Retirement Incomes....will you be in the top 3%!

I did say AT LEAST .

That is a minimum of one bottle. I am “on the wagon” at the moment .

 

thanks, yeh i figure they would be best to go see a FP. thanks for the heads up on the seminar info aswell, ill forward that tothem

 

I have a colleague who has just turned 60 and has resigned, finishing at the end of the year. He mentioned he went to see a financial advisor who worked out he’d have enough money to last until he is 89. I am guessing that some people calculate their retirement income on the basis of selling assets and spending the capital, which would mean that over time they would rely on the pension.

Probably a different mindset to many of us on the forum who are probably investing with a view to maintaining/growing capital and living on the income generated through dividends/rent.

 

Yeah honestly would not entertain eating into capital unless I had absolutely shedloads of it.

 

Totally depends on your vision. Plenty of the mega rich don't bequest it to their kids on the basis that they become complacent about money.

You can't give them everything but nor can you give them nothing either.

Plenty of ways to mix it up, retire early use the cashflow & some capital as a stopgap until super kicks in and live off tax free income until it goes to zip leaving whatever remaining capital outside of super untouched as your legacy.

The trick is to know how much to put into each bucket.

 

And people say capital growth alone makes people rich. Just look at that data after 30 years of the biggest growth and easiest credit in human history. The facts are the facts. All that growth doesn't produce income. Only the very few make that strategy work for them. For the majority it is absolutely fools gold.

The way I see it, there's no reason that just about anyone who wants to, can achieve the following by the age of 65/67 - or earlier .

1. own their PPOR outright
2. own 2 or 3 INV properties outright, that generate @ 100K - 150K after expenses and taxes.
3. own 1 x resi property outright in SMSF, generating @50K tax free after all expenses

It will take @ 20 years to achieve it, give or take. Requires thinking differently to the herd

 

No issue with the concept but a property returning$50k/yr nett ie over $1000/wk nett - that's more than 5% nett on a $1m (or median priced house in Sydney) x 2 or 3 properties, you'd have $3m in capital if it wasn't closer to $6m as you'd have a massive land tax impost as well.

The higher the property is valued the lower the nett yield generally (you'd be lucky to find a $2m property lease in for $1400-1500/wk). Land tax is close to $8k, rates$2k, water $1k, insurances $2k, maintenance $2k, management $4k

Add to that the property in the SMSF would be over the $1.6m limit for a fund in pension mode and it can't straddle both pension and accumulation so would have to be sold to meet the annual draw down requirements.

 

A 600-650k dual occ returns 35-40k today . Land value 200-220k ish. Buy 3 of them for @ 1.8 ish .

Set them to IO and they spit out 9-10k net . 3 of them gives you 27-30k extra for PPOR mortgage repayments .
I’ve got some dual occs + NRAS available that will spit out 18-20k until 2026.... 3 of those would give you 54-60k net for the next 6 to 6.5 years - which should be pretty handy in helping with many a PPOR mortgage

Or if you don’t have a PPOR mortgage , just set them to P&I and pay them off over 15-20 years. In 20 years, if rents have appreciated just 50% you have @60k income. If rents do better than 50% in 20 years , you have more than 60k .. If costs have doubled , allow 10-12k for costs and that’s @ 48-50k generated by each dual occ once they’re unencumbered . 3 of them is going to produce @150k ( or more of you get better than 50% rental appreciation over 20 years ) and you are sitting well under the NSW land tax threshold . And that’s before any growth is factored in. These results are based on an extremely conservative assumption of no growth and 50% rental appreciation over 20 years.

