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When To Stop Property Accumulation And Move Onto Cashflow Consolidation?

Discussion in 'General Property Chat' started by Michael.Knight, 17th Aug, 2015.

  1. Michael.Knight

    Michael.Knight Member

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    Hi property-mites,

    Is there a guide as to when to stop property accumulation and start focussing on cashflow / consolidation?

    Is there a general age group (eg 40s, 50s?) which is the best?

    Or is the answer to keep accumulating properties until you reach your servicability limit?
     
  2. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    How much is enough for you is different for how much is enough for me (or anybody else).
    I have 70+ yr olds as clients still in accumulation phase and 30 somethings that are retired.
     
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  3. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    I guess you stop accumulating when you figure you have got enought to create the income you want/need.

    Age is another variable which may need to be considered too which may cut the accumulation phase short if you feel that time is limited.
    Serviceability may or may not be hit before you have accumulated enough.

    We have accumulated enough before 40 years old with plenty of serviceability available, but don't feel the need right now to accumulate anything more.
     
  4. C-mac

    C-mac Well-Known Member

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    Good question!

    As others have said, it really is a very personal thing, I.e. case by case.

    I don't even know the answer myself, for myself! I guess because it's because the biggest variable - how much compounded growth your portfolio achieves in any given span of years - could influence how much more property you need to acquire to hit your goal.

    For Instance, if your goal is to own say $4mill worth of property that achieves a rough 5% gross yield, and you own $1mill of property in August 2015; you wouldn't need to buy as much in the next five years if it grew to say $2.5mill in that time versus say $1.8mill.
     
  5. OC1

    OC1 Well-Known Member

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    Mine was always based on the numbers ie net worth & cashflow. You then realise that you can always do with more (never enough). I've changed my approach recently and it now aged based. It creates more urgency.
     
  6. FireDragon

    FireDragon Well-Known Member

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    I don't think there is a guide, my dad was still accumulating property when he was 70 years old.:)
     
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  7. Heinz57

    Heinz57 Well-Known Member

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    Be nice if there was s guide. It would tell us old farts when to stop
     
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  8. MTR

    MTR Well-Known Member Premium Member

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    Forget age bracket, don't follow rules, time the market instead, accumulate on a rise and sell down some properties prior to peaks, build portfolio/manage debt/cash flow.... and you probably have less stress, helps with future servicing and perhaps get to the end goal with less risk and if you get lucky shorter time frame.

    MTR:)
     
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  9. jpcashflow

    jpcashflow Well-Known Member Business Member

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    Hi, I agree with MTR!!!

    For me personally even though I am only 31 I have hit the brakes on buying property as I am paying down my investment debt at a quick rate. I am also concentrating on development sites :).
     
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  10. MTR

    MTR Well-Known Member Premium Member

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    Learnt the hard way, when you know better, you do better. :)
     
  11. jpcashflow

    jpcashflow Well-Known Member Business Member

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    Learning is good :) just keep ya head up
     
  12. Scott No Mates

    Scott No Mates Well-Known Member

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    I woz gonna stop when I had a nuff. Now I want two nuffs ;)
     
  13. Reno Crazy

    Reno Crazy Well-Known Member

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    I think I would have to go into re-hab to stop researching and buying property, for me it is a disease. Though still in my 30's it will be interesting if I'm still as keen in 10 or 20 years :p
     
  14. Tim86

    Tim86 Well-Known Member

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    Accumulate until the wife says no more.
     
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  15. skater

    skater Capitalist Premium Member

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    That's pretty much it. Buy, buy, buy, then sell a few & we're done.
     
  16. twobobsworth

    twobobsworth Well-Known Member

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    You tell your wife!!
     
  17. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Is that the time to look for a new wife;)
     
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  18. Tim86

    Tim86 Well-Known Member

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    Its okay I married a smart woman who is worth listening to.
     
  19. Tim86

    Tim86 Well-Known Member

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    Lol she just wants to put on the brakes until I finish renovating our own house. Then she doesnt care how many more houses I buy.
     
  20. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    One theory is that as the property values increase the yield decreases as does the leverage. Imagine you purchased a $100,000 in Sydney x years ago and this is now worth $1,000,000.

    You might
    1. Have a deductible loan attributtable to this property of $80,000
    2. Cashflow positive
    3. maybe paying land tax
    4. maybe getting 3% yield before expenses, 2% after.

    So it may be time to sell and buy shares which may:
    1. grow faster than property
    2. give a higher yield
    3. have no headaches
    4. have no ongoing costs, or extremely low costs
    5. have franked dividends with tax credits
    6. are able to be sold down in stages to fund lifestyle if needed