Sounds great.
What is your end strategy?
- Thread starter GoAnna!
- Start date
Sounds great.
Hi Rixter,
I was wondering how your plan worked out.
How has it worked financing wise now you are no longer PAYE? Are you dependent upon certain bank products existing? Are there risks that you foresee?
I've secured all the funds required to fund lifestyle for the next 10+ years prior to exiting payg. In 10 years time portfolio values & yields will be double again. But arent intending to draw down on it until another 10 years after that due to our SMSF which can be drawn upon tax free for that period.
Brave assumption .... I hope it works out well.
Always wise to have an acceptable contingency ... commendations sir.
Great to see you posting again, GoAnna,
I suspect you've got your end plan well and truly sorted, GoAnna!
For newer posters, I'd suggest having a read through GoAnna's interview. An amazingly inspirational and highly successful investor.
In terms of my own end game, outside super I'll end up holding a mixture of resi, shares and unlisted commercial property. Inside super, I'll hold shares. Working on the share side of things now.
Keep posting, GoAnna, your insight is sorely missed.....
(The numbers are telling me what to do.........) Hi Rixter,
I understand that concept, and I believe I could also exit the rat race yet I am scarred to do it. Why? Somehow my mindset is not there. The current portfolio is 29%LVR (includes IPs personal or in trust, SMSF, and PPOR) and 37%LVR (excluding PPOR).
Though, I do want to offload 2 IPs next year, bad eggs or lemons, not much growth there.
This will simplify my life and management of the IPs a bit.
Some blocks, over 1000sqm could be redeveloped in the future, but I think I will leave it to kids, or some future developer that may wish to buy it, time will tell?
So I suppose the idea is to live off equity? I can pull out around $2.8 million right now, from only 3 properties (The valuations came higher than I expected), while the rest are maintaining themselves but I cannot bring myself to do it? I suppose I am waiting for the youngest to finish the expensive private school in 2 years before I make any such decisions.
I am wondering what your level of LVR is that made you comfortable to exit this rat race?
BUT to answer the question I would like to live off the rents, equity, some dividends and future sales if we renovated the houses!
Hi MIW, lvr is 50%. Not sure of what your cash flow is or lifestyle costs, but if you can pull up to $2.8m and have the cash flow to cover the interest component then you are in an excellent position.
Quick calculation, $100k per year to fund lifestyle over 10 years @ 6% = $1.3M total funds used of your $2.8M... and that's capitalising the interest component along the way without using any rental income to pay the interest costs..
Providing you've structure your portfolio for CG, the assets growth you're securing those drawing against along the way would be far outstripping your $1.3M draw down.
Mindset is the key component..
Well done on your achievements & Success.
Quick calculation, $100k per year to fund lifestyle over 10 years @ 6% = $1.3M total funds used of your $2.8M... and that's capitalising the interest component along the way without using any rental income to pay the interest costs..
Providing you've structure your portfolio for CG, the assets growth you're securing those drawing against along the way would be far outstripping your $1.3M draw down.
Mindset is the key component..
Well done on your achievements & Success.
Would banks let you extract equity for personal use when you don't have a job?
Maybe it depends on the cash flow and LVR.
Don't forget to plan for the downside. Can you withstand a 2% rise in interest rates and prices falling 15-20%?
We are at the stage where if we sold everything up it would probably be enough.
It seems to make sense to just consolidate and reduce our exposure to markets and cycles.
But we are also conscious that unrealised gains are worth more than realised gains. So we are probably going to stay in for another cycle in the Sydney market and continue to build assets in some other markets.
The end game is, however, to sell up and get a safer more diversified income stream stream - but probably in another 10 years.
P.S. Just read the interview with Goanna - a great success story. A lot of wealth made in Tassie of all places.
It seems to make sense to just consolidate and reduce our exposure to markets and cycles.
But we are also conscious that unrealised gains are worth more than realised gains. So we are probably going to stay in for another cycle in the Sydney market and continue to build assets in some other markets.
The end game is, however, to sell up and get a safer more diversified income stream stream - but probably in another 10 years.
P.S. Just read the interview with Goanna - a great success story. A lot of wealth made in Tassie of all places.
Do you mean the property valuation is higher than the would be sold price? Hence, you are better off extracting the equity rather than selling and realising the gain??
There is no end game.
There will always be opponents to challenge, so you can reach the next level.
The game will never end, unless you quit.
There will always be opponents to challenge, so you can reach the next level.
The game will never end, unless you quit.
It was more the CGT and selling costs that reduce the realised gain.
Love it. I'll still be messing around with business until I croak I think.
Like Rixter, I can't see any issues for you with that kind of equity, however unlike Rixter, I'd be more concerned with the cashflow of the portfolio, because while having heaps of CG in the future is awesome, you may not be able to access it without a job.
In our situation, we're selling down some Sydney properties and keeping quite a few cash cows for income. We'll still be exposed to the Sydney market, but in a smaller way, going forward.
I started investing in shares about 5 or so years ago. Initially, I used fundamental analysis to pick individual companies to build portfolio of stocks that I believed would outperform the market over the long term. Around 2-3 year mark I started to realise even though I am doing better than the market and have made decent returns some of my original assumptions about some companies were not correct. This created some doubt regarding my abilities to pick long term winners (I was not interested in short term 2-3 years investing as that's not passive and is more stressful).
I continued to actively learn about the markets during that time. The idea of index fund investing that I had originally completely rejected thinking index investing is for average Joe, my investing skills are superior to those of average Joe, started to appeal as even 10%-11% pa compounded over long term can be a very good return. Plus it's 100% passive and I am happy to pour large sums of money without having to worry about individual company risks. So about 2.5 years ago I sold down my portfolio of individual stock picks at a healthy profit and used the proceeds into investing in ETFs and and have been DCA ever since.
The reason to move to shares from property as asset class is because I started to like it as I developed my understanding of shares as part ownership of a business run solely to churn profits for it's shareholders and feel confident about it's future returns. Secondly, its much less hassle to own compared to property.
Cheers,
Oracle.
Cash flow is very very important. The drawings are serviced with it. ...not sure where I indicated it's not
The funds are already accessed and available.
Yes, I understand that may be the case in your situation. But not everyone is as well positioned as you are in this instance. You DID say you had 10 years of drawings & then another 10 you can access through super, didn't you? By that time, your rents should well & truly be sufficient to keep you going.
I'm thinking of someone who may have 10 years of drawings up their sleeve, but at the end of the 10 years can't access any more unless they sell down.
We've got a substantial amount of drawings, but we'll be solely living on rent. The drawings are there ready to go, should we need them, but we are planning on not needing to use them at all. We also don't have much in the way of super either, so our investments are really all we have, so it's important to me that we have a strong cashflow.
