Stratergy for mum

[Ridin-High]

Here is my own mothers situation,

- Using Rent/Term deposit interest/pension to live on
- Mother working part time (13hrs P/W) looking to retire 45y.o
- step dad retired (59y/o)

ASSETS
PPOR - value 530k / 30k debt
IP1 - Value 200k / no debt - rent 160pw
IP2 - Value 180k / no debt - rent 160pw
Term deposit - 290k
Pension - 2.5k p/m

REQUIREMENTS

- provide living expenses for 3 adults, 1 child
- provide 1k "play money" for step dad p/m
- Stay inline or ahead of inflation (cost of living)


Basically looking here what you folk would do differently or if their is anyone she could get intouch with who can provide a no bs solution (not trying to push their own product eg. managedfunds/shares)

 

[The Y-man]

Get the other two adults working?

Anyway, is the 30k loan against ppor at a lower interest than the term deposit?

Cheers,

The Y-man

 

[s_t]

She seems in a pretty good position to me!
So she has income of
$1386 rent + $2500 pension + $1450 (term deposit 290000*.06/12) = $5336 / month.

910k of assets that over time will appreciate nicely,
and she's not 45 yet! (How does she get that pension??????)

$1k play money per month is a requirement??? That pension money is obviously being put to good use.......

Investing that $290k of cash (or part of) in some high yielding stocks would be one possible solution. Could try a good fee for service only financial planner, but not too many of them around.

 

[BayView]

Whack all the term deposit onto the PPoR mortgage and blast it away would be a good start unless the TD has better interest than the PPoR loan.

 

[Bon]

Why not use the equity to hold another couple of properties and service the shortfall between rent and interest only repayments from the other properties?

 

[Ridin-High]

Get the other two adults working?

Anyway, is the 30k loan against ppor at a lower interest than the term deposit?

Cheers,

The Y-man

Pop - 83 yrs old (also has a 500p/w pension forgot to mention that, but he uses that on smokes/beer/pokies and thats fine because id want him to enjoy himself)

Stepdad - 59 retired on medical stuff

Mum - Lazy

S_T, my step dad retired got a pension from super + part payout, when he dies the pension gets halfed for my mum.

the "play money" is basically to keep my step dad occupied, $250 p/w to get him out of the house its a necessary expense as he becomes really anoying.

Im presuming once mum leaves her current job, she will be doing EBAY full time.

Many thanks for the responses so far, wonderful hub of information this group of people

 

[BayView]

Mum - Lazy
Im presuming once mum leaves her current job, she will be doing EBAY full time.

Laughing my head off at these two comments!

 

[kradical23]

Im presuming once mum leaves her current job, she will be doing EBAY full time.

You can actually make a decent living out of Ebay, but it does take a bit of work to get going.

 

[twobobsworth]

You can actually make a decent living out of Ebay.

The founder Pierre Omidyar sure has!

 

[Twitch]

1) Charge board to the free loading adults
2) Review the rents on the IPs and bring up to market, they look low
3) When the TD matures; Pay out the PPOR loan, put $60k in an ING online account and the other $200k in a share index fund or ETF (eg STW).

 

[jasper]

For someone you discribe as 'lazy' she seems to be doing OK. Find a good financial advisor for her that you both trust, she probibly doesn't want to be getting into more properties and the worries of them. Regulary review the rents on the IP's to keep them in line with the market.

 

[Dazz]

looking here what you folk would do differently

have a squizz at the following ;

1. Sell both IP's. Get say 350K in the hand.
2. Pay off the 30K PPoR loan.
3. Take out the 290K and add it to the 320K giving 610K.
4. Buy the attached for cash. It's in NSW but other than that - I have no clue. 2 min search.

http://www.realcommercial.com.au/cg...c=&c=14233352&s=nsw&snf=ras-syd&tm=1222841912

5. Use the clear 3.4K p.c.m. nett rent for your living expenses.
6. Have 100K cash at call 6% for emergencies earning another 0.5K p.c.m.


End result :

Fully paid off PPoR. Fully paid off IP. 100K cash buffer. 3.9K p.c.m. income excluding any pension.

Some people might call that risky....but fully paid off IP's and a cash buffer doesn't sound risky to me.

Could be worth nothing - but then that's what you paid me....so she's about even.

 

[crc_error]

http://www.realcommercial.com.au/cg...c=&c=14233352&s=nsw&snf=ras-syd&tm=1222841912

what a ripp off, many LPT's and even bank shares are paying higher dividends than that.

Even if she was to put CBA shares, she would get over 10%PA dividends without the hugh costs associated with buying property.. ie stamp duty etc.

 

[Ridin-High]

Update - Stratergy advice.

Gday folk,

Some more news/updates.


Mum broke the T/D a few months ago.

Purchased a property (mortgagee sale) for a good price creating instant equity.

current assets/rent

- IP 1 - 200k - 180pw (increased 20p/w), no debt (used as security my IP)
- IP 2 - 180k - 180pw (increased 20p/w, no debt
- IP 3 - 278k (+ 12k reno) - conserv val 300k - 340pw rent, 75k debt
- PPOR 530k - 1.1k debt

Equity - 1.134 Mill
C/F - 36.4k p.a
Super pension - 30k p.a

Now what mum wants to do is burrow against the value of her IP for living expenses (Living of equity) to the tune of $10,000 p.a.

After using the calculator from James Gatherum-Goss, with the following fields entered.

Assets - 1.134m
liability - 0 (mum pays the interest on 75k doesnt capitalize it)
rent - 0 (this field presumes you use rent to pay for interest i think)
Interest rate - 8%
Lifestyle cost - 10k p.a
inflation - 3%
cap growth over entire portfolio - 3% compounding

5yr Mark

new worth - 1.314m
new debt - 62k

10yr

New worth - 1.524m
new Debt - 163k


This is using very conservitave figures and seems fesible.
Now what i want to get down is the structure of the loans, what products to use, when to get the money paid. eg 800p/m from a LOC to choosen acc.

Would you burrow against the value of one property or would you do like a portfolio valuation and burrow against that?

Basically looking for some good advice on strucutre.

Kind regards,

RH

 

[Token Funder]

current assets/rent

- IP 1 - 200k - 180pw (increased 20p/w), no debt (used as security my IP)

Is this a change to circumstances since your original post or new info? Is your mother a guarantor on your loan?

 

[Ridin-High]

Some new info, yes to guarantor on loan.

 

[atti]

obviously ur mum doesnt own all of these IP in her name right ? that would be only reason why she is entitled to pension because thats designed for people that doesnt have IP and on low income.... doesnt make much sense someone has this much passive income recieves pension...

 

[silversands]

Hi atti,

Most recent post states she receives a superannuation pension, not centrelink pension.

 

[Ridin-High]

Hi atti,

Most recent post states she receives a superannuation pension, not centrelink pension.

this is correct, IP's in mothers name, super is from step father.

Anyone have any advice on structuring for LOE.

LOC or OFFSET.

Lender = CBA

I'm not mega savy on LOC's, what features would we be looking for?
Also would she take a LOC against one IP or against entire portfolio.

 

[atti]

unless your mum is going for CF+ Properties i dont see the point in borrowing more money, she is pretty comfortiable as it is..