Hey Everybody!
I would like people’s advice about how to create a plan for financial freedom. Any tips, advice or experience would be greatly appreciated. I am only 19 years old but have a deep desire to become financially free as soon as possible. I have the opportunity to start young and so I don’t want to miss the chance. I plan to have bought my first IP by the end of 2010, which is more or less a simple goal. However I feel I can’t see past this first mile stone and so I thought creating a concrete plan would help me out.
So I guess I am simply asking for some resources that I can research myself. Please don’t say ‘see a financial planner’. If they knew how to be financially free then why are they still working!?
Cheers Pasha.
We are not all doing so because we have to. Some of us carry on working because we enjoy it.
Please don't say 'see a financial planner'. If they knew how to be financially free then why are they still working!?
Richard Taylor | Australia's leading private lender
I would work out your budget for now and for the future – ie how much do you think you will need to retire, or reach your goal.
Once you know that then you can work out how to get there. ie how many properties would give you that much income. This doesn't necessarily mean they need to be paid off completely either.
Once you know roughly how many, plan how you are going to buy them. ie save 5% deposit, get the first one, wait x months and save deposit and use capital growth for the next one and so on.
Try to be realistic and conservative in your estimates.
Then do some short term goals. eg save $100 pw and have $10,000 by xx.
You can have some fun on a spread sheet doing this stuff.
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
Thanks Terryw,
I have been keeping a record of all my expenses for the last 18 months, but I haven’t really studied it much to see where I can cut back my spending. I am pretty frugal with my money so any additional cut backs could result in total boredom!!!
Having said that I can’t believe how easy it is to spend money. For example this month, February, I have already spent $500 which is a lot of money when your a first year apprentice.
First of all I want financial stability. I want to be not dependent on my job. To me this means owning properties that return $50k/year. So if I was to have 5 free hold properties that could return $10k each then I would be financially stable. I would like to be in that position when I am 30, (10 year time frame)
From this point I would be aiming for an income purely from property of $200k+/year….
woww… 200k/year… nice income from IP in 10 years
brainwashed by Steve's book
sorry..yep, thats not what i said….so i’ll give you a second chance to read it again
$50,000 pa from 5 properties. That seems a reasonable plan.
say they were $200,000 properties. you would need around 10% deposit for the first one = $20,000. How would you save $20,000? Depending on your income you may save $200 pw over 100 weeks or $400 pw over 50. You may already have some saved, so it may be quicker. If you have FHOG it may be very soon.
Once you have that then keep saving. ideally in an offset account. Your first property (after its rented if FHOG) may be paying for itself, or very close. Get all the depreciation reports done and save tax while keep saving. At the end of the year you may get some tax back and this can go towards the deposit on the next. Keep trying to maximise your wages too. Do what you can to get high rents too.
After a while the growth will happen and your incomes will start to increase. Try not to increase your spending but keep on saving and ti will become easier and easier to get more property.
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
Damn I like your posts Terryw, I am going to have to print them off before I forget!
I personally have already saved $20k, but my parents are willing to add a further $100k. So with a total of $120k it could be possible to buy 2 IP’s but only if I could service the loan. This would be asking a lot and something I wouldn’t be comfortable with, so….
I could buy one IP ($300k), using only $60k as a deposit, then put the other $60k directly into an offset account, and with a little luck the IP could pay for itself…..hopefully.
Then I could save all of my income into the offset ready for the next IP deposit.
My wages will be increasing steadily for the next 3 years, so as long as my spending remains low, I should have a lot more extra cash.
How does that sound? I buy one IP thats neutral, which then sets me up for a second IP in approximately 12 months….
Can you get the FHOG, move into a property for 6 months and then rent it? Move back with your parents if you can and save even more.
By moving into a property and then out again before renting it you can keep it CGT free for up to 6 years.
So what you do is to treat one IP as your main residence, keep buying 5 or 6 more and then when you want to retire you sell the one that is counted as your main residence and get the proceeds tax free. You then move into one of your IPs, keeping the money in the offset account so hopefully you will be paying no interest at all.
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
Yeah Terryw I should be able to get the FHOG, but I have been reluctant to because it would cost me as much to live there for 6 months as what I would gain from the grant. However if you are correct about it being six years CGT free after living in it for only six months then its certainly the best option.
Is that correct? Surely everyone would do that?
yep, its true
see the tax act, s 118-145
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.145.htmlTerryw | 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 Pasha,
Spent more time reading and learning from wealth accumulation and personal improvement books, and also check out this and other property investing forums. Often, there is a direct corelation between your personal abilities / character and the eventual size of your accumulated wealth.
Many successful investors are often not deeply motivated by money itself. For me, perfecting the 'Art of the deal' (researching, analysing, negotiating, closing, renovating and leasing) is more exciting!
All the best in your journey.
Regards
Daniel Lee
Qlds007 wrote:We are not all doing so because we have to. Some of us carry on working because we enjoy it.Please don't say 'see a financial planner'. If they knew how to be financially free then why are they still working!?
Don't listen to any sporting coaches either for the same reasons..
Investing in any big deal is a serious issue. Buying a location is also valuable and pretty necessary thing. An ideal business location is really need of a business enterprise.
I think that the first thing is to establish what your goal/objective is (you seem to have already established that).
You need to also establish what your comfort levels are – ie renovations, developments, buy and holds etc – ie what sort of property do you want to buy?
Once you have established these then you can move on to looking at things like structures – ie what would be the best solution for you, idenfityin areas that are going to provide you with the solutions to your strategy (ie high capital growths or area that gives you the opportunity to buy low, renovate and quickly sell to generate equity etc), finance – getting your approvals in place etc..
I know you are concerned about servicing – have you considered building up your equity through renovations? If you brought a few properties with the objective to renovate them and resell them (at a profit) you could continue to build up your equity whilst you wages are continuing to increase over the next 3 years??
I hope this helped somewhat?? Just a thought?? Good luck with everything!!
Wishing you the best future in your property investing journey!…
Jodie
Property Coach and Finance Specialisthttp://www.multiplepropertyservices.com.au.
I help people realise their lifestyle goals using property as the vehicle.. As me how today – no cost and obligation free!Jodie.. why your response is always the same on each and every thread?
Hi God of Money,
My response to Pasha is similar to an earlier one as I found that the questions where almost identical – wanting to know what to do when they are getting started? Thats all….
Thanks again for your question though..
Take care
Jodie
Property Coach and Finance Specialisthttp://www.multiplepropertyservices.com.au
I help people realise their lifestyle goals using property as the vehicle.. As me how today – no cost and obligation free!GOM
Oh you old sinic, you know why the answer is the same to every question it is called promoting your business.
Richard Taylor | Australia's leading private lender
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