What to do.

Discussion in 'Share Investing Strategies, Theories & Education' started by Bully, 2nd Dec, 2019.

Join Australia's most dynamic and respected property investment community
  1. Bully

    Bully Member

    Joined:
    19th Apr, 2019
    Posts:
    9
    Location:
    Sydney
    Hi. I’m 52 and renting. I sold an investment property a few years back so I never reaped the growth that many did of recent years but I am a good saver. I have around 1.1 million saved and $500000 in super. I can’t seem to find a house to buy that I like and to be honest it’s wearing me down with the little time I have to search due to working 6 days a week. I’m thinking of investing money but I have no idea what to do or where to start. Bank interest is about 1.8. % so I basically get nothing for my money after tax. Can anyone offer some advice as I feel quite lost as to what direction to go in. Thank you.
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    7,292
    Location:
    03 9877 3000
    If the fundamental problem is you're time poor and having trouble finding a property that you like, why not employ a buyers agent? There are several excellent BAs on this forum that may cover where you want to buy.
    @Propertunity
    @Jacque

    If they can't help you, they can probably refer you to someone who can.
     
    Propertunity and Froxy like this.
  3. Brady

    Brady Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,207
    Location:
    Adelaide, SA
    52 years old, would be looking into maxing out super if not already.
    How long are you planning to work for?
    I wouldn't be too fixated on buying a owner occupied property now, chances are where you might want to live will change in the not too distant future.
    Definitely need to get those funds working better for you though, cash in bank not ideal.
     
    thydzik likes this.
  4. Bully

    Bully Member

    Joined:
    19th Apr, 2019
    Posts:
    9
    Location:
    Sydney
    Hi Brady. When you say max out super can you explain?i do the maximum employer/salary sacrifice of 25000 per year. I want to make my money work better for me instead of having it in a bank acc. but be accessible if I find a house to live in although that feeling wavers regarding buying. Not sure how long working for. I’m not a planner that way.
     
  5. Brady

    Brady Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,207
    Location:
    Adelaide, SA
    That's what I meant.

    How long have you had the $1M sitting @ <2% interest?
    Do you have a timeframe to purchase a property, say existing lease expiring etc
    If you don't have the time now to look are you prepared to pay a BA to look?
    Realistically will the money sit there for a further extended period?

    Right now you have cash, very low return, greatest liquidity, no risk
    You could invest slightly higher return, much less liquid (timeframe locked away), still low risk
    You could invest for higher return, with ok liquidity, but risk increase

    I think you're focusing on buying a property, when I would focus on what the actual end game is.
    Still haven't answered question regarding working timeframe, will where you want to live change once you stop working?
    Purchase/sale costs are pretty high!
     
  6. Bully

    Bully Member

    Joined:
    19th Apr, 2019
    Posts:
    9
    Location:
    Sydney
    Hi Brady. I’ve been saving for about 12 years so it increases about 80/90k per year. I had a property that I was to buy but it fell through due to owners not finding a new property and selling me their on. Long story but it was a friends aunts place. Haven’t found one I could call home since so I’m bit lost. I don’t see myself living in Sydney when I retire. Maybe south coast where it’s cheaper to purchase.
    I’m in construction so around 60 years old be long enough on the tools.
     
  7. Brady

    Brady Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,207
    Location:
    Adelaide, SA
    Why no look at property you want to live in once you retire, might be easier to get excited about it.
    It probably wont worry you if it doesn't happen too fast
    But if you did buy now might allow you to enjoy tax benefits, reducing your taxable income, whilst repaying the debt on the property you will live in later in life.
    (pending your purchase price and what you do with your cash, might work out to be getting you better yield than funds in the bank)
    Reducing the large transaction costs of buying/selling.
    Personally I would buy, borrowing max, putting funds into offset, keeping them their for rainy day
    Allowing access if you found opportunity elsewhere (maybe share market drop)
     
    Jacque likes this.
  8. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    12,470
    Location:
    Brisbane
    Could you buy where you may want to retire, live in it for enough time to establish it as your main residence, and then move back to Sydney and utilise the six year rule?

    You'd rent it out, claim all the expenses against your income and rent somewhere cheaper whilst you are working.

    If so, you could move back in before the end of the six years, live there for another period and do it all again.

    That means you don't pay capital gains tax on that property when you finally do sell it.

    Just one idea...
     
    willair, Propertunity and Jacque like this.
  9. Tonibell

    Tonibell Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,044
    Location:
    Sydney
    Is the path you are on taking you to where you want to be ?

    If saving and putting in to super will give you the lifestyle you want in the timeframe you want - then no real reason to change.

    We looked at this around 10 years ago and decided our current path would not get us there - so we changed.

