Newly FIRE, new to forum

[Optionallyretired]

Hi all! Great to be here. I feel I've turned a new page now and looking forward to reading mor on the site

Let me tell you a little about myself. I'm 34, married and nely retired. I terned thr phrase 'optionally semi retired' for a few reasons. 1. It can't hurt to make more money, ever. Provided you want to. 2. I still like my part time job as a Musician and never really want to stop doing that.

All-in-all I have a pretty strong dislike for general work so made retirement my biggest goal for the past 10 years and have finally made it to a point where I actually feel comfortable financially so left my job as a Communications Technician to travel the globe. I write this from my Hotel in Phnom Penh, Cambidia. What a place I can tell you. Enjoying the experience.

I notice the majority here and on other websites use shares as their chosen vehicle, which I aim to get into at some point in the future but for now, as an Australian I'm sticking with property which created our wealth in the first place and continues to grow it. What I did is buy (finance rather) multiple properties one by one, rent them, use tax strategies, wait fir the rising tide which has averaged 7%pa using mostly borrowed funds that allowed me to leverage my small deposit. I basically turned about $30,000 into hundreds of thousands relatively quickly turning the modest 7% gain on the banks money into a more than 100% gain on my small amount every year. I recently sold a few of these to pay down the mortgage and kept the bedt renting ones. Now we're left with $1,250,000 worth of property averaging 7% a year but I use 4-5% as a safety rule. Anything above thst is a bonus. We then refinanced the equity out up to 80% of the valueof the invedtment property giving us hundreds of thousands to use with still thr last 20% in as a buffer and use that as living. I only need $20k a year max so happy enough to use in the meantime but truth be told, I make that playing music on weekends do it eill just sit. Might buy onee more property with a small chunk to up our portfolio val.

So thats it for now. Our porfolio isn't quite as high as I'd like it to be unless you imcludr our home but comfortable enough for now. Once we ourchase one more invedtment I'll be happy to sit with that and maybe one day sell them to stash into shares. I feel we still have many years working capacity if abdolutely need be but the maim driver is living while we're still alive
you nevrr know when you're time's up so live

We refinanced a LOC meaning equity that sits in an iffset account

 

[martyb]

Above my pay grade, but I'll be following along

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[Texconsin]

Amen.

Above my pay grade, but I'll be following along

Sent from my SAMSUNG-SM-G900A using Early Retirement Forum mobile app

You and me, both, bro'.

 

[Optionallyretired]

Wow. I'm humbled Marty if you're saying what I think you're saying. We've no kids so think thats the main reason we're setup. Paired with the undying passion to make it happen above all else.

We're not rich in by definition (though we are in my eyes) and every other Australian seems to think thry need multi millions to be free. Thise same people live extravagently though. Most Aussies do. The median wage here is $78k and jobs are pretty easy ti come by. It is a different economy entirely to the US. Lots of 'Mon n pop' invedtors around that make good wealtyh through just one rental property. We run into many Aussies all over the world and find thats a factor (in the older ones anyway)

 

[Alan]

Welcome to the site.

Sounds like you are doing great.

Where in Australia do you live, or have retired to?

 

[Optionallyretired]

Wow. 2 replies! Sorry, I was writing last reply before seeing.

What exactly do you mean, am I missing something?
Property (at least in Australia) isn't hard to buy. I have no special quals and have been working whats classed as low income jobs my whole life. Nevr earned more than $60k a year but investing I made that plus more some years. Maybe it's different over there. I'm now making a surplus income from rent (finally!!) paired with low mortgage means our exoenses have halved almost overnight. But 10 years in the making

Do you have any specific questions? We're heading off to the markets now. Anothrr toyrist attraction. Went to the killing fields yesterday and tge genocide museum. A very solemn but worthy visit. I feel privelaged to have seen the sights and felt the atmisphere. I took some time ti sit in a cell and feel what might have been going thtough one's head. It wss hard to describe. Anywsy, I look firward to getting bk to you later

 

[dallas27]

Please use spell-check, my brain hurts.


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[Siestatime]

Wow mate! You may be doing great in real estate, but remember 'don't put all your eggs in one basket. I would take all the proceeds from the rentals (minus the $20k you live on) and put it is US index funds. In the meantime, enjoy life!


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[Alan]

Wow mate! You may be doing great in real estate, but remember 'don't put all your eggs in one basket. I would take all the proceeds from the rentals (minus the $20k you live on) and put it is US index funds. In the meantime, enjoy life!


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He lives in Australia so US index funds may be treated as PFIC's and taxed very heavily.

 

[Optionallyretired]

Cheers guys. Please forgive my bad typing. It's a comvination of rushing and fat fingrs on a small smartphone and it's hard to go back and get to some of the mispelt words, it doesn't let me!!

Anyhow, I was initially suprised at your first comments because: The Aust property investors forum I've been part of for 10 years now basicaly laugh at my semi retirement. Apparently it's not even close to being enough and most just can't fathom. Then again the same people can't understand why I'd want to explore thr globe either. They all still work to make more because however much you have is never enough so theres your answer.

