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Well put Alistair!
Hi Ben.
A big 'DITTO' on what Alistair has had to say and your legal background will prove very beneficial in your clients mind as they realise you are not just someone who walked off the street, did a few weeks to get their Cert IV in Fianancial Services, and then tell them what is best for them. I must also agree that you should be aiming much higher than a $150K income with your background. I would not recommend Refund Home Loans as a Franchisee – they keep your clients and they lock your trails in if ever you decide to leave.Hi Stever1
I have to agree with MarJac. The ole student accoms (particularly around Melb with Melb Uni) have traditional shown very little Capital Growth so, the question needs to be asked: are you considering an IP for capital growth or income producing at the sake of capital growth? Until you know what YOU want out of your investment, no-one will be able to answer your question with any degree of accuracy.Australia currently has a housing shortfall, strong population growth, a robust financial system, low unemployment, improving economic conditions and a residential market that appears to be moderating in growth in a controlled fashion. Importantly, mortgage arrears have not moved upwards suggesting that Australian borrowers are coping with the increased level of interest rates quite reasonably.
Hi Jamie.
I gather it is the May edition that I haven't got yet. I look forward to seeing you and your family in API magazine and my hat off to you as you must be doing something very right to be in one of API's articles and not an advertisement. I do hope,after having read more about you in API, that readers and contributors to this forum come to realise that there are some significant contributors of time, knowledge and experience to this Forum such as yourself. Congratulations!
Kind Regards,Hi Eric.
A Section 32 acts like a Form 7 does in SA – it is simply a declaration to a prospective purchaser of any easements, restrictive covenants, EPA declarations, etc. You should be able to get a copy of this information from the Lands Title Office in Victoria. I would suggest contacting Victorian Consumer Affairs as they control Real Estate Agent Licensing and should be able to help you get this information discharged. Once you have the correct info, it's simply a matter of filling in the S. 32 with the answers provided by Lands Title Office. If you are in any doubt, a neat trick is to call on one of your local real estate agents and ask them (as a favor) if they could just peruse the completed S.32 to make sure there are no glaring mistakes. There is no reason any Joe or Josephine average can't do a Section 32 themselves as often the charges by Solicitors and/or Conveyancers are obscene.
I hope this has been of help to you?
Kind regards,Hi Dan.
Neither company is on any international stock exchange, both in a communist country (not meant to be political) keen on getting foriegn currency, and China being a country that, at best, is still difficult when it comes to trade relations. I can't find anything on of substance on either company and anyone can throw together a website for under a $100.
In my personal and humble opinion I would NOT invest a single cent into either company due to lack of national and international transparency.
I hope this has helped you?
Kind regards,Great 'outside of the square' thinking Scott – and that's taking you at your opinionated face value best, and after having read between the lines (it's a lawyer thing
)Try the Financial Review Newspaper or its online version. It's practically the "Bible" of the financial masses who are into Macro and Micro Economics and what is happening locally as well as abroad. If that doesn't work, in around 4 years you could have a Bachelor of Economics and then you're laughing!
Hi Choubi.
How long is a piece of string? Regardless of the purchase price, the settlement terms are part of the negotiations between the Vendor/seller and the Purchaser/buyer. Title can change hands ONLY once the Lands & Title office is satisfied that there are no debts, liens or caveats and ALL the conditions of the contract for sale have been met. BUT WHY on Gods little green earth would anyone want a Title to change hands BEFORE Settlement (and those subsequent conditions) have been met? Have you heard of squatters rights and how difficult it can potentially be to evict someone once they have possession of your property? Man, your questions bring to my mind a legal, conveyance, residential tenancies and contractual nightmare.Tylon, make sure you ask your Accountant about Tax Variation (the old 221d) and how it applies to you. It should always form part of one's tax minimisation strategies (if applicable and worthwhile).
