Greg, thanks for the link. Yes that's basically the strategy. Build your asset base as fast and as quickly as you possibly can. Let that asset base increase in value whilst drawing down a tax free income to fund your lifestyle. As long as you've structured correctly so the asset base is appreciating in value faster than you're drawing down (subject to lender DSR criteria) then your net worth is always increasing.
We've done it!
- Thread starter Rixter
- Start date
Having read the article at the link provided by El Caballo; and I admit, not the entire thread, I have just had a bit of a lightbulb moment! Thanks Rixter and El Caballo! I like this living off equity idea instead of selling off earlier to own outright less properties! Can anyone explain the quote below in a simpler way, especially what is the dreaded DSR wall? Sorry, some of this stuff is like a new language to me!
"Cashbond Structures are an excellent tool for those in a position to possibly use this option. But you must plan & structure well ahead of time before hitting the dreaded DSR wall. Otherwise you'll find you've painted yourself into a corner - catch 22 situation."
"Cashbond Structures are an excellent tool for those in a position to possibly use this option. But you must plan & structure well ahead of time before hitting the dreaded DSR wall. Otherwise you'll find you've painted yourself into a corner - catch 22 situation."
Hi Simron,
Here is the Cashbond for Dummies thread where I explain all about the Cashbond Structure. Have a read mate as Im sure it will answer your questions. Feel free to post if you have any other questions.
Average growth & of late above average increase in yields. I'm anticipating increasing growth & yields as the supply/demand equation tilts to under supply for the growing increase in population.
All ticking along nicely in relation to CG & yields.
Currently working through our portfolio sprucing up & renovating (total paint out inside, new floor coverings & window treatments as required) properties as tenancies expire to increase yields & values further. Renovations being project managed by our PM's whilst we manage our PM's.
CG across the last 12 months I estimate to be around $200k conservatively and expecting further increases as our Brisbane holdings exposure kicks in also over the coming year.
Currently working through our portfolio sprucing up & renovating (total paint out inside, new floor coverings & window treatments as required) properties as tenancies expire to increase yields & values further. Renovations being project managed by our PM's whilst we manage our PM's.
CG across the last 12 months I estimate to be around $200k conservatively and expecting further increases as our Brisbane holdings exposure kicks in also over the coming year.
This was your post from a few years ago. Did you end up going down that path or finding a better one?
All ticking along nicely in relation to CG & yields.
Currently working through our portfolio sprucing up & renovating (total paint out inside, new floor coverings & window treatments as required) properties as tenancies expire to increase yields & values further. Renovations being project managed by our PM's whilst we manage our PM's.
CG across the last 12 months I estimate to be around $200k conservatively and expecting further increases as our Brisbane holdings exposure kicks in also over the coming year.
Excellent!
I hope your predictions for Brisbane are correct - the majority of mine are right here!
We conducted further DD in these areas.
In the end, deciding it didnt fit our personal risk profiles as the stock market is too much out of our control.
We opted to just keep doing what has worked best for us. Why tinker with something that's not broke.
All poised in readiness. Its just a matter of time as the cycle continues to turn.
Yes you can ask.
But I will tell you without having to ask. Next FY
Great thread Rixter and I rate it 6 stars! I'll read it again later.
Also great to hear you plan to retire next year. I guess it's not worth continuing to work an extra 5 years so that you have extra property and income to live off.
And hearin lies the implicit risk as well.
If you are drawing a 'personal debt income' the asset class must increase.
For Australian residential property this strategy has worked very well for a long period, some 23 odd years in fact.
But has anyone 'back tested' this theory for say the period from 1980 to say around 1991.
By the way Jan Somers books looked at it from a very long term 'income point of view'.
For those that can see the difference Jan Somers viewpoint still holds, even over longer term multiple cycles.
Why?
because its an income approach
Yep I agree totally - there's no risk free investments out there.
Even the most conservative form of savings in a bank account has its risks associated with it - just ask the self funded retirees at the moment in times of low interest rates.
CG must continue same as rental income over a 10 year cycle. Thus the reason to structure accordingly.
What the majority don't realise is when it comes to 'income', there is 2 types - 1/ Positive Cash flow income & 2/ Capital income.
1/ Positive Cash flow - where cash revenue exceeds expenses.
2/ Capital Income - where asset value exceeds asset debt.
You see, the poor & middle class paradigms think positive cash flow for income, whilst the rich/wealthy class think capital.
The rich/wealthy control appreciating assets for income to fund their lifestyle whilst 'others' are offsetting the holding costs along the way.
('Others' from a property investors perspective being the tenants & taxman.)
At the end of the day as long as you meet DSR and your LVR is reducing due to well structured portfolio growth outstripping loan redraws, then whats tax deductible and whats not deductible in relation to 'personal debt income' becomes irrelevant. You are already funding your lifestyle living costs without the need for tax relief - deductions simply become a bonus.
Its a complete paradigm shift in thinking away from the conventional way the poor/middle class masses are brought up accustomed to.
I hope this helps.
