Thanks Marty and Mustacheandahalf ... just back on the forum here after a while off so apologies for being so quiet! Great thoughts from you both.
I'd not thought about renovating the townhouse just before we retire to sell - that is a great idea. Hopefully, my side business will become a steady income, and we can achieve all our goals. Still, if not, this is worth falling back on to get money into ETFs to hopefully help support us when we need that bridging in our late 50s before we access superannuation. It feels great now having this pointed out - another insurance policy!
Although my husband loves the idea of ER - or probably more financial independence really - he does the sort of work where he could take a contract for several months or years if needed, so we can also fall back on that (hopefully).
We actually had been looking for some time at an inner-city area we see ourselves living in when the kids move out - somewhere smaller to base ourselves when the dream of extended travelling becomes a reality. We'd been reasonably seriously looking the past year, and apartments in Australia, or at least where we are, took a big hit the past few years and were not a great investment. We've been watching the development approvals and weekly sales supply, and the particular area we want to base ourselves in has some significant infrastructure starting late this year.
Long story short, an apartment in a position (both the suburb and location within the suburb) we like came up for a great price due to a contract crash and we grabbed it. With interest rates so low, the income will come close to paying for itself for the next three years and this coincides with our son finishing at an expensive school. Of course, our own mortgage will be finished in 18 months too. So, we leaped knowing when fixed rates finish for us, should the worse happen and payments go up significantly, we will have loosened some current expenses. Houses have taken off in our city, but apartments haven't quite yet - although the supply in this area has dried up somewhat compared to even a few months ago.
The difference with this scenario is we didn't buy a house in, say, Orange or Toowoomba purely as an investment. Our thinking is we are buying somewhere we have long envisioned living for half the year when we are older, and that having this will allow us to unlock rent on our family home in ER, too (assuming we don't want to sell it, then - but I've regretted selling every property we ever sold so love the idea of keeping it as long as we can to access later, especially if the rent is split between us both in retirement, thereby being okay tax-wise).
And Mustacheandahalf - your thinking is ours exactly and the only reason we kept this townhouse which hasn't been a fantastic performer (rent dropped from $445 to $395 since we bought it, primarily due to an oversupply of apartments hitting the market in our city in late 2016/early 2017). But what we do have is a large townhouse with three good size bedrooms, two bathrooms, a small back yard and a great position. Once we do it up, it offers a small home to a family and, we are hoping, a wonderful alternative to a small apartment. Houses are going crazy here in Australia and lots of people will be priced out of the suburban home with a large yard, so something like this should hopefully be an appealing alternative.
Thanks again, everybody - feeling okay about this because, as my sister keeps reminding me, we've invested in a future lifestyle we've said we wanted for years and aren't just doing a spreadsheet analysis. I think the rent on our family home will help a lot in ER, and gives peace of mind that if the market is going through a bad time, we won't be necessarily forced to sell a heap of shares or work any more than we need to top things up.
My husband's final dream is an apartment on the beach in an LCOL country in Asia we love and where we want to spend several months a year in ER! I'd be happy to rent via Air BNB each year, so we will see how that pans out after the pandemic.
