Who is the best professional to see regarding strategy?

Hello!!

I've been reading the forums for some months now, but feel I need further direction with where and who to go to for advice to better plan our future.

Our situation is:
- Family of 4 (2ads 30yrs, 2 young children both at school next year)
- I don't work as I'm currently studying (1 more year of degree left, and have been looking after the kids)
- Husband is tradie on $51k/yr gross
- live Regionally
- bare minimum savings
- credit card with no debt (4k)
- no car loan
- live a very non-extravagant life, but the kids rarely go without (most of our furniture is second hand/gumtree etc)
- both loans are with one of the big 4 banks
- still trying to understand the PI world and terms used.

IP 1 (purchased 2013) 3 br, 1 bathroom
Purchase price $185k
Current potential sale price $310k+
Original loan $176k
Current loan $155k
Was PPOR until 2017
Current P+I payments $265/pw
Current rent: $295 pw
Rent mgmt fees $23 pw
Rates $1750 per year
We chose to make this a rental as it pretty much pays for itself (well that's what we, as novices, figured, and if not, at worse was covering the cost of the new place)

IP 2 (current PPOR purchased 2017 with intentions of having it as rental in near future)
Purchase price $170k
Loan amount $172k (guarantor in place - was a last minute offer by them as we were going to get LMI)
Current P+I payments $235 pwk
It's currently 2br, 1 bath, and partially renovated (by us, we are slowly doing bits as money permits). We are planning on adding extension of a third bedroom.
Possible future rent when 3 br: $260pwk
Possible sale price once Reno completed $230k
Rates: $1250 yearly
I refer to this house as an investment because we purchased it for that purpose with the intention of buying again once I'm graduated and working. We can't afford to have a house sitting vacant while renovating hence why we live in it. So far have spent $4500 to buy all new flooring, change some rooms around, paint, build in laundry and mud/dumping room(were external), new lights and blinds throughout. Although we don't have the full money to renovate completely, I've budgeted 10% of purchase cost, so $17 000. I'm a savvy shopper and husband is a tradie so this is achievable as we've done up all costings. This $17k is extension, kitchen , bathroom and what's been done already (we use clearance products, salvage yard products, etc)

Our goals aren't as clear as what they once were since I started reading here and discussing with my husband. We enjoy renovating and have always intended to buy, renovate, rent out and hold more for a hobby and retirement than anything else. Now we don't know if we should buy and flip PPOR a few times to get some CGT free cash behind us. I personally think we are in a fantastic position considering our situation, but excited that it will (should!) only get better when I work (graduate wage begins at $64k per year). I think we have a knack of doing a quality Reno for low cost and want to put that to use, but it's finding the start up money to do so!

We want to start off correctly when my wage kicks in, but I feel like I'd be wasting people's time as we are low income earners ( at moment), have no money to invest further at the moment (despite browsing property every spare minute I have and dreaming). So do I keep trying to plan now or wait until income is coming in (obviously all job dependant)? We aren't aiming to retire in our 40's or anything, just looking to provide best future for our children, us, and also factoring in that we will perhaps need to house or be carers for a set of parents - not that any are sick, it's just what I feel we need to plan for. Would we see a financial planner, mortgage broker or accountant?

I personally think keeping these 2 houses is the way to go, but I don't really know.

Also, if we were currently able to buy another almost or neutrally geared cheapie that isn't in need of reno, we would, but I think we are far off being able to: dreaming hurts sometimes!

Thank you in advance for reading through my confusion and the advice with which profession to engage with!

 

I would start off with a wealth strategist, finance broker and a good dose of self education.

The free stuff, YouTube, podcasts - try “the Propert couch” one of the contributors is a member of this forum

 

I'd start with a broker - you probably only need a preliminary chat for now. If you can access equity in your IP once you start work, that will go a long way toward funding your renos and buying costs for the next one. Just save as much as you can in the interim, create as much equity as you can with your current reno and once you have a contract for your new work you will be ready to hit the ground running.

Sounds like you're living the dream - being able to add value on the cheap is a fantastic skill set, and so much fun!

 

1. Self education
2. Meet with a great broker
3. Increase income as much as possible.

Those 3 things will help to ensure you can continue to do what you love doing and continue to make profits while building up your asset base for the longer term.


*Stay away from financial planners in general.

 

I might be uneducated in this space but I think there is a dearth of skilled professionals out there with no vested interests whatsoever who can map and sequence a REALISTIC, fairly passive and detailed blueprint using property, shares and tax minimisation etc to attain early/semi-early retirement.

Some would say financial planners but a lot of them are incentivised to get you into particular types of investment.

 

The only person that could legally give that advice is a financial planner (minus the tax bit, unless they are a tax agent/lawyer).

