Hi all,
I am about to venture into property however, before I do this I would like to create my Master Plan first and work backwards from there. Having a master plan will hopefully clearly show me where I need to be and what financial cashflows and liabilities will exist at any particular time. This will effect what I am doing right now to meet these goals / requirements.
Just brainstorming at the moment and gathering information / insight. I have read Steve's book 0 to 130 and hope to read a few more.
Ultimately, my goal is very simple. I am aiming to have a portfolio which will provide a healthy income in retirement (I like to think in about 20 years). Nothing to fancy. Then continue building the portfolio for my immediate family's benefit. Who knows where it will go from there.
I currently have about 500K equity sitting in my PPOR maybe more. About 160K mortgage and no other debts.
I am not sure which strategy to employ. I am not adverse to developing property. As an architect I am familiar with the process . Whether this is a better path to take than buying established I am not sure? Hence the master plan.
How would you guys begin to structure your master plan based on this scenario? Which strategies would you employ? Goals etc?I know the answer is an "It all depends" type answer however, I am brainstorming right now and would like to hear how others who have already arrived where I would to go actually got there.
Mario
Hate to say so, but it does depend.
re: Developing; It depends on how much finance you could get to finance development (as it'll be slightly trickier than just getting a loan for a dwelling that already exists). So your income that will service the loan will come into play etc etc. It also depends how much time you have to put into this, and whether you'd actually make enough money for it to be worth the bother.
The other thing you'll want to pay a lot of attention to right up front is the buying structure. eg whether to buy the property/s in your name, inside a trust, inside a company, or inside a Self Managed Super Fund. This is a whole other topic that will require you to be across the pros and cons of each. For instance, in a super fund, you will be paying for property with pre-taxed dollars and enjoying great asset protection, but you might find you can't leverage one property against another if you decide to buy more than one property through super. A trust might provide you with the ability to distribute profits to whomever depending on the various earnings levels of family members in a given year, but you might have to forego the tax-free threshold for land tax. Buying in your name will allow you to negative gear against your income, but then your assets are at risk if you get sued. As you can see, quite a topic….
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Good advice above.
To add- how hands on do you want to be? How much spare time do you have?
Developing takes time and effort.
Buy and hold takes a lot less effort.Is your goal to retire/semi retire early? Maybe retire and develop?
It is hard to say what will suit you without knowing more basics.
Keep reading. But read more than the "how to get ### houses in 5 years.
Read some other strategies which will help you decide what path to follow.
Nothing is set in concrete. Lots of people start with buy and hold (with minor renos to increase equity and cash flow) then move into other areas as their expertise develops.With that amount of equity I'd be jumping in now. But as Jac mentioned get the setup right.
Wish this forum had where you live (City, state). That helps with advice. Different states are in different parts of the cycle so depending where you wish to buy/develop etc will make a difference to where to start.
Hi guys,
Thanks for the replies.
At this stage I am only focusing on understanding the different paths that are available to me that will get me to my goal.
That is – "A property portfolio that is generating an income 20 years from now equivilent to 30K/yr in my pocket in today's dollars"
Understanding the paths available will show me what structures, cashflow and time I need today to achieve this goal. The path I choose will be my master plan (subject to yearly assessment and adjustment).
Having a master plan will also allow me to ask the right questions of my expensive advisors- accountants, lawyers etc.
How have others here tackled this critical task of creating a master plan?
Mario
You must be logged in to reply to this topic. If you don't have an account, you can register here.