For those who put one of them in super - set it to P&I . It will run neutral - slightly positive at 70LVR P&I. You’d need @250k to qualify for the loan ( deposit + stamps + liquidity test) and @210k to actually settle the loan (30% + stamps + Legal’s ) Because the property runs neutral , your member contributions become the extra repayments . Depending on level of contributions ( up to 25k ) and number of smsf members, ( 2 members could be as much as 50k) the 420k ish loan could easily paid down in 7-12 years , leaving you with @60K ..or @48-50 after costs . Then you could add another . Now , your member contributions plus the 48-50 k will pay the 2nd off in 5 or 6 years, leaving you with 2 unencumbered dual occs generating 4 rental incomes tax free in pension phase .

All done with an assumption of zero growth , and with just 50% rental inflation... and no land tax to pay .

The numbers never lie . Simples

 

I must be looking at the wrong builders - they all quote more than that for 3/2/2 duplexes (without the land or site costs).

 

you must be. yep

 

Sounds like a postcode issue.

 

Yep...you can't build that in NSW.....in Qld you can do it for 300k odd. In some areas you can do a dual occ under 500k.

Also...lots of BS on here....30-40k on a product worth 600-650k is nutin special...I am doing this without any issues. The last couple are getting 6% plus returns without a dual occ. Why build inferior products when you get a superior product in better areas for the less and same return?

 

We reviewed a few in NSW regional areas - factoring in almost $0 land cost, vacant land (govt disposal), house with GF under one roof still didn't stack up.

 

This thread appears to be going off the rails, will send you a PM.

 

Like most retirees!

 

Yes that was my analysis also.

The real issue is the build costs in NSW. For example a very small 210 sqm (3 brd plus 1 brm granny) in NSW turnkey was coming in at around 400k-450k for the most competitive quote. This was in a new estate where the land is flat and all services have been provisioned ready to build.

The same build in Qld came in at about 280-300k in Qld.

Assuming you get the same land content and price....say 200k regional NSW and Outer Brissie for 200k I note the land in Outer Brissie will be 380-450sqm. The price point in regional NSW comes in around 600-650k minimum. In Outer Brissie product is 485-500k. Rent returns will be exactly the same.

 

Since this thread is still on the same vein i'll post the numbers below.

The numbers are current for the Cessnock LGA.

Assuming site costs of 30k
Land cost of 200k
Max cost of 550k using the using resort package and tile roof.

 

Course you can. We have been doing so for several years. And we continue to do so.
We deliver 275M2 turnkey - fences, turf, driveways, reverse air, flooring etc. $450K in Goulburn That's $1636 per M2. $420K in Orange and Bathurst $1527 per M2 . And that's today's prices. Three years ago, before these areas took off and trades got a little dearer, we were just under 400K turn key.

Based on the quotes you got, seems we are delivering 65 M2 more for @ the same money. In other words, we are effectively delivering the granny flat free of charge

So it really is possible to do great value Dual Occ's very well, and have them deliver excellent returns, and get people into one of those upper tiers of retirement income - which was the point of the thread.

Why on earth would you even consider telling people that these work better in SE Qld, where they are small and boxy and rapidly becoming dime a dozen ? You are supposed to be sophisticated. Surely you must know that rents face a real risk of being cannibalised when 1000 of them are built in the same three LGA's that allow them, over the next few years? Dual Occ's in SE Qld are very unlikely to get you to that 6 figure income stream... Doesn't matter one iota whether they can be built for 50-100K less if they cant hold their yields, pay themselves off and deliver a handsome retirement income. The thread is about retirement incomes, not lowest build cost

#forestsandtrees

 

@Archaon ... the site costs could be higher depending on land.

You will also need about another 40k for BASIX plus another 30k for hold, landscaping and other costs. So very hard to do under 400k.

Please do your own due diligence...there are heaps of these being built in the Hunter now. I am not discouraging you. But ask the question...you are spending say 600-650k and gettting a 5-5.5% return why would you do it?

You could built a simple house and land in parts of Victoria and even Qld and get 450pw ...for a 4x2x2 house and it will cost you about 390-410k. And it will also have some capital gains built in. PM me if you need to discuss.....

The dual keys look good on paper..but it is all not that it is cracked up to be.

 

No such thing as a free lunch...