Retired from Property People?

[mals69]

Would love to hear from people that have retired from the result of property investment, how you did it and at what age and how you spend your days now ?
It took me a few years to adjust to not having to be in regular work,90% of my friends were at work all day,and the ones that were not it wore thin fast sitting around drinking coffee each day.
I was so fixated on my goal of not having to work i had not stop to think for a second of what i would actually do with my time.

But now are in the swing of things going to the gym and other projects etc,would be good to hear other peoples take on it ?

[lissie]

We've almost retired - does that count ? The story and plan so far. Bought first IP 2003. Had a freehold home worth $370,000 plus shares of about $180,000 then. Current position - home worth $570,000, 6 IP's worth a total of $1.1M owning about $800k . Shares worth about $300k. Income wise we both have well paid IT jobs which we hate. So the plan is as of early next year. Rent home out - get about $25k net a year (pay little tax because of the deprecation on the IP's) . We need about another $50k a year to cover expenses - which we can easily make by working <6months a year contracting. And some point in the next 4-6 years depending on the CG on the properties and shares will have a gain of another $800k at which point we will have net assets of around $2M - which is enough for us to live on draing about $70k year.

As to what we are actually going to do : get fit, ski , drive around Oz (thats next year's one), walk the Camino de Santiago in Spain, blob on a beach or 2. Rent a batch up north for a summer (or more). Go back to uni (seems to me now you never have to pay your loan off so long as you dont have too much income - nice!) . Trade shares for fun and profit. Setup a proper website or 2 . Play aunty to the nephew and niece in Ireland, spend time with the elderly parents . How are we going to fit it all in - I have no idea. Ddi I mention learning to play piano ?

Next year I'll be 45 and my partner will 55. I'm not sure I'm old enough to be "retired " - I used to be called an unemployed bum when I stopped working for months at a time in my 20's and 30's. I always paid my way then too - so nothing much has changed - its jsut the asset base is starting to grow fast enough for it to make no sense to keep on working adding to it (or paying down the debt which is the same thing).

Got to say it was a very happy day a few weeks ago when we figured this out !

[JohnL]

I haven't retired but in May a group of 26 of us (Keith Cunningham grads; we meet every six months) got together and a few had this 'problem'. It can lead to depression so although a nice goal, its needs some careful consideration.

The first thing is that Keith doesn't agree with the model of 'retiring'. He points out that the richest people in the world still continue working ie Bill Gates, Donald Trump etc, even Robert Kiyasaki.

So its more of a concept of being able to retire, not actually retiring. He would say if you met your current goals, then set your self a bigger goal ie double your business over the next two years. He doesn't necessarily advocate going out and trying a different business where you have no expertise.

The other thing to consider is that in one model, true happiness comes from either personal growth and/or contribution (refer to the other thread on giving). Bill Gates is now going to spend more time on the business of his foundation and less at Microsoft.

If you are financially free but not doing one of the above, there's a chance you aren't overly happy.

So either grow your business or find something you are passionate about which relates to contribution, whether this is time, expertise or money. Also consider courses etc that will continue to grow you as a person.

A few thought starters.


John

[xris]

A good topic.

I believe that the point of retirement is never really reached by those who are actually in a position to retire. This is because they need to carry on setting new goals: it is part of their make-up.

Also, as one does increase nett wealth, one’s goals change, and one’s financial requirements change. A 21 year old might think that financial freedom comes with a nett annual income of $50,000. When he reaches that point at age thirty he realises he needs $150,000 and then at forty, with family and other commitments and desires he finds he needs $400,000. It is never ending.

Also, I believe that without very careful planning, dormant money loses value, steadily but surely. I recently met some people (who should have known better) who said they were playing things safe by putting $1.5 million into a high interest bank account ‘to make sure it would continue to grow’ while they thought about what else to do with it. It does not take much to realise that money in the bank actually goes down in value in real terms.

