Well, the answer for the majority of those who want their children to live in Sydney or Melbourne, is that they won’t…
Unless you help now!
A few years back, a parental gift of $50k – $100k would suffice, but with Sydney Median house prices now over $1 mill, the $50k gift you would give them would only cover the set up costs to purchase.
The reality is that they will need much more help (like $200k+ per child) or they may have to just accept they will either have to just rent in these two cities, or move and live elsewhere.
Understandably, as a parent you don’t want that, so the financial burden is now shifted to yourselves.
Adding to this issue, is that you are in your prime and also trying to create for your own retirement.
Well I’m sorry to say that this plan you have, or don’t have, is not enough. You need to add in your kids financial future too.
But is it all Doom and Gloom?
Nah, there are ways…
We have a brand new location in a regional location where we can purchase properties that start with a ‘1’…
No, not $1 million – but $100k… now they aren’t that cheap, but they do start with a ‘1’, meaning there are some real cheapies under the $200k mark.
And the yields are between 6%-7% – meaning they pay for themselves. And even put a few dollars back into your pocket.
Now from time to time there will be a few repairs that need to be taken care of. This has to be expected of entry level properties, but in general they are great homes.
As a deposit, you may only need to fund around $50k of your own money or equity in a property you own to make this happen. It’s a much more affordable alternative to spend $50k now, rather than $200k in 10 or 20 years time.
A second alternative for you is to purchase a property for them in the USA, where we are buying properties for under US$75k and they are netting around A$200 per week back into your pocket… they are still currently half of their peak value which was before the GFC.
So without even giving them the property, $200 positive per week over one year = $10,400. Let this income compound over 10 years and we are talking $104k. Twenty years is double. This doesn’t include any investing of those funds, just simple math.
These properties are again funded through Australian properties you have. And after the huge gains you have made in Sydney or Melbourne recently, you have plenty of equity to play with.
With the $110k Australian you may need to invest in the USA, there will obviously be interest accruing on this, so the great part is that the rents from these properties will cover this interest and all other costs – and still be around $150 per week positive. So the financial risk is very minimal.
Especially, given the long term gains for your children.
What better 18th or 21st birthday present than a huge surprise that their parents had the foresight to help them all that time ago and get them in the property game.
You never know, you may even inspire them to be property tycoons… and in return, they’ll buy you a home when you retire. Nah never going to happen…