Planning for retirement

[LeroyPatrol]

Hi all,

It's not something I'd given much thought to until recently and then another birthday passed and I thought OMG. I've kinda come to the conclusion I won't get a decent paying job and this has taken a long time to come to terms with so I thought well I need to think and work smarter with what I've got. So I've put the wheels in motion. I couldn't afford an investment property in Melb so regional Vic it is. How I came to this is you can pay $750k for a house in Melb and only get $380-400 per week rent. You of course get capital growth. But a bank isn't going to lend me all the money and then I would need to pay the extra each month which I couldn't afford. In the country you can get a new house for $380k and get approx. $400/week rent! If you do the sums it's not far off being a neutrally geared property. You won't get the capital gain like the big smoke in the end but you will end up with an asset being paid for by your tenants! So this is the path I'm going down. What are others thoughts?

........Leroy

[ol' boy]

Noticed the same thing for years Leroy.
Don't discount the country, it is the new "city" in some cases.

Warrambool in SW Vic is a good example, was nothing over $1M 5 years ago and median home price was $350K
Now there is heaps over the $1M mark and median more like $480-$500, with plenty of $600 and $800K properties too.
Rent is narrow, Low mark is $300pw, high mark is $420pw.

In saying that, i just found a 20 acre property, with a 3bedroom house and Garage for $310,000 yesterday.
5min from Victoria's premier tourist attraction.

As far as Retirement and being Self Funded, that is anyones guess these days
Banks are hopeless
Shares, well, make sure you are very informed
Property, it isn't what it was 20 years ago (Rates, Land Tax, Repairs, RE Commissions, eat into you annual revenue)

Maybe sell a few bikes mate

[VroomVroom]

leroy , your strategy is exactly what i have done , but i started many years ago and now i'm 100% living off the rents , topped up by some casual paid work. I have some health issues which preclude me from full time work anyway. It has its ups and downs but long term its a good way to invest with reasonably low risk. Key is to get a good area and good tenants.

heck ive had my share of bad luck with some tenants but a good landlord insurance policy has got me through.

currently , as of 2017/18 FY the ATO is making large scale changes to deductions and expenses schedule , so check these out carefully before investing. I think since the ATO cannot get taxes out of large corporations they will turn to mums and dads property investors next .

[ol' boy]

currently , as of 2017/18 FY the ATO is making large scale changes to deductions and expenses schedule , so check these out carefully before investing. I think since the ATO cannot get taxes out of large corporations they will turn to mums and dads property investors next .

Exactly!
Has been coming for some time now
Started with Land Tax (which isn't much currently), then some rules changes.
I didn't realise there were new changes coming, thanks VroomVroom.

Another thing you might consider Leroy, is buying the Investment Property in a SMSF using the Bare Trust for the loan.
It has some set up costs, but when you are of the eligible age, you can sell the property with no capital gains tax.
(although, we all know, the ATO will change the rules, move the goal posts, just to fark everyone up, as they normally do)

I think it is good what you preparing to do Leroy
I have been drumming this into our 21 year old son, that if he starts now, its easy and he will only be out of pocket $50 to $70 a week of his own money, once the first deposit is paid. It is slowly sinking in.

Maybe another option Leroy, is to buy and renovate your principle place of residence
Try and pick a place where you don't have to get the Council involved (huge delays, extra expenses, objections)
Mainly internal changes, new kitchen, cosmetic works, landscape.... Flip
Not for everyone, especially with a young family, but maybe an option now and then.

[admin]

The entire Victorian coast bar Golden Beach etc is expensive now.

Like you Leroy, a birthday comes around and you think wow, I better start thinking about what I am doing. I turned 50 yesterday and its an age where you realise you have hit the "middle" category and retirement isnt that far off.

My father in law took an early retirement payout from Telstra in the 90's and retired at 47. He died last year at 72......retiring early killed his health, it started going downhill within 5 years.

I have had a horror health run over the last 10 years and am likely to be undergoing multiple spinal fusion. I have had to switch my mortgage to interest only and will likely have to keep it that way. Fortunately houses prices are on the rise in my area and I expect it to keep rising and join Melbourne prices.

