Hi guys and girls,
been about in and out of this forum for a while now, what i really want to know is the following please.
how do i become financially free?
i have money in my super i can use and i'm willing to use to buy property's
i just want to reduce my home loan from $190k to 0 is this possible?
i have no idea how to do it and i'm just about to be a dad for the first time my wife is 33 weeks into the pregnancy. i'm not looking for a quick fix i want a program or a plan i can stick to and works.
if anyone is interested in helping me that would be great i'm willing to pay for help just need to know where to start and how to go about it.
thanks,
Hi Kallan
Welcome to the forum and I hope you enjoy your time with us.
There is no easy answer to becoming financially free and it certainly won't happen over night.
Took me 10 years to build my portfolio and another 6 to have almost the entire investment debt repaid.
In saying that if you start small with the right advice and structure anything is possible.
When working with clients we focus both on short, medium and long term goals and try and add a balance of yield and capital growth to their portfolio depending on where they are in their wealth creation. You cannot live of capital growth so with interest rates falling cash flow becomes important so we try and structure the loans and property acqusitions accordingly.
Buying in your own name is totally different to buying inside a Self Managed Superannuation entity but structured correctly there is no reason why you can't do both.
Certainly the number of SMSF structures and loans we set up is on the rise.
Obviously without more details it is difficult to give an accurate assessment of your position however your amount of non deductible debt is fairly small so no reason why you can't look to expand your investment portfolio accordingly.
One of the our favoured products for forum investors is a niche product we designed where investors can borrow upto 100% of the purchase price of their investment property without needing to provide collateral security of their PPOR or their own cash savings.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Kallan
You have said the magic words…. money in super. Would it be rude to ask if you know how much is in there? This will help us see how many properties you could buy straight up front with the funds already in your super.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Richard,
You said,….
"There is no easy answer to becoming financially free and it certainly won't happen over night.
Took me 10 years to build my portfolio and another 6 to have almost the entire investment debt repaid."
Would you be willing to share how you did this? So many strategies I see are – pay interest only and never sell. So debt is never repaid….which I dont feel entirely comfortable with. What did you do?
Cheers
Gill
The definition for Financially Free is different for everyone.
But if you wanted to at least have the ability to pay all your bills on time, live in the home your currently in and go on one holiday in a year or so.
Then financially free would be the amount of income needed on a passive or near passive nature that supported that lifestyle. I would say thats between 30k for individual to 50-60k for a family unit.
And you could get there with 1 Mil invested at 5 %.
JacM wrote:Hi KallanYou have said the magic words…. money in super. Would it be rude to ask if you know how much is in there? This will help us see how many properties you could buy straight up front with the funds already in your super.
Hi JacM
I am interested in your comments about buying inside SMSF. I assume that Kallan is younger and therefore, would not want to tie up his properties until he reaches retirement age?? I have an interest in buying through a SMSF and have certainly heard the benefits of buying in super. I have not taken it further as I thought that if you are younger, would it not be better to buy in your own name so you can freely trade properties to build your wealth?
Cheers,
ChrisA1
Persistence is 'to keep on keeping on, no matter how hard the going may be'
Hi Chris
Sure happy to elaborate.
The first thing to say about "trading properties" is that a fair whack of money is lost in doing so. You pay stamp duty to get in, you pay selling agent fees and capital gains tax to get out, which erodes a fair whack if not all your profit, and them you have to stump up stamp duty to get in again.
Did you know that in super, after you've held a property for a year, the capital gains tax is only 10%. This is a far more appealing figure if "trading properties" is the approach.
An asset base can be built far quicker (than trading properties) by buying, adding value (eg renovation), revaluing and refinancing to pull out the equity to fund the deposit on the next one. Because no sale takes place, no capital gains tax is payable, but you are still leveraging the increase in value of your property.
In super, you use money you otherwise couldn't touch till retirement age, to fund deposits and buying costs of property. Assuming we are talking residential property, the bank will loan up to 80% of the purchase price. As a rough guide, it costs about $60k of superannuation money to acquire a property worth $250k. The tenants then pay it off. In retirement, you either live off rents or sell a property or two and pay yourself a lump sum. Going back to those figures, you essentially swap $60k for an asset worth $250k. That is essentially a return of over 400%, before you even factor in capital growth of the property in the years to follow. I don't know about you, but I don't see retail super funds producing that kind of a result.
It is a very powerful thing, taking control of your own super and using leverage (borrowings) to get into property. The earlier you start, the more powerful it can be. The money is stuck in super anyway – you cannot pay it to yourself for living expenses until age 65, so you might as well put it to good use and make it grow in the meantime.
In addition to this, acquire more property in your own name outside of super.
Hope this helps.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
As the above have mentioned, have a plan/set yourself goals and make sure you structure it right, Surround yourself with positive people. There are thousands of strategies to become financially free you just need to work out which you want to do and how/when your going to do it. Good luck
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
Many thanks for your detailed response Jacqui, a great explanation.
I was a little slack with the use of the term 'trading properties', I certainly agree with you that the buying and selling costs erode any profits, and I am a fan of the buy reno, reval process (where sales prices allow for the reno to make enough of a difference!).
ChrisA1
Persistence is 'to keep on keeping on, no matter how hard the going may be'
I dont think anyone WANTS to be financially free.
You see .. the more you live .. the more you see .. the more you want to see.
I think what most people want are better options. Money and the access to money creating facilities increases these options.
Financial security and FLEXIBILITY produces these options.
You'll always have the bills that rock in .. just for breathing air every couple of seconds. Those types of things are unavoidable.
But what you may really be seeking is a better financial education. And in the longer term .. that sort of skill .. is priceless.
I have old friends from high school that cannot believe in a world where they wont be receiving their ALLOWED benefits from the government.
That sort of idea really shocks me. To rely on an initiative that in itself is only meant to be a temporary measure .. not a lifestyle.
With a good financial education YOU steer the ship towards your familys' success and progress.
DONT BE SCARED OF DEBT. Be scared of unregulated and uneducated debt.
DONT BE SCARED OF SUCCESS. Be afraid of never having tried.
Even a failiure is still an education towards getting things right.
This bit made me smile.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi guys,
thanks for your replies, i'm 30 years old about to be a dad for the first time in September this year, my wife is a school teacher and is off work till August next year on half pay, i work full time in sales, been working full time since i was 15,
i want to reduce my home loan its currently $190K and i would like to reduce that,so i could re finance and free some money up each fortnight as well as build wealth as i go?
but not sure on using super? or what to do? would like some sort of cash flow before i retire, i would say at a guess maybe 40-50K in super but i will check it out,
thanks for your help i appreciate it.
Kallan
Gilly61 wrote:Hi Richard,You said,….
"There is no easy answer to becoming financially free and it certainly won't happen over night.
Took me 10 years to build my portfolio and another 6 to have almost the entire investment debt repaid."
Would you be willing to share how you did this? So many strategies I see are – pay interest only and never sell. So debt is never repaid….which I dont feel entirely comfortable with. What did you do?
Cheers
Gill
Gilly61,
If you go through and read Richards posts from all sorts of threads, you'll see he is extremely successful and way above the average investor. He has over 40 IP's which earn over 600K a year and for his 24 Million dollar portfolio, he is down to his last million in debt. I'm sure he didn't start out paying P&I on his loans, so he'll need to answer how he has done that. He is a big advocate of CF+, which will have helped him continually build upon that empire and whilst I'm sure the boom from last decade helped propel him to where he is today, the principles remain the same. You need goals, objectives, knowledge, a balanced portfolio and CF+ to continue to grow, to name but a few ingredients…..
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