Living off Equity - is this still an option?
- Thread starter Panic
- Start date
Also, have you ever done the figures on how LOE would effect your situation. Could you do it if you chose or is it something you never really considered.
Kissfan,
good question,the answer is no i still dont fully undertstand how LOEs work,
but as i made the phone call to Mr Narva yesterday i will go and listen to
how the system works, no use for me to criticize something that i know
nothing about,you can ask the same questions to three different people
its up to you to determine if a difference of opinions exists,as with my
share portfolio the first 15 companys i invest in are in the longterm
most i have held for over ten years,the others are purchased for
short term profits,then try and repeat the process if you are successful
but only property gave me the opportunity to do what i do.....
good luck
willair..
Kissfan,
good question,the answer is no i still dont fully undertstand how LOEs work,
but as i made the phone call to Mr Narva yesterday i will go and listen to
how the system works, no use for me to criticize something that i know
nothing about,you can ask the same questions to three different people
its up to you to determine if a difference of opinions exists,as with my
share portfolio the first 15 companys i invest in are in the longterm
most i have held for over ten years,the others are purchased for
short term profits,then try and repeat the process if you are successful
but only property gave me the opportunity to do what i do.....
good luck
willair..
Rather than re-hash the entire story, the updated version of LOE plus many examples which address risk profiling (SANF) and all the pre-requisite background will be posted on InvestEd from next week.
Regards,
Steve
Regards,
Steve
Steve Navra said:
Great Idea Steve. When ever a LOE thread is reincarnated here it always ends up in the same old dog chasing its tail senario! Just as bad is the which is better, houses or villas etc or to CF+ or -VE debates.
Does it really matter so long as what ever strategy you employ gets you to your reasons/goals for investing in the first instance within your chosen time frame.
One can always tell which investors have the right mindset to take them all the way. They're the ones who dont lose sight of the forest for the trees!
Hiya
You will find both STG and CBA offer resi backed "margin" lends at those sorts of rates.
ta
rolf
You will find both STG and CBA offer resi backed "margin" lends at those sorts of rates.
ta
rolf
It's through Colonial and is their Calia product.
Basically its a LOC with a margin loan attached, the Margin loan limit is a bit over double the value of the LOC amount.
Leveraged equities also then provided a margin loan at the same rate (negotiated) as the Calia product was over exposed to the managed fund. This is a independent margin loan.
Cheers
Basically its a LOC with a margin loan attached, the Margin loan limit is a bit over double the value of the LOC amount.
Leveraged equities also then provided a margin loan at the same rate (negotiated) as the Calia product was over exposed to the managed fund. This is a independent margin loan.
Cheers
not yet ready
Well, Simon, wish I could say I was living off equity; but I'm definitely not. Still working nearly all of the year.
Basically, it is `only` the mental step to conquer. I know and understand that, am working through it at my own pace.
Like I would so often be answered in Indonesia when querying progress on a task - not yet ready.
regards,
Well, Simon, wish I could say I was living off equity; but I'm definitely not. Still working nearly all of the year.
Basically, it is `only` the mental step to conquer. I know and understand that, am working through it at my own pace.
Like I would so often be answered in Indonesia when querying progress on a task - not yet ready.
regards,
Living off equity still an option
Rixter & kph,
Work for me is in an engineering office. I'm employed on a contract basis. And, yes, this is after retiring last year. There is a desperate shortage of skilled people ATM and so I was rather easily lured back to doing work that I truly enjoy. In particular, I work on spreadsheets and am expert at it. I am working at a place where I am happy. And, I'm yet to decide where I'm "going" with the rest of my life. (In the last year I've enjoyed a trip around Australia, a month-long holiday in Greece, the purchase of a 1989 model Ferrari. Later this month is the annual Ferrari Club of Australia week-long rally and I'm keenly looking forward to participating in that. I'm having another month off at Xmas.)
Living off equity for me is by borrowing against the strong capital growth. My portfolio has focused purely on capital growth properties and I've been seeing close on 20% per annum growth. With a few million dollars worth now, the growth in a year is very much more than I require for my relatively simple lifestyle - apart from that fast red toy! It is possible to borrow 70% on a 'no-doc' so on an ongoing annual basis that is more than adequate for me. (Even if I only use half of what is available and reserve the other half for servicing non-deductible interest.) (And, with the largish amounts of funds, I could do some developments if I wanted - though this thread is focussing on living on a fully passive income.)
And, importantly, funds are already in place to cover all expenses for the next few years. This has been in place since January. So, a revaluation next year should see another big bucket of funds approved and available to live off for another, say, 5 years. That is, say 8 years' worth in total. While that next 8 years passes there is likely to be adequate capital growth on the portfolio to cover ongoing costs beyond that. (In all likelihood, this will be growing MUCH faster than is necessary for my requirements. In the worst case (?) I should be fine. In just a normal situation I will be doing very, very well.) And that is with nil input from me. If things don't look so rosy, I can obtain funds somehow.
Importantly, it depends on what one is trying to achieve. I don't require much. If I wanted more - say $1,000,000 per annum - I'd do things a little differently, I guess.
I'm 100% invested into property. I've never obtained any financial planning advice and perhaps an adviser would recommend a more balanced, diversified approach. Or a set up more for income/yield. Money geared into high yielding shares, for example. I appreciate that what I'm doing is looking good ATM but of course things change. I'm comfortable with how I've covered the risks.