(I am not a financial planner)

 

One stop shop Financial planner/lawyer/tax agent/broker etc....businesss idea for you TerryW

 

I used to be licenced as a financial planner but it costs a fortune and not many of my clients actually wanted financial advice - what they thought was financial advice was actually legal advice.

 

The problem is a realistic plan probably isn't going to meet your expectations. Financial planning has to meet compliance obligations which often turn these plans into more about wealth protection than wealth creation.

Furthermore, you're probably expecting a document that would outline a sequence of things you need to do, and let you know what the results will be in advance. Ever notice that economists tend to change their minds on interest rate predictions quite often? They're usually not consistently accurate beyond about 6 months, so there is no way anyone could put together a plan that has any chance of accuracy over a 10+ year period.

Most financial plans talk about saving money and putting it into a particular investment and making consistent contributions over a 20+ year time frame. These plans actually do work. The problem is nobody wants to be told:
a) Save.
b) Invest conservatively for the long term.
c) Do this for long enough and you'll do well.

Many people on this forum want to be told how to invest over 10 years and retire. Whilst it is possible, it's not a realistic expectation for most people, even with the combined knowledge on this forum. There's a few regular contributors here that are very successful. What people don't see is that those investors have been at it for 20-30 years already.

 

Thank you everyone. I will keep reading, researching and plotting along how we've been going. I think the more I read (especially with the glorified media, in particular social media) the more I forget why we are doing what we are doing and momentarily fall into the 'want everything yesterday' train of thought. We simply enjoy property and also hope to continue providing tenants a nice, comfortable place to live.

Sometimes I feel that we will constantly be chasing our tail and have missed out of the capital cities market, but I need to remember we are young, open to change and exploration and that there is no certainty in property.

We are happy to and enjoy doing, I guess, the hard yards, while the kids are young, in terms of living amongst construction, and actually saving for things, eg the reno's and only doing new tasks when we can, and living cheaply but comfortably. I think and hope we are teaching our children valuable lessons in the process of how valuable a dollar is.

Thanks

 

Personally I'm finished with the accumulation....but lacking the provision of alternatives apart from drastic selling down to retire.
Re: the plan//sequence, I think everyone recognises that we operate in fluid/changeable environment but working with a set of conservative assumptions would probably generate a likely-ish scenario. But I agree with you that the outcome/strategy will be something that spans well over 20 years minimum unless we're talking about a high income earner/saver.

 

Hi @Lacrim that actually gives your comments some very useful context. I guess I have some pre-conceptions of my own, many people I speak with are very much accumulating, many with expectations of retiring very quickly.

The retirement phase can be where a financial planner can be very useful, but I agree that it's hard to find the right one. It's still a long way off for myself, but I can see it coming and I'm also struggling with it a bit.

I have met investors here and there who have successfully gone into retirement. The ways they went about it are as diverse as their financial circumstances, but perhaps some good old fashioned networking might help? Like any stage, look for people who are were you want to be and learn from them.

 

Imo the contents that come out of most of the media is potent poison for those wishing to create a successful life, especially if financial success is important. Once you let something in, it can be difficult to get it out. Best to block it from entering your consciousness in the first place.

 

Hi Cluelass86. You are my new Best Friend! Seriously - your goals are quite similar to mine, although we are older than you.

I agree to ditch social media and the TV as your financial education source and stick with PC and any UTube channels about renovating. There is a section in Property Chat for books and resources we find beneficial. Everything you need to know is available here in a very positive and uplifting social environment.

As Jess and Leo said, start with a mortgage broker who can offer current information about lending and how much you will be able to borrow after you start working. I see you as a very smart, down to earth lady who understands your household's reality and the great benefit of being willing to live a sensible sustainable lifestyle while creating a secure life for yourselves and your family.

As your knowledge and confidence grows, you will be able to leverage into higher-growth investments to power your goals and free up some cashflow.

PS, I wish I knew at 30, what you do.

*maybe adopt a more positive name, I'm keeping the typo above

 

I second the financial planner comment. The first and only one I ever got a consult with spent more time hedging his statements and avoiding saying anything firm to avoid sending me down the wrong path. It was the most wishy washy crap I’ve ever heard. After that I found I learned 10x more just talking to my mortgage broker and accountant.

 

You give your simple strategy as " buy, renovate, rent out and hold more". This sounds like pure gold in your circumstances and no expert could better it (certainly not some salesman from AMP).

Once you start a working get onto one the mortgage brokers on this forum and build your portfolio.

 

How would this person get paid?

 

Fee for service

 

How many newbies would pay for that? Even if they did most wouldnt do anything so the planner would get bad reviews.