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OWN TWO HOUSES INSTEAD OF ONE AT RETIREMENT – HERE’S HOW

by Editor | Oct 29, 2021 | Finance, Property, Silver Magazine

Nathan Coad of NMC Finance tells us what we need to know to retire comfortably, as long as we start now.

You know that guy. He earns the same as you, but he has two houses and you only have one. What’s his secret? GOOD FINANCIAL ADVICE. He has people working for him who know how to get the best from the existing system. And you can too. You just need to know how to make the system work for you.

I need to stress to the Over 50s that it is just so important to have a clear strategy for retirement. I work with a lot of clients in this space. The way you approach your planning at this stage of life can make all the difference to how you live in your later years. And it’s easy, legal, and very, very smart. Everybody needs to know this.

retire comfortably - retirement goals — True financial freedom at retirement is about making the system work for you

For those of you with an outstanding home loan debt on your home, there is good news. You are generally sitting on a lot of equity from the uplift in property values. It may seem to be just an imaginary amount of money or simply theoretical, but it is actually an important tool that you can use to free yourself from money worries in your later years.

You probably currently have no passive income sources and are going to be reliant in retirement on your superannuation generating a small amount, and then likely the Age Pension. But you could change that, depending on how you are currently set up financially.

You need to use the equity in your home to increase your wealth. We meet with people to understand the structure of their home lending, and work out how much equity they have. And then we can work out how they can put that equity to work, rather than having it sitting there doing nothing.

The good news is that anyone with equity building up, can use that equity to buy a second property. The second properties our business associates suggest you buy, they suggest for a reason.

The second property can help you reduce your existing tax base. Our associated registered accountants provide the advice here.
The second property is expected to increase in value over time, providing capital growth and make life easier at retirement. Again I will refer you to our partnered advisors who will guide you through that.
Clients will only have to contribute $20 to $50 a week themselves to actually secure the property in the current environment.
You will pay down your mortgage five to 10 years faster.
You’ll have an extra asset at retirement. With this, you can sell it, take the capital growth or keep collecting the rent.

The second properties our business associates suggest are all across Australia. They identify suitable properties in specific areas of Victoria, New South Wales and Queensland. These properties have been selected according to population trends, infrastructure, investment, and what is going on from various levels of government.

Having equity in your home actually an important tool that you can use to free yourself from money worries in your later years.

RISKS

There are the usual risks. There’s always the potential of interest rates increasing. If the rents don’t increase as well, you’ll have to pay the difference. Our associates take some of that risk away from the actual rent side of things. Properties that carry a five-year rental guarantee provide support. Our associates work with property managers so that if the tenant doesn’t pay the rent, or if there’s a delay in being able to find a tenant, the property manager will actually cover the rent for five years at an agreed rate.

The other key risk is that there cannot ever be a guarantee that property prices are going to rise. But, if looking at historical data in Australia, property generally has only really done one thing over the long-term. Gone up over time. Over the decades, as population growth occurs, urbanisation happens and infrastructure goes in. Areas that weren’t once ideal to live in then become very sought-after areas. Inner city areas in Melbourne like Carlton, Richmond, Collingwood are examples. In Sydney, you have Surry Hills and Redfern. At some point in time they were very undesirable places to live. Redfern only 10 years ago was still undesirable, but thanks to urbanisation and population growth, those areas have become sought after because of their close proximity to the city.

This gentrification and subsequent increase in property values is expected to happen all through Brisbane and through to the Gold Coast. It’s these areas of stable increases in capital growth that we our associates focus on.

The Covid crisis has ultimately started to change our culture. Regional areas propertywise have experienced such a boost because of people realising that they’re never going to have to go back to the office five days a week in the city. Personally, I don’t believe it’ll ever go back to what it was with large corporations in Australia reducing commercial leasing capacity and assisting employees with flexible working arrangements.

A CASE STUDY

Alison (48) and Paul (53) have a combined income of $200k. They are both self-employed and have a house which they live in. The house they bought last year for $655k has just been valued at $850k now. They paid $300k as a deposit. What should they do before they retire?

retire comfortably - case study — We can work out how they can put that equity to work, rather than having it sitting there doing nothing.

Advice: Firstly, I would work out what the borrowing capacity is and I’d suggest property-wise, Alison and Paul can probably secure a second property around about $470k over a 30 year term. A second property is a saleable asset, if you need to sell it, you are not going to be without anywhere to live.

