Hi from Downunder!

[Sparkie67]

Hi. I'm 42 yrs old and still working - currently earning about $80k, as is my partner. We are both sick of working and are pretty keen to go traveling on the cheap (rv).

We have the distinct advantage of being in Australia. We both own houses which have gone up 50% in the last four years. If I sold our homes and cleared all debt we would have $900k to $1M.

We figure we need about $35k to $40 k pa to fulfill our dream of travel. So it all seems doable in my mind. I'm still new to investing having never done any. I've just bought a house and the market did the rest! Ive got about $100k in my pension plan but won't get that until I'm 55 yrs old. SS is means tested here so probably won't factor that in. Have got a couple of probable inheritances to look forward to (approx $500k) but again I wont factor them in. It'll be a nice bonus if it happens.

I guess my question is what to do. I was going to just rent out both properties but I wont be able to pay the mortgage and live on the rent. I can keep it very simple for a few years by just sticking the sales proceeds in the bank. I can get 7%, paid monthly with no fees for 5 years, or 6.8% for 4 years. I figure that gets me my $35-$40 k pa plus inflation cover for the capital with next to no risk.

Am I missing something obvious?

 

[Coach]

Welcome to the forum, Sparkie!

I don't know enough about Oz to speak authoritatively, but I don't see anything you're missing. I think your idea to sell the properties makes sense. A 50% runup in 4 years looks like heaven from this side of the Pacific, as does 7% bank return. I think you'll find more freedom in not owning rental properties.

As long as your budget is realistic, it sounds like you've got it made. I assume that budget includes any taxes you'll have to pay and health care costs.

I'll look forward to your future posts.

Coach

 

[dex]

Hi. I'm 42 yrs old and still working - currently earning about $80k, as is my partner. We are both sick of working and are pretty keen to go traveling on the cheap (rv).

We need pictures of the RV. I'm researching buying or renting an RV in Australia. I'd like to buy since I would use it for a long period of time and possibly over a couple of years.

We have the distinct advantage of being in Australia. We both own houses which have gone up 50% in the last four years. If I sold our homes and cleared all debt we would have $900k to $1M.

We figure we need about $35k to $40 k pa to fulfill our dream of travel. So it all seems doable in my mind. I'm still new to investing having never done any. I've just bought a house and the market did the rest! Ive got about $100k in my pension plan but won't get that until I'm 55 yrs old. SS is means tested here so probably won't factor that in. Have got a couple of probable inheritances to look forward to (approx $500k) but again I wont factor them in. It'll be a nice bonus if it happens.

I guess my question is what to do. I was going to just rent out both properties but I wont be able to pay the mortgage and live on the rent. I can keep it very simple for a few years by just sticking the sales proceeds in the bank. I can get 7%, paid monthly with no fees for 5 years, or 6.8% for 4 years. I figure that gets me my $35-$40 k pa plus inflation cover for the capital with next to no risk.

Am I missing something obvious?

I don't think you are missing anything. The question is the outlook for the housing market.

 

[Sparkie67]

Thanks for the replies guys. I think Oz is a bit unusual at the moment. There was no economic downturn here to speak of (6-8 weeks), because we are lucky enough to have a load of coal and iron in the ground with China as a neighbor. Bit of a one trick pony though so could all come crashing down.

We also have a large migrant intake and no land releases for property (crazy in a country this big), so supply is always an issue. May be a bubble but obviously no one knows.

Our main banks are deregulated and also were protected by the gov, so they are as safe as is possible.

Health isn't an issue. I'm a citizen in Oz and also the UK (and therefore Europe), both of which provide free healthcare. Private insurance cover (currently $70 pm) speeds up the elective surgery but it all gets done for free if it needs doing.

I'm gong to convert my own Mercedes Sprinter into a stealthy rv, so I don't have any pictures at the moment. Most here are based on European vans. If you had a look at rental companies websites (eg Britz) you'd get an idea as to what is commonly avaiable to buy

This will all be happening in the next year so I'll post again. Great site. Been lurking for a while.

 

[Alan]

Welcome to the forum Sparkie. My brother is a mining engineer in Queensland, in the coal industry, and he tells me that the economy is doing pretty well, and you can see all the ships lined up waiting to get into port to load up with coal for China. He is in the process of building a new house at present (can't remember if he plans to sell the one he's in or rent it out after they move).

His son is nicknamed "Sparkie" from his career in the RAAF as an aircraft technician.

It sounds like you are doing pretty well financially - good onya!!

 

[dex]

I'm gong to convert my own Mercedes Sprinter into a stealthy rv, so I don't have any pictures at the moment. Most here are based on European vans. If you had a look at rental companies websites (eg Britz) you'd get an idea as to what is commonly avaiable to buy

Thanks - I've been looking at the link below.

Buy Back Deals on Australian Motorhomes & RVs at Sydney RV Centre - Australia's Most Respected RV Dealer

There are a lot of RVers here. I'm sure your will be RVing in the USA in the future.

 

[Sparkie67]

Thanks for the welcome Alan. Alas I'm not 'the' Sparkie, which would have been a coincidence!

 

[Sparkie67]

There are a lot of RVers here. I'm sure your will be RVing in the USA in the future.

