Dream to be Comfortable not Rich. Start Now!

Discussion in 'Property Investment - Other' started by bianca, 7th May, 2015.

  1. bianca

    bianca Botox costs too much

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    Hi guy's.

    I haven't been on for a few years, but thought it was a good time to give an update on my situation, to help get people back on track, just in case they have veered of into the never never,due to the current downturn.
    As you may know, my main passion is getting young people interested in investing in the property market.I don't get paid for it, but it's just something I like to do. It is extremely rewarding to see success growing from a few well planted seeds. So, get a coffee or a beer,and get some inspiration and reason to get started or to keep going! Here goes.....

    Motto-You do not need to be rich, just comfortable! Work and invest with that in mind, and the journey will be a lot easier.

    Last year, we took the plunge and sold our business to put our property investment strategy to work. We are now semi retired at 57, quite young when it has officially been stated that the new end of "middle age" is now set at 75!
    We own our own multi million dollar house, and have done so for 10 years.
    Our investment in property started at the age of 20, so it has been a long ride.

    So far it is working great. Due to one more project to complete, full retirement(urggh what an ugly old fashioned boring word!) is not yet an option, and finding the funds will be more difficult, but we will figure out how, what and where to do it.

    My advise to anyone reading would be this: (and this is my own experience only)

    1-Work hard and maintain a good job.or a good business. Being comfortable later on is fully dependent on this. If you are a business tycoon, obviously your vision and expectations will be different; hence this is targeted at the average, hardworking person.

    2-Buy your own home as early as you can. Do not overspend. Get handy and add value.. rent out a room/rooms to help with the payment. Do not buy too big too quick. Do this while you are young so you can cope with the inconvenience.

    3-Borrow against your home for your investment property as soon as you can.
    Set up a budget so that you can comfortably manage your repayments.
    Sit it out for while, keep working and do not rush.

    4-Start a small share portfolio,(blue chips that can just sit for years)apply dividend reinvestments if you don't need the often piddly dividend payments, get into some super if you are self employed. Not a lot, just some (I am not a fan of super myself) There is no need to gamble, in fact gambling can cost you a lot more then you gain.

    5-Keep your IP's on interest only, until you pay off your house. Then change some of your lowest loans over to P&I. The plan is to own, so you can live of the rents. You can also keep your own house at IO, and pay off large chunks at tax time, but this takes self-discipline. Once the equity starts to build up, reshuffle your loans.( and there are many ways to do this) Know yourself, and adjust your investment strategy accordingly. Always calculate CGT losses in your plans for future ownership.
    6- Make sure your portfolio is diverse.

    7- Make sure that you get the entire bang for your bucks, by buying claimable stuff through a point system credit card.

    8- do not waste your money on foolish things! Leave some of the pointless bargains of consumer crap until later, or when you can realy afford it.

    9- Try to only buy things which are tax deductible.

    10- Never gamble on property in dodgy areas, unless you can afford to lose big, or are totally in touch with economics and the markets. Mining towns are for gamblers, unless you actually live in one of them.

    10- Keep your day job and be the best you can at it!

    INSIGHT:

    We own a commercial property, 2 other properties , and 2 more very shortly. That will be a nice enough income to sustain the next decade.
    We have 6 more properties to sell over the next few years, depending on our income and the market. We have recently sold 3, over 3 years.
    We are still working, whenever we feel like it, and to keep an income for negative gearing. The share portfolio keeps growing, and there are bits and pieces in Super funds which will also come into play in the next decade.

    Luckily I am not a Botox queen or high maintenance, the kids are independent ( and following my strategy quite nicely) I own everything I could possibly want, all purchased as tax deductible items along the years, have travelled everywhere I want, own a Porch, a yacht, a few cars, and have enough Visa points to go anywhere for free. I have a massage every week, facials and get my nails done. My husband now spends a lot of time in the yard, completing projects.

    But we are not rich! It has taken 35 years to get to this point, and it has flown by.

    We will not join the rich list anytime soon, but hey, this is comfortable! Ask yourselves, is it realy necessary to be "rich" rather then continue your life in comfort? Being on the rich list takes a lot of time, energy and maintenance, unless you are a crook. And even then the anxiety will kill you in the end. Plan to be comfortable, self sustained and happy instead!


