We are in our late 60s, have around $1.000.000 in equity in our house, living on a pension, what are our chances of becoming financially independent within a reasonable period of time, say 5 years, while we still have our 2 (4) feet out of the grave. We bought Steve's first book, 0 to 130 etc last week and I am finding it difficult to be able to put it down, will be purchasing his 'other' books in due time. We are not wanting to be the best, just want to be able to enjoy a few more of the nice things in life, plus help our children and grandchildren.
You're never too young or old to start anything!
Colonel Sanders was 66 when he started KFC and look where it is now
If you've got the passion behind what you do, you'll achieve it.
All the best,
Lance
Whoopi 2
Is your pension from Kevin Rudd or a superannuation pension?
Forget what you have read in the books, its all fairy land stuff, even Steve McKnight admits his book is not possible nowadays.
Most people will tell you to go to a Financial Planner , which is fine if you are stupid and know absolutely nothing about investments – just look at what has happened to everyones superannuation ( not mine by the way) and shares and investments in unsecured deposits.
The second obvious thing to do is sell your house before its worth $600,000 by next year, buy some cheap units or townhouses near a station that shows positive cash flow and relax.
good luck
DONT rush out and sell your house like negative Nellie suggest above. Yes values are declining but if you where to sell your place to downsize and free up some cash. Remember the houses you would be buying will have dropped also. Plus there are many ways to use your equity without selling. Im sure some people with expieriance in building there own wealth will jump in soon. Me, im just starting out.
normally advisors will recommend a 5-10 yr minimum period for investing. at your age, you dont have the luxury of taking risks.
If I were you, I would be downsizing the house & investing the rest after consulting a PROFESSIONAL INDEPENDANT ADVISOR.
It is unlikely you will get a good rental yield on a house worth millions, so it must be sold.
There are only two ways to increase your income: have more money to invest OR improve the return from your existing investments. A home is a LIABILITY not an asset.
WJ Hooker wrote:Forget what you have read in the books, its all fairy land stuff, even Steve McKnight admits his book is not possible nowadays.
Hey guys,
I just bought Steve's book, and about 1/5 of the way into it. I think it really helps to open our mindset. However, if the above statement is true, then does he have a book that is more updated for today's strategies?
Thanks all
Alliance,
Steve's book 0 to 260+ properties was published late 2006
Alliance_22
Was refering to Steves first book, the one Whoopi 2 is reading.crashy
Agree
devo76
Was thinking sell now get $1,000,000 rent for a while or live with family for a while. When prices drop, buy your block of units or townhouses, move into one and rent the rest. Or some variation on that.
I am a professional accountant with around 400 clients. I have had the luxury over the last 25 years, to see many many people make good decisions and bad.
the saddest ones I have seen in recent years were the retirees who with the buzz of greed in the air took the plunge and moved from conservative to high risk at the wrong time.
the worst was a couple in their late 70's who had 1M in their S/Fund who moved out of blue chip into Macquarie Mangaged funds. they dropped over 50% before the crash in October.
Your retirement years are not for learning new skills in areas you don't know.
Many on this site have ridden the roller coaster up without understanding the fundamentals. Go back and read the thousands of cult like quotes, that property cannot go down, it doubles very 7 years , it is not timing in the market but time in the market, the right time to buy your next property is now. Yep they made money but had no understanding of the fundamentals. They laughed and ridiculed foundation with his logical cyclical view of the market for years. and od course don't worry CHINA, until evryone in China has bought a car teh demand for iron ore will just rock on. Of course not sure how people who earn A$1.50.an hour will ever be able to afford it…., but don't worry Perth will just keep on booming ..Most of them have gone.
The book that helped drive the market and create the self fulfilling prophecy of the boom was written in another time and in another world.
As bad as things are (and for many it is great, low rates, cheap petrol and free money from 747 Kev) this will be a big one, and it has not even started.