I think so too. Our plan is a couple of years around Oz/ New Zealand, then UK and Europe, and then the US and Canada. And then maybe spend the inheritance on a yacht in the Mediterranean until I stroke out!

The website for vans seems good. Takes away the hassle of selling privately

 

[ronocnikral]

I'm gong to convert my own Mercedes Sprinter into a stealthy rv, so I don't have any pictures at the moment. Most here are based on European vans. If you had a look at rental companies websites (eg Britz) you'd get an idea as to what is commonly avaiable to buy

i lust for a sprinter. a bed in the back. climbing rack hanging on the sides. mmm....

welcome...i'm still trying to figure out how vehicles in oz can stay on the road being upside down and all...

 

[Sparkie67]

i lust for a sprinter. a bed in the back. climbing rack hanging on the sides. mmm....

I've found a 4 post 12volt pulley system that lifts a fully made double bed up to the ceiling so the whole interior can be dedicated living space. Cant wait to start! Love a good project

 

[CoolChange]

I've found a 4 post 12volt pulley system that lifts a fully made double bed up to the ceiling so the whole interior can be dedicated living space. Cant wait to start! Love a good project

Any chance you can post a link showing this contraption? It sounds like an interesting use of space.

BTW: Welcome aboard.

 

[NW-Bound]

Lots of RV'ers or RV'er-to-be here. All right! Welcome aboard.

 

[Sparkie67]

Any chance you can post a link showing this contraption? It sounds like an interesting use of space.

BTW: Welcome aboard.

Thanks. Not sure if I've done the link thing right but hopefully this is right

Bed Lifting Mechanism Northcoach Motorhome RV Equipment Parts Accessories

 

[Sam]

We have the distinct advantage of being in Australia. We both own houses which have gone up 50% in the last four years. If I sold our homes and cleared all debt we would have $900k to $1M.

Welcome.

How long do you think that advantage would last? 6 more months, 1 year, 5 years? Are you aware of the recent US real estate bubble burst? Or the same burst that happens everywhere in the world every 2 decades, give or take a few years? Australia might be well physically isolated, but that rarely prevents bubbles from bursting.

5 years ago, most Californian, Floridian, Arizonian, etc... felt the same advantage you're experiencing today.

 

[Sparkie67]

Welcome.

How long do you think that advantage would last? 6 more months, 1 year, 5 years? Are you aware of the recent US real estate bubble burst? Or the same burst that happens everywhere in the world every 2 decades, give or take a few years? Australia might be well physically isolated, but that rarely prevents bubbles from bursting.

5 years ago, most Californian, Floridian, Arizonian, etc... felt the same advantage you're experiencing today.

Hence my plan to sell up while the going is good. The general consesus here is that the market drivers are good for a little while yet. But a slowing China would certainly have an impact.

Given longevity is a problem at 42, if I can get 7% for 5 years I can worry about investments all over again when I hit 47!

 

[Sam]

The general consesus here is that the market drivers are good for a little while yet.

That was the general consensus in the US too, right up to (and even beyond) the collapsing point.

 

[DangerMouse]

Welcome.

How long do you think that advantage would last? 6 more months, 1 year, 5 years? Are you aware of the recent US real estate bubble burst? Or the same burst that happens everywhere in the world every 2 decades, give or take a few years? Australia might be well physically isolated, but that rarely prevents bubbles from bursting.

5 years ago, most Californian, Floridian, Arizonian, etc... felt the same advantage you're experiencing today.

Sam, I don't believe the housing market will crash in Oz like is has in the US. It is a totally different market, mainly because there is no such thing as a non-recourse loan. Also because interest rates are so high on mortgages in Australia (7%+), loan profiles are probably a bit different than here in the US. Also in Australia it is not possible to deduct mortgage interest on your principal place of residence.

That said, I would not be surprised to see a slight drop as housing prices in Australia are some of the most unaffordable in the world. Thing that does keep driving the prices is as Sparkie says, supply and demand.

 

[Sam]

DangerMouse, isn't that what everyone says to defend the high price of housing? "It's a totally different market."

It does not matter (not to me) that interest is high, loan profiles are different, different or no interest deduction, or even supply and demand. The simple fact is that when the house price over income ratio is high and still rising, there's bound to be correction.

There is no exception to that rule, to my knowledge.

 

[heyduke]

no one is going to ask where you are getting such good interest returns on capital

I just did ... in fact I will be in Sydney next saturday and see if I can find them

 

[Sparkie67]

no one is going to ask where you are getting such good interest returns on capital

I just did ... in fact I will be in Sydney next saturday and see if I can find them

Any high street bank. Just walk in off the street. Might even get more with a bit of a haggle. Given the global situation it's money for old rope.

 

[DangerMouse]

Getting high interest on your savings in Oz is a piece of cake as interest rates to borrow money are way higher than in the US.

ANZ Interest Rates

 

[Sparkie67]

Getting high interest on your savings in Oz is a piece of cake as interest rates to borrow money are way higher than in the US.

ANZ Interest Rates

Westpac gives 7% with the government guaranteeing deposits of upto $1M.

Term Deposit Rates, Compare the latest rates and terms - Westpac