Who lives off rental income alone

Do You Live Off Rental Income Alone?

  • yes

    Votes: 6 5.7%
  • No

    Votes: 81 77.1%
  • mix of rental income and other investments

    Votes: 13 12.4%
  • Almost There

    Votes: 7 6.7%

  • Total voters
    105
  • Poll closed .
G'day everyone.

This is my first post but I have been lurking for a while. I would just like to congratulate Kathryn D. Kum Yin Lau, Sue 78's MIL, and Nikolina, and I think from the way they wrote Uncle Perce and Natmarie 73 for being able to live independently from rent. What a marvelous achievement.

Slim :)

Slim,

At the moment I am cash flow positive with a bit left over but I certainly wouldn't be able to live off my rent unless I could get my expenses <$200 per week. I have an offer on a property where I live that if it all goes through would allow me to not have to work but I would probably only have $1000 per week to live off out of which ongoing bills etc would need to be paid. I don't know about anyone else but $1000 a week is not enough for me to quit work especially if interest rates rise and cut into my cashflow.
 
Natmarie,

I agree.....I am about 50-60k per annum cash flow positive. I certainly would not want to retire on that.

It does give me some comfort.....but I will need a lot more for me to retire. Obviously, people have different lifestyles....but this amount would not suit mine.

Whilst Nikolina has made good progress to date.....the question needs to be asked if she would be happy to live such an existence over the long term?

Slim,

At the moment I am cash flow positive with a bit left over but I certainly wouldn't be able to live off my rent unless I could get my expenses <$200 per week. I have an offer on a property where I live that if it all goes through would allow me to not have to work but I would probably only have $1000 per week to live off out of which ongoing bills etc would need to be paid. I don't know about anyone else but $1000 a week is not enough for me to quit work especially if interest rates rise and cut into my cashflow.
 
No i don't run any kind of business, im on an average wage - He He. I pretty much saved evey single cent possible from an young age and put the money into an savings account which i was earing a few k intrest on per year, to me EVERY cent counts! I purchased my IP (house) just over 1.5 years ago now at that time the market was down, the owner had to sell and i put in a low ball offer which eventually got accepted.

I don't know about anyone else but I'd like to know what Nikolina considers to be an "average wage" because when you really crunch the figures using an average wage say of $40,000 after tax then it would take quite a while to save a large deposit even if you are living at home. My salary is around twice the average wage, plus I have cash flow from a few of my properties and very little living expenses for housing and bills thanks to company provided but I can't save more than $2000 to $3000 a month and it would still take me a few years to save up enough deposit to allow a Sydney property to be CF+

Now add in the costs of doing up a nice car, going out on weekends and going overseas (as Nikolina has told us she has done/does)and the amount that can be saved reduces substantially and you would not simply not be able to save enough for a deposit on a property in Sydney within 1.5 years unless it was heavily negative geared. More likely you would be saving for many years while property prices continued to rise and lock you out

I'm sorry but the figures simply don't add up unless Nikolina's idea of the average wage is $150,000 or so.
 
Suppose one could be working in an ''average job'' working ''above average hours" (eg. 6-7 days a week), and subsequently have an ''above average wage''... but on working usual hours may be considered to be on an ''average wage''. :)
 
1. I understand what LVR is and how to use equity.

2. I undertstand tax including CGT.

3. The strategy im adopting im more then happy with and will continue with it.

4. I don't want to use my equity to purchase so many more x amount of properties (Yes i could go out 2mwz and buy 5 + IPs using my equity if i wanted to. I realise this) no matter how much more CG this will give me in the future.

5. I don't want a high level of debt

6. All the above positive and negative replies have only made me even more determined.


Thanks.
 
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Most definately - I don't disagree although the sort of jobs where doing overtime will increase your weekly take home pay are usually lower income jobs unless you are a contractor. I'm just saying that the official "average wage" would make it very difficult to save a large deposit in such a limited timeframe so I just wanted to know what Nikolina's definition of average wage is. High earners may think that the average wage is a lot more than a low income earner. Saying you only earn the average wage can be deceiving unless it is specified as the official average wage from the ABS.

As for different strategies, do whatever works for you is what I say. I am happy to get into huge debt as long as the property generates enough cashflow to cover the loan and put money in my pocket as well.
 
Nikolina,

I can't be bothered arguing with you. But your story is not straight or you do not understand what living off rental income is/means, and to be honest- who cares either way.

all the best
 
I dont believe they are bashing Nicolina just offering different strategys. Congratulations on your efforts so far Nicolina I would love to be in your position at age 23. Well done.

Everyone has there own strategy and thats cool. There is no right or wrong strategy. Just different strategys. People should pick what feels comfortable and works for them.

This is also a forum where people can post their opinions and also a forum for learning.


One thing that I think people have forgot to mention... is inflation

My strategy is IO accumulating ips, retiring in 20-25 years and then paying down the loans. My first ip that I bought was for $210 K in 2009. If I were to pay off this ip it would take many many years. I'm on 50 K pa can only save approx $12 pa at the most. If I were to pay this down it would take more than 10 years. In that period of time I would have lost the opportunity of accumlating 4 or 5 more ips. I would rather have 6 ips by 2020 than just my ppor and 1 ip.


