What age do use plan to retire ?

You want to ask @Jess Peletier and @Colin Rice that question.

In my experience, banks prefer PAYG but it depends how many millions you are making from your business

 

There is no difference as long as you get a positive surplus amount in the banks calculator.

The main difference between self employed and employee is that self employed need at least 1 years tax returns but preferably 2 years as this will open up the options of lenders. Employees only require payslips and sometimes PAYG Summary to demonstrate income.

Consistency of income for SE is also important as a recent year that is 20% below the previous will be the default figure as opposed to an average of the the 2.

Self employed people can "addback" some things like depreciation, interest payments for HP and biz loans and once off events like legal fees.

 

It depends how good the business is The main benefit is the ability to earn as much as you please - you're not limited by your employers idea of what's fair.

It can be worse if you've only been trading less than 2 yrs, as most lenders need 2 yr ABN minimum.

 

Yes but the "millions" could really boost your borrowing power. 2 years of getting a business up and running then hopefully being in a position where you can borrow more than the "job".
Or does it take longer?? 2 years to get a business up and running might not be at "$mega income" levels, but years 3,4,5 you might be onto a winner and the banks rolling out the red carpet .... or you could have a dud and essentially be earning an "income".

The brokers would see some interesting progressions of businesses and borrowing power.

I don't see "buy and holds" being enough to really get good traction, especially now. You need that extra income imo, by either working your way up the behinds of the career world or looking into other avenues and multiple income streams

 

Ahh very interesting, i assumed avg of 2 years. On the smart property investor podcast they recently mentioned this topic and getting your pay right so that you are consistently getting paid on the x of the month and the same amount or close to. Makes sense now

So really if you're starting out from scratch there's likely some low income months when which could push your borrowing date back a few months or longer

 

I think the brokers answered this one well.

Personally, don't know.
Was always able to borrow what we wanted when we needed it.
Even though we operate a business, we still get decent salaries too.

 

Probably just over 300 after all expenses paid, NOT including interest.
However, debt should be almost zero very soon with all loans fully offset.
But then, I'll probably want to go buy a pretty decent commercial property for long term which will increase the debt, and hopefully also increase the passive income and asset base too.

 

Any idea yet how you are going to select a commercial property? I am interested in CIP down the track but know nothing about commercial property. I understand it can be more difficult to find a good deal than with resi.

 

From employee to self employed took 3 years to replace previous income and by year 5 had tripled previous income as employee and in year 7 its quadruple and exponentially increasing.

Might sound impressive to some but the first 2 years I broke even where my expenses literally equaled income.

I would say a few years more likely and thats if you make it as 95% of new ventures wont be around at the 5 year mark.

 

Noice......how are you going about reducing debt is this through the sale of a business?

 

I want to retire before I'm 50. I'm 24 now with basically no investments behind me. Only up from here I guess! Better get started soon.

 

Yes.

The business helped greatly with all our property accumulation.
Now that's done, we don't really need the business anymore.
Not much different to selling down some property to pay off remaining debt.
Also, the one and only reason we started the business was to accumulate property faster.
12 years later, mission complete.

A big benefit of this method is banking the great capital gains achieved from starting a business from scratch while achieving great profits during the development of the business.
You can't sell your job back to your employer after a decade of hard work and effort...

 

Have you tried to sell the business yet? This is the part I am struggling with, not sure how difficult it will be to sell mine one day. From what I understand it's not easy for someone to borrow money to buy a business so can be difficult to shift.

 

That's more what i was getting at.

Could you have done what you have done without the business ((I'm guessing no where near quick) or how long would have it taken?

 

Absolutely not.
Guessing we would have only got to about 20% of where we are now without the income/cash flow/equity the business provided us.
The business practically self funded our developments, which helped a lot.

We are not great property investors compared to many here, but did address the most limiting factor of increasing income levels early on to make property investing much easier.
Didn't see the point in doing it the hard way, although business is hard, at least you have full control.

 

Yeah that's awesome!

Did you see a gap in the market or was it something you were already involved with prior to starting the business?

 

I think we need to get some actual PC interviews happening. Especially for great stories like Ace!

@Simon Hampel ?

pinkboy

 

Yes would like to see those even the same people from SS (with updates!)
Need more inspiration
Retirement is still far far away from me

 

@Simon Hampel is there an option to make it a "premium content" part of the forum? Pay to read the articles or a new type of membership to allow access to the stories.
The stories in ss are priceless but were shared during a "different time" of internety . Member's may not be inclined to share their story with the world but happily do it for the "pc community"

 

That was our strategy. Build up a well-run and profitable business (working long hours for 20 years in one business) as a cash cow to pour money into Super (to buy shares) and into accumulating property.

Then we capitalised the business' profit into a sale price, sold the business (basically tax free), poured that money into Super and our PPOR.

I love businesses (I had four of them), especially successful ones.

I would be lying if I said the strategy was fully planned out on Day 1. It sorta developed over time as I gained knowledge, skills and experience.

As I wrote on another thread, I am a big believer in planning (background in IT and project management) but I also subscribe to the "Ready. Fire. Aim." approach.