Critique my situation / portfolio for early retirement

[bob999]

Background: Couple with two kids under 5 years age. Both of us are in our late 30s. Living in Australia. We both work as consultants and our income is not fixed.

Household annual income ~ AUD $400,000 gross
Investments: 3 investment properties worth AUD $1.7 Mil with debt of $1.15 Mil @ ~4%
Total rental income ~ 90k per annum
Total expenses for the 3 investment properties ~$65K per annum plus principle payment of ~$24k per annum
Vanguard index fund = $220k
Super (combined) = $240k (similar to US 401k but can't withdraw until age 60)
Cash = $175k

Reason for large cash, job uncertainty for both of us.

Total annual expenses ~ 80k (including rent of ~25k per annum)

Net worth ~1.2 Mil (not accounting for tax upon sale of 3 investment properties)

Target net worth of ~2.5 Mil in order to FIRE (including PPOR which we will buy in future). Saving rate ~70% of take-home pay.

How soon can we FIRE?

Note: All figures are in AUD and to convert to USD I would assume a 40% reduction due to higher cost of living and weaker AUD.

[marty998]

Whopping big income you have there!

I'd be loading up on shares and paying off the investment debt very slowly. Do you have the cash in an offset account?

I'll come back here a little later to provide a more i depth response.

[bob999]

Whopping big income you have there!

I'd be loading up on shares and paying off the investment debt very slowly. Do you have the cash in an offset account?

I'll come back here a little later to provide a more i depth response.

Yes the cash is in offset account. I am saving more cash at the moment for a deposit on PPOR and maxing both Super accounts at the moment.

[marty998]

You posted a case study a couple of years ago!

Give you the situation with your incomes, when you FIRE is going to be a matter entirely up to you and how big a PPOR you want to build(?)

In your post 2 years ago you said you had bought the land? Are you building now?

[bob999]

You posted a case study a couple of years ago!

Give you the situation with your incomes, when you FIRE is going to be a matter entirely up to you and how big a PPOR you want to build(?)

In your post 2 years ago you said you had bought the land? Are you building now?

How time flies :)

I built on that land already and rented it out. That's the 3rd investment property now.

PPOR is still a struggle to decide upon given the housing cost. 

[marty998]

If you want a PPOR you simply need to go and do it now. You more than have the means, you just need to take the plunge.

Otherwise I fear you'll "blow" that $175k on another investment property!

Can you give us the value and corresponding debt on each of the properties? There may be strategies you can use to minimise CGT on eventual disposal if you want to swap them for shares to provide more income.

[bob999]

If you want a PPOR you simply need to go and do it now. You more than have the means, you just need to take the plunge.

Otherwise I fear you'll "blow" that $175k on another investment property!

Can you give us the value and corresponding debt on each of the properties? There may be strategies you can use to minimise CGT on eventual disposal if you want to swap them for shares to provide more income.

To be honest, I am sick of investment properties and if I had known about Index funds 15 years ago then I probably wouldn't have bought them.

My plan for reducing CGT on the investment properties was to sell them once I fully FIRE so that my CGT will be on a reduced income. I am not aware of any other means of reducing CGT. Are there other ways?

Property 1: Approx value $480k, Debt = 167k
Property 2: Approx value $420k, Debt = 345k
Property 3 Approx value $820k, Debt = 640k