All Topics / Help Needed! / Are we too old for this?

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  • Profile photo of CeeKayCeeKay
    Participant
    @ceekay
    Join Date: 2012
    Post Count: 13

    Are we too late to start down the property investment path at age 65?  We are on a pension as our business doesn't make enough and we dip into limited reserves.  We have a good equity in our home and are prepared to downsize.  Had a good year last year, so last tax return is good.

    Has anyone else ever been successful with this at our age?

    We have a little experience in property investing but currently hold no properties.

    I'm just finishing Steve's book and it has me wondering.  Can someone help?

    Thanks in advance for any insight you might have.

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099

    Never to late; as long as it’s really want you want + it meets the goal you want to achieve. Some issues you may face are;

    1. Serviceability- instead of servicing a loan on 30 years…you may have to service it on a reduce term OR have a set realistic exit strategy
    2. Time – Like most investment it required time for it to grow…so it depends if your after rental yield or capital growth etc..
    3. Aggressiveness- Steve’s way of investing is what we call ” aggressive investor ” – keep on buying and unlocking unrealized equity ASAP so more properties can be bought in a short period of time- this may or may not suit your investing style + the bank may not fully support this style of investing given your age.

    4. You may want to consider buying it under a SMSF???

    The oldest client we have serviced a loan for was 71.

    But either way- what ever you choose, i would highly suggest you speak to a financial planner; as there may be better means of investing given your retirement age. For example- a Superannuation Investment bond- 6-7% rental yield , low entry cost – and depending on your age and how you buy it- you pay NO CGT after 7 years.

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

    Profile photo of CeeKayCeeKay
    Participant
    @ceekay
    Join Date: 2012
    Post Count: 13

    Thanks Michael

    I think an SMSF would be a more expensive way to go than holding company and discretionary trust.  I did discuss this with my accountant today.

    I'll have a look at the investment bond.

    What a great forum this is.

    Thanks again

    Carole

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099

    Also one more thing you may want to discuses with your financial planner ( if she/he haven’t told you yet) is to change your Superannuation account to a Account based pension account. It means you start to draw on your Superannuation on a regular basis…but

    1. You no longer pay the 15% tax
    2. You no longer pay the 10% capital gain tax

    And if you didn’t want to draw on the super- you could do a round robin and add the funds back into the Superannuation.

    P.s Im not YET a registered financial planner- so please seek your own professional advice.

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099
    CeeKay wrote:
    Thanks Michael

    I think an SMSF would be a more expensive way to go than holding company and discretionary trust.  I did discuss this with my accountant today.

    I'll have a look at the investment bond.

    What a great forum this is.

    Thanks again

    Carole

    No problem Carole.
    Set up:

    SMSF – cost is around $3,000- $4,500
    Trust – $2,000 – $3,000

    Holding cost-yes SMSF is slightly more ~ 20% more PA.

    The cost difference is marginal…if your worry about a $1,000-$2,000+ difference for something as important as important as having the right structure, vehicle of purchase and asset protection, then investing in property may not be right for you, as PI has a lot of another associated cost…just something to think about.

    Your financial planner will and should be your next best friend :)

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

    Profile photo of DHCPDHCP
    Member
    @dhcp
    Join Date: 2010
    Post Count: 190

    Hello CeeKay

    Real Estate investment isn't a rocket science BUT the fundamental MUST be learned. And not to be bias at your age of 65, I would personally join any of the investment courses offered by the following investment guru which are mainly PCF advisor to accellerate your WEALTH creation rather than lose your life time saving.

    Steve McNight 12 month course
    Margaret Lomas
    Helen Collier-Kogtevs

    These guys are the expert in REI and through their programs they will coach and guide eventually you will achieve your goal.

    Their courses would cost you between 2K to 4.5K for 12 months. You only need someone to help you get you started then you can take care from there…if you want you can continue to join their programs.

    I've read all their books so needless to attend their courses because I already know what I wanted to achieve.