I agree with your last 2 statements Michael. Buying off the plan is where so many of these east coast 'wealth creation' companies make such obscene amounts of money. I believe it's always better to buy under 5 years old to maximise depreciation but, as you correctly stated in your last statement, not if affordability becomes a problem. Again, each Investors individual circumstances must be looked at and ultimately, it should be the Investor themselves that decides what is best for them – not some glorified developer with an off-the-plan, neatly wrapped and heavily padded IP!
WOW Michael! I did the maths too but you forgot to factor one HUGE factor into those figures – HOW MUCH INCOME TAX ARE YOU PAYING?
You do the maths on a combined household income of say a modest $100K (split $50K for each partner with both PAYG). You're going to be losing what $25-$35K in tax and probably battling to get back more than 10% of that tax. Multiply that tax left in the governments coffers over just 10years and you've effectively lost over a QUARTER to a THIRD OF A MILLION DOLLARS IN TAX Now factor in tax variation of a conservative $10K and all of a sudden you have a tenant AND your taxman (ATO) subsidising your brand new, maximum depreciable IP. That's an extra $100K this couple can use to pay off their IP Loan, existing Home Loan, whatever. All of a sudden, fwords prior statements are looking quite accurate.
I have read hundreds of posts on this very good forum and the one big constant is so many contributors gives opinions and advice with 'blinkers on'. Before you go investing into any IP you MUST look at the fundamentals of affordability, correct loan structuring, tax minimisation, infrastructure, future growth, and so on – in other words, EVERYTHING! Is it any wonder so many novices to Property Investing either don't know where to start or simply don't start at all because it is so difficult to get COMPLETE info on their individual circumstances?Perhaps I should re-phrase point 1 as Buy brand new to maximise tax deductions OR buy what you can afford. But, BUY SOMETHING!
I agree sapphire, that you do not have to buy brand new. In fact, you should always buy, after having done your due diligence, what you can afford – and that is not always brand new. However, if you are paying lots of tax and getting very little back then a new, and negatively geared IP allows one through tax variation (S15.15) to reduce their tax throughout the year by up to half (using the ATO's money) and depreciation on top of that to reduce your tax burden even further. For an example, I have a client who is getting just over 70% of the income tax they were paying prior to their IP purchase through a properly structured, negatively geared property. But this will not work for everyone. As I've already said, you need to invest into what you can afford.
Choosing the right investment loan can prove as difficult as finding the right investment property. Is there any difference between a loan from a bank and a loan from a credit union? Is it worth paying extra for a loan with more features? If you need to borrow a lot of money where should you go?
The main problem is there are potentially more home loans to choose from than there are investment properties.
With so much choice it’s hard to know where to begin. However, one thing is for sure – you shouldn't go with the first lender to approve your application. Gone are the days when ` borrowers visited the bank manager cap in hand. Today most lenders are keen to visit you. Borrowers today are in the driver's seat, so take advantage of it!
Where to begin?
One way to manage the selection of an investment loan is to use a mortgage broker. Mortgage brokers can do a good job of wading through a wide selection of mortgages to find one that meets your needs. However, if you are happy to leave the selection process to someone else, you need to have a clear understanding of the selection criteria they're using to both eliminate and include lenders. Whether you choose to use a broker or whether you prefer to do-it-yourself, you should spend time defining your needs and preferences.
What do you want?
Because there are so many factors differentiating the many loans out there, its a really good idea to consider and list your needs before you set out.
Questions that every lender will ask you are: –
How much do you need to borrow?
What will the loan represent as a proportion of the property value (i.e. the LVR)?
Are you borrowing for investment or personal purposes?
How long do you intend borrowing for?
Are joint incomes required to meet repayments?
Which State/Territory is the property located?
You may also have special needs –
buying the property through a unit trust or company structure, or you could be buying land with a view to building a house.Loan Functionality
Investors should always think about flexibility with their investment finance. Would you like to vary the size of the loan without lots of paperwork? Would you like to vary your repayments? or Do you simply want a no frills loan with the best available rate? Ultimately, the loan structure you choose will determine the flexibility you have.
