Who is going to retire young

Is your avatar the picture of you at 42?
What sort of business did you set up? Great story.

 

Feels like it.

Industry not important, though Business services will suffice. Before starting a did a 14 year “apprenticeship” in the in industry learning all aspects of the business, operations, sales, marketing. I was confident I had clients that would follow me, had investors and had a good pool of talent to draw on. I would not suggest this as a path to get rich quick!

 

I took a different path - just kept refinancing and bought another and another and another without an exit plan except to just keep accumulating. The exit plan I had envisaged was a LOE variant. Done many cosmetic renos - almost each time time I bought and during ownership.

My problem is similar to yours except I have to sell down about 1/2 of my portfolio and i'll get that magical $100K passive (net). But as some of you know, I'm not willing to do what it takes (yet).

I'm waiting for a turnaround in rents like we had between 2005-2008..I believe we were on track for that to happen in 2-3 years until COVID19 hit. I still think it'll happen but super low interest rates, Govt stimulus, build to rent and the virus have muddied the waters in terms of timing and the supply shortage.

 

Wow.
This is powerful. We have one ip and the same in managed funds. One does appear easier, but do you think that the gurus of which I think you are one are less sure about property now?

 

Good to hear your success story. is there any way to optimise tax in the sell down process or are you resigned to paying the full CGT?

 

By and large, will cop full wrath of CGT apart from one in a company structure....and perhaps selling if/when I stop work. Selling while gainfully employed is going to guarantee 25% of the gains going out the door and never coming back .

 

Yes it’s a changing! Yes I was complimenting you!
We have one expensive ppor, one cheap ip and the same in shares. Lots in super. We are 45yo so uncertain about next steps. Property might not repeat the last 20 years. Land tax is a thing. Thinking of buying in Kingscliff just to avoid it.

 

Nice stories Wylie and Lucky Duck. The honesty is very moving. Bless. Thanks for sharing. Yes land tax is a thing there and a yucky thing it is. Two very unexciting IPs and i sock as much as I can into paying them down and a decent amount to super. Cant and wont sell as I get hit with the expat foreign CGT. So maybe draw down equity later to buy a home somewhere when I finally do settle.....ha read never! Maybe something i can also rent some rooms out or something to live in and produce income. As you guys say tricky times. At 53 I still have time to bumble along. Being here is comforting as I self educate

 

That's what I did.

 

10 years yesterday since I retired.

Not as young as some but not as old as others.

I had to wait until the FY I turned 55 so that I could make use of all the tax benefits.

Ten best years of my life (including 2020).

Going out to a special lunch today to celebrate. Might even have a glass of nice shiraz to top it off (probably more like a bottle).

 

What's the definition of retirement?

I mean I believe were always working towards a goal till time comes up (unless the brains time comes up first)

 

Nice. I think for me it means financial independence. Where I'm all set up and don't have to worry anymore. As to retirement, I don't think so. At 47 I quit my profession as a regulatory affairs expert. Last 6 years I retrained and became a fully qualified K-12 teacher. I think I'm semi-retired now. Because I have assets but need cash flow. And its too boring sitting at home. But I couldn't be serious and professional any more so I changed to a more fun life with more paid holidays. Later once I have more of a buffer I want to try the next stage of life in my 60s of renovating properties. Then see after that.

 

Nice story. I'm 46 and looking for a change. I own a PPR and wouldn't mind renting from this point onwards. The reaction I generally get is 'you're too old to be rent vesting'. I'd love to say I'm close to retirement in the next 5 years but nothing is further from the truth. Need to get on that IP treadmill. But you've inspired me..its never to late for a career change- if you know what that is!

 

I rented and bought two IPs. I had to move around with my career and I still do now as a kindy teacher. I bought in areas I could afford and rented in expensive areas I couldn't. I took in student boarders and rented out two of my 3 bedrooms and lived rent-free myself. Now I don't pay rent as work provides accommodation free. I'm using my salary to pay down my IPs. I also put 15% to super. I'm single, mature and had 0 help from anyone. You can do it!I had no clue what to do after I got sick to death of my serious professional life. I sort of fell into teaching then did the qualifications later to get real money. Funny thing now is I save double what I did on my fancy 6 fig salary.

 

Yeah, selling down is a dilemma when you're reducing the total value of the assets you hold. I have considered the permutations of this quite a bit. For quite a while I was intending to sell a townhouse I built, which would also get me over the $100k mark but would have reduced the total value of my asset base. This scenario entailed keeping my PPOR to utilise the 6 year rule. However, as my current PPOR is mortgage free I will not be reducing my asset base if I sell it as the sale proceeds will be fully re-allocated to equities. The property is also a period house and I really don't want the bother of a tenant causing damage to the original features. Selling my PPOR and consequently moving into my most valuable IP will also alleviate some of the land tax pain too.

The way I look at it life is fleeting and sometimes you've got to just roll the dice and go for it. I was planning to take 2021 off with an eye to only doing contracting work from then on. With the borders closed and travel quite unlikely I'll delay that by a year. Hopefully we will well and truly be in the clear COVID wise and the economy is on the mend by 2022. If so I will sell my current PPOR, renovate my new PPOR and travel.

 

Yes at some point the dice has to be rolled. Will you be equally happy in your IP than your PPOR, finances aside? That you're mortgage free on your PPOR is a huge upside.

My analysis boils down to the same thing because selling is wealth destruction via CGT and reducing the $ value of assets. Less asets = less benefits of compounding growth. It's a pretty simple concept.

However, if you fail serviceability and can't do a cash out, don't want to embark on a money spinning business ie what you really want to do is smell the roses, travel and do all sorts of fun things, what other choice have you got other than to sell?

 

I suppose you have to ask yourself ........why you became an investor And what was your end goal the purpose of this??

 

Finances aside I definitely will. The IP is larger with more land, there's room for a pool and I'm a big fan of mid-century architecture. I've lived about three quarters of my adult life at my current house and I will be very sad to leave it though. We have great memories here and we love the house but we're also quite excited about renovating and moving to the new house.

Absolutely. The other factor is that selling down will also realise income and capital that will make serviceability much less of an issue.

Very true, the goal is abundant financial independence. It's not monopoly. There's no point in being the richest person in the graveyard if you haven't lived a free life.