Opportunity to set myself up ? need advice on how to begin

[rednut]

I have been a long time lurker, but haven't yet taken the plunge into investment properties, and probably need to get more educated about strategy if I'm honest. However, I have a golden opportunity coming up in about 6 months that I would like to take advantage of and need some advice on how to begin.

The opportunity is a job in remote Australia that will pay me an incredible salary for a few years - 400K to be exact. I say a few years as I don't think I could stay remote for more than 3-4 years tops. I would then return to a lower salary thereafter, ballpark 150K

I'm not sure what my strategy really is yet, and this is why I need some advice.
My main aim is having a more secure retirement income as I don't have much super, and don't want to be working my **** off in my 60s trying to build some up. I'm thinking my "ideal scenario" would be to accumulate enough IPs over the next few years, with a view to hold them over the long term, in the hope they eventually become cash flow positive in order to give us a retirement income down the track. I am currently 42. Is this realistic?

We currently have a 2 BR townhouse PPOR in inner Melbourne - mortgage owing approx 460K, value approx 700 I think, although I haven't had it formally valued yet. I think I could rent it for at least $550. If I continued to pay off principle I would have a shortfall of approx. 200/month - I haven't done the sums very accurately yet but these are ball park figures.

So my questions are:
Is my long term goal realistic or possible?
Is this new job really a realistic opportunity to "set myself up" for the future or am I being niaive?
What type of properties should I be aiming for price-wise and how many could/should I realistically acquire, or is that too broad a question to answer?!!
Should I continue to pay off P&I on PPOR whilst away? My feeling is I should so that I have 1 property owned outright at some point.
Should I speak to a mortgage broker/financial adviser in order to be guided on how to begin?
I am very new to all this and need as much guidance as you can offer me!

Sorry if I sound all over the place with this!

 

[Rolf Latham]

wow thats some increase in income

At a cost of course

yes, have a chat with a broker about serviceability,and working out and THROUGH your goals, your basic data suggests you will be equity bound (ie not enough deposit ) to fully flesh out your borrowing cap on 400 k a year.

One piece of specific advice I can offer without seeing or hearing anything else, is that to make sure you structure your finances and investments such that your role doesnt become a golden handcuff.

having worked in the bush and expat myself, I still see friends doing stuff they are "forced" to because of earlier financial decisions.

"Temporary" often becomes permanent and one doesnt realise it

Obviously, your property portfolio choices will be somewhat influenced by that

ta

rolf

 

[Terry_w]

A large chunk will go in tax, but there will still be heaps left over and this could set you up for life. I would suggest you speak to a financial planner and mortgage broker and also get some advice regarding structure and taxation.

 

[Mr. Fabulous]

I would suggest you speak to a financial planner and mortgage broker and also get some advice regarding structure and taxation.

There are several good mortgage brokers on here. In your position, I would speak to the following and make a decision as to who you would like to work with:

Rolf Latham (www.asapfinancial.com.au)
Corey Batt (www.xlfinancial.com.au)
Kinnon Bell (www.kineticfunding.com.au)
Peter Tersteeg (www.sagelending.com.au)

They are all great brokers, with proven track records and all very knowledgeable.

As far as working with a financial planner, if you wanted to go down this road, I suggest the following:

- they understand and support direct property investment
- they charge Fee For Service (which means a flat dollar fee based on which services you wish for them to provide, % of Funds Under Management is NOT FFS, rather just pseudo commissions)
- they have at the absolute very least - 5 years' of proven experience in the financial planning industry. 10+ years is better.

For structure and taxation advice, you can't go wrong with Paul Gerrard at Price Financial (http://www.pricefinancial.com.au/). Super good bloke who really knows his stuff.

 

[jingo]

One piece of specific advice I can offer without seeing or hearing anything else, is that to make sure you structure your finances and investments such that your role doesnt become a golden handcuff.

having worked in the bush and expat myself, I still see friends doing stuff they are "forced" to because of earlier financial decisions.

"Temporary" often becomes permanent and one doesnt realise it

Obviously, your property portfolio choices will be somewhat influenced by that

ta

rolf

Rednut, this is really good advice from Rolf. If you decide to go the property path, have a thorough plan worked out in terms of what you will buy, when, how much growth they will likely generate, how long they will be -ve geared, and exactly how they will generate a retirement income for you.

I rekon a chat with Rolf or Peter and the advisor recommended by Mr Fabulous (or Mr Fabulous himself who as I understand is also an advisor?) would be a good first step.

Other pathways to travel - you could simply set up an offset account against your PPOR mortage, then stash cash into this until it is paid off. And after this, or even at the same time, begin stashing cash into index funds that you keep for life.

Obviously my ideas are to be taken at face value and you need to research your own in conjunction with professional financial advice.

All the best,

Regards Jason.

 

[Mr. Fabulous]

I rekon a chat with Rolf or Peter and the advisor recommended by Mr Fabulous (or Mr Fabulous himself who as I understand is also an advisor?) would be a good first step.

Paul is an accountant (hence structure and tax advice), not an adviser. I am also not an adviser. I work with advisers, but I am not (nor have any interest in becoming) a financial adviser.

 

[jingo]

Paul is an accountant (hence structure and tax advice), not an adviser. I am also not an adviser. I work with advisers, but I am not (nor have any interest in becoming) a financial adviser.

Thanks for the clarification.

 

[Redom]

Great advice from Rolf, as usual. Hit him up - his track record means you'll be in good hands.

Congrats on the opportunity, that income jump can be life changing if well utilised.

Cheers,
Redom

 

[Macca]

All good advice as usual on SS, the $400k years are the set up time and a quite nice $150k will keep you going while they pay themselves off.

The mention of stocks needs to be blended with your Super Fund, if you self manage Super then you need to make that choice but if you contribute to an industry fund then you will find they offer options for the stock market through that.

This allows you to do real estate and let the fund do stocks, diversity in assets is good when young but you can also take on too much.

It may be worth considering where you want to live in your retirement, if you intend to live in Victoria then have most if not all there as it is much easier to supervise when within an hour or two.

If you intend to live in QLD then start in that state, if you get really keen and land tax is becoming a problem then move to another state for your buying.

If you intend to amass an empire of RE then start in areas that offer the best opportunities, this is a lot harder as you need to monitor developments all over OZ, look up a few of Rixters posts on SS

 

[rednut]

I'm sorry for the delayed reply - I have been snowed under at work.
Thankyou all for your advice - muchly appreciated.
I will begin by seeing my accountant and chatting to some mortgage brokers as you've recommended.
Stay tuned though, I may have many more questions!