Alison and Paul also need to have an exit strategy at retirement.

On the other side of this process, Alison and Paul would build ownership in the property that has a renter in it and the rent is paying it off. They are only approximately paying $20 to $50 per week to get into this situation. The lending is structured so that direct mortgage exposure against the primary home is limited.

THE SECOND PROPERTY

No emotion should be attached to an investment property. Think of it like purchasing a share in a company. What you’re looking for is an asset that’s going to be generating demand.

OTHER OPTIONS

There are other ways to increase your retirement pot. An example is salary sacrificing a part of your salary, into superannuation and at the same time access a part-pension from your superannuation. That round-robin transaction results in you firstly ending up with the same net salary each pay period that you would have otherwise, but you end vvsuperannuation’s a lower tax environment than your personal status, in your marginal tax rate.

Having a clear strategy for retirement is the route to financial freedom

Any superannuation strategy will be guided by our associated financial planners who are engaged to advise on the suitability of acquiring property in the fund.

So why isn’t everyone doing this? Mostly they don’t know they can. This is why financial advisors are so valuable. They understand areas in which you can quite lawfully utilise the tax laws to your advantage.

People who build up large property portfolios – all they’re doing is utilising knowledge and applying it. It’s sitting within the parameters of the tax law. Knowledge is power, and then applying it, that’s when it becomes apparent.

Property is just one asset class, and there’s many asset classes you can access. But property is one which you can utilise with the tax system to help you pay down that asset faster.

SUPERANNUATION

Superannuation is the other key area we can assist with. If people have built up a good base of superannuation over their careers, we can help clients navigate purchasing property through their superannuation.

EXPERT ADVICE

How do I know how all this works? Because I’ve been a career banker. I started in 2005 and spent most of that time in the lending environment.

Up until 2018 I worked in two of the major banks, before I started NMC Finance. I started my own brokerage because I saw a gap in the bank offering. One of the reasons why I really enjoyed being a commercial banker was being able to go out and build relationships with clients and provide that personalised experience. So setting up my own firm really allows me to do that.

I’m not limited to one set of credit policies with one bank, one set of products that probably doesn’t fit all clients. I’ve got about 38 lenders in my panel, and I’ve also got the ability to go offpanel where there’s an alternative scenario that’s suitable for a client. And so when you’ve got the power of that behind you, you can build strong relationships with clients that you can keep for life. I really enjoy working in this space and it’s thrived through the pandemic.

THE TIME TO ACT IS NOW

It’s been a really great time for clients to be able to secure extraordinary discounts on their finance which are in place for the whole of the 30-year terms. It’s also the perfect time to be refinancing, securing very cheap money. It is the lowest environment, interest-rate-wise, in the history of Australia. This is your window, jump through it.

A consultation with Nathan is totally free

Contact NMC Finance on 0498 766 639

Or log onto nmcfinance.com.au.

Unit 5/36 Commercial Dr, Ashmore

This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances.

Want to read more about financial planning? Check this article out.

Anticipate Life = Helping Those We Leave Behind

by Editor | Aug 5, 2021 | Lifestyle, News, Silver Magazine

Anticipate Life is now offering an amazing new service to make sure your final wishes are safe.

There are a lot of things that can’t go in a Will. But if you are no longer around, how will people know about these things? Well, now there is a place online where you can leave all the details, so your family will know exactly what to do. A new start-up, called Anticipate Life, has created an amazing service that could save your family a lot of heartaches when a loved one passes.

Leave behind your belongings through Anticipate life — Anticipate Life Founders Lea Russell and Paul Kamarudin

Anticipate Life – Solving a Problem

A LOT OF US HAVE BEEN THERE – a relative dies and we do not know what their funeral wishes are. We do not know the contact details of their friends who might want to come to the funeral. We don’t know what to do with their beloved cat. But now, there is a new service that can remedy this.

Anticipate Life is an online record of what your family needs what you plan to leave behind when you pass away. These are things that fall outside of what you can put in a Will.

