Hi Guys
First of all thanks for taking the time to offer all the guidance that you do on this forum. I'd love some feedback on our cash flow situation/options. Our situation is that we both work, no kids, and earn around $200k between us but this is reliant on living remote and we plan to move on next year. We hope to take some time out after that (I'm 45 and husband 51). Husband will work on maintaining the properties and having fun and I'm happy to carry on working part time/or seasonal and think that this would cover all our financial costs. However, I want to check I'm maximising our cash flow. I'm speaking to a accountant this week but just want to get some impressions. The other thing about us is that I'm fanatical about property investment and other half is going along with this reluctantly!
We own 6 rental properties and live in a rental provided by work. At the end of this year, all going to plan, we will have a monthly income before tax from property of 3.5k per month (I've deducted agents fees but not insurance and rates). This is just across the 4 properties which are all paid for. I'm happy with that and think we'd probably just need to earn about another 1k per month or so to have enough to live comfortably (we'd need to pay rent or a mortgage) plus have enough to cover any ongoing costs and maintenance for the properties. Total equity in properties currently is $720k and total debt is 410k. All owned in our own names, no trusts etc.
I've made some mistakes in that the houses that we have paid down fully (4 of them by end of this year) do not return quite as much as the others in our portfolio that are more expensive. I suppose that's normal, their yield is no longer as good as when we bought them (all were 8% or better). An option is to sell one of the cheaper ones which will pay off a dearer one and give us an extra $300 per month, not insignificant I guess, would pay for some treats. Also, one less set of rates and insurance to pay perhaps.
The other 2 properties which are positively geared, are on 30 year P&I mortgages. I'm going to try to put in some cash to these to bring the repayment period to 20 years given our ages. The rent covers all their costs so costs nothing to hold them but they obviously don't provide an income. I've heard people say it would be better to take IO loans to increase cash flow but given our ages I don't think that would help us, maybe this works best for younger investors?
We have superannuation and have been paying the max into it this year for good measure.
Is there something else that you'd do in our situation to increase cash flow? We did plan to sell one every five years to increase our annual allowance running along side rental income from the remaining properties. I did think of buying another property, but it wouldn't help with immediate income, and I think we'll have sufficient funds in 20-30 years for our needs as the two remaining properties will then be paid up. Is it possible or even necessary to increase our monthly cash flow from investment now whilst we're young enough to enjoy?
Thanks for reading!
First of all thanks for taking the time to offer all the guidance that you do on this forum. I'd love some feedback on our cash flow situation/options. Our situation is that we both work, no kids, and earn around $200k between us but this is reliant on living remote and we plan to move on next year. We hope to take some time out after that (I'm 45 and husband 51). Husband will work on maintaining the properties and having fun and I'm happy to carry on working part time/or seasonal and think that this would cover all our financial costs. However, I want to check I'm maximising our cash flow. I'm speaking to a accountant this week but just want to get some impressions. The other thing about us is that I'm fanatical about property investment and other half is going along with this reluctantly!
We own 6 rental properties and live in a rental provided by work. At the end of this year, all going to plan, we will have a monthly income before tax from property of 3.5k per month (I've deducted agents fees but not insurance and rates). This is just across the 4 properties which are all paid for. I'm happy with that and think we'd probably just need to earn about another 1k per month or so to have enough to live comfortably (we'd need to pay rent or a mortgage) plus have enough to cover any ongoing costs and maintenance for the properties. Total equity in properties currently is $720k and total debt is 410k. All owned in our own names, no trusts etc.
I've made some mistakes in that the houses that we have paid down fully (4 of them by end of this year) do not return quite as much as the others in our portfolio that are more expensive. I suppose that's normal, their yield is no longer as good as when we bought them (all were 8% or better). An option is to sell one of the cheaper ones which will pay off a dearer one and give us an extra $300 per month, not insignificant I guess, would pay for some treats. Also, one less set of rates and insurance to pay perhaps.
The other 2 properties which are positively geared, are on 30 year P&I mortgages. I'm going to try to put in some cash to these to bring the repayment period to 20 years given our ages. The rent covers all their costs so costs nothing to hold them but they obviously don't provide an income. I've heard people say it would be better to take IO loans to increase cash flow but given our ages I don't think that would help us, maybe this works best for younger investors?
We have superannuation and have been paying the max into it this year for good measure.
Is there something else that you'd do in our situation to increase cash flow? We did plan to sell one every five years to increase our annual allowance running along side rental income from the remaining properties. I did think of buying another property, but it wouldn't help with immediate income, and I think we'll have sufficient funds in 20-30 years for our needs as the two remaining properties will then be paid up. Is it possible or even necessary to increase our monthly cash flow from investment now whilst we're young enough to enjoy?
Thanks for reading!
