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  1. #11
    Join Date
    Oct 2013
    Posts
    1,654

    Default

    Wayne - you've oversaved. Congratulations for seeing this instead of continuing to plow ahead.

    As you'll know by now, property is not a truly passive investment, even with managers in place. It's a very good vehicle for building long term wealth, due primarily to the leverage effect - much harder to get that on shares.

    Were I in your position I would absolutely sell down my portfolio at least a bit, and dip into the stockmarket. Over the next 5-10 years probably transition the whole portfolio.

    I wouldn't focus too hard on the high dividend stocks though. I'd work out what sort of cash return I need each year, and invest in a good mix of high-div low-growth and low-div high-growth stocks - yes, probably avoid the no-div stocks. And make sure to keep a good foothold in the property sector, by buying the listed property stocks.

    I'd stay NZ-based to avoid unnecessary complications of the FIF regime.


    On the retirement-by-investment side, especially those young and keen, I can highly recommend people go check out Mr Money Mustache and the online forum over there.
    AAT Accounting Services - Property Specialist Accounting - AATAccounting.co.nz
    Lower fees for investors, traders & real estate agents!
    [email protected] for more information.

  2. #12

    Default

    Don't know what Wayne does for a living but you can also do some consulting/contract/project work to keep occupied once you're sick of watching the daisies pop up.

    @Anthony - I love the MMM blog. Being wired to the frugal gene has given my wife and I a massive safety net.
    Free online Property Investment Course from iFindProperty, a residential investment property agency.

  3. #13
    Join Date
    Jun 2004
    Posts
    10,479

    Default

    Thanks for all the comments.
    The sharemarket doesn't faze me - currently have $320k invested. It got to $600k and I got nervous so sold half and built a house to rent (or reduced some mortgage depending on your perspective).

    The comment on over-saving is interesting. It kind of just happened as part of the plan.
    Built a couple of houses recently (subdivided etc) and came out $500k better off (they are being rented). That made a big difference to the LVR.

    What retirement looks like is certainly a potential issue.
    At the moment it would be filled with travel. Currently having trouble fitting in 8-10 weeks travel into 4 weeks leave but leave without pay seems to solve it for now.
    If free it would probably be more like 4-5months a year - there is a lot of world out there.
    One 'problem' I have is that I get paid very well doing what I do and I don't hate the job (don't love it as much as I did, probably at 80% love these days).
    It is really hard giving up a big salary - a big mind leap for a conservative guy.
    The other option for 'retirement' would be more time to spend on my hobby - building houses (as in a lot of the actual work rather than just organising).
    So keeping some money aside to fund developments is certainly an option. Right now developments are better if sold - the numbers are shakey (return wise) to rent.

    What has struck me when I looked at it is how rent returns have reduced from when I started to the point that they are now just not suitable for cashflow/ living.
    I had though that I would live off the rent but now find that it is hard and other options are probably better.
    It is a warning to those who feel you should look at the current value of your property as it is the cashflow that is important.
    There are often much better options for the money.

  4. #14
    Join Date
    Apr 2016
    Posts
    272

    Default

    You have done really well. congratulations

    You have 6million of rentals, 1 million home and debt of 2 million so a 28% lvr.

    Wouldnt a better way to have a revolving account. Use the money tax free and then in 10 years it should have doubled?

    Im curious to know how you were able to do so well
    What types of properties did you buy and where? how long did it take?
    Have you been in a salary job through this time or a business?

  5. #15
    Join Date
    Jun 2004
    Posts
    10,479

    Default

    Quote Originally Posted by investorak View Post
    You have done really well. congratulations

    You have 6million of rentals, 1 million home and debt of 2 million so a 28% lvr.

    Wouldnt a better way to have a revolving account. Use the money tax free and then in 10 years it should have doubled?

    Im curious to know how you were able to do so well
    What types of properties did you buy and where? how long did it take?
    Have you been in a salary job through this time or a business?
    Salaried.
    Have been investing for 12 years now (time flies).
    I made the mistake (?) of waiting until I had a mortgage free home.
    I think the key, for me, was being able to participate in the building process (I'm not a builder - far from it actually) - sweat equity if you will.

    Revolving credit account - this would access some of the capital but I'm not sure that is the best way.
    The issue I see is that property is around 3% net return (cash flow wise) which really isn't a lot for the risk.
    Sure there is still capital gain to be had (the houses are mainly in Hamilton) but other things have capital gain also (shares).

    For building wealth property is good - leaverage.
    For maintaining wealth property is good - they do generally go up in value at least at the rate of inflation
    For cashflow property seems to be sub-par.