Finally, JohnL’s points are all good in my opinion, so I will not repeat them.

xris

[Gatekeeper]

Due to my early entry to PI at 19 yrs I managed to give up work after my second child, aged 37, my partner gave up work and sold his business just over a year ago on his 40th birthday (one of those things you always say you'll do!!). We have a nice PPOR, 2 rentals and no debt.
We are currently having a go at the "good life", and spend a lot of time gardening, keeping chickens and chopping wood! We've made our home very energy efficient, with solar, wetback woodburner and an acre of trees to supply it, and will continue to improve things as time goes on. We live on the smell of an oily rag, but it's a great challenge and we are very happy. I love all the physical work, we are both ultra fit and the kids (now 6 & 10yrs) are loving having us both around all the time. We are building another rental (start next week if it stops raining ), and will be labouring on that project.
We're both following our passions, his is antiques and mine is the environment and macroeconomics and we make the odd dollar in that direction, and we are putting a lot of time into community and youth groups. I wish there were more hours in the day!
I don't think its really retirement as I put in much more effort than when I'm working for someone else, but it's oh so rewarding.

[lissie]

A good topic.



Also, as one does increase nett wealth, one’s goals change, and one’s financial requirements change. A 21 year old might think that financial freedom comes with a nett annual income of $50,000. When he reaches that point at age thirty he realises he needs $150,000 and then at forty, with family and other commitments and desires he finds he needs $400,000.

xris

No no no - that's the whole point - yes maybe a family needs more than a young single but if the family is grown - or you havent got one - why keep on adding more and more "necessities" and keeping on working? I found (and is this why most marketing as directed and 20 somethings ?) that once I have one of every thing thats pretty much all I need - I dont need to replace gadgets unless they break , I have tried the expensive hotel weekends a few times - been there done that. As I said above although I admire Gatekeeper and I can understand swaping time for $ with young children - its not for me . And yes dormant money in a bank a/c does loose value (at the rate of inflation) - but passive investment in property will grow quite nicely thanks!

[sooty]

Hi, I would love to have your problem, but unfortunly I not their yet. but I am trying!Market

[sooty]

Whoops must have pushed wrong button. market value 1.08, equity 680, 3 X IP's, but only 12,000 after tax per anum. Just taken capitol gains from 2 x IP's.But we are getting there which is not bad for a truck driver.May be part time work to gain more time to invest?

[Monkeyboy]

My goal is to retire in 10 years time. There are so many things in the world that I want to do that if I wait until I am 65 to retire then I will be way to old to do them.
Yes the wealthy may still work if they CHOOSE but if they don't want to then they don't. Do you really think Donald Trump considers making a TV show work.
I am not a lazy person and in reality I work pretty much most of the time (just ask my wife) but if I have the option of sitting in some far flung village in Japan and learn the art of origami or WORK I would choose Japan, simply for the experience, and I don't care two hoots for origami but I love to learn.
I also want to help people and the environment and animals and to do this I believe I need to make lots of money to do all this. So my retirement is looking pretty busy and I can't wait to get there. I certainly am not going to wait until I am 65.

[Monid]

Interesting topic, and one my wife and I have discussed a fair bit.

We aren't retired yet although I guess you describe her as retired, she is an artist and although she does sometimes do part time work is currently between things. We are structured so that if things continue the way they are and we don't do anything to accelerate it all our properties will be paid off in 10 years earning us about $800 a week in present terms. (I'll be 38, she will be 35) Which is not hugely flash but will be sufficient for us, we try to live pretty cheaply and pretty smally.

We have a policy of not wanting to compromise our quality of life for the sake of money, we are happier living on less than working the typical 9-5 and hating it.

Personally I'm not planning to retire I really like what I currently do (lecture on philosophy/bioethics). But I like having the ability to retire if I chose. Also it means that if we really want we can come home to NZ even if I can't find a permanent post in NZ. Then I will semi-retire hopefully tutor at a university and teach philosophy in schools.

So we are primarily investing not for the ability to retire, but instead for the flexibility it will bring.

[xris]

Yes the wealthy may still work if they CHOOSE but if they don't want to then they don't. Do you really think Donald Trump considers making a TV show work.

Yes, that was really my point. People like Trump may not need to work or make silly TV shows, but they do it anyway because they have to be doing something just to keep themselves sane. My interpretation of retirement was sitting on your bum on a beach somewhere all day and drinking cocktails. I would not define spending all day doing something, such as promoting a charity, learning origami, or making a TV show as retirement - it is far from it. It is work but work that you do not need to do for financial reasons.