I think realistically we will just stay put until retirement age, then sell and buy a small house in the country and live off the profit we made from this house. Thoughts of investment are just not interesting me anymore.

I am in Tasmania at the moment and could easily live here. Its very stress free and even better is vast majority Anglo Saxon white. Yes, that is a racist comment but I dont care.

[enf]

.......................
I am in Tasmania at the moment and could easily live here. Its very stress free and even better is vast majority Anglo Saxon white. Yes, that is a racist comment but I dont care.

Why? It's a fact......

[Seymour Butts]

I wish I had given it some thought in my youth.
According to my financial planner I will need to work up until lunchtime on the day of my funeral.

[mtv]

I wish I had given it some thought in my youth.
According to my financial planner I will need to work up until lunchtime on the day of my funeral.

Same... except I will need to keep working after my death.

I agree with real estate being a good investment in some country areas.

I have a friend who bought 10 acres on the fringe of a large country town around 30 years ago.

He built a house and shed on it, but the remainder is vacant.

He is now surrounded by estate developments and they are all wanting to acquire his property.

Considering median prices for land in the area is now around $140K for less than 1/4 acre and there's competition from different developers, he's sitting on a proverbial goldmine.

He's in his early 70's and still working, but if it was me, I'd be selling up and getting a smaller property with a sizable nestegg.

If he wanted, he could probably even negotiate a new home in the deal with the developer.

[Antennaman]

I am in Tasmania at the moment and could easily live here. Its very stress free

I live in Tasmania. World's best temperate island.

I've come across people from the greater Sydney area & QLD who sell up there & move here, buying 2 properties, one to live in, one to rent, & have money left over. Median house price here is $230,000, median rental is $265-00.

Finding employment might be tricky if you're not ready to retire yet. Especially if you are south of 50 and unskilled (whatever that means.)

[Uncle Fester]

I think many think too big when they plan to retire.
First of all there are (hopefully) no kids feed.
If you don't work you don't need to live where it is expensive.
We just spent a week in a little bush house, cooked simple food on top of a wood heater, only had 12V for lights and a little telly and to charge our gadgets. I spent some of the time cutting trees to clear a bit of land and made heaps more firewood ... AND I LOVED IT.
No bills, this place being an MO doesn't even cost rates, just pure nature and independance and freedom from the rat life.
I could clearly retire like this, growing an orchard or something, live off the pension(after paying tax most my life) and calculated I would still have enough to save for cruises and road trips.
This is just hypothetical for me as I started quite early to invest in my future and while I am ATM cash poor and am (relatively) asset rich, at least too much to receive pension.
Just food for thought.

Otherwise I would personally NOT bet on rising realestate anywhere, things are looking dicey, but country should be the least affected. Aim to renovate (DIY) existing rather than build new and potential is often priced in, especially with properties that might be subdividable. Maybe just add a separate Granny flat and run AirBnB for extra income.

If looking at shares I would start learning how to use PUT warrants so when the crash (China<->Realestate) comes you are prepared and can identify the signals. Puts are normally just used to hedge but I am starting to think differently. However if you haven't done shares in the past, now would NOT be a good time to start IMO.

Financial advisors are crooks(they work for a company NOT you) or incompetent, DYOR.

[Rick]

I retired 10 years ago, but I work harder than ever before LOL, I'd sooner wear out than rust out, country properties are great investments, the best part so many people want to live in the country it attracts long term tenants, got a mate with a rural property down here in Tas, his current tenants have been there 10 years and dont plan to ever move on.

[Thala Dan]

Given your proximity to one of our largest defence facilities, it might be worth having a look at this:



There's one other very important aspect, besides money, of a successful retirement...........lots of personal interests and hobbies.

Once you've punched that time-clock for the last time, you'll be quite amazed at how much of your life was occupied by work of the paid variety.

Suddenly, you have all day, every day, to fill in with meaningful activity............a much more difficult challenge than first appears.