To answer your question Al we live in the Nortern Territory of Australia. Darwin is the city but we live in a rural area with land. Nice n quiet but still close to everything. We've stayed there, but in 'retirement' ae just basically doing more travelling as we wish. Thats the difference. The Wife still has her job to go back to and says she likes it but these past few months off have swayed her somewhat and she's beginning to come around to different ideas. I'm pretty easy, I like home while she works. Plenty of chores to do and thr dogs keep me company. I think I like the holidays too but in moderation. You can never have your cake and eat it too.

In regard to the share portfolio I start with a small amount in cash aftr Xmas for a trial prriod but in NT, nothing beats the leverage property provides. Once we have more than enough cash in x amount of years then we can plonk the cash into them.but for now I'vr

 

[Optionallyretired]

Ok. I seriously gotta get the app for this page!! But apparently it's not compatible with my device oh well, I"ll be back on the PC in a few weeks.

Thanks for listening and your suggestion thus far anyway and I'll probably check in from time to time
Cheers!

PS, the $1,250,000 is a total (inc our home) so investment prop value $550,000 returning positive $10,000 surplus after expenses. No other loans apart from what I class as a relatively small mortgage and investment prop debt of $370k. Our home has grown in value over three years by $100k and we paid down anothet $150k from Investment prop sales so doing ok there but your own home isn't really for eating. We can rent it though whuch is a plus and it's in an area of strong demand and the high land content is what will drive it up into the future.

To simplify. $450k total equity. $1,250,000 total portfolio. Average 7% growth. $10k cash rent return. If we do nothing then adding 5% gain to the portfolio is around $800k per decade. More than we will spend. Add another decade and at similar growth this equals a further 1.2M. Again more than we would spend and I'm still only age 54, more than 10 years shy of traditional retirement age

So our options are: live simply. Work a little. Rent the house and live elsewhere for a while, take 6 minths a year off and work part timr for the rest. Sell up and buy in a cheaper area interstate, invest the rest. There are a heap of options, we just have to work out what we want to do when we get home

 

[rodi]

Semi retire makes sense....Probably not full retirement. But it sounds like that's your plan.

I'd be nervous having all my eggs in real estate... I have a rental property (paid off) so I appreciate the rental income stream - but having gone through the real estate bubble here - I tend not to look at the equity, just the income. In a down market it's hard to sell or refinance to get at that equity... and in retirement you need income streams. I would be too nervous putting all my investing into such an illiquid asset base.

I also don't count my personal home equity - I have to live somewhere... so the paid for house is just a reduction in my spending needs.

Welcome to the forum. I've heard Cambodia and Vietnam are really interesting tourist locations and are on my bucket list.

 

[Alan]

We have friends who lived in Darwin for several years while he was in the military and they absolutely loved the town and area, although the summers are pretty brutal. They live near Melbourne these days and we visited with them this year. Shortly after we'd left, the wife took the 3 young boys back to Darwin for a 2 week vacation, which shows how much they grew to like the place, because it is a heck of a long way from Melbourne to Darwin to fly with 3 kids under 10.

 

[Optionallyretired]

Wow, sure is a small world. Good to hear they liked it so much! I not as keen.. There's just way too many yobbos around these days. Not so much in the Northern suburbs, but Palmerston and beyond every man and their dog seems to have a pig cage on the back of their 4wd towing a boat behind. This might sound exciting to some but it gets old pretty quick. Just in general people are angry. I think it's mostly due to money worries because everything's so expensive. Rents are 3/4 of a weekly paycheque now and a mortgage round about the same. Families are struggling and theres no choice but to keep working hard just to keep your head above water. That would wear pretty thin on just about anyone. But there are good things about it too. I like our piece of paradise. It just shits me to venture out of it 5 minutes on the road with a bunch of pissed yobbos does it to me every time. Alot of folk enjoy annoying others. It just comes natural there now and is strangely addictive. A vicious circle so it's been good to get away from that.

Anyway, coming here has made me think about our finance situation. The thing is: a large gas plant has just fired 1000 workers who were all on big bucks and theres now a glut of rentals on the market. We have our place leased for another 9 months still at an extraordinarliy high rent. Around $150pw more than it probably should be and if they move out and the market is still feeling it then there goes our good immediate cash return.

So, if we placed this one on the market we may get more for it because of this high rent. My question to those with more experience is this. What to do with the proceeds? If we plonked it on the mortgage we,d have a new mortgage of about $220k (with a gross val of $675k) at 4.9%pa equals $12k interest per year which is the same we pay now if you take into account the current rent return we get holding on to the investment house while it hopefully, steadily grows in value. If we do this though we have just our own house left over and some equity we can't really use. Great for low expenditure, not great for future income unless we use it to buy more investment property. Would it be wise to sell the investment home and use proceeds for shares? I know nothing of the stockmarket. Maybe hitsgh yihelding? I dunno thats why I'm asking. I guess I want to know, what would you do? I'm doing the best I know how

 

[Alan]

I'll bow out now as I have no experience in buying to rent, or investing in the Australian stock market.