When we started our goal towards Financial Independence, we admittedly didn’t start from a complete blank slate. Mr had enough foresight to purchase two properties in his early 20’s, and combined with Mrs to purchase another property in our mid 20’s.
All of these properties are located in the Canberra region (not very diverse by any means). One of these properties has been a success and the other pretty much a failure. Regardless they have been an important first step in the journey towards Financial Independence.
Initially all properties were placed on Interest Only loans for a period of 5 years to free up as much cash as possible to be directed to the offset account which was placed against the Principle Place of Residence. Money held in the offset account provides peach of mind that if everything went wrong tomorrow, we would have enough in reserve to get by until we sorted things out.
Over the years the loans have reverted to both Principle and Interest payments, and instead of jumping at the chance to place them back on Interest Only loans we have both agreed to leave the loans as is and slowly start paying off the houses while we continue to think of a more optimum path moving forward.
We will leave a snapshot of the property details below as a starting point of our journey; we will provide a monthly update of our saving patterns to keep ourselves accountable and motivated moving forward.
Overview: Starter house in which we lived in for 18 months before upgrading, hasn’t had much in the way of capital growth but has always had a rather strong rental yield with zero issues.
Type: 3 bedroom house (purchased off the plan in 2009, settled 2011)
Purchase Price: $390,000
Remaining Loan: $325,825
Current Market Value: $500,000
Overview: Purchased to be an investment property in the heart of Canberra’s CBD, being naïve 20 year olds we were ‘tricked’ by the expected rental return.
Type: 3 bedroom house (purchased off the plan in 2009, settled 2013)
Purchase Price: $405,000
Remaining Loan: $378,265
Current Market Value: $410,000
Overview: Purchased to upgrade the family home in 2013. Property is half an acre just outside of Canberra with development opportunity (currently RZ2). Purchased knowing we could potentially knock down, subdivide and build multiple houses on each block. Long term strategy is to hold onto this property until zoning increases to allow units and then sell up.
Type: 5 bedroom house (purchased 2013)
Purchase Price: $600,000
Remaining Loan: $550,741
Current Market Value: $750,000
While we have always anticipated Real Estate was going to be the method that set up our retirement plans, we are starting to learn that the share market has its place as well. We don’t particularly want to sell our Real Estate to free up the equity to purchase shares, but it may be something we explore moving forward, as with debt-recycling strategies.
Happy to hear any suggestions on what you would do moving forward. I understand everyone’s journey is different (even if the end goal is the same), I am definitely open to suggestions on alternate pathways and hopefully other readers may benefit from your insights too.