This truly thoughtful tech start-up was founded by Leanne Russell and Paul Kamarudin. Says Leanne, “After witnessing first-hand the confusion, family conflict and lengthy red tape that can occur when a loved one dies without leaving clear instructions and information, we decided there had to be a better way. We soon realised it wasn’t just our funerals that needed pre-planning, but all those aspects of our lives not listed in our Will; those everyday aspects that would take time and a certain amount of sleuthing on our family’s part to sort out after our death.”

Leave behind your precious things through Anticipate life — Bernadette and Max Fulton say that Anticipate Life is a fantastic adjunct to a Will.

Online Wishes

Storing your wishes online has advantages. It cannot be lost if you move to a new home, and everyone knows where it is. Anyone who sees it after you pass will have read-only access – they won’t be able to change anything. You can also update it easily as you progress through different stages of your life.

Says Leanne, “When Paul’s mum passed, two brothers didn’t talk for 18 months because they couldn’t agree on what her favourite poem was for her funeral. The conflict could so easily have been avoided.”

Paul says knowing they are following their loved one’s wishes can be a real comfort for those left behind. “Communicating end-of-life and after-death wishes is not only respectful, but it also ultimately relieves stress and conflict at what is already a difficult time.”

Leanne and Paul worked with Gold Coast-based lawyers Bernadette and Max Fulton to develop Anticipate Life. Says Bernadette, “Sadly, we have seen many families torn apart after a death because the Will doesn’t typically provide total clarity about the deceased’s visions for their funeral. It may lack detailed financial distribution instructions or who is to inherit special or valuable items. Anticipate Life is a fantastic adjunct to a Will, allowing people to be very clear and detailed in their wishes, and to easily keep their wishes updated.”

Anticipate Life took two years to develop. User data is safeguarded by global gold-standard infrastructure and robust encryption and privacy protocols – meaning it is as safe as Gmail. In terms of your information, only you can change what is stored in the online locker. Once the subscriber has passed away, only then can their Executor or Nominee access the read-only information.

Online security is great. But the best part is emotional security – knowing that everyone is clear on your wishes. ■

Instructions You Should put In Your Digital Locker

■ Funeral plans. Your Will needs to go through probate before it can be released to your loved ones and your estate can be settled. This can take ages. If funeral plans are in your Will, your family may not see them in time and not know what to do.

■ Pets. Make sure your family know what is happening to your pet. Is it going to a charity like AWLQ? Are friends or family going to take it? What are the dietary needs and medications? Who is the vet?

■ Your Digital Estate. This has become a big deal. This is stuff you cannot put in your Will but your family will need to know. If you use services like GPay or Apple Pay these accounts will need to be shut down. Who gets your cryptocurrency? How do families access it? Online accounts like Netflix will need to be deactivated. Plus you may want people to memorialise your social media accounts like Facebook. Your family will need to know how to get into your laptop, into your phone, and into your email account. Access to digital photos may be very important to your loved ones, as well as your music collection on your computer. For this Anticipate Life recommends a password manager, like LastPass or 1Password.

■ Gifts with conditions. “Give this ring to Elizabeth when she graduates from university.”

■ Everything that auto-renews via your bank account needs to be cancelled. Mortgages, loans, utilities, charity subscriptions, any other subscriptions, club memberships, child support, insurance policies. Make a list of all of your memberships so the family will know what to cancel.

■ Someone may owe you money, in a casual or formal arrangement. This is where you could forgive the debt or let relatives know who owes what to you.

■ You may have love letters or final words that you want to hand on to your family. This is something you can now store digitally in your Anticipate Life locker. You can also include emotional items, like a recipe from grandma that was handed down, that you want to pass on.

■ Lists of contacts. Who is coming to your funeral? A list of everyone who needs to be notified and their contact details is great here. Plus people you want to be called, like that old lover from Paris, and your school friends.

■ Write your obituary or eulogy. This will save your family from having to do it at an upsetting time.

■ A list of things that aren’t as important or valuable enough to be included in your Will. Go through your stuff and make an inventory. Then list who is getting it. Things like televisions, jewellery, collectibles, vehicles, art and antiques, computers or laptops, power tools.

■ Name your favourite charity, so people who want to donate in your memory know what to do.

■ Have your organ donation wishes made clear. Organ donation is time-sensitive, so this needs to be accessed quickly.

Subscriptions start from just $5 per month. Find out more by visiting www.anticipate.life.

website of Anticipate Life — ou and your loved ones can find information quickly when needed with an easy-to-use web application.

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