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Today's episode is a great case study. Georgia is stating to feel the strain of managing her two investment properties and she wants to make sure she makes the right decisions now so that she can enjoy her retirement. Georgia is 52 and has no children, lives in Sydney, and works four days per week. She owns a property in Pagewood, (Sydney's eastern suburbs) and St Leonards (lower north shore). Collectively they are valued at $2.86M and they bring in a rental income of $86,000 per year.

Her plan has always been to eventually move in to the Pagewood property, but she wants some help working out when and how to do this. Ultimately though, Georgia will want to downsize into something more manageable. 

What are Georgia's key challenges? 

Georgia has no borrowing capacity in this current economic and lending climate. The change in interest rates have been tough on Georgia, (and many others), but her offset balance and savings balance ($285,000) are holding her in good stead.  Dave steps through these challenges in details and has some ideas and modelled scenarios to share with Georgia.

Should she hold? Should she sell? Or are there other options? 

Considering the cashflows is one thing, but calculating the recent capital growth that Georgia's two properties have delivered is also important. 

Mike shares Georgia's financials with our listeners, and while the data is detailed, it's reassuring to see just how much wealth she has built whilst also enjoying the important things in life. One key observation is the power of time, and what this has done for Georgia. Georgia has a portfolio equity position of $1.257M and an LVR of 56%. She has stayed the course, and as Cate points out, "It's a healthy LVR!" 

Georgia considered selling one of her properties to fund her cashflow. Dave chats about the modelling, likely outcomes and questions they addressed. What did they determine would optimise Georgia's scenario? And what did she decide? Tune in to find out how the modelling gave her the answer. 

Cate touches on the value of time, and the prize that it can deliver for those who are patient.  Mike discusses the shock that our pace of interest rate increases delivered for a lot of investors. While we may be close to equilibrium, our last two years have been tough on plenty of households.

Back to Georgia... what is her risk profile? And what determines risk profile? And how does risk profile translate into goals, options and decisions? 

Back to metrics... the Trio chat about how to best construct conservative estimates and Cate leans on her 29 years of investing experience and assures Dave that his vacancy rate modelled assumptions are reliable. Mike circles in on the historical growth of each of Georgia's two properties and he wholeheartedly supports her decision. 

Dave shares in detail the three scenarios that were modelled... and following trialling multiple versions, the findings were compelling. Tune in to find out! 

..... and our gold nuggets! 

Cate Bakos's gold nugget: "Personal finance is just that.... it's personal!"

Mike Mortlock's gold nugget: Mike's vegies and dessert metaphor is apt, but in this case, he marvels at how Georgia made the vegies into dessert. Her regimented approach impressed us all. 

Dave Johnston's gold nugget: This was one of Dave's favourite case studies and he highlights why you don't need to own lots of properties to get a benefit out of one key plan.

Show notes: https://www.propertytrio.com.au/2024/10/07/case-study-retirement-success/