The departure of children from the nest (you hope ) also adds to the vacuum, particularly for the other half.

Once you've made your investment decisions, the money, for the most part, will take care of itself.

But staying active and engaged with the world in an enjoyable and rewarding way is something you have to work at every day.

Make sure that your planning for this aspect of retirement is uppermost in your mind....other wise you could end up a financially independent, but bored-shitless retiree.

[enf]

All good points, but it depends on the individual and circumstances. I have been fully retired for 4 years and was in partial retirement for 10 before that.

I never had any issues, although I have tended towards "rust" a tad recently...... The thing is to recognise it and then start the engine again, despite the inevitable ailments associated with age (and MAN! I have a few!)

A bit hard in Canberra at the moment because it's so f*cking cold. But I have no intention of ever going back to timed work again....no way. Life without an alarm clock is just too good.

[shred]

I am in Tasmania at the moment and could easily live here. Its very stress free and even better is vast majority Anglo Saxon white. Yes, that is a racist comment but I dont care.

Don't worry: the Immigration Department noticed this about 10 years ago and has been pushing Sudanese and Bhutanese refugees to Tassie ever since. Generally, from what I've seen, these people make some effort to fit in and make a positive contribution (I'm sure there are exceptions to this, but I haven't yet encountered them). But in the case of the Sudanese; only a government department would think it is a good idea to take refugees from one of the hottest and driest places on Earth and relocate them to one of the coldest and wettest parts of Australia.

Back on topic: I concluded years ago that superannuation was a scam and that governments and greedy superannuation funds would collude to ensure that I had bugger all to retire on if I continued to trust them. I've had my own little pool of investments outside super. Although they attract a higher rate of tax, at least I'm fully in control of it and people like Bill Shorten can't get their grubby fingers on them to use for "nation building" or whatever brain fart they're having in the runup to a future election. . Having the flexibility to access my savings whenever I need to has been useful a few times too.

On the bright side, I moved my super to an industry fund and it actually started getting decent returns for the first time in a decade or so. Funny how the commercial / for profit funds charge massive fees both in a good year and a bad year, yet still fail to generate much income for me.

[bob_m_54]

We have 2 rental properties, one managed by the local real estate agent, and the other we bought as a pre-leased to DHA property, with 6 years left on the lease (and just added 5 years to the lease). The DHA leased place is the better of the two, as far as ease and peace of mind goes. They do charge more, ie 15% (most property managers charge 7%) of rental income, but they handle all the minor maintenance, and you have guaranteed rent even when the place is empty. Also, when the lease is finished, they repaint the inside and replace carpets. The thing is, you can possibly get a better deal from the realty company when buying a DHA leased property, because the customer base will be smaller. You don't have to compete with people who are buying a property to live in. So if it's a slow market, you have leverage.

[lsemmens]

In saying that, i just found a 20 acre property, with a 3bedroom house and Garage for $310,000 yesterday.
5min from Victoria's premier tourist attraction.

So which border are you close to?

[LeroyPatrol]

Maybe sell a few bikes mate

Now you're just being silly :P



Good reading everyone's responses especially the ones about making sure you have interests! I have been trying to work on this side of things as well.

I did look at the Defence housing but I didn't think the return was that good but yes I agree less headaches with not having to worry about tenants, maintenance etc. I didn't think about asking the local agents about Defence properties for sale! As someone eluded to, Wodonga has a couple of army bases so lots of demand for rental housing from them.

SMSF...hmmm I will have a look at this. My tactic is to have a neutrally geared properties. I'm not anticipating a huge capital gain but wanting them to be paid off over the next 20years.


.......Leroy

[Thala Dan]

Leroy,

I thought of you and this thread when I read the item linked below:



Obviously, you will need to research the topic much more thoroughly.....but there is some relevant information in the above.

[LeroyPatrol]

Leroy,

I thought of you and this thread when I read the item linked below:



Obviously, you will need to research the topic much more thoroughly.....but there is some relevant information in the above.

I'm going to look into this but I don't think I'll be able to take advantage of the negative gearing implications due to not being in a high paying job.