When To Stop Property Accumulation And Move Onto Cashflow Consolidation?

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?

 

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.

 

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.

 

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.

 

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.

 

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

 

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

 

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

 

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 .

 

Learnt the hard way, when you know better, you do better.

 

Learning is good just keep ya head up

 

I woz gonna stop when I had a nuff. Now I want two nuffs

 

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

 

Accumulate until the wife says no more.

 

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

 

You tell your wife!!

 

Is that the time to look for a new wife

 

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

 

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.

 

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