Early retirement

Hi Dazz

I'm with you on the below and you seem to have bucketloads of both cashflow and capital growth following your strategy

But how does an average wage earner/investor chasing their personal final stepping stone, follow your chosen strategy and cross the bridge to early retirement?

.....or control a portfolio where the equity increase every year is 100x the size of what you incur every year to live in NTDD.....and then who gives a rats....:cool:

Like many, I read the posts and think, great, cool, excellent, wunderbar....but how can I apply that to my personal situation to benefit (yeh, I know, Marsha, Marsha, Marsha..its all about me ;))

From the age recently re: average wage

The average wage in Western Australia jumped 7.7 per cent in a year to $75,592, compared with 4 per cent growth in NSW, to $68,182.


And Mining (Oil&Gas probably more)

Figures from the Bureau of Statistics, published yesterday, show the average full-time pay packet in mining jumped 5.9 per cent to $109,143 in the year to February.
 
In answer to the few people who are in the midst of refinancing at the moment having trouble, I'm not sure why this is? Is it possibly the particular financial institution you're dealing with? Remember you may have to switch lenders to one who is favouring cash out.

Also, I have experienced a similar concern once; before I ever attempted to go direct. I saw two brokers who took a long time to come up with anything and in the end told of the dismal news. Remember they are most probably trying to reconfigure the loan so they get paid again, which may not neccesarly benefit you anyhow. I'm a big fan of a good broker for obtaining a loan, but certainly not for refinancing cash out.

Anyhow, I then went direct to one of the Big-4 with no problems whatsoever (under 80%) LVR. I'm also doing the same within the next week (just waiting for another property loan to go unconditional first to keep the CRAA clean)

So it may be an option for you. I hope this helps.
 
There is no one superior strategy....there is lots of strategies. Its up to the individual person to decide which is the one or ones for them to use. We are all different just like all strategies are different. Which one you choose ultimately revolves around ones personal risk profile.
 
Hi Dazz. How does an average wage earner/investor chasing their personal final stepping stone, follow your chosen strategy and cross the bridge to early retirement?


In short Redwing, if you want the brutal truth, they simply cannot.


Looking at the level of income vs the spending habits of the average wage earner, I'd say they are going to have extreme trouble just keeping their head above water with the necessities of life, especially if they are married with a bunch of kids. Forget investing in anything.


I chose to sacrifice 4 years of earning out in the workplace to gain a degree - like alot of folk do - that would give me a foot in the door to a highly paid industry. With decades of sacrifice, hard work and application, the rewards came.

  • The degree wasn't average.
  • The work hours weren't average.
  • The grotty places of employment weren't average.
  • The risks I took with my personal safety in countries most people won't set foot in weren't average.
  • The risks and work I did during "time off" wasn't average.

I also chose a wife who wasn't a spendthrift. That has been key. We live in a nice house in a nice location and drive nice vehicles....but it wasn't that way for a long time.



Like many, I read the posts and think, great, cool, excellent, wunderbar....but how can I apply that to my personal situation to benefit


A lot of the time Redwing you cannot. There really needs to be a ladder - if you will - of where investors are and what techniques are appropriate for each rung of the ladder.


Attempting to apply a technique that works great on level 9 is foolhardy if you are only on level 3 and only have the resources and level of knowledge appropriate for a level 3 investor.

Frequently there are laws in place banning lower level investors (due to what they choose to invest in) from applying the higher level techniques.

Hey - it's no easy road to hoe. Nothing comes easily, you need to fight and scratch and crawl your way through the mud before getting to the golden sands of the beach beyond. You can't fly over the mud - wading is the only way. But the act of wading through makes you stronger and wiser I believe, which enables you to step up the rungs of the ladder one at a time.


I wish I was in your position 10 years ago Redwing and had someone to ask about these different techniques. No bugger would even talk to me....in fact I couldn't find many who knew, and the ones who did certainly didn't own or know how to drive a computer, so unless I could lean over a fence and have a face-to-face chat with some crusty old Greek guy, it was simply feeling my way in the dark.
 
In the same vein Rixter to continue the early retirement discussion and various strategies

But how does an average wage earner/investor chasing their personal final stepping stone, follow your chosen strategy and cross the bridge to early retirement?

