What is your end strategy?

I am starting to look ahead and think about how I want things to be when I am "old" gulp.

The thought of renovating or flying interstate to inspect properties doesn't seem an appealing prospect in my 80s. Or do I pass on the responsibility to the kids?

So I am wondering in terms of return / capital growth / ease of management the best form to hold my wealth.

Do I try and catch a couple more booms (and will they eventuate?)

What is your plan? What are you considering as part of your plan?

PS Hello to the old timers who are still around.
 
Pfft. 80 is young. My dad is early 80's and just drove down to Melbourne from Adelaide to do some maintenance on his investment property there. I don't see my parents slowing up any time soon. Last year they renovated a house in Brisbane.

You do have good point about what happens next though. When it eventually gets too much for them or they just don't want to do it anymore, do we take over or do they sell? I'm not sure what the answer is but it is worth considering.
 
I think for me it would have to be as passive as possible. Rather have only a few high rent/high value properties with minimal involvement and enjoy retirement/ hobbies/ family. Would probably pass it down too rather than sell: assuming properties are paid off by then - if not, I would probably sell to keep only a couple/a few paid off properties.
 
Its not that I couldn't do it. My mother is nearly at that age and she could.

But I have no interest in property consuming the rest of my life.
 
Welcome back GoAnna! I think you're getting ahead of yourself, I'm guessing you've got about another 35-40 years before this becomes a problem... :rolleyes:

From the point of view of management and tax, holding property actually kind of stinks. It's the most heavily taxed asset class and does require ongoing effort to maintain it, if only through maintenance and managing tenants (even if you do have a PM, it still takes effort).

Consider a portfolio of shares. No land tax, fully franked dividends, nothing to do but collect a cheque periodically. Of course the downside tends to be volatility (when compared to most property) and loss of control, but this can be easily mitigated by being picky about what you hold.

Property is a fantastic vehicle for creating wealth. However there is a very good argument to transitioning that wealth to other asset classes as you approach an ongoing income phase.
 
What is your plan? What are you considering as part of your plan?

From the point of view of management and tax, holding property actually kind of stinks. It's the most heavily taxed asset class and does require ongoing effort to maintain it, if only through maintenance and managing tenants (even if you do have a PM, it still takes effort).

+1. Agree

The effort still feels justified when prices are rising but it really stinks when prices stagnate or go backwords which can easily happen with property.


Consider a portfolio of shares. No land tax, fully franked dividends, nothing to do but collect a cheque periodically. Of course the downside tends to be volatility (when compared to most property) and loss of control, but this can be easily mitigated by being picky about what you hold.

Again +1. Agree

I try to make it even more simpler by holding only low cost index funds. Both domestic and international for diversification.

So GoAnna..that is my long term plan to just have a basket of index funds owned within discretionary family trust. I am already doing that now purchasing every quarter (DCA) and plan is to never sell and just live off dividends.

My reasoning apart from what Peter mentioned above with management of property is also my wife is not interested in investing so I want to have everything setup that is as passive as it can get if I were to leave this world before my wife. Dividends just keep getting automatically deposited into the bank accounts.

Finally, I don't know if my kid will have any interest in property when he grows up so again if I were to pass down assets to him I would like to make it really simple hassle free.

Worst thing that can happen is after both of us are gone kids just don't care about the management/tax of owning investment property and decide to sell it all as it gets all too hard. Triggering CGT and possibly not knowing where to re-invest the sell proceeds and might end up spending it all :eek:

Cheers,
Oracle.
 
So oracle you are shifting over time across to index funds?

How do you decide if they are likely to be reliable income wise long term? Purely through diversity?
 
So oracle you are shifting over time across to index funds?

How do you decide if they are likely to be reliable income wise long term? Purely through diversity?

Yes, GoAnna, that is how I would like to have everything setup in the end. I am still in my mid 30s so will take my time to move my property assets into stocks. Don't want to rush into it and pay heaps of tax right now as I am already on high tax bracket from my day job salary.

You might want to have a quick read of the 2 posts I made last year. Not much has changed since then for me.

1) http://somersoft.com/forums/showpost.php?p=1179070&postcount=118

2) http://somersoft.com/forums/showpost.php?p=1179886&postcount=130

In terms of reliability there can be some volatility with index funds/ETFs so you have to plan in advance to cater for it. There are some LIC's mentioned in that thread that have known to have always maintained or increased dividends with proven track records. You can look into them if income certainty is what you prefer.

Cheers,
Oracle.
 
This is/was my plan.
Age until 40: Accumulate enough property to fulfil basic needs at the age of 55.

Age 40 - 55: Increase share portfolio enough to fund reasonably luxury (holidays etc) . Also slowly add/develop properties.

Age 55-70:
a. Develop\renovate existing properties if possible.
b. Buy a large land in a good area and develop 1 large & 2 other dwellings. We may need to sell most of our IPs for this.
Rent out those 2 dwelling to our kids for lower rent but let them take care maintenance.
Let one kid live with us in the large house but let him or her take care of house expenses.

