After reading a recent thread on retirement planning, it got me thinking that i have maybe sabotaged my plans and don't know what i should do next. Am age in mid forties, and a few years ago sold an investment property which helped to almost pay off our ppor - so its been great the last few years not having to think about ppor repayments. I have young kids and work short hours so the sale of this investment property has given me the lifestyle i wanted but then now what about longer term retirement plans? I have a fully paid investment property that yields 40k a year. i have 2 other residential investment properties that i don't consider to have great prospects in capital growth going forward, they've only gone up slightly since i purchased them 10 plus years ago. So if i am to aim for 100k income when i retire in say 15 years time, i guess i need to buy a few more properties ? maybe sell my underperforming ones ? Also have a few hundred K in shares which i love dabbling with but not sure if i can expect amazing growth compared to leveraged property ? so what to do to bring my passive 40k a year to 100k in 15 year time frame?
Can I ask why you paid off an IP when you had PPOR debt? Maybe the not so good ones are ready for CG? A friend of mine had a property which she held for 10 years. Very little growth, she deemed it a dud and sold.. in the few years after she sold it doubled in price. Can i ask where they are? Do they have a decent yield? You are in a good position but agree that you need to do some planning moving forward.
I sold an IP to pay off PPOR debt ( put it in ppor offset ) I have a remaining house in Perth which yes May come good after a stagnant 10 years and a unit in Granville which has ok yield but I’m unsure if growth will be stellar in the future.
I'd probably offload the Granville unit and put that money in a second house IP. Where is a question though, I'd say Perth but you already have one there. Cheaper end of Brisbane could be an option too.
I was referring to the paid off IP. Perth is on the move so I'd hold that. Units have had less growth than houses in Sydney in the last 3 years. I think they will pay catchup so personally I would hold that too. You could use the equity in the paid off IP to purchase more.
It sounds like you are well on your way to achieving your 100k goal as it is. Maybe a few tweaks to your current plan would make for smoother sailing. Holding your current investment in Perth I think would be wise. Over a 15-year period, the Granville unit may also reap decent returns. I guess the question is would you be better off, selling the unit to purchase another, and would this new purchase outperform the unit over the next 15 years? Hard to say really, as it depends on where you purchase and the CG you see moving forward... Do you have the capacity to buy another IP without selling anything? You could buy now with the expectation of selling down the track and using the growth from one of your IPs to pay off the house and/or unit. This could be another 40k income once paid down. The additional funds in shares could provide the surplus for you to achieve the 100k p.a you are working towards.
Can you buy more IP’s ? The likelihood is that perth will outperform over the next years compared to others . Many of the long term successfull PC members have bought or are buying there recently and they rarely get it wrong. We settled last Friday . Ten year underperformance is my number one metric when I’m looking where to buy and it’s payed off consistently over the over 20 years I’ve been investing in property . ( I don’t buy I’m mining towns etc ) cliff
You're mid forties and want to retire in 15 years. Answer is simple - dump as much as you can into super.
Thank you everyone for your thoughts. i think i need to be a bit more patient with my 2 underperforming properties. As i don't work much, i'm not able to source anymore loans. Have tried with 3 brokers - all say i have more loans than i should have at current income. Forgot to say, we have purchased a property in smsf last year in outer brisbane - Am happy with that growth so far. Have pre approval to buy another ....guess i should keep working on that. Yes it makes sense to work on the property purchase in smsf since i can get the lending there but the interest rate is much higher than outside smsf.
if I was in your position now, I would do the following #1 Sell the Granville unit 100% and will unlikely ever buy an apartment again unless its right on the beach after an area has had a decent negative growth #2 Keep the Perth property, if there is a potential reno, I will renovate to pump the equity and raise rent #3 Refinance the cash out of the paid off IP and throw that cash in the offest account and buy 2 Properties in Perth (Keep your cash in the bank and use equity for tax deductibility) #4 My perth IPs will be either a stock with potential subdividision or very close to the beach with solid yields #5 in few years when Brisbane market stagnate or hava a correction I would buy in Brisbane and in Redcliffe Peninesula my preference would be, had an awesome 40% growth last year but for me even more (IP went from 430k to 780k!!!) I would not be buying there now or soon again, I am now buying in Perth Best of luck!
I am in a similar boat. I have a PPOR that I am still paying off with 5 IPs. Two of them are units, one was a rookie error 4 years ago. Bought off the plan in Leichhardt and have been dealing with issues with the builder so waiting to have everything remediated before offloading. Its had good depreciation and is (currently) cashflow positive, but hasn't moved a cent since I purchased, if anything, I'm expecting to take a hit when I sell it. I am currently trying to sell a unit in Warwick Farm, but it's just not moving, so I'm not sure whether I should just hold on to it or lower the price so I can get out and use the CG from the last ten years to pay down a chunk of my PPOR. My other IP's have been great. Two regional houses which I build granny flats on and one house in Auburn with a granny flat which hasn't had stellar CG over the past ten years but has good cashflow from the dual income, so my goal is to hold onto that for a while longer and eventually sell it to pay off my regional IP's to retire early. Question is, should I take the hit on the units and use the borrowing power to buy somewhere else or ride out this storm and wait for apartments to play some sort of catchup?
I actually don't think they'll catchup. I know buying and selling is a hassle though but I think you'll make more money elsewhere.
If planning to buy more property, give consideration to the purchasing entity and how different income taxes and cgt taxes will be as a result. It can be much faster to reach a target like yours if some of the property is held in a low tax environment such as an SMSF
A possibility might be to move a unit to an SMSF, use super funds to purchase from myself? I assume the SMSF would then need to pay stamp duty, but it could be an option
Hi @Metis No you cannot transfer a residential property that you already own into a SMSF. You'd have to buy something specifically for the smsf.
Thank you for the advice. I've listed the unit- while I wont be getting as much as I'd hoped to given the current market, it will help me pay off a decent chunk of my PPOR.