<edit>

Looking at Payscale Australia

Median Salary by Job

Mechanical Engineer AU$75,471
General / Operations Manager AU$107,505
Project Engineer AU$89,462
Operations Manager AU$81,696
Graphic Artist / Designer AU$45,200
Geologist AU$87,250

Seems a bit skewif?
 
In the same vein Rixter to continue the early retirement discussion and various strategies

But how does an average wage earner/investor chasing their personal final stepping stone, follow your chosen strategy and cross the bridge to early retirement?

<edit>

Looking at Payscale Australia

Median Salary by Job



Seems a bit skewif?

Rixter has already asked you to clarify your question for the exact same post in the other thread Redwing.

Cheers

Rooster
 
Rixter has already asked you to clarify your question for the exact same post in the other thread Redwing.

Cheers

Rooster

I thought it made more sense here though Rooster, where it was intended to go? Not sure how to define the qusetion any further than the below :confused:

Q: How does an average wage earner/investor chasing their personal final stepping stone, follow your chosen strategy and cross the bridge to early retirement?

Dazz and Rixter have been talking about LOE and LOR in the above thread and I was wondering how an average investor would emulate either investor.
 
In the same vein Rixter to continue the early retirement discussion and various strategies

But how does an average wage earner/investor chasing their personal final stepping stone, follow your chosen strategy and cross the bridge to early retirement?

<edit>

Looking at Payscale Australia

Median Salary by Job

Mechanical Engineer AU$75,471
General / Operations Manager AU$107,505
Project Engineer AU$89,462
Operations Manager AU$81,696
Graphic Artist / Designer AU$45,200
Geologist AU$87,250

Seems a bit skewif?

Where did these salary figures come from? With the exception of the graphic artist / designer, they look suspiciously very low to me (i.e. like 50% or more below what people are reportedly getting in the mining centres).

I imagine anyone in those occupations with a mining sector income and a bit of investment sense could set their family up for life in under 10 years easy (although they might have to work hard, not buy any fishing boats, and avoid the drug-fuelled week-long prostitute+booze binges allegedly common among the fly-in fly-out workforce.)
 
Loe

Interesting discussions relating to LOE and LOR.

I'd like to see an example of LOE and how it could be projected (with figures) to work over a 40-50 yr period.

Has anyone actually done the figures to see if it is sustainable?

What sort of portfolio would be needed to LOE on an amount of $100,000 p/a for 40 yrs? Would you need to sell eventually to repay debt? Would the capital gains tax on the portfolio hinder the repayment of debt?

How can you refinance without showing the banks income from a JOB? How do cashbonds work??

Will rents really keep up with the ever growing capitalized interest - not to mention the holding costs?


Regards Jason.
 
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Interesting discussions relating to LOE and LOR.

I'd like to see an example of LOE and how it could be projected (with figures) to work over a 40-50 yr period.

Has anyone actually done the figures to see if it is sustainable?

What sort of portfolio would be needed to LOE on an amount of $100,000 p/a for 40 yrs?

Jason have a play with the LOE calculators. You can plug in some number scenarios for yourself to provide a better understanding.

Would you need to sell eventually to repay debt? Would the capital gains tax on the portfolio hinder the repayment of debt?
Im not planning on selling so no CGT, selling costs but more importantly no lost future income and growth which is the main aim for purchasing in the first instance.

How can you refinance without showing the banks income from a JOB? How do cashbonds work??

This is how I have used a Cashbond/Annuity to keep purchasing IPs. I use it in conjuction with my CGA Strategy -

When you have a few IPs under your belt Serviceabilty will eventually become an issue. The banks/lenders will not lend you money due to you not meeting their standard lending criteria. As you know banks/lenders work out seviceability under 2 modules - LVR & DSR.

Where the majority of investors start to reach their borrowing capacities is in relation to the DSR or Debt Service Ratio. In other words not enough cashflow income to service your IP debt. Now this isnt really a problem if you can increase your income. But how can you do that

Obviously there are many ways as the mind can conjure up. But the main ways most investors know of is to increase you PAYG income and/or increase your IP rental income. As these methods are fairly well reliant and restricted to market conditions alot of investors dont know where to go to from there. Alot forget about the store of Equity they have with their low LVR's created over time by past capital growth.

Thats where a Cashbond or Annuity comes into play - which is method I have implimented to get me around the lack of serviceability issues and allowed me to keep borrowing to build my Portfolio.

