My personal State of the Nation and next financial steps ...

Hi all, not sure if this is the right place to post financial situation and where to next but here goes ...

Current State of the Nation
Assets:
PPOR fully paid & Valued at $1.9Mil.
Cash in Savins $300K
2 x Cars fully paid and worth approx. $25K combined

Liabilities:
2 kids
Wife

Income:
Approx. $200K per year gross
Wife not working

Age:
Early 40's

Goals :
Get out of the CORPORATE World as FAST as I can and become a Property Investor
Achieve $150K Net income per year to fund lifestyle and work on real estate investing / projects full time.

Challenges :
Where to start ?
Option 1 : Borrow like crazy all equity from PPOR and CASH and go on a buying spree which means I have to stay in the Corporate work longer.
Option 2 : Look to do a makeover in Sydney. Wife halfway thru Cherrie Barber renovation course
Option 3 : Use $300K of cash savings to fund lifestyle for next 2 years and use equity from PPOR to pay off interest on property
Option 4 : Look for some neutrally geared IP's.
Options : 5, 6, 7 ??? PLEASE HELP

I don't want to see a Financial Planner as the one we had during the GFC wiped off 10 years of my life savings hence why I am sharing situation here. There are a lot of folks who I know have already achieved financial independence here and I'd rather hear / learn from them.

Look forward to an interesting thread ... thanks everyone.

 

I'm not certain your Mrs will like being called a liability

Neither am I sure that with 2 kids your wife could be described as not working.

You are not going to achieve that by using a buy, reno, refinance some equity out, hold strategy at this point in the property cycle and in the current credit environment.

You could try a combination of buy, reno, sells and some developments but you don't have any history of doing anything to realise what you're good at and what makes money. You need to try a few things while you keep your corporate job before quitting it. Ms Barber's courses are fine and should put you on the right track - do a few and see what works for you.

 

@Propertunity 1&2 - that's what I thought too.

@hillsguy - it may be difficult to find value in the Sydney market so you may need to look further afield eg interstate or other major regional town eg Newcastle, Central Coast etc

 

Thanks guys for input so far ...

I will add ... have bought/sold IP's before both in Sydney and Qld. Small reno on the one in Sydney. These IP's were all flogged at nice profits to pay for BAD investments where we owed banks money.

I am a DIY and great negotiator. My wife's strengths are in interior design.

Keep the input coming ...

 

I nearly didn't click on this because of the title - nation = country.

You have no need to see a financial planner. You should seek legal and tax advice on structuring things both in terms of ownership and lending strategies.

Do this in conjuction with a mortgage broker.

Then decide on the types of property and location.

Depending on the income you seek, it shouldnt take you too long.

 

- I see you did list $150k as the income.

Shouldn't take you too long to get this.

 

At 4% yield that would be approx $3,750,000 in unencumbered property - it might take longer than I first thought!

 

So ... anyone know of any 'property investment savvy' accountants in the Hills area in Sydney ? Someone who is not going to push any financial products.

Thanks heaps !

 

Every strategy has trade-offs. One of the trade offs you should consider is whether to downsize the poor in order to achieve your passive income goals quicker; or keep the high value ppor and take a bit longer to build up that passive income.

 

Bumping this thread to see if there is any more input here from anyone ?

 

You asked about accountants. I say don't limit yourself to one just in the hills area. I know it's convenient. But with that about of money I'd rather have the best accountant I can find. There is a guy in Sydney's south that is well respected in this forum as being a great accountant and also one who specialises in investment properties and specific entity structuring to suit your needs. PM me if you'd like his details.

 

Correct Rolf ... it's the outcome that I am seeking.

Aside from income a little higher thanks to a pay raise and 400K now in savings. I am still no closer to clarifying plan to move forward. Spending way too much thinking, number crunching and almost paralysed by all the analysis !!!

Please feel free to chip in / add to this thread .... I have committed to the Mrs to having skeleton plan completed by Xmas !

 

bumping up ... anyone ?