Downsize, free up some capital, or sell your house and go to a casino, at least the casio may throw in a free night in the executive suite. (sorry …. that was a bit harsh but directed more at some of the entusiastic newbies rather than yourselves)
gmh454
I think I get the drift?
You agree with me about the book being written in another part of the cycle that is gone.?Don't you just love all those real estate agent terms, especially the old favourite "Now is the best time to buy"!
Yes, they should sell their house and downsize before its too late to get some capital.
WJH yep, I think those books were for the up part of the cycle, don't think books on the down part of the cycle would have sold that well..
Woopi, consider what is important to yourself for the next 10, 20, 30? years. As you have ceased working you will need to live off whatever you have accumulated in your working life. Your investment profile will need to remain conservative ie not highly leveraged/minimum risk investments (this may be cash at bank, term deposits etc), your house is most likely capital gains free as well as pension test exempt however this situation will change if you sell your house and sit on the funds or even if you give away more than a certain amount – it will affect your pension status. You may consider downsizing into a more appropriate house/unit (possibly an over-55's development, an easily accessable unit/house etc), use some of the funds to update/spruce up the new place, give a portion of your sales proceeds to your kids (check the limits which apply to pensioners) and retain the rest in a low risk environment.
See a financial planner as to how best structure your affairs.
Woopi, with the equity you have and the income from a pension, I would suggest you think carefully about using real estate as a vehicle to create wealth when you only have a time horizon of 5 years in mind – unless you're an active investor i.e. buy, add value and sell.
I'm not giving advise here but what crashy mentioned, i.e. downsizing and investing your remaining equity might be a very good alternative if you want to be a more passive investor. Be careful with using advisors, as most advisors make their living from commissions. Also, the majority of fund managers underperform the indices they benchmark against. If you intend to invest in shares/funds learn a bit about asset allocation (just google it) or read the book "gone fishin portfolio" and consider developing a portfolio of index funds. The share markets world wide have been hammered so you could have picked a worse time to enter (but we may not be at the bottom yet so a dollar-cost-averaging approach to get in the market might be an idea).
Never keep all your funds in cash, as inflation kills over time.
hi
have you considered a reverse mortgage? this allows you to withdraw funds from the equity in your home which would give you the money to live well. i'm not sure how it affects a pension but as it is borrowed funds, i wouldn't assume that it would.a reverse mortgage allows you to stay in your home but access some of the accumulated equity in it. the loan is not repaid until after you have both passed on and the house is sold.
it would give you the money to be generous with your grandchildren and have some fun!
Thanks one and all for your comments so far, please keep them going, many heads are better than one.
I am now at page 60 of Steves latest (?) book, 0 to 260 etc, and am finding it very informative indeed, for if I understand what I have read so far, no, it is not an impossible dream of ours, just a matter of knuckling down to the hard work of reading, thinking, a bit of dreaming perhaps, then have a look at what prospects there may be in our area, and perhaps a bit further afield, I am a doer not a sit on my bum and get someone else to do the doing, am able to do minor renovations myself to not only structural work, but painting, and landscaping etc also. In other words, I love a challange.
What are our chances now?
I think you have good chances of buying properties. Whether they will increase in the near future is a different matter.
One problem you may have is how do you qualify for a loan to release the equity in the first place as you stated you are on a pension.
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
Just a beginner. Can anyone recommend a good property accountant and good property lawyer in SA……….?
Zollo wrote:Just a beginner. Can anyone recommend a good property accountant and good property lawyer in SA……….?
I would consider using Mel Ciampa at Home & Housed (based in Adelaide) (08) 8178-0097.
woopi.. i would say read, read and read and go to info nights and listen to lots of advice and somewhere in there you will come to a point where you know where your going to head. You definately have the collaterol but now you need the right vehicle and interest rates and house prices are almost perfect for the jump but as gmh544 states.. its going to be an ugly time for the country, something we have not seen. so wait and watch
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