- Mark AdamMember@mark-adamJoin Date: 2007Post Count: 3
Ok straight to the point;
My mother is 55 she is planning to work for another 6 six years, is on the lowest tax bracket so she is not earning that much.
She has four properties all fully paid for
1. Family home worth 800 000
2. Beach house around 600 000
3. house on land 400 000
4. 2 Bed flat 200 000
5. 50 000 cash
She has told me that another property investment would be worth while. We live in Perth. She will not buy in another state due to her worrying about not being able to over see what is going. Fair enough I suppose.
I know you guys are all about positive cash flow but this is not going to wash with her, she wants to invest in apartments near the city.
I think that this is possibly the worst time to be investing in Perth but that is not really negotiable.
At the same time Perth prices are high but mining is booming, we have a lack of properties to lease and rents are low.I think rent will go up alot in the next year.
Yield at the moment is around 4% pretty bad but will improve,.
I think if you own more than 20% of an investment property you are not doing it properly is this correct?
I guess I am struggling with Idea of how she can service more investment properties.
Could someone please give me a few ideas of what she could do with her assets?
Would there be any chance of her quitting work now?
MarkmillionsParticipant@millionsJoin Date: 2005Post Count: 355
If I were considering investing in Perth now I would attend course being held by Gavin Hegney. Theres one coming up soon so I’d look into straight away. I’ve attended a course where he was a speaker previously I found his info very rewarding. These are some of the areas I would consider. Ellenbrook – newish homes with higher rent return then most suburbs. New excellent schools and shops. Good access to Midland. Community feel. Bayswater unit near river. Close to city. Not bad value for money. Coastal near new infrastructure. Large block in some parts of Eden Hill – being rezoned this year. Ashfield large block near train – zoning will be increased in a couple of years. (I’d speak with Bassendean council first and get better ideas as to where they want to increase density). Also new land being realeased in Bassendean soon which should push prices up of existing homes also. But I’m sure there is heaps of areas that should do OK in next 6years and recommend at this stage in life to get professional advice first.mathewc73Participant@mathewc73Join Date: 2005Post Count: 241
I hear you saying your mother is stubborn but at her point in life, I think my strategy would be around capital and income protection which may or may not include a strategy to purchase more properties.
What if in exactly 5 years time property prices halve in WA due to a resources recession? How is she protecting her nest egg?
To me it sounds like an exit strategy should be worked on.
Maybe you can sell it: in that its okay to purchase another so long as you can protect what you have first?
Maybe work backwards from what her income/investments would look like during retirement and how a new purchase would impact that?
Well thats my 2c. Here are my ideas to your Qs:
You can own any % of the property you like its about balancing gearing with cashflow. I like a balance that leaves me at least cashflow neutral for new properties and in the +ve for my older ones. That way if I lose my job or something I dont stress (not that Ive lost my job… yet ).
Can she leave work or support another property? You need to do an income and expenses anaylsis. You will figure it out based on that. If the net income from my properties = 60% of my work income, I would leave work tomorrow and focus on business opportunities!
Custom Oil Portraitsgive90Member@give90Join Date: 2007Post Count: 54
mark; does your mum rent her properties? even at five percent returns on their current values, she should be grossing $60,000pa. the fact that she is on the lowest tax rate would indicate that she may not be doing this. before she looks at further investment, perhaps she needs to re-evaluate her current returns. with all that paid for property, she should be able to retire on her current wage now and still pay off an investment if she really wanted to.
the house on land; not big enough to build a duplex onto? nice little hobby to build a duplex on land attached to a house; then sell off house, one unit, keep one and do it again the next year….
graceTerrywParticipant@terrywJoin Date: 2001Post Count: 16,213
With that much equity your mum could have given up work ages ago.
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Send an email to get my newsletter.grossrealisationMember@grossrealisationJoin Date: 2005Post Count: 1,031
my advice is to organise an exit plan
I would look at what the value of the asset is at the moment
and then take that equity and throw it into a secure income producing asset
I would do direct investing,
but your mum may want to look at some one like mac bank( even thou I don’t recommend them as they are a major bank and they take most of my deals away from me).
I would look at equity lending off the base at this stage not reinvesting on new properties
after 50 you need secure growing assetts with income not more debt.
buying or leveraging is good to go to retirement
but once there you need to do the opposite and that is secure your position and make that position last as long as possible not grow( if you can its better), as you will be slowly eating it away, as slow as possible
that why you need a structure that will both feed you and grow( hopefully faster then you eat it) at the same time,
but the rub is that these structures need to be in place for some time and it does not sound like your mum has done this.
so you need to consolidate your position and work out a plan for your mums retirement and adjust the structure to suit.
there are a few accountants here that can do that. but a 55 It would be a brave person that would be aiming on being a property guru.
my time line is 50.
I hope you do well
I am not a financial planner nor do I do broking, so you can ask a few here who are to help you out.
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