Retirement strategy for someone who got lucky in the crypto market

Hi guys, I am currently 26 I am currently looking to retire early. I invested in crypto currency before the bull run and have accumulated a little bit over 300k after tax which I can invest in the property market. I am a software engineer currently on a 80k salary package in Sydney. My goal is to bring in 100k a year.

I am looking to buy investment properties in Australia. I was thinking of investing in places with a decent population and growth in cities such as Melbourne, Sydney, or Perth.

I am wondering what the best investment strategy for me could be is? I have read and done some research on how some people can retire on 3-5 properties but I am quite confused as I have been researching and doing some calculations based on assumptions.

Say if on average one property makes me about $6k per year, if I had 5 properties will produce me with an income of $30k I am confused as some people have said this can make them over 100k a year.

With a capital growth strategy, say I buy 5 apartments for 300k wait 10 years for 600k this will give me a total of 1.5mil before tax but I am looking for cash flow as I want to be able to get income immediately.

Just wanted to ask what would be the best way to maximise/capitalise on this great opportunity I currently have?

Thanks!

 

GENERALLY speaking, and from a resi perspective, forget about living off rents. With a P&I regime in place, it'll take at least 20-25 years minimum before rents > all expenses including obligatory principal repayments. You could target higher cashflow regional areas but I personally wouldn't. I stick to metro areas b/c the demand is more stable and long term CG more predictable.

Whilst not the ideal outcome, the endgame would come from selling the property after a cycle or two, minimising CGT and dumping the proceeds in the stockmarket for cashflow.

 

I see, so from the 1.5mil I calculated I could put it into the share market hope for a 7% return on it a year and there is my income haha

 

Why not opt for a retirement income stream derived from rental income, Super drawdown pension phase payments and dividends. Diversification being the key.
Building up a cash pool is also prudent.

 

Net cash in your hand..more like 4-5%.

 

Different people will have different strategies depending on each individual's circumstances. What are your goals and what are most important to you? Accumulate good debt? Buy and hold in high growth area? Having another income stream from your cash-flow positive properties? Mindset and structures are part of the key to thrive in building a successful portfolio. Having the right people behind you is the other half of it.

 

Simple example for the sake of an example of $300k invested in the ASX300 index fund on the stock market. Ticker is VAS.

Assumptions:

• $300k buy on 26 May 2010 ( 5,339 units or shares of VAS bought at $56.19)
• All dividends reinvested

Inputs above just entered into a dummy portfolio in Stock Portfolio Tracker | Sharesight

Capital gain is $108k
Income return is $262k

Total return is around $370k.

(this example is just a dummy buy transaction entered into sharesight 10 years ago with all dividends then reinvested)

Past performance is not an indicator of future performance. Obviously need to be selective of when you buy.

 

What you're referring to " Living of 4-5 properties" depends on the debt level.

My client is 45, he has 5 unencumbered properties, retired and living of his rental income of $450 a week per property.

It's only viable when you become debt free.

 

I would rather 10 properties at 50% LVR than 5 properties fully paid off

 

Ah I see, how long did it take for him to pay off these properties?

 

Could you please elaborate on this?

 

i think what Terry meant is if have 10 properties which is the same debts as 5, then in the future you would have more capital gains out of 10 instead of 5

 

Imagine owning $2mil worth of property with no loans = $2mil equity,
or
$4mil worth with $2mil in debt = $2mil equity.

You now have
- double the capital compounding
- double the amount of rents increasing at x% per year
- ability to live off capital gains in the future
- move flexibility in using the CGT rules
- ability to use offset accounts - offsets can shift income to different entities.
- ability to recycle loans

But more land tax (perhaps!)

 

True that totally makes sense, thanks

 

@Terry_w I was thinking I would buy 3, 500k properties and after a few years I could use an HELOC strategy to buy another few more properties.

Then I can sell the other 3 properties after 10 years which would have doubled over that 10 year period and still have another 3 properties. Rinse and repeat

 

This may be of interest


How to Mini-Retire on Just 4 Investment Properties How to Mini-Retire on Just 4 Investment Properties

 

Not 100% sure, he paid off these properties before I meet him.

 

Hasten Slowly, Hard to get yields to do what you want in Melbourne or Sydney buying there should be the final property due to the silly lending critera banks use. You buy a 320k house for 300k with an unconditional offer that could net you 10k, you LOC 250k of growth shares, in 3 years you have another 350k to buy a 340k house for 320k cash, LOC 300k for shares , after 3 or 5 years with growth and share purchases from income, you have 600k. You can buy 2 more properties and have 5 paid off properties netting 60k p/a. By than the bank might not lend much more money but keep your LOC's open for share investing and property purchases.

 

In your opinion, what makes you think they will double in 10yrs? i.e. what will enable a new purchaser to pay double what you paid? Sounds like you are pretty confident...

 

at age 26, plenty of time to do the accumulation phase. The first thing to do is FIND YOUR TEAM to start your IP journey. A good wealth/financial planner, a good Mortgage Broker, a good Tax adviser/lawyer, a good accountant.

Also Crypto is showing we are probably in the early stages of another bull run. Printed higher High on the monthly chart close.

https://www.tradingview.com/x/3EcW92b4