Hi all,
After much reading and listening, hubby and I think we're ready to take the plunge, so interested in your feedback. Some info first:
CURRENT FINANCIAL POSITION
Husband & Wife (40y/o), HH Income of $300,000
PPOR valued at $1,050,000
Debt on PPOR $630,000
Current Offset Balance $40,000
Surplus funds after mortgage repayments $2k pcm =pa +$24,000
OUR 10 YEAR GOAL
• 5 to 7 years pay off PPOR and one of us quit work and have net income from property of $150k pa. At 10 years, the other can quit and live in the Bahamas
• Free up time to be with kids
• Earn enough to travel overseas once a year
STRATEGY
• Buy Hold and Rent with minor cosmetic renovation
• Opportunistic major renovations but not in first years of strategy
• Cash Flow neutral to positive, therefore yield 7%+
• Minimal negative gearing, overall portfiolio CF+
• Capital Gain potential 8%+ required to turnover equity
• LVI average 10%
• Properties $150k to $400k range, houses and units
• Diverse mix of metro, regional, coastal and mining to spread risk
• Estimated number properties required 10 to 25 (depends on ave$)
• Purchase 5 in year 1, deposits from LOC $180k, retain approx. $30k
• Draw on IP equity YoY to purchase additional properties
STRUCTURE
• Establish Discretionary Trust
• Establish Company as Corporate Trustee
• CF neutral and positive properties purchased in discretionary trust name
• CF negative purchased in Individuals names to offset tax
• Isolate PPOR lender from IP lenders
• LOC deposited into PPOR offset?
• PPOR currently owned in wifes name. Mortgage in joint names.
RISKS
• Life insurance, Income Protection, Critical Illness, Wills, Power of Attorney (Financial + Medical) all in place.
• Unemployment risk mitigation = balance of $40k in offset (seperate to LOC)
• PPOR equity to be min 20%
I'd appreciate your collective guidance on the following:
1. Are our goals to retire at 50y/o realistic?
2. I have the LOC docs from my bank (Westpac) ready to sign is there anything I need to be aware of? My Bank Manager has suggested I redraw first and then take LOC, which I think is perhaps not the best way to go if I want to pay off the PPOR?
3. Have I got my structure right? I have docs from our Accountant and he's recommending +CF purchase in Discretionary Trust and -CF in my husbands name first (both our incomes are $150k each but PPOR is in mine)?
4. Am I going to run out of equity and finance with this structure/strategy?
5. Anything else screaming alarm bells from my notes above?
Love this forum, read it every day and appreciate whatever opinion you have before we put our testiclays on the line
Thanks everyone!
Thunder
After much reading and listening, hubby and I think we're ready to take the plunge, so interested in your feedback. Some info first:
CURRENT FINANCIAL POSITION
Husband & Wife (40y/o), HH Income of $300,000
PPOR valued at $1,050,000
Debt on PPOR $630,000
Current Offset Balance $40,000
Surplus funds after mortgage repayments $2k pcm =pa +$24,000
OUR 10 YEAR GOAL
• 5 to 7 years pay off PPOR and one of us quit work and have net income from property of $150k pa. At 10 years, the other can quit and live in the Bahamas
• Free up time to be with kids
• Earn enough to travel overseas once a year
STRATEGY
• Buy Hold and Rent with minor cosmetic renovation
• Opportunistic major renovations but not in first years of strategy
• Cash Flow neutral to positive, therefore yield 7%+
• Minimal negative gearing, overall portfiolio CF+
• Capital Gain potential 8%+ required to turnover equity
• LVI average 10%
• Properties $150k to $400k range, houses and units
• Diverse mix of metro, regional, coastal and mining to spread risk
• Estimated number properties required 10 to 25 (depends on ave$)
• Purchase 5 in year 1, deposits from LOC $180k, retain approx. $30k
• Draw on IP equity YoY to purchase additional properties
STRUCTURE
• Establish Discretionary Trust
• Establish Company as Corporate Trustee
• CF neutral and positive properties purchased in discretionary trust name
• CF negative purchased in Individuals names to offset tax
• Isolate PPOR lender from IP lenders
• LOC deposited into PPOR offset?
• PPOR currently owned in wifes name. Mortgage in joint names.
RISKS
• Life insurance, Income Protection, Critical Illness, Wills, Power of Attorney (Financial + Medical) all in place.
• Unemployment risk mitigation = balance of $40k in offset (seperate to LOC)
• PPOR equity to be min 20%
I'd appreciate your collective guidance on the following:
1. Are our goals to retire at 50y/o realistic?
2. I have the LOC docs from my bank (Westpac) ready to sign is there anything I need to be aware of? My Bank Manager has suggested I redraw first and then take LOC, which I think is perhaps not the best way to go if I want to pay off the PPOR?
3. Have I got my structure right? I have docs from our Accountant and he's recommending +CF purchase in Discretionary Trust and -CF in my husbands name first (both our incomes are $150k each but PPOR is in mine)?
4. Am I going to run out of equity and finance with this structure/strategy?
5. Anything else screaming alarm bells from my notes above?
Love this forum, read it every day and appreciate whatever opinion you have before we put our testiclays on the line
Thanks everyone!
Thunder