Why most People with Only Property Retirement Income will Struggle?

Discussion in 'Investment Strategy' started by sash, 20th Jan, 2018.

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  1. MTR

    MTR Well-Known Member

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    Not so, pay on average around $2k a property dependent on value of house

    Its also dependent on State, varies significantly for example Texas taxes are very high

    Income tax also much lower
     
    Last edited: 21st Jan, 2018
  2. Sackie

    Sackie Well-Known Member

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    Your not kidding there. I (and I'm sure many others here) have tried everything to legally reduce the tax we pay...its painful but I guess unavoidable.
     
  3. jprops

    jprops Well-Known Member

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    Seems like you have a contrarian view, would love to hear more.
     
  4. skater

    skater Well-Known Member

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    Further than 5 yrs away.......To whack it into Super means we'd be partially LOE......which I'm not willing to do.
     
  5. sash

    sash Well-Known Member

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    Its goin' to get interesting from a CF perspective.....tell em to hurry up ratchet up dem rates den....
     
  6. MTR

    MTR Well-Known Member

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    Hard to develop in Oz unless fat juicy profits, tax man is your partner
     
  7. sash

    sash Well-Known Member

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    There are cities you can do this quite easily.

    Let me ask the question..in the USA you buy something for 70k do a 15k reno and sell for say 130k....that is not a huge amount of money.

    I like to keep low risk but want 100-150k profit...usually I do these on a spend less than 350k.
     
  8. skater

    skater Well-Known Member

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    Not at all.....what we've got is fine, so long as we don't put $25-50k into Super each year. Better reply in the other thread. You're bound to see it. Enough about Super, I don't have any, I'm not getting any, so let's leave it alone.
     
  9. MTR

    MTR Well-Known Member

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    numbers nothing like this for our development project in Atlanta

    We are looking at around 600k profit for Memorial Ave, our 5 townhouse development that is US$, tack 30% to this if bringing the money home. Check out my media for pics

    There are many price points in Atlanta, some pockets are very expensive. Holds you go lower entry point
     
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  10. sash

    sash Well-Known Member

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    OK...are you doin' this by youself?

    Each to their own...but I prefer not to manage exchange rates...etc....it gets too complicated. Probably more of where I am at...I want to maxmise CF with very little effort.
     
  11. MTR

    MTR Well-Known Member

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    No one way is perfect, if I could find a development site in Oz that makes sense I would develop

    Melb land too expensive, Perth market not grest as you know

    Not at all poo pooing Oz just waiting and watching

    Would like to repeat Thomastown

    Your land and house profits been great...timing is everything
     
  12. Sackie

    Sackie Well-Known Member

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    Personally I agree that you'd want to have decent fat in the deal. I think the higher density sites or higher end product sites bought at an advantageous part of the cycle will help alot. All comes down to 1 thing imo; buying the site at a price that makes sense. Also I've never been interested in high ROE deals...only ROTDC.
     
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  13. virhlpool

    virhlpool Well-Known Member

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    It's true but it's really hand to mouth situation for them as they end up paying all that they could have received as welfare to the nursing home (Centerlink pays directly), hence no scope of even li'l luxury or purchase/shopping beyond just their stay in nursing home. On other hand, people with some savings don't have to worry about li'l expenses that may bring some joy in their life or some fancy food more than once in a while. I guess it's a reasonable difference.
     
    Last edited: 22nd Jan, 2018
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  14. MTR

    MTR Well-Known Member

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    Yes buying at the right price, that's also timing. Interesting though you could get the timing right on the buy but on completion of the project the markets change and get the timing wrong when selling.:mad: don't you love developing, all fun and games.
     
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  15. Sackie

    Sackie Well-Known Member

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    That's why its potentially higher rewards. Because of the greater risks..:) Tbh its only fun until its not fun..which is about 10 minutes into it.
     
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  16. Big Will

    Big Will Well-Known Member

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    You have a bit to learn about shares as property can also be worth nothing if it is blown up from a nuclear bomb and has radiation - chances of it happening is extremely low but still possible. If it did happen we would have much more important things to worry about.