  6. #16
    Join Date
    Apr 2016
    Posts
    272

    Default

    I guess there is no guarantees but if i think big picture.
    6million in property gaining 10% roughly each year. 600k per year tax free.

    How much money do you need/want?

    Keeping means your cash wont be turned into smaller amounts due to inflation/others leveraging.

    Have you brought houses? units?
    How many properites and income streams do you have?
    Subdivided each one?
    Do you have a thread on your story?

    I am fairly fresh to the property game so curious to know what has worked for you

  7. #17
    Join Date
    Jun 2004
    Posts
    10,479

    Default

    Quote Originally Posted by investorak View Post
    I guess there is no guarantees but if i think big picture.
    6million in property gaining 10% roughly each year. 600k per year tax free.

    How much money do you need/want?

    Keeping means your cash wont be turned into smaller amounts due to inflation/others leveraging.

    Have you brought houses? units?
    How many properites and income streams do you have?
    Subdivided each one?
    Do you have a thread on your story?

    I am fairly fresh to the property game so curious to know what has worked for you
    I see your point - but that relies wholly on capital gain which isn't guaranteed.
    It could be said the same for shares + they provide better than property in dividend return.
    Property doesn't gain 10% per year, every year like clockwork but, I suppose, in lean years you still have equity to remove so you wouldn't starve.
    Food for thought!

    10 stand alone houses, 3-4 bedroom in the upper quartile of quality (not bottom feeding).
    No I don't have a story out there - I suppose I'm not a trumpet blower.

  8. #18
    Join Date
    Feb 2010
    Posts
    309

    Default

    Quote Originally Posted by investorak View Post
    You have done really well. congratulations

    You have 6million of rentals, 1 million home and debt of 2 million so a 28% lvr.

    Wouldnt a better way to have a revolving account. Use the money tax free and then in 10 years it should have doubled?

    Im curious to know how you were able to do so well
    What types of properties did you buy and where? how long did it take?
    Have you been in a salary job through this time or a business?
    Hi
    Can you explain how you can use a revolving account to fund your retirement?
    I don't quite get it.
    Thanks
    Richard

  9. #19
    Join Date
    Mar 2007
    Location
    New Zealand
    Posts
    128

    Default

    Wayne that is a good portfolio you have built up, congratulations. I know 'someone' with a similar portfolio in terms of equity.The issue definitely is the cashflow return in property, its just too low. To add to that, there is a lot of work managing tenants and managers. I agree though that property is a good long term wealth creation asset, just not a cash cow.

    For those of you already retired, what level of retirement income do you deem enough to liveoff, assuming you have a family of some sort (kids etc), especially if you live in the bigger cities like Auckland..????

    Retirement is definitely a goal I am actively working towards and I have no concerns about being bored. The way I see it, we spend about 30-60 years of our lives preparing for (school, Uni) a job and then working a job/business. No matter what anyone argues, the MAIN reason for a job/business is to make money. Sure there are a few other things like satisfaction, achievement, importance etc but ...see how many people will show up to your office tomorrow if you told them they would not get paid (I suggest none).

    30-60+ years of a lifetime spent chasing money is to me quite a underwhelming life. Sure we have other aspects of our lives within that period but the majority of it (8-10 hours a day) is spent on doing work to get money, to do the things you want to but dont have the time.

    So retirement to me is about living, helping, achieving, accomplishing BUT NOT with a monetary angle to it. I am involved in many charities and plan to basically get involved almost full-time doing meaningful work, not just for the sake of money. Sure some jobs are meaningful (social workers, nurses, etc etc) but not many people want to do that as the money is terrible. As MMM (Mr Money Moustache) says in his posts as well, work is much better, when its not for money.

  10. #20

    Default

    Hi Wayne,

    Congratulations getting to your position. Very similar to ourselves ($8m rentals, $2m home, $3m debt, high earning but fallen out of love with it, looking to travel), and have been looking at how to convert this equity into "retirement" income, given the difference between the ~3% net yield on property (cf to ~7% when we started investing 20 years ago) and fairly safe alternatives out there.

    For what its worth, my plan is to sell down "enough" but rather than invest in stocks etc directly will invest further into PIE funds - conservative funds from a quality provider currently return ~6% pa tax paid. No worries about selecting / following stocks, and having risks of insufficient diversification. No I am not a financial adviser / get commissions or anything like that, this is what I do now with part of my income, and plan to ramp it up with a capital injection - timing somewhat dependent on election result!

    Good luck with whatever you do


 

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