buyer's Agent for your first one. Commercial is a completely different beast to residential with a lot more pitfalls.

 

But keep in mind that using a buyers agent is no guarantee is avoiding pitfalls as a client of mine has learned recently with a commercial property. still check everything thoroughly

 

Happy to talk to Buyers Agent for Commercial and see what they can offer....Any recommandation?

Thanks @allanh and @Terry_w

 

nope