The lifestyle you desire?

[SliderC]

I hear it all the time "how many properties you buy depends on the lifestyle you desire" then I also hear "most investors never sell and let inflation grow their profile".

My question is, how do I fund the lifestyle I desire if I never sell? Am I dependant on my rental returns/rental growthAre their ways to access equity without paying tax on it? Wouldn't my equity redraw be non tax deductible?

Anyone have any experience with funding your lifestyle without selling our props?

Cheers!

 

[beachgurl]

Living on Equity LOE was all the rage pre-GFC. It was super easy back then to max out your equity and push it into your little coffers (ie savings/offset account) to do whatever you want with it. Each lender has different rules now on cash out and some won't allow you to do it at all.

Search for LOE on here as there's been quite a lot of talk over the years about it.

 

[Harro]

I hear it all the time "how many properties you buy depends on the lifestyle you desire" then I also hear "most investors never sell and let inflation grow their profile".

My question is, how do I fund the lifestyle I desire if I never sell? Am I dependant on my rental returns/rental growthAre their ways to access equity without paying tax on it? Wouldn't my equity redraw be non tax deductible?

Anyone have any experience with funding your lifestyle without selling our props?

Cheers!

What, exactly is the lifestyle you desire?

 

[Ace in the Hole]

You can always pay down/offset debt without selling to increase your cash flow/passive income.

 

[D.T.]

My question is, how do I fund the lifestyle I desire if I never sell? Am I dependant on my rental returns/rental growthAre their ways to access equity without paying tax on it? Wouldn't my equity redraw be non tax deductible?

Don't need equity draw. In fact that's hardly a possible (or sustainable) strategy for most people.

Instead, allow rents to creep up over time. The costs for the most part stay static and rents rise with inflation, creating a larger, more profitable gap. If you had say 20 properties that were $100/wk positive each that'd work out to $100K a year after costs.

Sometimes, you can overshoot your goal (to say 23) and sell of the additional and use the proceeds to pay off (or offset) some debt. This helps bring the existing ones up to that $100/wk positive (or whatever your goal is).

 

[Aaron_C]

Anyone have any experience with funding your lifestyle without selling our props?

Don't give up your day job that quick...

 

[A Jeremy]

Rules are meant to be broken. If you go in with the intent to never sell and over the course of a couple decades sell a few, who is going to say 'tisk, tisk' when you're drinking martinis?

You won't be able to afford the lifestyle you desire next year or the one after that but if you're patient and play the long game by building a positive cashflow portfolio instead of selling, which is not at all passive, your bank balance will begin to creep up.

Of course you have make sure you keep the same discipline with your spending, which allowed you to begin investing, when you have more means because just as there are low income earners who are broke, there are also high income earners who are broke.

 

[datto]

There has been a tectonic shift in property investors wealth over the last 12 months or so.

It measured about 7 on the richter scale.

After shocks are still occurring.

A tsunami of cash has swelled up - kinetic forces are at play here.

If the energy is not dissipated but instead funneled correctly then stratospheric heights of wealth could be achieved.

Thank you and good evening.

 

[D.T.]

What on earth are you on about?

 

[Singo]

What happened to datto?

 

[D.T.]

Something in the water in those feral western suburbs?

 

[SliderC]

Thanks all, I had figured it would be mostly related to your potential cash flow just curious to know if anyone had any creative ways of accessing their equity without selling.

20 properties is quite a number =/ however 100k passive is also quite impressive...not sure ill ever get to that point.

For the modest of income folk, I imagine properties are sold up to pay down PPOR/retirement slush fund, doesnt really seem much point holding 1-2 properties for the rental incomes, it would mostly be taxed anyhow

Wonder what the pension pays...

 

[Corey Batt]

Thanks all, I had figured it would be mostly related to your potential cash flow just curious to know if anyone had any creative ways of accessing their equity without selling.

20 properties is quite a number =/ however 100k passive is also quite impressive...not sure ill ever get to that point.

For the modest of income folk, I imagine properties are sold up to pay down PPOR/retirement slush fund, doesnt really seem much point holding 1-2 properties for the rental incomes, it would mostly be taxed anyhow

Wonder what the pension pays...

Generating 100k cash flow from rents isn't a difficult task if you're methodical, make sure your purchases assist your goals and you have a decent time frame (say 15 years). Plod along and you'll get there without any huge impost and a nice comfortable retirement!

If you dabbled in more adventurous endeavors such as development or renovations you can go further/get there quicker.

 

[BayView]

Thanks all, I had figured it would be mostly related to your potential cash flow just curious to know if anyone had any creative ways of accessing their equity without selling.

you can use the equity to buy a business/es and there is the cash flow from it/them.

 

[D.T.]

you can use the equity to buy a business/es and there is the cash flow from it/them.

Unless of course your name is bayview

(just poking fun of course, no harm meant)

 

[sanj]

Unless of course your name is bayview

thats a bit harsh, no need to stick the boot him.

marc's post is right though, good businesses will return significantly higher returns than property, even at a 4 times multiple youre talking 25% returns as opposed to 4-5% which i genuinely consider to be a waste of capital.


it's easier said than done of course but can certainly be done.

 

[A Jeremy]

My problem with owning a business is trusting people to do their job. People at all levels fail expectation and those who exceed don't work for others - they start their own. You can put systems in place for quality control and continuous improvement but then someone has to carry out those tasks and who is watching them?

For me to sleep and own a business it would have to be so successful that I can step back and be able to afford a high enough wage for a high quality MD to oversee everything.

 

[kathryn d]

Figure out how much income you want to generate for retirement.

How many properties will it take to provide that amount.

Save enough for the deposits. or use existing equity.
Pay off these properties.

The faster you pay them off, the faster you are FI - financially independent.

That's one way, along with many others.
This one is guaranteed to work.

Hoping for capital gains and selling down in the future, is a gamble.
Your choice

 

[BayView]

Unless of course your name is bayview

(just poking fun of course, no harm meant)

Nah; all OK; I'm a big boy.

I still draw a wage from the place, but it's not the projected figure, and I also work twice as many hours in it than I had in mind when I bought it.

Stiff shoit.

$100k nett per year for a 20 hour week was the original plan.

My return on investment is currently about 15% (if I don't treat my wage as a wage, but as as money paid to me from my initial outlay - as you would with an IP). Not real good in my book.

My problem with owning a business is trusting people to do their job.

You never really can.

All you can do is try to hire the right staff, and have some sort of system/s in place which will control their ability to steal stuff, and to continue to be productive when you are not looking.

Bar-coding everything and a no-cash business is one way.
Explicit job description and task lists for each shift is another.

I - like many employers - think they can buy loyalty through treating your staff well; extra money, freedom with time off, etc.

Sadly; not 100% true.

 

[geoffw]

The income is one part of the equation.

There's also the expenditure.

When I had the business I took a big cut in take home pay. I managed to do OK- I found that I had been spending a lot on things that I could easily do without. Now that I have an increase income I'm saving a lot more of it.

We are also looking at the possibility of spending at least some months of the year overseas once we finish working- where the expenses are a lot lower and the lifestyle can be quite good. There's a lot of possibilities.