A cashbond basically works by converting existing equity into cashflow for the purposes for increasing your income in the eyes of the banks/lenders.

The way it works is as follows - you purchase a Cashbond/Annuity or guarranteed income plan from an finance/insurance company. That company then pays that back to you plus interest over a nominated term - terms start from 1 - 15 years usually. You chose the length by the income you require needed to lenders.. You purchase the Cashbond using funds with drawn from a LOC.

For example if you purchased a $100,000.00 cashbond over a term of 5 years, each year you would get $20,000 plus interest paid back to you. Now when you go to the bank for a loan to purchase your next property you can show 100% of that $20,000 income on the INCOMES side of your loan application on top of your existing Payg Income & all your other rental incomes...In other words You have effectively increased your borrowing because you have an extra $20,000 income in the eyes of the banks.

You can also use that cashbond income to service your portfolio holding costs as well if wanted..... I personally cashed my CB in and put the funds back into the LOC where it was originally purchased from tho.

This how I have been able to keep purchasing. Now I know this method is not for everyone. It all depends on your circumstances, goals, time frames & your individual investor risk profile.

For my information I have posted extensively on the cashbond structure here.

Will rents really keep up with the ever growing capitalized interest - not to mention the holding costs?

Have a play with calculators above. No one can predict what will or wont happen in the future. IMHO I think rents will increase to a point where in general terms we will become a nation of renters due to affordability issues, same as its gone in Europe.

I hope this helps.
 
Hi Rixter

Which banks are you using the cash bonds with and how do they look at CB's if there
is no wage income?

Cheers

Pete
 
Thanks Rixter for the links to the LOE calculators and the information about cashbonds/annuities.

It's certainly very interesting - and adds another dimension to investing in property. As has been explained a number of times, there are many strategies. Sometimes combining them works well too.

Just playing around with the calculator - having a low LVR before deciding to LOE would be advantageous. So too would drawing out equity that would last for a number of years (maybe 10) before embarking on the strategy.

Regards Jason.
 
Just playing around with the calculator - having a low LVR before deciding to LOE would be advantageous. So too would drawing out equity that would last for a number of years (maybe 10) before embarking on the strategy.

Yes,,,,thats why my target is sub 50 LVR and approx 10 x annual lifestyle costs already available sitting in LOC's.
 
Heres the thing Locko
You wont retire and become a fulltime investor with that strategy
Thats what I thought when I started out. I have been investing for the past 25 years and have been a full time real estate investor for the past 6 years.I have seen other investors simply adopt similar strategies to yourself and have ended up going back to work. Its all about the right strategy at the right time in the property cycle.I have bought positive cashflow properties (that put money in my pocket.i.e. Buy and Holds.some off these have achieved 10% growth over the last year) have renovated negative geared properties into positive cashflow and renovated properties for 30% instant capital gain in the last year. have dealt with sellers directly(theres a way you can get the motivated seller to call you )and turned negative geared properties in positive geared properties by Vendor Finance making $30k upfront, and $270 pw on some deals. I have done so many no money down deals without even needing a bank.As well as do Vendor Finance I have actually become a bank(a little bit different than Vendor Finance) and become !st Mortgagee) Most wealth creators only teach one strategy.I have done so many different types,
 
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Heres the thing Locko
You wont retire and become a fulltime investor with that strategy
Thats what I thought when I started out. I have been investing for the past 25 years and have been a full time real estate investor for the past 6 years.I have seen other investors simply adopt similar strategies to yourself and have ended up going back to work. Its all about the right strategy at the right time in the property cycle.I have bought positive cashflow properties (that put money in my pocket.i.e. Buy and Holds.some off these have achieved 10% growth over the last year) have renovated negative geared properties into positive cashflow and renovated properties for 30% instant capital gain in the last year. have dealt with sellers directly(theres a way you can get the motivated seller to call you )and turned negative geared properties in positive geared properties by Vendor Finance making $30k upfront, and $270 pw on some deals. I have done so many no money down deals without even needing a bank.As well as do Vendor Finance I have actually become a bank(a little bit different than Vendor Finance) and become !st Mortgagee) Most wealth creators only teach one strategy.I have done so many different types,

Thanks piaatcaso,

I really appreciate the spam email too!
It took you 19 years to retire? I think you're confused by the phrase "early retirement"

Regards
 
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