What's your Exit Strategy

Do you have an exit strategy in place?

How did you put it together?

What's your exit strategy when you've finished building your portfolio, i.e. live on equity, minimise tax, transfer your assets to your kids...etc

Instead of retiring, maybe you've reached your goals and you want to continue to work because you enjoy what you're doing - please share as I'm also interested to hear from people who have reached their goals and living "the dream" through property.

 

For me, I dont really have an exit strategy that completely 'exits' me from property. My personal 'exit' strategy is to continue to reduce my percentage of debt to equity, but continue to grow my wealth, so my net worth increases (probably slower as i'm reducing debt so leveraging less). The reduction in debt will increase cash flow and mitigate risk long term.

Net worth is great, but when you go on holidays it's the cashflow you pay with.

This is what works for me.

 

When Offset accounts = Debts
I am a free man

Rents should be sufficient for me to live off.
Assets would probably be moved into a trust around then (when i got the money to spare to cover the transaction costs) so that it can be ruled beyond the grave.

 

Usually have an exit strategy for each property , ie what am i trying to achieve from this particular deal and what is my plan b with this particular property.

But in terms of property investment as a whole, no exit strategy as don't want to exit

 

I've considered this @Leo2413 but I don't think it's for me.

I'm 43 with three kids. Forget super. Time isn't really on my side, but you may have gone a different route.

 

Our strategy is to sell the business we built which provided the cashflow required to accumulate a good sized portfolio.
Offset the debt.
Live off rent.

 

Yeah mate gotta do what works for you and your situation.

 

So what's your exit strategy if I may ask?

 

To groom my kids to take over, then I retire.

 

Hi @@eng, @MTR has an inspiring story. Might be worth having a chat

 

That could work well for you - do they seem interested in the business so far? (Note that I have no idea how old your kids are, so this could be a silly question...)

 

Living on rental yield & equity if that's a viable option in the future.

 

What's your timeline? Being the devil's advocate properties bought now that are slightly negative or neutrally geared will unlikely have enough natural rental increases to generate enough cash flow to live off in ~10yrs' time(assuming that's your time frame to retirement). In my opinion living off equity is a strategy that is going to be harder and harder to do in the current lending environment. May be worthwhile doing some simulations based on 6-7% interest rates, 4-5% average growth to map out how to get to where you want to...

 

@Befuddled - great post.

Typically one needs 20-25 times the income required as the end goal in paid off property.

So if you require 100k in 10 years, it makes sense to have a $2.5m portfolio returning 5% today. Having said that CG is not guranteed, so return is also essential. Given your age (and not knowing the exact circumstances) If you have the capacity to build this sort of a portfolio, I would do so aggressively with at circa 5 x $450k properties at around 5-5.5% return.

Alternatively, as some on this forum are doing, look at developments once you have a decent foundation in the next couple of years.

Further, as the saying goes, we over estimate what we can do in one year and under estimate what we can in 10 years.

 

Thanks @Befuddled We've planned for 18 years and I do do a few forecasts on PIA, but I'm no expert. I'd rather retire sooner than later - preferably with all my mental faculties intact.
I don't think we'll finish super rich, I'm happy to end up "middle class" as we're already starting pretty late. My goal is to not be reliant on the pension.

Our aim has been to add 6.5-7% rental yields to our portfolio, although this hasn't been that easy in Logan. But long term, that's our general plan. Our first IP is 6.9% yield, we're settling the second in Kallangur at 6% (I deviated from the plan because the property was brought $60K below value )

 

It is ok to deviate from the plan /strategy. We did too for a couple of our purchases; had we not, we would have been in a different position.

Also, as there are markets within markets, logan is different to North Brisbane. It doesn't matter if returns are lesser in the north, in my view, if you are looking to benefit from a rising market, returns become secondary. Why miss out on capital growth vs having a property which is positive casflow by $100 a month!

 

PS you should also read up on @Travelbug on somersoft. Her and her husband started in their 50s pre Sydney boom, took action and were aggressive in acquiring. She recently retired.

 

Hey @monalisa
I had a great chat with @Travelbug she was the one person who inspired me most to work through my predicament. My wife had no interest in property at the time, but Travelbug helped me be patient and to keep learning... several months later my wife and I are now on the same page. We both invest and make decisions together, drawing on each others strengths.

 

This sounds excellent

You have a great attitude and I am sure it will work out great.

 

Exit strategy was simple. To sell everything by 2017 and wait for it to crash. Then if prices after the crash will be good enough to buy a few than maybe do a little investing. If the crash will not happen stick to other investments.