    Of course - you need to have a good idea of the end destination first.
    ,
     
    wylie likes this.
  10. Bully

    Bully Member

    Joined:
    19th Apr, 2019
    Posts:
    9
    Location:
    Sydney
    Brady that’s given me food for thought. I’ve never thought about the costs associated with buying and selling. So when you say borrow max do you mean only use the money necessary that the banks require for deposit and stamp duty etc then borrow the rest and then put my leftover from “1 million” into the offset so I always have access to it easily incase I wish to invest?
     
    sharon and Brady like this.
  11. Bully

    Bully Member

    Joined:
    19th Apr, 2019
    Posts:
    9
    Location:
    Sydney
    Thanks Wylie. Probably not an option with my work. I am a long term employee of a company that looks after me. Also I’m undecided about my end game. I’ve only been thinking about it since turning 50 and I will be honest it can be overwhelming to think I’m not settled and renting and no real idea where I might want to retire.
     
    Last edited by a moderator: 2nd Dec, 2019
  12. Bully

    Bully Member

    Joined:
    19th Apr, 2019
    Posts:
    9
    Location:
    Sydney
    Thanks Tonibell. Can you elaborate on how you assessed the path you were on. This is all new to me and all advice is greatly appreciated.
     
  13. Jacque

    Jacque Jacque Parker Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    2,598
    Location:
    Sydney
    Thanks for the tag @Peter_Tersteeg very kind :)

    @Bully it sounds like you have some planning to do before making a decision on what/when to buy. Whether or not this is in a place where you'd like to retire to, or simply getting into the market, it's a big decision so make sure you take the time to decide where and what. A BA may well be a sound idea, based on your time-poor status, and once you've decided on where, contact a few to make sure you get the right fit for you. Yes, I'm a BA so putting it out there but I'd also encourage you to look online at sites like REBAA and REINSW if buying in NSW. @BuyersAgent Matt Knight would be able to provide some info on the south coast, as this is his specialty area. Best of luck with it all :)
     
    Propertunity likes this.
  14. Bully

    Bully Member

    Joined:
    19th Apr, 2019
    Posts:
    9
    Location:
    Sydney
    Thanks. Your correct I need to work out what I want. I’m the building/construction problem solver and all round wizz guy but I’ve never placed any time into my future.
     
    Brumbie and Jacque like this.
  15. Tonibell

    Tonibell Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,044
    Location:
    Sydney
    For us we had built up good assets pre-kids and had a PPOR in a good area - but the building stopped when we moved to a single income with (very large !) school fees.

    We also had an idea about a retirement age and lifestyle that was not going to happen unless we started building the assets up again. For us that required some drastic action and a fair amount of risk - so we had to change the path we were on.

    As my mentor, Benny Hill, says - just because nobody complains doesn't mean all parachutes are perfect.
     
  16. Propertunity

    Propertunity Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,476
    Location:
    NSW
    Sometimes if you don't know what you want, it can help if you start making a list of things you do not want when you're older. i.e.
    I don't want to rely on the old age pension
    I don't want to be renting
    I don't want to be in the public hospital system
    etc
    and then start on the I do want list:
    I do want at least 1 overseas holiday each year
    I do want to live within walking distance to the ocean (or forest or whatever floats your boat)
    I do want to ......and so on.
     
    oracle likes this.
  17. Lacrim

    Lacrim Well-Known Member

    Joined:
    25th Jul, 2015
    Posts:
    5,293
    Location:
    Australia
    Are you single, and where would you like to live in Syd (within reason) given your finances?
     
  18. TAJ

    TAJ Well-Known Member

    Joined:
    10th Oct, 2017
    Posts:
    1,214
    Location:
    Northern NSW
    Sounds to me like you need a holiday!
    Seriously though, you need to put in place some guidelines and a clear timeline to be able to achieve what many would be envious of considering your current financial position. As much as we want to, we don't live forever!
    Become the allround whizz guy of your own future!
     
    willair likes this.
  19. Brady

    Brady Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,207
    Location:
    Adelaide, SA
    Might not even need to go to the effort of making it main res
    Yup. Buy future retirement home now, rent it out. Borrow as much as possible, park funds in offset to reduce/zero interest. Will likely get close to 4% rental yield on the central coast.
    Have funds ready to go if/where see opportunity. Sounds like it's meeting your future goal of property ownership, along with giving you the flexibility of further options
     
    sharon likes this.
  20. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    12,470
    Location:
    Brisbane
    ... and if the house you buy now and rent out ends up not being the place you want to retire, at least you likely will have built up a chunk of equity and can then buy where you want to.
     
    sharon and Brady like this.

PFA Property Expo is designed in a way that visitors can gather maximum real estate knowledge with added benefits. Different speakers will be presenting on different topics as where to buy, when to buy in this market...