 

150k net-you need roughly 4mill in investments outright. I'm sure if you structure correctly, less.
What's it cost to rent where you live? Can you re arrange the living scenario if renting is much cheaper, and use the house to start generating cash.

 

If you could cut the amount of money needed you could retire much quicker.

 

You need to act is what you need to do - it's been 12months and not much has happened. $100k extra savings is great, but not going to get you that retirement.

Need to consider tax, lending, structure, legal.
And whilst some have said no Financial Planner - I seriously hope you have some Personal/Risk insurance in place. Nice to have $200k income and ~$2M house, but would hate to see that property have to be sold if something was to happen to you. Your partner isn't working and you have 2 kids.


I would be looking to speak to someone about what you could do, so many different options.

PPOR freehold @ $1.9M @ 80% = ~$1.5M of usuable equity without LMI

Based on this you could get ~$6M of property without LMI - I wouldn't be using your cash, keeping that for SANF / raining day.

Doubt you're going to be able to leave the corp world within 5-10years without changing your plans
If you buy up you still need time to actually get some growth
If it was me I would be buying 4-6 properties in growth areas close to neautral as possible total ~$3-4M debt
Would be sitting back grinding at the corp world collecting the $$$ with aim to exit at age 50 or earlier
Could easily do it 5years earlier if you sold up your PPOR, could buy elsewhere cheaper or rent
Hopefully you buy well, maybe 4 or 5 out of 6 perform and you end up with IP assest $4-7M and paydown or offload the duds
With $400k of existing cash flow I would look to start trying to increase this also, whilst it's sitting in the bank it might be getting what say 3%
Would be looking at some sort of LIC and keep pushing into that also over the next 5 or so years\
If you saved $100k this year could do the same each year, bringing you up to ~$900k cash/LIC savings by your ~50yo
Keeping around 5% buffer of total debt which would give you bit more then a year of interest payments

So by 50 you might have $1-2M debt on asset $3-5M pending how well your selections were
Interest for $1M @ 6% = $60,000 p.a
Interest for $2M @ 6% = $120,000 p.a
Rent $3M @ 4% yield = $120,000 p.a
Rent $4M @ 4% yield = $160,000 p.a
Rent $5M @ 4% yield = $250,000 p.a
So could be as much as neautral > $190,000 + p.a
Then you would also have your cash/LIC that could live off until you reach 65/67 when you're able to access your super that you have been receiving from the CORP world.

Really so many variables, only thing I could bank on is that if you just put money into cash will only get the growth from your super and PPOR, your cash will only be income which you will eventually need to access to fund lifestyle.
Why not add in LIC/shares/property which can give you both income and growth.

 

UPDATE to this thread.

Current State of the Nation
Assets:
PPOR fully paid & Valued at $1.9Mil.
Cash in Savings $1.3 Million (thanks to a legal case I had that has now settled)
2 x Cars fully paid and worth approx. $25K combined

Liabilities:
2 kids
Wife

Income:
Made redundant in December and paid out until March for my notice period.
New contracting opportunities on the horizon (approx. $900 - $1,000 per day)
Wife not working

Age:
Early 40's

Goals :
Get out of the CORPORATE World as FAST as I can.
Achieve $150K Net income per year to fund lifestyle and work on real estate investing / projects full time.

Challenges :
Where to start ?
Option 1 : Borrow like crazy all equity from PPOR and CASH and go on a buying spree which means I have to stay in the Corporate work longer. + HOUSING DOWNTURN not great.
Option 2 : Look to do a makeover in Sydney. Wife halfway thru Cherrie Barber renovation course. NOT SURE THIS IS THE RIGH TIME
Option 4 : Look for regional cashflow + properties ala Nathan Birch to bring income at the cost of no / little growth

Appreciate any more feedback / options / ideas !

 

You could retire tomorrow

 

Is your wife still doing the Cherie Barber Course? Must be a degree

Are you still looking at property for investing and have you done any investing since last post? You have good savings if it's not all from a court case.