First time in a forum so here goes…
My wife and I own our home outright (worth around $450k), have $500k in savings and $150k cash in our SMSF.
We'd like to build a property portfolio for our retirement (we're 51/50)…problem is I'm not sure how to go about it as at the moment I have no personal income other than interest from the $500k (about $20k pa with today's low interest rates).
My wife works PPT and grosses $40k-$45k pa.Any thoughts on a strategy that covers both…creating medium term investment income but also with (now) cash flow.
I should be able to leverage into several properties but unsure of my position from a financing point of view (re low income).
Can anyone suggest a good specialist property finance broker / guru that might be able to steer us in the right direction…or at least make some suggestions.Any thoughts, suggestions or advice would be appreciated.
If you have an SMSF you seem to know what you're doing and I'm surprise you hold so much money in cash and no investment (or perhaps you have plenty of shares/gold etc but didn't mention).
If that's the case I suggest you consult an independent professional planner. I'm sure you already know that, there's a lot at stake here and at this age there's not a lot of room for error.
Nonetheless with $500k you can buy 3 positive cash flow properties in Melb/Syd and I guess that'll have some but manageable impact on your current cash flow – you lose the 20k interest but you'll gain some excess rents after paying off the mortgage. Again if I were you, and if I haven't been paying attention to tax planning / property investment, I'll gladly budget 5-10k to consult an independent planner and property adviser (who doesn't broker your loan).
I'm interested to know tho, whether an SMSF structure for $150k of super has been worth your while? It seems like a small amount to be worth the effort of self managing. Plus if you're holding cash in your super, why indeed bother with SMSF?
My intention has always been to build a property investment portfolio but for one reason or another haven't quite gotten around to it…yet.
I've been self employed for 6-7 years, the type of business I was in produced large but spasmodic income…some years plenty, some years none at all.
Upon advice from my accountant we set up a Family Trust and a SMSF which helped (from a tax planning perspective) in the 'big' years.
Unfortunately the GFC has buried that business.
The only 2 forays I've had into the share market have been disastrous…we bought in two days before the '87 crash and again about 2 years ago (just before the GFC hit). Stock we bought 2 years ago at $1 is now trading at 15c and dividends have been suspended…ouch!
I've spent the last two years waiting for the bottom of the market to 'make a killing'…in the end I just couldn't bring myself to risk my hard earned capital in the share market again. At 51 I just can't afford to stuff it up. So now i'm back at my original strategy…to build a property portfolio.I've been considering a strategy to accelerate the process of (using my cash) buying a large corner property with an existing house and building 1 or 2 new dwellings facing the other street…renovate the old house / subdivide off from the new dwellings and sell thereby reducing some of the debt on the new dwellings.
Then I would have the new rental properties valued and get most (or all) of my funds out to do it again. Hopefully they would be cash flow positive and pretty much look after themselves.Does anyone have any thoughts on this strategy?
Hi Delltone, Your strategy is sound. You can build a portfolio this way. My own building strategy is to buy- renovate and sell. We are currently doing a renovation in a large regional town in Victoria. We bought a property in 98, renovated for around $50K and sold it for a total profit of over $200K. I plan to do this again and again in this large regional town. If you need help with planning person or don't have the time, drop me a line or call me 0439385217 and I will help you get started. Cheers
Since you have no debt you should be able to do something with your wife's income and the potential rental income from the purchases. May also be able to use your last 2 years tax returns for evidence of income – depending on your situation.
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
As you have a good amount of money wife’s income you can invest these. You can consider building a property investment portfolio. I am not a experienced guy. So those are only my personal opinion.
Thanks rarhrahprincess. Many years ago (mid to late 80's) we renovated then sold a couple of houses with great success. They were our PPOR (for 12+ months) at the time so no CGT was applicable when we sold them (happy days).
I've recently investigated the possibility of doing this again but finding a good 'doer upper' in my region is a challenge these days. With the proliferation of renovation and real estate shows on TV of recent years it seems as though everyone is wanting to have a crack at it, thereby creating stiff competition for (and forcing the prices up of) suitable reno properties.
Unlike years ago the recent market hasn't been growing at a sufficient enough to rate to make these projects viable.
However the numbers you quoted are fairly impressive…if you can steer me toward a reno where I can pick up $200k I'd be happy to explore the possibility.Hi Delltone, I am looking at a couple of places today. My husband and I picked up the place we are now renovating for $150K. They are out there. I was working as an agents representative until recently. I thought like you that there are not many places out there but what I did find is that people will not touch homes if they need work or are untidy so it brings the price down. I am looking at JV opportunities. We are located in Melbourne. There is another one I am looking at in Kensington in Melbourne which would be a great renovator. Yes, the shows have made it popular but people generally dont want to take it on. Deceased estates also make great renovators! Our reno in Spotswood was a PPOR but we have not done this since. You possibly also need to look at setting up structures for your investments. Let me know if you want more info- I can steer you toward renos that are sub $200k!
Rarhrahprincess…I'm happy to consider any good opportunity.
What are the numbers on your $150k reno property.
How much are you spending and what will it sell for once renovated?
Are you living in it?Hi Delltone, I am looking at a couple of properties currently around $160K to $180K. One I am looking at would bring about $250K when renovated and there is a possibility to subdividing the back block off and selling it. I am about to do some feasibilities on this. I have access to a planner who I am about to talk to to see if it can be divided off and the cost of doing this. I look forward hearing from you again soon. Cheers
You must be logged in to reply to this topic. If you don't have an account, you can register here.
