PodcastsThe Property Couch465 | How This Family Can Afford their Year-Long Holiday While Building Their Portfolio
465 | How This Family Can Afford their Year-Long Holiday While Building Their Portfolio
The Property CouchWed Oct 18 2023
Buying a New Home in the Southern Highlands:
- Linda wants to buy her own home in the Southern Highlands for retirement
- She is unsure if she can afford it and needs guidance on how to get there
- The plan shows that she cannot afford to hold onto her Sydney investment property while buying the new home
- She needs to sell the investment property now or later, but selling sooner may be more beneficial
- Linda also realizes that she needs strong money management skills and clarity on where her money is going
Retirement Planning:
- Linda wants to stop working at the zoo by age 65 and retire comfortably
- She needs a clear roadmap to financial peace and a plan for achieving her retirement goals
- Three scenarios are considered: buying an investment property and then a new home, selling the existing property and buying a hybrid, or selling the existing property and buying a new home sooner rather than later
Cash Flow Management:
- Linda had credit card debt and a car loan, indicating weak money management skills
- The plan helps her understand where her money is going and how to control it better
- Cash flow analysis shows potential gaps between income and expenses that need to be addressed
- A focus on reducing debt and improving cash flow will help achieve financial stability
Property Investment Options:
- Linda was pitched the idea of investing in land with house-and-land packages but felt unsure about it
- She wanted clarity on how this option would address her issue with money management
Retirement Income:
- Linda needs to plan for retirement and ensure she has enough income
- The plan helps her determine the optimal timing for selling her investment property and buying a new home
Optimization and Sequence:
- The plan helps Linda optimize her financial decisions based on her goals and timeline
- It provides different scenarios with varying timelines for buying properties and achieving financial stability
- Linda chooses the scenario that aligns with her preferences, such as buying a hybrid sooner rather than waiting until 2034
Financial Confidence:
- Linda gains confidence in her financial planning through the detailed roadmap provided by the plan
- She realizes the importance of money management skills and clarity in order to achieve financial peace
- The plan addresses missed opportunities and ensures that Linda can retire comfortably while enjoying current lifestyle choices
Overall Value:
- Linda's story highlights the importance of seeking help at any age or stage of life, not just for young investors
- It demonstrates how proper planning can lead to confident decision-making and optimization of resources
- Through this process, Linda gains clarity on her goals, improves money management skills, and creates a clear path towards a comfortable retirement
Retirement Scenarios for Linda:
- Scenario 1: Keep existing property and buy a smaller investment property in the Southern Highlands.
- Scenario 2: Sell existing property to buy a more realistically priced home in the Southern Highlands. Chosen scenario aligns with Linda's retirement location preference.
- Scenario 3: Sell existing property to buy hybrid home at lower price point, invest in additional property in 2025.
Benefits of owning principal place of residence:
- Principal place of residence offers government support services and protection from means testing.
- Owning own home was prioritized due to potential benefits earned over years of working and paying taxes.
Considerations for choosing retirement location:
- Distance between Taronga and Southern Highlands is approximately two hours.
- Desire to retire in preferred location influenced decision-making process.
Importance of timing for owner-occupied purchases:
- Delaying purchase can lead to increased costs due to capital gains tax on investment properties and higher debt levels for later purchase.
- Highlighted importance of prioritizing owner-occupied purchase sooner rather than later.
Linda's chosen scenario:
- Chose scenario 2, selling existing property and buying more realistically priced home in desired retirement location.
- New home would cost around one million dollars, allowing her to maintain income through part-time work during retirement.
Financial outlook for Linda:
- Minimal debt on principal place of residence, comfortable savings expected in 20 to 30-year period after purchasing new home.
Feedback from Linda:
- Expressed gratitude for seeking professional advice and creating a plan aligned with retirement goals.
- Wished she had started the process earlier but felt confident about financial future with advisor's help.
- Using tools like Money Smart and more platform helped her feel in control of money and plan execution.
Importance of finishing books:
- Life hack: Finish chapters instead of stopping in the middle to maintain momentum and positive reinforcement.
Rental market insights:
- Hobart experienced 24.5% increase in total rental listings over past year, resulting in lower median rents due to increased supply.
- Canberra also saw increase in total rental listings (9.9%), leading to decreased rental yields and median rents.
- Rental markets influenced by supply and demand dynamics, as well as government policies such as rental caps.
Closing remarks:
- Hosts emphasized passion for helping people make informed decisions about property investing and retirement planning.
- Encouraged listeners to take action, seek advice if they want to transform their financial situation.