Was your risk management sufficient coming into Covid-19 Crisis?

Yep the only thing keeping me afloat is cash buffer.

So I have around 10 years’ interest worth of cash on hand. I get pretty uncomfortable if I fall into the 3-4 year range, especially in the last two years where I knew the market was out of control bullish on shares and properties. Perhaps in a depression I’d be more happy to eat into that buffer for investments.

I mean cashflow is neither here nor there. My houses and properties tenants can all go bust in a recession. I wouldn’t be counting on my rent from the subway shop or hot pot franchise next month. But I’ll be expecting the bank and state Govt to foreclose me and charge me penalty rates if I don’t pay interest or land tax because you know, MPs and staffers need to fly business class.

 

My house has fluked it.

Turns out I work for an essential service and due to my side hustle, have everything I need to work from home through this poonami.

My wife is in childcare and apparently will retain her pay if they close.

I am under no illusions on how lucky we are....

 

I've previously cringed a little that most of my tenants were on welfare. Now it seems that lowers my risk of their defaulting.

 

Your houses are Govt subsidised. Lucky. All my tenants are villified by welfare

 

Yes it's ironic isn't it, one of my better tenants is a hotel manager and will likely have issue, but the family with 5 kids who as far as I can tell their primary income is welfare are probably in for a cashflow boost! Maybe Logan will hold up alright!

 

I retired from work a few years ago in my late 30's. Large property portfolio generating passive rental income. Before I stopped working, I made sure to set up a large LOC to have excess funds for any opportunities too good to refuse in the future. It costed a bit to set up, and I haven't touched it to date.

My view has always been to get credit when you don't need it, cos when you do need it, the banks won't lend it. I have a large cash buffer too (5 years worth of loan repayments). Looks like this black swan event is the perfect opportunity to invest to generate more passive income for the future.

 

Stress tested family budget to ensure 6 months of zero income. Side note, its amazing when you need to tighten the belt, exactly how much you can cut back.

It is scary how many people live pay to pay and can be whiped out in a couple of weeks

 

wow, well done.

 

Just put all of my savings into a PPOR purchase in December so cash position is really bad right now. In hindsight, I should've purchased something cheaper with some change left over as my employment is in a high risk cyclical industry. But who would've thought something like this would happen? While it will be devastating I think you can't control what you can't control. I'm young, so I will just work through it or restart from scratch if things go south.

 

Only one lesson learned from current situation for me, if I were to invest in properties in the future
it will only be commercial, servicing assessed on lease doc basis only, and also only taking out
limited/non-recourse lending ... if such things will still be around in the future. LOL

 

I hink commercial could be more risky than residental tbh....

 

Good attitude, hope things work out for you.

I can think of points in my life where I have been in this type of position - starting new jobs, buying PPOR, kids coming along and down to one income. These are times where your margin of safety is wittled away. It is not a nice place to sit and you cross your fingers and hope things go how you want. At the end of the day sometimes it just comes down to luck.

 

What an encouragement for myself. Good one

 

If anyone thinks they are in some even a small way unaffected by this think again...
Some may me not out of work, but their pays may be eventually cut too? Priorities can change
I think, we are all connected, hence I think we all will be affected?

 

Large buffers in place, very low LVRs, alternative passive incomes including overseas, invested into collectibles and similar too, still in business for now, other assets possible to sell?
Still though feel .... for masses and family abroad (sad!)

 

Roughly 10 months buffer in cash but I'm torn between whether I should invest or hold onto it tight for now.
Thinking of refinancing all properties to max terms and interest only, to manage cashflow. But only half heartedly. Anyone else doing this? I've only ever gone P&I (yes even the investment properties for a no of reasons.)

 

Having cash buffer for 2 years is my risk management.
Didn't want to heavily leverage into this space since 2019 as I saw it was just safer to sit out as recessional cycle is running past their historical 10 years.
Still have plenty of options to reduce my risk. Interest only or bank holiday for cash flow.
Opportunity knocks every week one of my mentor says.

 

As an australian I definitely feel an impact, however my current financial position does not appear to be impacted, have been approached by multiple head hunters this past week. Buisness is booming I suppose in the Youth industry.