Chaos!
The last week or so has been a busy, somewhat frantic, glorious blur.
You may remember, I said previously that we may start renting at some point in the future.
Well…we decided, instead of humming and harring about it or waiting for the right time, we’ll just do it!
Since I knew it was going to be a costly exercise, it was easy to delay to sometime in the future. But I guess we grew sick of our own procrastination. And we deemed the downside to be relatively limited, as we can always move back to our old cosy situation.
It’s been a whirlwind of full-to-the-roof car trips with bags/possessions, organising works at our old place, and packing/unpacking. Since we’ve only been here a couple of days, there’s still plenty of unpacking to do. And safe to say, the Strong Money blog has been a fair way down the priority list.
Now that some of the madness is over, I decided to carve out an article about what’s going on.
Well…we’re not selling it. We’re getting it a little bit spruced up to rent it out. There’s a couple of reasons for this.
We’re not sure if we’ll like renting, so we want to be able to go back to our old house. Also, Perth property prices have gone nowhere for ages, so we have little equity in the house (we kept borrowing from equity in our house to use towards deposits on other properties).
Therefore, we have little to gain by selling it.
After spending a couple of days furiously cleaning and tidying up the courtyard, putting some new plants in and getting some painting done…it looks great. So nice in fact, that it almost makes us want to move back!
Haha, almost!
Interestingly, it’s my first time moving a whole house-load of stuff. And it’s my partners first time renting. She’s always been an owner.
I’ve never had much in the way of possessions. And after this experience, I really feel like I’m very much a minimalist type of person.
Before we moved, we donated a bunch of clothes and dvds. We also recycled some old electronics and cables that were clogging up some drawers. We even got to throw a few things away, which I was overjoyed about 😉
After moving, it still feels like we have way too much stuff for my liking. But it’s not all about me, and household peace is more important than my urge to have less stuff!
Here’s a few reasons why we decided to relocate Strong Money HQ…
Despite sounding like the middle of nowhere, we’re actually only 25km from Perth City. And only 10 minutes from the largest shopping centre in all of Perth.
Here’s our lovely new outlook…
Front gate out to the reserve
Lake/wetland area of the reserve
Long-view aspect of the reserve – our dog’s new playground
Since we’re already homeowners, many would say we’re going backwards by renting.
I don’t think in terms of “rent money is dead money”. To be honest, I think that’s a rubbish statement in isolation. It pays to look at the total financial picture, before deciding which is better – renting or buying.
Because this is an experiment, it doesn’t make sense to buy. Maybe we’ll try a few locations, before we decide where to settle more permanently.
Renting is just another version of try-before-you-buy. And with hundreds of thousands of dollars on the line, plus massive transaction costs, it’s not a decision to take lightly.
Besides, most of our savings are tied up in other investments. And no bank would want to talk to us anyway, since we’re not working. Sure we have some investments, but also plenty of debt and no job income.
It’s a messy picture, and most financial institutions would likely smile politely and proceed to decline any requests we made. We’re in the classic Equity Rich, Cashflow Poor situation.
Things will be quite different. A few things are happening simultaneously here.
In 5-10 years time we will own much less property, meaning lower debt and drastically-reduced expenses.
We’ll also have much more shares, meaning much higher dividend income. There may even be some part-time work or hobby income as well.
Basically, the cashflow situation will be reversed. All our investment equity/savings will be easily accessible. We could probably even qualify for a new mortgage if we choose.
Around this time, we’ll have decided how we want to live, and where to set up Strong Money headquarters more permanently.
So we’re giving ourselves a lengthy period of experimental-renting, that should time nicely with having converted our equity into a juicy dividend income stream.
Later on, I’d prefer to be an owner because I really want to have a large solar power setup, with battery storage.
And I may even treat myself to an unnecessary new car…an electric one of course! Our current car is almost 20 years old, so hopefully it makes it to 2025 😉
A side bonus of moving further away from Perth City, is that housing is generally better value.
This 800sqm reserve-facing 4 bedroom house, is only $400 per week to rent. In total, it’s about $21,000 for the year. And our other living expenses are roughly $20,000 – $25,000.