    I have re-read my posts form all the previous years, and am very proud to see that mostly everything has gone to plan. I guess that is the reason for this post- to show people that it is possible for the average person as long as there is a firm plan in place. Luckily for us, we will still fall under the "pension" plan in the future, if we suddenly lose everything. Our assets and refusal to engage in tricky strategies, which border on dishonesty, preclude us from it, but many will not be so lucky. The pension cut off age means that a lot of younger investors now have to provide for their own retirement.
    If you make the money, and pay your taxes, your country will be grateful for it.
    However, the benefit of negative gearing and tax deductions are necessary to keep this strategy for self funding alive!
    Having said that, your investment planning and execution will be vitally important to sustain you in later life. Do it right, do it legally and never rip anyone off! Karma will shine on you!

    Property investing is not an easy rags to riches ride, for anyone who is contemplating using property to retire on. Sometimes reading the forums and listening to young and vibrant entrepreneurs, makes the journey seem like an easy road to riches. Forum contributors can divulge information in a brief summary, with a nod and a wink, and the enthusiastic may plunge in and get themselves into a lot of trouble.
    "Mortgagee in possession "sales are rampant at the moment, as evidence for this. On other hand, forums can be a great place to find out information. Over the years I have often stalked this forum in particular, to gain knowledge, and find out if I was doing things right (for my situation) It takes hard work and mental stability. The more property you own, the more work involved.

    You don't need to own 20 or 30 properties.
    Settle for less. There will be times that you think " I can't be bothered anymore." "Let sell!"
    Don't, unless you really have to.
    Why?
    Because capital gains are a real dirty word if you don't play your cards right, and know exactly what you are doing. I have made this mistake.

    Sometimes one might get the impression that investing in property is as easy as finding a loan, a financier, and getting a property manager and the right insurance. It is not!
    There are many problems the investor has to face at some time.

    The main problems I have encountered are the periods when the properties are vacant, and the cost component of continual abuse and destruction of the tenanted houses goes through the roof. " As long as you have adequate insurance" is also not always the answer, because the time it takes to compile police reports for wilful damage claims, the time to find repairers, get things fixed, and often the extra costs involved can stretch the funds and your headspace for a time. Lucky for me, my husband is a builder and can handle all the repair works , but for those who aren't handy on the tools, there ARE costs involved, and sometimes big enough to blow a huge hole in your budget. Finding new tenants, the loss of the first week of rent, etc. are all costs that somehow have to be accommodated. LOC's, equity loans blah blah are great, but they still have to be repaid.

    Taking tenants to court to recoup your costs is also more often then not a farce, because the courts are in favour of the tenants more often then not. Hardship. Loss of work, illness etc. can have a huge effect on the outcome of court cases.
    So again, do not be fooled into thinking that by having
    adequate insurance your woes of owning property and dealing with bad tenants. are over.
    Managing more then 10 properties will become a job, even if you have half managed by an agent and half yourself.

    Having a good property manager is also not as easy a solution as it looks in written word. In times of excessive vacancies, and economic decline, property managers cannot perform miracles and find tenants out of thin air. Property managers also do not have much clout in the courtrooms, and, in my experience, more often then not, the results from court cases to recoup outstanding rent and costs are a waste of time. Finding the run away tenants in the first place can be an arduous job. Having access to surplus funds somewhere to tide over this situation is an absolute 'must".

    So what is the message?:)

    To those just starting- and who aren't reliant on old money-

    Property is till a great vehicle to set yourself up for a relaxed lifestyle, at the age when you need to be relaxed.

    Don't waste your money if you are young. It is too hard to come by. Pretending to be rich, fuelled by a notion on tv or in the media that to be rich is the be all end all, is dumb. Being comfortable and self-sufficient is so much more rewarding,especially if you only have yourself to rely on.

    Buy that property as soon as you can, whether you are single, married or in a relationship. Save, save, save, for that first deposit. After that, the doors should open.

    Never buy something you cannot afford. It is better, at first, to buy small and add value, then to buy a mansion and lose all your money. There is a life outside the capital cities.

    Procrastination is a downfall. Skip the expensive restaurant meals, the fancy trips, the flash cars on HP, the toys, until you are financially comfortable. You should earn your rewards, not just grab them to keep up with the Jo's on the block.They are all false Band-Aids, and the joy you get from them are short lived. Live within your means, and only play if you can afford it after your investment is taken care of.

    If you can do it now, do it. The interest rates at the moment may never be this low again!

    Cheers from someone who is there and can now call the shots! xx
     
    marg4000, redwing and baby blue eyes like this.
  2. Hooray

    Hooray Member

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    So, aim low. Sorry, not interested.
     
