Starting with $3,900,000 - what would you do?

Do you want to swap advice FFRB?
If one were to come to you with the opposite scenario, i.e. Has 3.9 mil in property and cash available and wanted to get started in the share market - What would you do?

If you think carefully and genuinely about your answer, you may in fact find the answers to your original question.

 

To someone with a cleft chin.

 

I also saw a similar thread and set out similar by another new member.

Your in the US, who would bring cash here when the trend is our dollar heading down against the US (well last time I looked), but lets say they had no choice. I am someone who is very cynical, it would be like a mechanic asking for best place to get car serviced & I think your wrong, lot's like to boast it would seem, but either way, they can read if new (*legit*) members or pay for advice, my free advice is transferring that money to AU residential property would be idiotic at best.

PS people do not boast just to get the opposite sex for a little or long time.

 

My thoughts exactly.

Ps I'm following you nothing suss

 

What would you do Sanj?

 

You want half my money, you gold digger lol

 

Hi everyone, thank you all so much for your kind, sincere, thoughtful and helpful responses. I really appreciate it.

I'm out right now and typing on my phone, but I want to let you know that I will provide some detailed responses later this evening or early tomorrow.

I also just want to say that I am truly earnest in my request for advice, and grateful for your knowledge, experience, and guidance. There are some things that I know and can be helpful to others when they are learning, but I really know almost nothing about property and sincerely want to learn. I share my financial position, which I know is extremely fortunate, only because it is directly relevant to developing a strategy - not because I want to boast, showoff, or prove anything. I apologize if I came across otherwise.

Thanks again to all of you. Please keep sharing, and I'll write back in meaningful detail soon.

Best,
FFTB

 

Interesting position. You are asset (including cash on hand) rich, yet cash flow (income from salary) poor, average including your wife's. Need a few IPs to improve the cash flow. I would seek a 1m ppor, and 3 500k IPs - fully paid off.

 

If you consider that your large equities asset was built primarily through skill rather than luck or inheritance, and are confident in your abilities, then tbh I would continue to focus your assets primarily on equities.

Having said that, have no issue with simple strategy of just taking a loan out to buy an IP in a blue chip area. Though not sure what your total cashflow is like -ie does earned income incl dividends, what are your annual expenses etc...adding the interest to the rent you pay may overextend depending on your situation. Course you could just sell a few shares here and there as required.

It's what I did and has worked well for me. The property gives me peace of mind, while the equities do the heavy lifting. My equity/property asset vale ratio is around 75/25 with the property loan about 60% repaid.

 

It's possible that dividends from his share holdings are higher than rent he would receive from resi property.
Point is, to advise on improving his cash flow, you first have to know what it is.

 

There are a lot of unknowns at the moment. A bit hard to give advise until they are shared. Such as:
- What do you want to achieve?
- US shares - source of the shares, yield, type of shares (blue chip, diversified), tax implications on the gains?
- Aus income - why so relatively low, ability to increase income to service debt?
- Personal - how long plan to stay in Oz, plans for kids, risk appetite, missus views?

 

Possible..yes, I did mention CF assuming from salary only. Besides, share gain is over 50% cg from purchase price, so I'm gonna assume their dividends are lower and they are mostly growth shares...yea...lots of unknowns...

 

Great questions, and I'm happy to answer them. I'm still out but will respond to all of the above later tonight or tomorrow.

 

I'd say there are more than a few people on PC who have accumulated that amount of net equity, and much more. The difference is that, for those who have, have probably done it investing in property, whereas OP is currently overweight in equities.

It's quite difficult to swap from one asset class to another. The transaction costs can be quite significant (such as tax), which erodes away the hard earned equity.

 

I can't advise on investment strategies, but:

• If you are a US citizen then you will be taxed on your income wherever you are in the world. And if you renounce citizenship then you'll be hit with a capital gains bill. So you'll need professional advice.
• As mentioned above, valuations for assets for capital gains is based on the date you arrived in Australia.
• I believe you can transfer foreign currency into the country within a six month window of arriving without incurring a capital gains fee too. After that you'll be charged if you've made money on FX movements.

Given income levels and the amount of capital gains in the portfolio, I'd guess that the shares might be from options in a start-up. If so, I'd consider diversifying as the tech sector in the US is starting to look like it's pining for the fjords.

 

Well ok, if your genuine, which is good, then I would suggest reading as much as possible still, try and decide what is it you want to achieve, think carefully about where you want to put your cash, as you may want to spread it across different investments.

If you want to do this part fairly quickly, I would suggest paying one of the forum members who know tax, finance matters, as you may snooker yourself if you make the wrong moves. There are at least 2 people here I think would be good to get advice from, there are others outside, but many are not that clued up.

There is no real shortcuts to buying residential property, once you sort the above out, if residential is part of the mix, then you have to look at many many things, I believe you have to have knowledge on the area your buying too, you cannot just use numbers from the internet (which you will find are different for each place you get them from).

If I were you, I would make any residential property only a part of what you do, probably my prior comment/s would spell that out

 

Disagree . Done with planning and care , residential property is a safe and rewarding vehicle .

The people who in know on the forum and in life who have got into trouble have done that in commercial , industrial , developing and in business

They are out there and there are a few long term members who would be in that category , and they have done it with boring old residential investing .

I would buy a PPOR assuming that you know where you want to live . Most people make good choices with those . If you're not sure , keep renting . Have an
LOC and you can always keep that in the back ground as a back up .

I don't know the American market so can't comment on that . Not sure on all the tax implications of selling share etc

First think I'd be doing is spending some time reading the forum . It won't take long before you get a good feel for how property investing works in Australia .

Hopefully it won't take long to figure out who , but there are some people here who really have no idea on what they're talking about , though their posts taken in isolation can sound convincing .....

Assuming you don't want another job and and get involved in developing / Reno , choices to make are which cities , and within those cities which segment .

Australian cites don't all move in sync . Historically Sydney moves first , then Melbourne , then the rest

Sydney has boomed so most wouldn't recommend that . I'm not a Melbourne expert . Perth and Darwin are coming down and haven't bottomed .

Most people on the forum are buying in Brisbane or Adelaide , though there is a vocal minority who are negative about them , and some who are negative about property altogether .

When you come to which segment , you can either go nice suburbs whether these are middle or upper level , or cheapies . Again they can move at different times in the cycle so they have there pros and cons

There are many people out there who dismiss the cheaper segment , basically because they wouldn't want to live there , but it's a lot less problematic than the bottom of the market in the US .

if you went that way , you want good returns . No point in buying bottom of the market in Sydney because after the boom the returns are crap .

You need to look at vacancy rates carefully

We buy nice and cheap and have done well out of both . We're buying cheap at the moment

Cliff

 

The only downside with a set-up like this is the US Equities market implode,and the Aussie dollar goes up ,but the question to ask yourself is ,you would have had a very good plan to get too this stage,or this is a quote from a book,,you are rich if and only if money you refuse tastes better then the money you accept..

 

Can I ask you why the interest in Australian Resi Property? Are you keen to invest in Resi property here? As others have asked what is your end goal? If you know nothing about property investment I wouldn't be touching any of your Capital just yet as it is already invested and might trigger Capital Gains Tax.

May be once you start answering to few questions that have been asked you might get more advise from forum members.

Cheers,
Oracle.

 

damn, what an awesome position to be in,
if you did do it through hard work/skills and acumen then congratulations!!!

if it was inherited or handed to you on a silver platter....................... do you have a sister!!!?