So our annual spending is around $40,000 – $45,000.
That’s my rough guesstimate anyway. I’ve said before how I don’t meticulously track everything on a spreadsheet. But instead, I keep a running estimate with pen and paper, of our bills as they grow or shrink over time.
Out of interest, I’ll be auditing myself at the start of next year, to get a clear picture of how our spending differs from my estimate.
Maybe it’ll be way off! Who knows? We’ll have to wait and see.
Update: See our full annual spending here.
Anyway, this level of spending can be covered by around $700k worth of good-quality, dividend-focused Aussie LICs (under current franking rules). So although we consider it a great life, it’s not exactly expensive to maintain 🙂
So far, we love the location. With the lake/reserve effectively an extension of our front-yard, it’s really tranquil.
And since the local shops aren’t far away (15 min walk), it feels as though we’re still close enough to enjoy the convenience, without as much traffic and other hassles of urban living.
Our dog seems to enjoy it now, after a panicky first night. Yesterday, I noticed how nice it is to walk around the yard at the end of the day with a drink and look at the trees.
There’s been quite a bit of interest in our old place so far, which is nice. The rental market in Perth is quite tough, so a short vacancy would be great. Fingers crossed!
We’re looking forward to settling in, unpacking properly, and setting up a new veggie patch. There’s still a fair bit to do, but that’s ok. It’s sometimes nice to have a boost of frantic productivity, among an otherwise cruisy early retirement.
Speaking of which, I think I’ve earned myself a beer!
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Was wondering where you were as haven’t seen much of you on PC forum.
Thornhill would be proud. Ideally he would prefer to own no home and rent but unlike other countries there’s no long term leases (eg 10 years) in Australia to guarantee security of tenure. Otherwise he would be entirely invested in Shares. So he settles for the next best thing in owning a unit and borrowing against it to buy shares.
First move, toughen up younger fella we’ve done 19 complete moves in our lifetime including a few times overseas:-).
Hope your new place works out well. Do you have the owners permission to introduce vege gardens and fruit trees?
Yeah been a bit busy. Sometimes I don’t comment on there since I have little to add. The other folks(like yourself) make much savvier and thought-provoking conversation!
That’s likely our long term plan, eventually own a place and mortgage it for shares. All the benefits of owning, without all that lazy capital tied up.
Haha shit! You guys are nuts, that’s once every couple of years! I bet you’re hoping to never move again??
Thanks mate. Yep, vege garden will be fine as there’s lots of empty garden beds already. And the fruit trees are staying in very large pots, since we’re not here permanently. The house has a couple of established fruit trees of it’s own 🙂
i d love to follow the experience thru since i m asking myself the same question. we own a uni 2 bed with 2 kids and thinkin of renting with more space until we can move back to our unit when they re gone…
It’s an interesting toss-up, that’s for sure. I think there is little to lose, since if we don’t like it we can always move back. So far we like it (aside from the upheaval), but we’ll see how things go over the years 🙂
Will be sure to provide an update later on!
Meant to add that Mrs SM might like this thread on the forum:
https://www.propertychat.com.au/community/threads/the-vege-garden-thread.24244/
And a few somewhat older pictures of our productive gardens:
https://www.propertychat.com.au/community/threads/the-vege-garden-thread.24244/#post-450560
Cheers
Thanks Austing, I’ll let her know.
I do remember some seeing pictures of your gardens before. Very nice!
What is the potential impact on your old ppor’s CGT exempt status when you sell it? I’m assuming you’ll be negatively gearing it.
If we rent it out for longer than 6 years straight, we lose the CGT exemption.
See here for the rules regarding that: https://www.ato.gov.au/General/Capital-gains-tax/Your-home-and-other-real-estate/Your-main-residence/Treating-a-dwelling-as-your-main-residence-after-you-move-out/
We may move back in at some stage, and the 6 year rule would start again. We could then move back out and rent the home for a further 6 years. If we sell before the 6 years is up, we still receive the exemption. That’s my understanding anyway…
Mind the snakes!