So, let’s look at loan structures. Loans can be: –
Standard Amortising;
Line of Credit (Equity)
Amortising Equity; or
Standard Interest Only
One way of describing the structure of the loan is the repayment schedule. The repayment schedule is defined by the term of the loan (say 25 years) and the types of payments you make – interest only, or principal plus interest. A traditional principal and interest loan for the purpose of buying the property (and nothing but the property), is known as a Standard Amortising Loan.
More and more borrowers are taking advantage of the equity in their property by using it as a security to borrow for other purposes. Loans that allow you to use a mortgage for purposes other than investing in property fall into the "Line of Credit" category. These loans don’t have a strict repayment schedule therefore, work best for borrowers who have plenty of self discipline.
Amortising Equity Loans let you borrow against the equity you have built up against your home. However, each time you change the loan amount, your repayment schedule is reset. You pay principal and interest repayments on the basis of your specified terms. These loans are good for borrowers who have built up equity in their home but like (or need) the repayment discipline that an amortising loan provides.
If you don’t need to build up equity in a property, you may choose to use an interest only loan. Investors typically use interest only loans to maximise tax deductibility over the life of the loan.
The problem with assessing a range of opportunities is simply dealing with the large number of variables. This is where understanding your own needs and working with a specialist finance broker comes in handy. Although each of us has unique financial needs, it’s a simple fact that some products on the market have more features than others. If you find a loan that has a mountain of features, chances are you won't be the only person that suits. Similarly, some loans are cheaper than others. If we combine these two ideals and hunt down all the loans with the most features that are amongst the cheapest, we find the best 'value for money' products.
On top of all this are the multitude of tax implications: depreciation, variation, etc. There are no quick and clearcut answers to your questions and you either must through time and effort learn alot more or refer to a specialist/expert.
I hope this has been of benefit to you?
G'day Matt.
Knowledge on its own is NOT power. Gain the knowledge and do nothing with it is meaningless. Knowledge + Action = Power!
May I suggest you start buying Australian Property Investor magazine from your local newsagent – HUGE levels of KNOWLEDGE. Also, checkout the Investment tab at our website and see if this is further knowledge you can use."Apply yourself. Get all the education you can but then, by God, do something! Don't just stand there, make it happen!" Lee Iacocca CEO Ford Motor Co.
Hi NSW.
How do you know your offer was actually presented to the Vendor(s) for consideration? In South Australia, for an example, ALL 'Letter's of Offer' MUST be presented to the Vendor(s) by the Real Estate Agent within 48 hours. The Agent MUST also get the Vendor(s) to sign an acceptance, rejection or counter offer to the Purchaser. In this way, you, the Purchaser, KNOW FOR SURE the Agent has indeed presented your offer. If this is not the case in the state you live (which is probably NSW as an obvious guess), may I suggest you re-submit the exact same offer to the Agent but add a codicil to the "Letter of Offer' that it must be signed-off by the Vendor as either being outright rejected, accepted (perhaps subject to different conditions), or the Vendor(s) counter offer in selling price and/or conditions of sale at a lower price. I hope you get the idea. Have a look at the OCBA (Office of Consumer and Business Affairs) website in SA and check out the regs and laws surrounding a simple letter of offer to purchase residential property and simply apply the same criteria to your offer.
I hope this has been of some help to you.
Kind regards,G'day Ajay.
I have always found the best way to find tenants locally is to advertise in the local newspaper like say The Messenger in Adelaide. They are usually placed in the back of the real estate section of the local paper under 'Homes or Units for Rent/Lease. If you can't interview them, then get a local real estate agent to take applications and check work histories and personal and professional references.
I hope this has helped?Hi Dougie.
The only way I can see you earning $30-40K per year with $200K is to look at investing in US property.
Invest in the US wisely and you would easily pull-in $30-40K a year in income after costs. Send an email to Drew, a good friend of mine, at: [email protected] and he'll give you all the info you need to make an informed decision on this – but, at the very least, have a look, you might be very and pleasantly surprised.
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