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First Post LOE Question

Discussion in 'Investing Strategies' started by MARKAT, 7th Mar, 2007.


    MARKAT New Member

    26th Sep, 2006
    Adelaide SA

    I'm new and this is my first post. Somebody introduced me to InvestEd through as I am a property investor. However, equity rich and cash poor. I have found the articles really interesting and ....... has last chapter been published yet!!

    What do you think. I have 40% LVR and 1.1 million of property. As far as everyday income, have been in a bit of a bind for a year or two. Have heaps of untapped equity and this led me to read the article. Am not a good figures person. Essentially mum of three boys, whose husband is out of work. Busy with family and trying to hold down part time work as well as develop a property. Short of getting that regular income through working at a day job, do my figures stack up for being able to live/partly on equity??? Am a bit scared to jump into an unknown domain - i.e. shares etc. although the article does make a lot of sense and I am reading and rereading it, to cement the concepts. I think we are at a standstill until one or other of us has a fulltime job really. We need cash to live off..... essentially.....

    What thinks all of ye?

  2. voigtstr

    voigtstr Well-Known Member

    24th Jan, 2007
    I'm definitely no expert, I'm just starting out on investments myself. I would hope that someone here could recommend a good financial planner.
    I expect it would involved getting at that equity, investing that in income focussed funds and, using that income (which is quarterly) to pay the interest on the property loans, and provide a surplus to live on. A financial planner could really help sort out the cash flow for you I would hope.
  3. coopranos

    coopranos Well-Known Member

    11th Oct, 2006
    If you are seriously considering going the Living on Equity route, I suggest you find some authors who promote the idea and read as much as you can (remember, you dont have to completely stop working to utilize this strategy, you can use it to suplement a part time income for example, or assist with living expenses while you are starting a business venture or perhaps while some property developments are coming along).
    You need to work such things out for yourself, but I would suggest that $660k equity is nowhere near enough to support someone full time living in Australia. A couple of years with flat performance on property and you might find yourself in a bit of trouble.
    A few things you might like to investigate are using your lazy equity to purchase either more property or perhaps diversify into some higher yield investments like shares/managed funds. Although I dont think $660k is enough to throw in the towel on the day job yet, you are definitely in a favorable position - double the amount of property you own for example and you will still have the same amount of equity, but instead of 5% pa growth getting you $55k a year extra equity, all of a sudden you are looking at $110k extra equity. a few years of this (coupled with a positive property market) and you could be looking at $1.2M-$1.5M equity pretty quickly, which then gives you some more choices (such as LOE).
    I recommend having a read of a book by Michael Yardney "How to grow a multi million dollar property portfolio" - the property stuff is basic but it has a great explanation of LOE and how it might be able to be implemented with a consistent plan.