The often over-used term "financially free' is a better phrase to use than being "retired", in my opinion.

xris

[xris]

Following on from the previous post...


This then leads on to property and what one needs to be financially free. A lot of people seem to think that owning, say, four properties debt free at age thirty is financial freedom and they can then step back and spend the rest of their lives doing what they want to. I dispute that. With few exceptions, dormant money goes backwards. The example person here would at least need to spend some time attending to ongoing maintenance and management. Also, and very important, he would have to look at the reality of what he is getting. Example below:

Gross rent in per annum 62,400 (4 at $300/week)

Less vacancies 1,200

Rates/
Insurance/
Management 10,000 (4 at $2,500)

Maintenance 12,000 (4 at $3,000)


Actual annual rent in 39,200

Less tax at, say, 20% 7,840


Money in hand 31,360


Not bad still, but all of a sudden your income has halved and you have to think twice about those planned three overseas trips a year.

Yes, you might say, but you have four appreciating assets. Maybe, but the appreciation is not steady and regular and neither are the rent increases. And, if you want to remain debt free, you have to sell one to acquire the capital gain, which throws a spanner in the works of your calculations. If you borrow against the increased value then bang, another big dent in you calculations. And don't forget that as you get into middle-age your commitments and expectations may be greater, and an annual nett income of $31,000 may be woefully too low.

The point of all this is that being financially free is not as easy as some people think.

xris

[Gatekeeper]

Very true Xris, it's not as easy as many think. Lissie makes a good point. Do we really need all that "Stuff". When I really analysed what we spent, a lot of it was to keep all the toys ticking over, so you end up working hard just to maintain what you have and have even less time to enjoy them. We have disposed of a lot of extras that were holding us down, like the fast car (Corvette), that spent most of it's time clogging up the garage for the 20 years we owned it. After years of spending up large on whatever we wanted, because of the pay back, it lost it's shine.

It's all about balance I suppose.

[lissie]

Following on from the previous post...


:

Gross rent in per annum 62,400 (4 at $300/week)

Less vacancies 1,200

Rates/
Insurance/
Management 10,000 (4 at $2,500)

Maintenance 12,000 (4 at $3,000)


Actual annual rent in 39,200

Less tax at, say, 20% 7,840


Money in hand 31,360


Not bad still, but all of a sudden your income has halved and you have to think twice about those planned three overseas trips a year.

Yes, you might say, but you have four appreciating assets. Maybe, but the appreciation is not steady and regular and neither are the rent increases. And, if you want to remain debt free, you have to sell one to acquire the capital gain, which throws a spanner in the works of your calculations. If you borrow against the increased value then bang, another big dent in you calculations. And don't forget that as you get into middle-age your commitments and expectations may be greater, and an annual nett income of $31,000 may be woefully too low.

The point of all this is that being financially free is not as easy as some people think.

xris

I agree that its not a smooth curve - either on the CG or income side. That's one of the reasons I'm looking at getting into actively managing shares as well. Their liquidity will complement the property CG. Also I think well-discplined appraoch to a LOC is very handy too - although we pay down all the actual loans - I would imagine always having a LOC available for the properties to fund the unexpected maintennace/rates/tenatnt done a runner combination which always all happen in the same month courtesy of Mr Murphy. Also there is always the option of getting work again for a short while - it doesnt have to be a career - it just has to pay the bills. I think too by the time I'm really really old (like 70) reverse mortgages will have come into their own.

[nathman]

Its interesting reading some of the posts on this thread. As a 27yr old i guess some of you have a bit more life experiance and property investing experiance than me.

My goal was to be financially free within 10 yrs ( started 2 years ago) I'm on my way with 5 properties and $27k pre tax profit currently.

Now most of my friends laugh at me when i say I'm going to retire (don't really like that word - too many bad conitations) at 35. They just think I'm being a prick.

But as some have pointed out, I don't think i could ever 'retire' there are just too many property ventures to start and business interests to follow.

Its all in your mind set really. If you are around those you care abour and have enough money and are doing what you love - what else could you ask for

Just my two cents worth