  3. EN710

    EN710 Member

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    Not exactly, your comfortable might means being really rich :D
     
  4. jrc

    jrc Member

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    Good on you! Sounds like you have enjoyed the journey.
     
  5. Highlygeared

    Highlygeared Highlygeared

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    Thanks very much Bianca for that generous and insightful post. Would it be pushing the boundaries a little to share some high level numbers - that would be extremely helpful I'm sure to the forum given that we all agree and disagree the numbers for a 'comfortable lifestyle'.
     
  6. S.T

    S.T Member

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    Can someone give me the shortened version?
     
  7. bianca

    bianca Botox costs too much

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    what kind of numbers are you after?
     
  8. EN710

    EN710 Member

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    Thank you Bianca.

    For me the post is about being modest, to remember what's important, what I really want to do and be patient. :eek:
     
  9. Highlygeared

    Highlygeared Highlygeared

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    Generally:

    - property portfolio value
    - Total value of shares and div %
    - debt/LVR
    - overall net cashflow per week with/without active job/business income

    I think basically the number of interest is how much cashflow per week is required to sustain your lifestyle. We've seen some saying $50-60K is enough, $100K, $150K and some even at $200+, etc
     
  10. bianca

    bianca Botox costs too much

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    the idea is to give the average punter an idea of an alternative strategy. There is no point in being short and sweet, because that keeps people guessing. Put your feet up, get your head out of the Financial review and read how Jo average can have a fantastic life without dying from a heart attack at the age of 50!Go on..i know you can do it.:)
     
  11. bianca

    bianca Botox costs too much

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    ok Highly geared. I'll dig up some numbers and post them later.

    To those questioning the value of "comfortable' and "rich":

    To give you an idea of our current lifestyle;

    We have a pretty nice unit at the Gold Coast where we and our family stay a few times a year-last time for 3 months. It was a 'mistake' buy at first, but time has seen it flourish as a nice little earner.
    We live in a magnificent house on the beach, where it's summer all year round.
    If i feel like being a bit flash, i drive my Porch, but frankly, there is not a lot of reason to leave our house:) and it just site in the garage.
    We have travelled around the world and back, in luxury and also on a budget in the early days.
    I can't think of anything i want to own anymore. All my hobbies are fulfilled, whatever i want to do at a whim, I can.
    We can travel all we want. We can take off in the Catamaran anytime, and go sailing around the Whitsunday islands.
    We can work when we want, and if we need some extra income.
    Our health is still good,our family taken care off.
    We still look pretty darned good even after all the hard work;)
    We can still dream of a "next" project if we get too bored.

    What on earth more could you want by being super rich? You can't take it with you?
    "Comfortable" is achievable by all. Super rich is a level from which many fall as quick as they have reached it.
     
  12. spludgey

    spludgey Member

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    Great post and congratulations!

    However, I do disagree a little with your point 10(.1). I like buying in dodgy areas because yields tend to be much higher there than in bluechip areas.
    But you do have a caveat for that, so I can't fault you for it. ;)
     
  13. Ace in the Hole

    Ace in the Hole Don't compete, Dominate !

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    The title of this thread is very misleading.
     
  14. mikezen

    mikezen Bigmember

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    Great post, this will appeal to a lot of people
     
  15. Brian84

    Brian84 Member

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    Congrats on your success. That sounds like what I want to achieve. I will get there someday soon
     
  16. pinkboy

    pinkboy SS Lookerafterer

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    Dude, no need to quote half the internet for a one-liner.

    pinkboy
     
    Terry_w likes this.
  17. Phiber

    Phiber Member

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    Good on you, great achievements!

    To be fair, I would think that most people would qualify your lifestyle as rich rather than comfortable: the beach house, the boat, the cars, the travels.

    When thinking of comfortable, personally I would have in mind a simple lifestyle in an average suburb, where one does not struggle with money, but also for whom the pleasures of life have to be enjoyed selectively.

    Again, great achievements!
     
  18. baby blue eyes

    baby blue eyes Vicki

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    Great post, I agree with you Bianca, comfortable is a great place to be... Congratulations!!!
     
  19. trey

    trey Member

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    A great post!! Thankyou for sharing.
     
  20. tomlemke

    tomlemke Member

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    Congrats! defiantly agree with phil sounds like you are living the dream;)

    More importantly what kind of Porsche is it :D