    BTW, Steve bought 200+ properties in the US, so I followed him, I bought 3 myself.

    Good luck.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Carole

    I hate to say i think Michael is very high on his costings for a SMSF.

    Realistically $800-1000 max for a SMSF and if you needed a Corporate Trustee maybe add another $850.

    Dont forget you dont have to form a Bare Trust or Custodian Security Trust just to buy a property in your SMSF so maybe no added expenses there.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi Ceekay,

    65 hmmmmm – too old?

    Average life expectancy in Australia is around 84 years (give or take a little). If you have an 'average' life expectancy then you can look forward to hanging around for another 19 years or so. What quality of life do you want during this time which equates to approximately one quarter of your total life span.

    At your age borrowing money may be an issue and it may worthwhile seeing if family members would be interested in some form of trust structure.

    Be looking at a cashflow investment at your age – without knowing the ins and outs of your situation it is a little hard to give further comment.

    Certainly the costs of making a mistake are going to be high. Equally the cost of doing nothing are equally high.

    Would your super amount make a Superfund investment worthwhile.

    Profile photo of Paul DobsonPaul Dobson
    Participant
    @pauldobson
    Join Date: 2003
    Post Count: 1,196

    Hi CeeKay

    There is an alternative to direct investment in property that may be attractive to you at this point.  We have built a business showing people:
    1.  How to buy a property and on-sell it with vendor finance.  The idea being that people may do one or maybe two of these properties with you and then go solo.  They don't always want to be sharing the profit with you  ;-)  and
    2.  How to sell an existing property with vendor finance.  There are plenty of properties out there that have less than stellar capital gain prospects and negative cash flow.  Selling them with vendor finance can lock in fixed capital gain on these under-performing properties and get them to generate positive monthly cash flow.  This strategy can allow people to improve the structure of their existing portfolio and give them more flexibility in the future.

    The above to strategies do not involve direct property investment but they do generate, for us, great positive cash flow and a share of the locked in capital gain on these properties.  However it will take diligence over the next couple of years to really learn the business.

    Cheers,  Paul

    Paul Dobson | Vendor Finance Institute
    http://www.vendorfinanceinstitute.com.au
    Email Me | Phone Me

    An alternative way to finance your home.

    Profile photo of christianbchristianb
    Participant
    @christianb
    Join Date: 2009
    Post Count: 386

    CeeKay,

    Perhaps you could consider using what you already have to get what you want.

    If you have the right type of property, you may be able to redevelop and subdivide that property so that you can down-size and invest at the same time.

    For example, you could build a second dwelling on the land – suited to your needs – and then either sell or rent out the existing dwelling. This obviously won't work in all situations, but it may be worth considering.

    Profile photo of CeeKayCeeKay
    Participant
    @ceekay
    Join Date: 2012
    Post Count: 13

    Thanks all for your help – and support. 

    It's made me a little more confident that we can do something – albeit carefully. 

    Unfortunately our property doesn't lend itself to subdivision or anything like that – but we are ready for a change anyway.  When I say downsize – I actually mean downprice.  We are lucky enough to be in an area that has appreciated quite well and have been here for over thirty years.

    Derek, I'm going way past 84 – in fact I like it here so I'm not going anywhere.  Just need to make some plans now as to how we're going to finance it!  We both enjoy property investment – anything to do with property.  Can't go on holiday without hanging round real estate agents' windows.  So I guess whilst that continues, as long as we're diligent and avoid costly mistakes, our quality of life will be good as we're doing something we love.

    I'm working on some business models now to see just how we need to structure ourselves.

    I'll check out some of the courses, and also Paul, I'll have a look at your website.  That might be a way to go.  I liked that part of Steve McKnight's book, but I don't know how to do it.  I see you do, so that might be a winner.

    There are some great articles in this forum – I'm so glad I found it.

    Thanks again to all who helped me.

Viewing 11 posts - 1 through 11 (of 11 total)

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