Originally published in The Frontier Investor
Newly single? Let’s uncover how you can bounce back and build a strong financial foundation after a setback.
When you’re newly separated and life’s upside down, it’s hard to imagine how you’ll ever manage to start again. Worse still is the reality of having your home of the past decade on the market, kids thriving in local schools and work only a short commute away.
It takes so long to find the right place to bring up a family, build a strong local network and call a place your own. Separation threatens that very existence, but how can you manage to keep a hold on the area when you’re now living on one income, with half the equity you once had available?
How renting can help achieve your dreams
Giving yourself permission to rent is the first step. Most of us are so hooked on the Great Australian Dream that we struggle with the idea of living anywhere less than our own home, but this is just what you need to stay exactly where you are.
In all likelihood, it was probably hard enough to buy into your current area on two incomes, let alone one. Your finances will only stretch so far now – and that’s more pressure than you need.
Let go of the strong desire to live in your own home and find somewhere to rent. All the responsibilities for maintenance will be in someone else’s hands, while you settle down and get used to the new normal.
… And buying elsewhere can make them stronger
After you’ve had time to take a breather, you’ll be wanting to make a decision about your settlement money. This isn’t something to try to do early on when the psychological impacts of disbanding your family are still stronghold back until you feel that things have calmed down enough to make a considered decision.
With your main aim now to provide a secure lifestyle for your children, getting back into the property market as a ‘rentvestor’ is a strong wealth-building strategy to create both assets and an alternative income stream. Allocating a percentage of your cash settlement towards a residential investment property in an area where you don’t want to live, but can afford to buy, is the way to go.
You’ll have cash flow available to maintain your current lifestyle and take you towards retirement with capital firmly in place. Over time, as you develop a diversified portfolio, investing interstate could also help strengthen your asset base.
Using this strategy to achieve single income dreams
It’s important to note that these same principles can apply to anyone on a single income, just by thinking outside the square of regular home ownership. As long as you have an upfront cash deposit – or equity in another property – and you’re working, the property market is an achievable goal.
You get to live, work and play in your suburb of choice, while acquiring assets elsewhere – at a much lower cost. Find a property that will give you a good return on investment, strong capital growth and a decent rental yield – easily achievable with the right property portfolio professional.
Your investment will help you make the money you need to live the lifestyle you want. Along the way, the tax rebates you get as an investor will help as well, providing a cash flow bonus.
Making your money work for you, rather than the other way around
Using property to earn the money to support your lifestyle is the smart way to go to build wealth and secure your future. Think outside the square and life will be yours for the taking.
As always, if you have any question, please leave a comment below.
Until next time,
From the desk of Christine.