Hi, I have been trolling this site and others for a long time now and feel I am stuck in an analysis paralysis situation. I am a chronic over thinker and assess everything from every angle and end up doing nothing. My husband and I are currently living overseas and are wanting to build up a property portfolio to set us up for retirement. We sold our PPOR just before we left to move O/S and are yet to get back into the market. We have 2 children and one will be moving back to Australia soon to go to high school. Our plan is to stay O/S for the next 5 years to see my eldest through high school. My husbands package includes most living expenses and school fees so we are in a good position for servicing loans and the Oz dollar at the moment is in our favour. While still wanting to maintain our standard of living we have recently been given a pre approval for $800000. My problem is that one minute I think we should be looking at a property with the intention of living there which is obviously more an emotional buy than a property purely for investment and the next minute want something purely for investment. My feeling is that we should be looking at the potential PPOR first. Bearing in mind my husband is 45 years old so our strategy needs to be fairly aggressive if we are to achieve our goals for retirement. I know this may sound a bit vague but if anyone can assist or put me onto someone who can advise a strategy for expats I will be eternally grateful. Thanks..
Hi ccbz
It really depends on the end goal. If you define where you’re trying to get to, it is far easier to determine whether assets you are considering will take you closer to that goal. Residential real estate is one example of an investment vehicle that people choose to move them towards their goal. Other examples are things like shares.
The “goal” is not “to collect properties”. The “goal” is a passive income goal by a certain point in time. For instance, to assemble a portfolio which produces a surplus of rent (after bills and mortgage) of say, $15k within 8 years, and a surplus of $50k within 18 years.
Think of those dollars as equivalents. The surplus may be higher but so will be the cost of living, so it sort of balances out. It is easier to think of in terms of relativity. eg a loaf of bread costs $1. Within 8 years I want the rental surplus to be able to buy me 15,000 loaves of bread per year, regardless of the price of a loaf of bread at that time. Generally you put your rents up each year which assists you in moving towards that goal.
Remember that PPOR mortgage interest and bills will not be tax deductible, whereas mortgage interest and bills on an investment property WILL be tax deductible. Some people who have the desire to live in an expensive area choose to rent there (since rent is often cheaper than what mortgage repayments will be in an expensive area), and spend their money on investment properties in areas where the properties pretty much cover their own costs.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
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