Age 70+: Leave it open as it is really hard to see what will happen in 30 years time.
 
Hi GoAnna...welcome back...you have been missed

Being one of the elders I can add what I have done is :


  • Sold down any properties that caused any problems, eg any Body Corporate held units.
  • Invested the money in term deposits or bank deposits giving higher interest .. this currently not working, so buying some shares
  • Kept higher value properties and living off rent
  • I also used some of the cash to buy a holiday house, about 1 and a half hours from home, which I use constantly
  • Spend and travel as I want ....Travelling overseas around 4 to 6 times a year ...
Long term held properties have given me a very comfortable lifestyle :)

Chris
 
G'day Goanna, great to see you back.

Im now in my CGA LOE harvesting phase, having fully exited the rat race last year.
 
Great to see you back Goanna.

We're presently transitioning Hubby out of the workforce. Lots of refinancing, selling & restructuring.
 
Again +1. Agree

I try to make it even more simpler by holding only low cost index funds. Both domestic and international for diversification.

So GoAnna..that is my long term plan to just have a basket of index funds owned within discretionary family trust. I am already doing that now purchasing every quarter (DCA) and plan is to never sell and just live off dividends.

My reasoning apart from what Peter mentioned above with management of property is also my wife is not interested in investing so I want to have everything setup that is as passive as it can get if I were to leave this world before my wife. Dividends just keep getting automatically deposited into the bank accounts.

Cheers,
Oracle.

Oracle: this plan is not disimilar to mine. At what point in your journey did you decide to draw down to purchase shares? After you reached a predetermined portfolio asset value goal, once you exhausted your ability to borrow for property, or some other trigger entirely ?
 
Ho! GoAnna!

I am starting to look ahead and think about how I want things to be when I am "old" gulp.....PS Hello to the old timers who are still around.

Ho, GoAnna!

I was talking to Mike about your townhouses only last week, there are some similar roof lines under construction which we walk past every so often, so if your ears were burning last week, it was us!

I will write again in a bit of detail about the planning ahead and getting old bit, I am a bit busy right now as I have my Surprise 65th Birthday Party on Sunday: Yes, I know about it, the Surprise is to find that I am suddenly, 65!!! It certainly does creep up and has caught me unawares. I could have sworn I was still only about 48!

Don't know why I logged in tonight, just had the prickle that I should, so hello to you, too!!

Lotsa love
Kristine
 
Hi Goanna

My plan is to monitor my IPs for a few years and lizard around as they grow in value. Then finally sell.;)
 
Hi Goanna

Nice to see you back . BTW , a big thanks for the unit block you told us about in Newtown , Tassie . ( though did ruby first notice it ). It's the only property we still have from our original purchases and it well and truly cash flow positive .

Do you still have you Hobart " house " , though to call it that is a bit of an understatement .....

Our aim at this stage is to end up with a portfolio nice properties in nice areas , hopefully fully paid off . This will minimise the number of properties we have and hopefully the work involved .

We have one unit in manly which is in a bigger block ( pacific wave ) and with that size , the BC seems to run effectively and outside paper work we don't have to do any thing . We have units in a company title block in Mosman and being smaller , we need to keep a closer eye on things , so that takes more time .

We bought our nice properties in the period from the GFC until late 2013 .

We have a couple of these we may sell down to pay off debt , but we're about to go on a spending spree with the aim of buying multiple " cash flow " properties , holding them while they go up in price , then selling them to pay off the other properties .

What we do after that will depend on whether we need any more money ( hopefully not ) or doing something to keep the brain ticking over .

My assumption is , unless there is a major change the world works , we will continue to have cycle every ten years or so .

My perception is cycle wise , we are around where we where when the chat room was occupied by you , me , ruby , sim , Michael g , Yuch , rob , Nivea , boiler room , ani ( what happened to her ) , Paul zag , Jacques and Ross v ( rip ) etc , and who can forget asy ...

Sydney has boomed and Brisbane is just starting to move .

Cliff
 

Do you include franking credits into your calculations?

Early end-game
I'm in my early 30s and looking to take a mini retirement. Roughly 6-9 months off work for slow travel, learning a language and spending time with family and relatives abroad.

Thought it might also be a good time to offload a couple of Sydney properties to take profit. My earned income will be minimal so CGT is minimised. Use profits to pay off remaining PPOR debt, reduce investment debt and invest into dividend paying shares.

Semi end-game
Return to work on a contract basis (work 6 months a year, 6 months travelling) or part-time. Just enough to pay for living expenses and continue to DCA a little into shares. My thinking is that life will be much more enjoyable this way with the tradeoff being that my full retirement date will be pushed out by a few years.

Property continues to compound in the background

End End-game
Sell majority of the property portfolio and convert to more dividend paying shares and live off fully franked dividends.
 
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