Haha! We saw one yesterday actually.. only a small one though 🙂
Some great reasons to move. I also like the idea of try before you buy in a few locations before settling on a forever or a ‘for now’ home. The pictures look great too.
Just a side note – your 800sqm house is cheaper to rent per week than my 2 bedroom apartment in 35km from Sydney city…I don’t know the sqm but it is way smaller than yours. Big differences and another huge reason I won’t buy here yet
Thanks Miss B.
Wow, that’s a huge difference. And even such a large distance from the city!
That’s probably a good call currently. Cash can be put to better use if there’s no overwhelming urge to own a property 🙂
This article covers something I’ve been beginning to think about, perfect timing. Thanks for conveniently moving! There are some factors making our suburb quite unpleasant, but I don’t want to sell and move. I’d rather try a new neighbourhood out first.
However, we’re both like Ms SMA, and have never rented, so I’m not sure what to expect. Also, no rental history, and cats. Not sure how easy it would be for us to even get in! How long did it take for you to choose the property? The location looks amazing. Can I ask how long your initial lease is for?
Ahh you’re owners too, it can end up being procrastination overload! Smart move wanting to rent first. I cannot wrap my head around people wanting to spend 25-50k stamp duty, agent fees etc to move house and avoid paying that dead money (rent). And the new place is often unknown – expensive gamble.
We weren’t sure we’d get approved either, due to not working, lack of history and dog – just bank balance and assets to go on. But rental market is weak here which helped. Cats should be fine. Dogs are higher risk, higher wear n tear, from the owners perspective. You can just keep applying I suppose, until you get something. We looked on and off for a couple months, decided what we wanted most (close to lake), then one came up pretty quickly after. Lease is for 12 months. We really like it, super peaceful with lots of open space!
Looks like Lake Joondalup Natural Reserve ? or is it Jandabup Lake ? 🙂
Lake Joondalup. We wander across the road every morning to look at the ducks and swans!
so you still own your own house and renting that out ? and rent a new place in near the lake ?
Yeah it’s rented out while we try out other locations to see where we want to stay long-term. So far we really enjoy it here. More quiet, more green space and more bike friendly 🙂
Mindarie tick all these boxes and much more, you should move here and become neighbours
Haha thanks for the invite – one suburb at a time!
haha, I’m curious as to what your daily routines are ? do you ever become bored ? or consider going back to work casual or part time ?
Actually no not really. Spend time on the following things each week: daily dog walks + playing, bike rides, some weight training, working on the blog/notes, reading investment reports, researching possible investments, reading/talking on a forum, reading books, quality time with my partner, helping her in the garden, cooking yummy food, time with family or friends. I like to spend time thinking too, and then relaxing of course.
I could probably do some part time work, but I’m not really sure what, or what the point would be. At this stage, there’s nothing I feel like I’m missing by not being at work. I get to do all the stuff I want to do without being too busy or stressed – and get the freedom to be more active and do all this other happy stuff!
hahaha….we have so much in common… definitely should meet up with you whenever you are free……..
Sure, we can do that. Will chuck you an email.
Loving everything you post Dave! I’m just beginning my FIRE journey and it’s even more inspiring to see that you are also from Perth/Northern Suburbs 😉 It looks like you’ve find yourself a great location there. Lake Joondalup is such a beautiful walk/ride! Would love to catch up at some point mate! 🙂
Hey PerthFI – wow another one out this way! You’re the 3rd guy who’s contacted me from nearby. Must be something in the water lol.
Yeah it’s been almost a year now and we love it here. So much nature and peace & quiet.
Sure I’d be happy to get together for a chat – if you like you can get in touch through my contact page.
Oh really there’s definitely something in the water! That’s fantastic to hear, we can almost start a small Perth FI community.
That sounds wonderful mate! Much appreciated and I will certainly get in contact with you 🙂
Wow, happen to come across your site while searching about early retirement! What you’ve done is almost exactly what I have in mine, right down to your annual expenditure. I’m in Perth as well and is counting down to my early retirement. Would definitely like to meet you one of these days.
That’s fantastic Ronald. Great to hear it gels with your experience too. If you get in touch at some point through my contact page, I’m sure we can organise something 🙂