OK?
regards,
Rixter & kph,
Work for me is in an engineering office. I'm employed on a contract basis. And, yes, this is after retiring last year. There is a desperate shortage of skilled people ATM and so I was rather easily lured back to doing work that I truly enjoy. In particular, I work on spreadsheets and am expert at it. I am working at a place where I am happy. And, I'm yet to decide where I'm "going" with the rest of my life. (In the last year I've enjoyed a trip around Australia, a month-long holiday in Greece, the purchase of a 1989 model Ferrari. Later this month is the annual Ferrari Club of Australia week-long rally and I'm keenly looking forward to participating in that. I'm having another month off at Xmas.)
Living off equity for me is by borrowing against the strong capital growth. My portfolio has focused purely on capital growth properties and I've been seeing close on 20% per annum growth. With a few million dollars worth now, the growth in a year is very much more than I require for my relatively simple lifestyle - apart from that fast red toy! It is possible to borrow 70% on a 'no-doc' so on an ongoing annual basis that is more than adequate for me. (Even if I only use half of what is available and reserve the other half for servicing non-deductible interest.) (And, with the largish amounts of funds, I could do some developments if I wanted - though this thread is focussing on living on a fully passive income.)
And, importantly, funds are already in place to cover all expenses for the next few years. This has been in place since January. So, a revaluation next year should see another big bucket of funds approved and available to live off for another, say, 5 years. That is, say 8 years' worth in total. While that next 8 years passes there is likely to be adequate capital growth on the portfolio to cover ongoing costs beyond that. (In all likelihood, this will be growing MUCH faster than is necessary for my requirements. In the worst case (?) I should be fine. In just a normal situation I will be doing very, very well.) And that is with nil input from me. If things don't look so rosy, I can obtain funds somehow.
Importantly, it depends on what one is trying to achieve. I don't require much. If I wanted more - say $1,000,000 per annum - I'd do things a little differently, I guess.
I'm 100% invested into property. I've never obtained any financial planning advice and perhaps an adviser would recommend a more balanced, diversified approach. Or a set up more for income/yield. Money geared into high yielding shares, for example. I appreciate that what I'm doing is looking good ATM but of course things change. I'm comfortable with how I've covered the risks.
OK?
regards,
Pete,
Well done.
Questions I asked myself when considering using pure LOE -
If I didn't get IP growth how long would my SANF be OK for ? eg Bris was growthless for 10 yrs before 2001. After 9 years would I be beginning to doubt if growth will ever occur again & 'things really are different this time' ?
What worst case scenario to I allow for ? - 10 yrs no growth like Bris, 50% decline over 20 yrs - like Japan.
Would the banks ever stop doing Lo/No-docs at sensible rates ?
KJ
Well done.
That's how I define LOE too.Pete said:
Pete said:
Good risk mitigation.Pete said:
Questions I asked myself when considering using pure LOE -
If I didn't get IP growth how long would my SANF be OK for ? eg Bris was growthless for 10 yrs before 2001. After 9 years would I be beginning to doubt if growth will ever occur again & 'things really are different this time' ?
What worst case scenario to I allow for ? - 10 yrs no growth like Bris, 50% decline over 20 yrs - like Japan.
Would the banks ever stop doing Lo/No-docs at sensible rates ?
I too have never received advice from FPs. I feel a lot better knowing I did it myself, through educating myself & taking the risks I'm happy with.Pete said:
KJ
Pete said:
Pete,
Congratulations and thanks for sharing your story.
I am not familiar with no-doc loan but I am wondering whether there is a serviceability test for this type of loan, or is it purely based on the asset value?
Thanks,
caveat
With regard to my post just above, and I pre-empted this with the last paragraph,
I recommend no-one do as I have done - more or less in ignorance - WITHOUT getting either some expert advice or gaining some expert knowledge. So that one has the correct structure, use of equity, risk management, diversification, asset protection, tax "smart", etc., etc., etc.
What I've acheived may look alright but an expert would do things much smarter.
regards,
With regard to my post just above, and I pre-empted this with the last paragraph,
I recommend no-one do as I have done - more or less in ignorance - WITHOUT getting either some expert advice or gaining some expert knowledge. So that one has the correct structure, use of equity, risk management, diversification, asset protection, tax "smart", etc., etc., etc.
What I've acheived may look alright but an expert would do things much smarter.
regards,
Pete said:
Pete,
Im sure you did what was right for you at the time. As one evolves and becomes more knowledgable from their experiences they become more wise and savvy to doing things differently 2nd time around. Im sure this would describe you now - You've grown. Well done again on your achievements
Pete said:
Thanks for the details Pete,
Was wondering, what sort of rental yields are you achieving on your properties, and are the rents improving.( are rents increasing in line with the capital growth of the properties)
As we all know the rent return in Perth is pretty poor and I was curious as to what percentage the rent equates to as a percentage of the expenses incurred in holding the properties.
And, if the rents are not keeping up with capital value of the properties, then as you increase ( revalue) the borrowings, effecively its costing more of this equity to service the increased borrowings.
Sounds inefficient to me ( and now I'm confused)
And this is non deductible debt ?
kp
