Pull the pin now or wait?

Discussion in 'Investment Strategy' started by Lacrim, 1st Jul, 2017.

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  1. Lacrim

    Lacrim Well-Known Member

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    Well, I'm at a crossroads now, with the imminent banking changes essentially forcing me to make a decision (not necessarily immediately but within the next 3 years). Have been doing my head in contemplating diff scenarios. There are numerous permutations but basically it comes to down to these:

    1. RETIRE NOW by selling most of of my properties but keeping 4, own PPOR outright, with passive income from rents/shares in the early $100Ks net
    2. RETIRE NOW by selling most of of my properties but keeping 7, own PPOR outright, with passive income from rents (only) with just under $100K net in passive income
    3. DEFER RETIREMENT TO SOMETIME IN FUTURE (not sure when - say within 5years) by keeping most of my properties but selling down 4-5. Aim is to hold on to majority of properties but this 'deleverage lite' will get me to a 'safe-ish zone' wrt banking changes.
    4. DEFER RETIREMENT TO SOMETIME IN FUTURE (say in 10 years) by keeping ALL my properties. In order to this I'll have to perform/fund some unnatural acts ie a small development and 3 granny flats. However, keeping my existing debt/increasing it via these builds still places me in a susceptible position should interest rates rise significantly ie beyond 200 basis points.
    I am a bit of a hoarder (of properties) and finding it exceptionally hard to let them go given they're located in pretty enviable suburbs in Syd and Brisbane. Majority of portfolio, perhaps 75% dollar wise is in Sydney. Am highly aware that selling these down will kill the geese that lay the golden eggs and I'll (probably) be unable to ever buy back in...certainly not at the prices they were acquired for....and I know what it took , over almost 20 years to acquire them all.

    I'm 45. Anyone want to talk some sense in to me as to what you'd do in my position?

    Thanks!
     
    Last edited: 1st Jul, 2017
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  2. Stoffo

    Stoffo Well-Known Member

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    I would gladly swap places;)
    It is a piece of string question :rolleyes:
    "If" you retire, will you have enough going on in life to keep busy ?
    Go ahead and sell one or even two of the worst performers/least potential, if you like the money and free time, then look to retire :cool:
     
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  3. Agent30yrs.

    Agent30yrs. Well-Known Member

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    Praise the lord and chillax :)
     
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  4. Cactus

    Cactus Well-Known Member

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    What about 2.5 sell a couple each year for the next 5-10 years (depending on how many you have) and work another 2.5 years to clear some debt. This will spread your cgt and you keep more properties.
     
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  5. Ace in the Hole

    Ace in the Hole Well-Known Member

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    Has to be either 1 or 2, you got to retire ASAP!
    2 is the better option if you don't spend too much money.
    If you need more spending money you can do something between 1 and 2.

    But, you got to get a taste of "retirement" while your young enough to enjoy it.

    You can always work again later if you really miss it that much.
     
  6. Foxy Moron

    Foxy Moron Well-Known Member

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    Same as I was thinking. Maybe even change from fulltime work to part-time work as part of the mix.
    Definately keep the Brissie props a while yet and sell the least-premium Sydney ones first, but it sounds like like they're all blue chip just with poor yields I'm guessing.
     
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  7. teetotal

    teetotal Well-Known Member

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    You may need to ask yourself what was the purpose of all that you've done so far.
    If you think you'll be satisfied with any of those options, do it.
    Even it took you 20years to acquire, but assuming you were doing it to become financially free anyway. So that shouldn't hold you back to make that decision.

    Might be worth planning your life after now, if you retire. Think of all the things you would like to do and place a price tag on it. If your passive income supports you for the rest of your life then do it.

    Another way that one can think is to pursue your hobbies when you retire and try turning that into an income if you feel the passive income isn't enough.

    It's a great position you are in.
    Well done and Good luck !! :)
     
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  8. Lacrim

    Lacrim Well-Known Member

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    What's the financial benefit of spreading CGT? Never contemplated selling so never bothered educating myself about CGT.
     
  9. Lacrim

    Lacrim Well-Known Member

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    Not all blue chip Foxy but the ones I keep will be the ones that are, that's for sure.
     
  10. Biz

    Biz Well-Known Member

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    Retire and pull your pin whenever you like.
     
  11. Lacrim

    Lacrim Well-Known Member

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    Yes Ace, between 1 and 2, I'm leaning toward 2. I have more faith in the rent coming in week in week out than be at the mercy of companies' dividend decisions, despite their track record. Plus, I've got some exposure to stocks in my super fund...not that I'll be able to touch that till I'm 60.

    Having said that, it's @Terry_w's post about getting $94K in dividends tax free that tears me apart between 1 and 2.
     
    Last edited: 1st Jul, 2017
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  12. Gockie

    Gockie Life is good ☺️ Premium Member

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    Yep.... Very nice problem to have.
    I think for CGT tax purposes, I'd sell 1 IP per year because you'd be paying tax at the top tax rate. Unless you had bought them under different entities.
     
  13. Lacrim

    Lacrim Well-Known Member

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    The average yield of the Sydney stock ie return on debt is around 8% gross. It's the newer purchases in QLD and one in Adelaide that are the cashflow bleeders...average 5% (most purchased in 2012-2014). But I get that now may not be an opportune time to let them go.

    One of the properties I have in Brisbane is a house in Wilston - letting go of a property like that in that location is like pulling teeth.
     
  14. Lacrim

    Lacrim Well-Known Member

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    Don't hate my job Stoffo but don't love it either. And I can find plenty of things to do with my free time that have nothing to do with money.
     
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  15. ellejay

    ellejay Well-Known Member

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    How long are you going to live for? Serious question.
     
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  16. Foxy Moron

    Foxy Moron Well-Known Member

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    But what is the yield on current market value of those Sydney ones is the important factor perhaps ? Agree Wilston is prime.
    Like others are saying you have to be all over the CGT calcs before deciding. Will be a major influence.:)
     
  17. Gockie

    Gockie Life is good ☺️ Premium Member

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    I'm not sure that matters because the remaining assets he'd keep should still have growing values and incomes over time too. And push comes to shove, going back to work would be doable?
    Just my thoughts.
     
  18. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I have seen plenty of people build up large amounts of wealth yet keep working "just a little longer' to get a bit more and then either die just before retirement or just after.
     
  19. ellejay

    ellejay Well-Known Member

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    I meant as in considering pushing back retirement for 10 years without strong inside information to suggest you're actually going to be alive in 10 years time :p Personally I'd be enjoying some of the gains now while fit and well. I've been off work for months and can't go back...too many great things to experience.
     
  20. ellejay

    ellejay Well-Known Member

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    Yep and have all sorts of aches and pains that come on later in life. Spend retirement shuffling around doing not much.
     
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