    Chances of Wesfarmers going bankrupt and being worth zero is also low (maybe not as low as a nuke on your property low). However with ETFs which are less risky such as VAS which tracks the index of ASX300 the chances of the top 300 listed companies in Australia all going belly up is extremely low. If the top 300 companies did go belly up then we would have more important things to worry about.

    Also don't forget you can buy property through shares either direct holdings, through trust, listed companies or even ETFs.

    So both shares and property can be worth nothing, however if you buy high risk shares then there is a higher chance of losing money but same if you bought a property in North Korea it is high risk.
     
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  17. Karina

    Karina Well-Known Member

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    Having invested in both AUS and US properties and been through a few cycles I can comment on what's worked for me.

    AUS over 17 years has given me capital growth but not enough cashflow to put food on the table. This was simply a buy / hold and forget strategy. My longterm plan was to sell down 50% of the portfolio and use the capital growth to pay down the other 50%. I am consolidating this portfolio now and selling down so as to not hold much debt. I think holding AUS property does not generate enough income (without selling) but if you can own properties "free and clear" by selling a portion of the portfolio this is one way to generate a passive income. This is something I am moving towards.

    With the US properties I was able to pour money into this asset class at a time when both the US market crashed and the Australian dollar hit parity. This made for some incredible buys that generate lots of passive income. It also allowed me to generate US dollars that I could reinvest into buying more US properties. I am sold on US properties as an investment class. In fact I don't know that I would buy another Australian property again as an investment as I find the US opportunity much more appealing. US properties are excellent for producing a passive income due to the higher returns available. When you can buy an 80k property and rent it for $1000 a month US dollars that beats most opportunities in Australia from a cashflow perspective. One property won't make you rich but scale it to a portfolio size big enough and you can generate a nice passive income to live off.

    From a tax perspective I would have to say the US tax system is very generous. Depreciation starts from the day you buy the property for 27 years. You can write off the entire building over the next 27 years irrespective of the age of the dwelling (unlike Australia where the age of the dwelling affects how much you can write off) . Add to that the new trump tax package that appears to offer LLC (limited liability company) pass through entities additional deductions of up to 20% of net income (limited to 2.5% off the value of the assets) and you have a situation where you are getting some significant deductions. This is what my CPA understands of the new tax package and is waiting on IRS bulletins to confirm further details. There does not appear to be any exclusion for foreign investors from what he has seen so far from the information released. Please note this is not tax advise and you should refer to your tax professionals to verify any tax information and how this applies to your personal situation.

    I have not invested in other asset classes so cannot comment on those nor have I developed AUS properties which is another way to fast track a property portfolio.

    Sash, I did notice you plan to sell down over the next 15 years. One thing to consider is that future govts may move the goal posts on capital gains deductions so in years to come you may have to pay tax on 100% of the gain vrs 50% of the gain. Something to keep in mind.

    My latest US property. Picked this one up for under 80k including rehab costs. Rent around $1000 per month.

     
    Last edited: 22nd Jan, 2018
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  18. sash

    sash Well-Known Member

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    Karina...I get that things can change here..but they can change in the USA also.

    The Australian property market along with the UK, NZ and Canada are the most stable.

    Each to their own..I am now more focused on truly passive incomes...thus why the post. I also want diversification into shares...though it will only represent less than 20% of my overall net wealth and nother 5-10 in super.

    That along with rental income via some selling down should give me 150-300k net with very little headaches...that is the hope anyway

     
  19. Karina

    Karina Well-Known Member

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    Sash, I don't think there is a right or wrong strategy. Its whatever works for you and gets you to your end goal. A share portfolio is something I may consider one day although I don't handle market volatility well and would be looking at the share price each day so maybe its not for me.

    We never know what the future holds, we do know that governments here are looking to reduce the capital gains discount and its quite possible that may happen in years to come so it maybe worth considering locking in some gains now. Like you say things may change in the US. I don't plan on selling so as long as there are tenants available to pay me rents I should be ok, unless of course a nuclear war breaks out with the north korean's and that could change things dramatically but we would have a lot more to worry about than a property portfolio if that were to happen.
     
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  20. MTR

    MTR Well-Known Member

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    Excellent find Karina
    Hard to source at this price point, brilliant
    US market for me too in 2018, keep increasing cash flow


    MTR
     
    Last edited: 22nd Jan, 2018

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