Also: The unit i bought in 2009 for $210 K was worth $40 K back in 1990. Imagine If I had bought this unit for $40 K in 1990 and had decided to retire in 2010. I am on a $50 K pa salary. If I decided to only pay off this loan after I retired in 2010 I would be able to pay off the $40 K loan on my first ip in 2 or 3 years (thanks to inflation eating away at the loan) I think to myself. Why struggle to pay it off from 1990 - 2000 and beyond with my piddly payg salary all those years ago when I can pay it off now after inflation has worked its magic. My salary is so much more now than it was in 1990.


This just makes sense to me. I'm not having a go at other peoples strategys. As people are posting their strategys im voicing mine :)

Just something more to think about

I'm still trying to decide on whether i'll live off rental income when i retire or live off equity. I think i like the idea of living off the equity as you dont have to spend money on cgt, selling fees etc and you get to keep your asset base that will continue to grow for you over the years to come!

This is a great thread :)

Would like to hear about other peoples strategies.

:)
 
Hi all,

Nikolina, I just tried to highlight what was possible, and congratulate you on what you have achieved so far. However I do have a few questions.

I undertstand tax including CGT.

So you are happy to give up 40% of your rental income on the paid off IPs to the tax office while trying to reach your goal, effectively adding 20-30% more time to get there??

I don't want a high level of debt

What about a medium level of debt, by only buying 2???

All the above positive and negative replies have only made me even more determined.

More determined about what exactly?? Earlier on you said "I can't make up my mind".

Nikolina, have you actually worked out how to achieve your goal by using pen paper and calculator??? Have you worked out how long it will take to buy your 5 properties by saving, allowing for the tax you will pay along the way, as well as the increased cost of the IPs in the future???

bye
 
The question I would ask is "If you are in it for the long haul, why bust a gut to pay off an IP quickly?"

When tax advantages and more importantly, natural inflation will help you get there much quicker in my view, and not compromise your lifestyle as much.

I have some properties that are now worth 5-6 times what I paid (borrowed money)for them 10-15 years ago. I now have a very very low LVR and good cashflow.

I like to put a bit of a deposit down and pay off interest and principle. But even if I only paid interest only over this time, I would still be in a great position.

At the end of the day though Nicolina, it's your life and your money. You are doing it the way you know, and are comfortable with. Good luck and well done so far.
 
Bill, nice analysis as usual, cheers.

Hi all,

Nikolina, I just tried to highlight what was possible, and congratulate you on what you have achieved so far. However I do have a few questions.



So you are happy to give up 40% of your rental income on the paid off IPs to the tax office while trying to reach your goal, effectively adding 20-30% more time to get there??



What about a medium level of debt, by only buying 2???



More determined about what exactly?? Earlier on you said "I can't make up my mind".

Nikolina, have you actually worked out how to achieve your goal by using pen paper and calculator??? Have you worked out how long it will take to buy your 5 properties by saving, allowing for the tax you will pay along the way, as well as the increased cost of the IPs in the future???

bye
 
Good work Nicolina.

I have to put my 2 cents worth in:

Whilst Nicolinas strategy may not be tax effective, we all have to remember she is only 23 and has, or can have 2 properties that pay for themselves. At her stage in life, being young she could decide tomorrow to go backpacking in Europe, clubing in Mykonos, working on an ashram etc etc for 2 years, have a ball and know when she gets back that she is still miles ahead of most people her age. Even if she never does any more investing, she is still ahead of most of the population. She could decide to start a family at 30 and have the choice of staying home with her babies secure in the knowledge that she has a small income coming in every week. There are probably milliions of working mothers who would love to have that choice.

The agressive accumulation strategy is probably something she may want to do when she is older.

Aquiring these assets is a fantastic thing to have done so young and she has done it in a way that still gives option to do all those things that you want to do at that age without being tied to a negatively geared portfolio that will stop her doing all those things.

Nicolina, I think your strategy is spot on for someone your age and you dont seem to be missing out on the fun of being 23. Just make sure you keep doing those things that 23 year olds do because, trust me, doing the same things at 40 just makes you look a bit sad.


You have managed with a little sacrifice and alot of hard work to get ahead and that effort will pay you back many times over in the not to distant future.

Good work, keep it up (but make sure you have LOTS of fun).:D
 
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You are correct i have had people tell me, what on earth am i doing, why am i paying P&I on it and not just I, why didn't i spread the money over a few IPs, stop making bulk mortgage repyaments on it and the list goes on. I have thought long and hard about all of this and yes i could go out and purcahse x amount of properties if i wanted too but at the end of the day i don't wan't to own the banks millions of dollars. I would perfer to be a 30yo whom owns 5 IPs outright or close to it rather then own 15 + properties and millions of dollars to the bank.

Im looking forward to owing 5 IPs outright or close to it in the future and being debt free. Here is just an senario.

5 IPs returning $400 rent p/w.
5 x $400.00 = $2000.00 p/w and debt free. That's choice to me.

Each to their own though, this is just my strategy everyone is entitled to their own. :D


Hi

I was viewing the whos online and someone was reading this old thread from 2010. Just wondered how things are going with you and if you are using the same strategy?
 
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