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Retired & keep on investing...is it possible?

Discussion in 'Property Finance' started by Iamnumber5, 31st Dec, 2015.

  1. Iamnumber5

    Iamnumber5 Well-Known Member

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    Hi all,

    It's my first post here on PC, and it starts with a hypothetical question.

    Is it possible to get finance from a bank to further invest on IP with the condition that you are no longer working, ppor and all IP's fully paid off, rental income from IP's let say 150-200k, age early 40's?

    Tq
     
  2. LifesGood

    LifesGood Home Building & Development Consultant Business Member

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    Income is income so in short the answer would be yes, subject to lending criteria.
     
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  3. HomePage

    HomePage Well-Known Member

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    As a new retiree, I qualified for three times as much a loan on my retirement income as my still-working wife did on her salary at the time, so it worked for me.
     
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  4. Iamnumber5

    Iamnumber5 Well-Known Member

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    @HomePage Amazing..., you must have done very well with your investment. Has your investment strategy changed since you are no longer working?

     
  5. Redom

    Redom Mortgage Broker Business Member

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    Yes its possible, so long as you meet standard serviceability requirements.

    Your property endeavours may be treated similar to a self employed borrower. Income verification with many will be via tax returns rather than lease statements.

    Also some lenders will cap yields on higher yielding properties, so you may find large differences in borrowing power depending on the lender you go to.

    Great position to be in btw at that age. The forum would definitely welcome your story on how you got there. :)

    Cheers,
    Redom
     
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  6. Iamnumber5

    Iamnumber5 Well-Known Member

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    @Redom , Thanks for your explanation.

    I am a few years shy of 40, just projecting myself in the future to know what will be available for me when I will no longer have working income.

    Strong motivation to convert working income to investment one, frugal life, long work hours, wife's support, fear that good things won't last forever, and a bit of luck, has brought me to where I am at now.
     
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  7. MTR

    MTR Well-Known Member Premium Member

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    Absolutely, am sure brokers on here can help, otherwise pm me happy to help you:)
     
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  8. willair

    willair Well-Known Member Premium Member

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    It takes something special to be in that income range from the rental income alone,then add compounding for the rest of your life,and as you say luck,but it would have taken very carefull well thought out plans to get too this level at 40,a lot would be interested to how,when,well done..
     
  9. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Good stuff.
    We are in a very similar situation.
    Don't see why you couldn't continue to further invest perpetually as long as your assets and investments are producing cash flow/income.
     
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  10. Iamnumber5

    Iamnumber5 Well-Known Member

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    Btw....Happy New Year to all.

    @MTR Thank you for the hand out. After spending many hours reading on PC, it seems that your opinion on many topics has been highly regarded by many of the forum members...would really like to get your input in the future.

    @willair I am not denying that I am on a good income, but what has been boosting my wealth is riding on the wave of different investment vehicles. Shares, gold & property. The first two had been pure luck, but the last one, my brother & I were sure that prices would rise.

    I am not an expert on any of those investment, just good timing on my side.
     
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  11. HomePage

    HomePage Well-Known Member

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    The main thing I have changed with my investment strategy is to take a greater cash position precisely because my investments have done better than I need. In other words, I now choose wealth preservation over growth.
     
  12. MTR

    MTR Well-Known Member Premium Member

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    You are very welcome, always happy to help, there are many long time posters/ investors on this forum who contribute and share their knowledge. This is why we come on the forum to learn from other, never stop learning.

    Happy New Year:)
     
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  13. Finrod

    Finrod Active Member

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    This is a very mature attitude. For me it is/was such a psychological thing to "declare" and shift focus away from continued growth opportunities toward wealth preservation.

    There's an innate drive (or maybe greed?) to grab as much as you can as opposed to just what you need. This often comes at the expense of having to stay in the rat race longer (as your new target seems to continuously grow skyward), and potentially the risk of overreaching.
     
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  14. MTR

    MTR Well-Known Member Premium Member

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    Wise words.
    @HomePage is making sense and he also lives a good life.. good on him:)
     
  15. Blacky

    Blacky Well-Known Member

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    You could make your life easier and set up your loans is such a way that you dont need to ask the bank permission to re-buy.

    As an example rather than repaying debt on IP's use offset accounts. Hold cash in there, and when you are ready to purchase again, use the cash.

    The tax effect is neutral to what you are proposing. The risk effect is neutral to what you are proposing, the cashflow effect is neutral to what you are proposing... however, it saves you from approaching the bank again down the track.
    There could be even more tax advantageous arrangements than what you are proposing - but that would require a much more detailed review of your possition.

    Blacky
     
  16. Iamnumber5

    Iamnumber5 Well-Known Member

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    @Finrod I totally understand what you are saying, as I am having the same dilemma. I have been mentally driven growing assets for years and it's psychologically difficult to set the mode down to wealth preservation at such an age. However this is something that I have to deal with from now on till when the time do come for what so ever reason within/beyond my own choice. The last thing I want is to retire with the wrong mind set. I lost count to how many target which I set for retirement.

    @Blacky That seems like an effective way of doing it. Thanks

    @HomePage You have finally done it, good on you.
     
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  17. Omnidragon

    Omnidragon Well-Known Member

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    Interesting, been thinking same question lately. What 'discounts' are applied on rental income? Which are the banks that don't stress test your existing loans at 1000%?
     
  18. D.T.

    D.T. Adelaide Property Manager Business Member

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    On residential properties, they'll mostly take ~80% of your rental income into consideration (to allow for related expenses) and most will cap gross yield too ~7 I think it is. Confirm with a broker.

    From memory most of your gear was commercial? Completely different kettle of fish there I'd assume.
     
  19. Omnidragon

    Omnidragon Well-Known Member

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    Yea I have a lot of commercial (tends to be bank bills), and they're more relaxed from what I gathered as long as tenant's in place and gearing's low (ie 50-65%). I tend to deal directly with banks on these. Wasn't sure how the resi game would work though.

    Presume some banks still measure your outstanding loans at the prevailing rates?