Target 2020! My retirement goal - some advice please?
- Thread starter ChasingSugar
- Start date
Thanks for the thought raisers Jingo and Trogdor.
Well, got the Valuation back on the PPOR, $50k increase which is handy! Waiting on the others.
In terms of funding the deposits, this comes from my LOC/Buffer account. Increasing the value of my properties per above allows me to expand the buffer.
Land tax will become an issue, it's for this reason I am now focused on buying in NSW for my next 2. (On top of better CG opportunity, IMO). My last land tax bill was $5K for the year for the portfolio in Victoria. But I think going forward trusts might help too? (will find out!).
The buffer I aim to keep is Circa $150K. And I will top up as time goes on. In terms of circumstance change, I've got lots of insurance (income, death (fair life changer that one!) and TPD. As well as all the relevant property ones. So with the buffer, the fact my wife is a teacher and can go back at any time, and my flexibility as a career sales guy, I like to think I have it covered as best I can. The way I see it, if I don't make the goal, I'll just keep working until I do.
In terms of what to do when I get to 2020.... My plan is to quit that year, then have a year off traveling. (Savings or draw down equity). On return I'll work with the finance team. There will either be sell down and reinvestment for diversification, or rent drawdown etc. it's a way away and won't need an urgent decision. Hope that makes sense?
Side note - would be an AWESOME problem to have!
Hi Chasing sugar
Just finished reading the thread, great work to date, that presentation would be interesting to view also
It would be great to get that 84% LVR down in the next 7 years also
How are you hoping to turn the $550k equity into $3-4 M in 7 years?
To turn $550k into $3 M in 7 years would take a Compounding Annual Growth Rate of 27.42%
If the $550,000.00 only grew at 7.5% each year, then in 7 years it would be approx $912,477.00
Just finished reading the thread, great work to date, that presentation would be interesting to view also
It would be great to get that 84% LVR down in the next 7 years also
How are you hoping to turn the $550k equity into $3-4 M in 7 years?
To turn $550k into $3 M in 7 years would take a Compounding Annual Growth Rate of 27.42%
If the $550,000.00 only grew at 7.5% each year, then in 7 years it would be approx $912,477.00
ChasingSugar, I've been reading this thread carefully and I see a few negative comments on how you are highly geared and so forth. I disagree with these folk and congratule you on the LOC to cover investment shortfall (capitalising interest) to pay off the PPOR sooner.
You have it going on man! Well done. I like your level of investment, you'll never make it very far if you stay in the small pond with the rest. And it takes guts and determination to be a successful investor.
You have it going on man! Well done. I like your level of investment, you'll never make it very far if you stay in the small pond with the rest. And it takes guts and determination to be a successful investor.
Why is growth only calculated on the equity? That's the point of the high leverage.
Hi i2009
I don't think it is intended to be negative, but investors who have been through a couple of cycles will know how it works and how you always need to cover your a...e
LVR is very important, markets run in cycles and they do crash, properties go backwards or stay flat for 7 years plus we have seen this happen in Australia, Perth, QLD, Syd. Could you imagine what would happen to your portfolio during this period if you were 80% LVR and you were relying on equity to pay back debt
MTR
Hi i2009
I don't think it is intended to be negative, but investors who have been through a couple of cycles will know how it works and how you always need to cover your a...e
LVR is very important, markets run in cycles and they do crash, properties go backwards or stay flat for 7 years plus we have seen this happen in Australia, Perth, QLD, Syd. Could you imagine what would happen to your portfolio during this period if you were 80% LVR and you were relying on equity to pay back debt
MTR
what do you mean equity to pay back debt???
are you trying to rely on property doubling every 10 years to draw out and use it as a buffer,
other then rising prices, I dont think there is many ways to lower your lVR signfnicatnly across a large portfolio, even a payg job will be a drop in the ocean
No, at all.
Am talking about LVR, and managing the risks, in otherwords reducing debt to keep moving forward, rather than continually growing the portfolio and ignoring LVR, fatal when the market goes backwards.
The target retirement date is 2020, so 7 years from now
ChasingSugar said:
Actually using just the above numbers it looks like an LVR of 86.1%
Equity of $375,000.00
Total Loans $2,328,000.00
Total Value $2,703,000.00
ChasingSugar has said that the IP's are in a mix of regional and suburbs, with reasonable rental returns (neutral) and annual average growth of 10% plus over past 10 years.
And picked up another one during the thread
What do you mean redwing?
I'll do some quick calculations then. 550k equity at 85% LVR would put the total value of the port folio at approximately 3.5 million.
So 7 years from now, with 7.5% growth like you suggested, the port folio will be around 5.8 million. Resulting in equity of 3.35 million.
Hi TMNT
Nothing if you believe this, did years ago when I started but have realised there are too many variables including interest rate increases etc to rely on growth.
I was just looking at the equity growth, as you suggest it's how much you can control (based on your SANF) as gross value matters
10% of $2,000,000.00 will always be more than 10% of $500,000.00
Mate thank you, I really appreciate that!
Seek accountant advice mate.
I believe people have had varying success with this strategy. It's all about how you put it to the ATO.
If you're diverting funds to pay off the PPOR because it is non deductible the ATO will not allow it under part 4A.
If you're diverting funds to pay off the PPOR because your wife is uncomfortable having so much debt on your house and you are capitalising the interest on the investments because you want them to be stand-alone investments and not eat into your salary.... you may have more luck.
I'd be looking for an accountant who has had success with these private rulings before and have them apply for one on your behalf.
If you're diverting funds to pay off the PPOR because it is non deductible the ATO will not allow it under part 4A.
If you're diverting funds to pay off the PPOR because your wife is uncomfortable having so much debt on your house and you are capitalising the interest on the investments because you want them to be stand-alone investments and not eat into your salary.... you may have more luck.
I'd be looking for an accountant who has had success with these private rulings before and have them apply for one on your behalf.
A good article on retiring at age 40. Is seven years too short and ambitious a time frame to be making three mil?
http://au.pfinance.yahoo.com/money-...ement/article/-/13718769/how-to-retire-by-40/
http://au.pfinance.yahoo.com/money-...ement/article/-/13718769/how-to-retire-by-40/
