Forum Replies Created
hmm imteresting accounting concept… booking profits from a falling market that you aren’t in – I like it! I might put that one to my bank manager
BHP – I sold way too low… pessimism got the better of me. but the market seems to be topped out anyway (not that I know anything about it)
SS – initially it seems a bit less user friendly but once you get use to it the postings seem more frequent. I think Steve and SS should consider a merger. most users are just flicking between the two sites anyway. Look forward to the reaction of your negative views over there… keeps em honest anyway!
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
“2. Any idiot can make money in a boom but only the smart know how to make PROFITS in a gloom market.
Agreed. Apart from your suggestion to build new houses, do you have any other helpful ideas?”gees F – are you suggesting you have zero ideas of how to make money in this market? as I posted on SS… I have seen 2 developments this week being sold off the plan at well under 10% of their true worth (and that was an asking price). On one of them an investor I know snapped up 3 of the units. The agent seems very proud that he has sold half of the development already!! by the time they make it to the market they will be worth another 10%. no idea how the developer will make money out of one of the projects, but it’s a free world.
even buying a block in a new estate is seeing around 10% returns by the time title issues and that’s about as easy as it gets.There are many many ways to make money in any market and to throw your hands up and say “everyone has bought too many plasmas and therefore the end can’t be far away and this statisitc and interest rates and oil prices and share market crashes and bond rates and…” is just defeatism. I do however agree that you can’t just pick up the phone and ask an agent what to buy and hope to double your money in a year.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
when you cut through all the gobbledegook, the underlying story is property goes up on average over time. Just buy well, ensuring you can service it and in the most tax effective manner you can. Try to think ahead of the market as much as you can and buy at a good price or buy a property in a location likely to grow.
People are always speculating that property is about to crash, or the end is nigh, but usually the bottom comes and goes whilst people sit around on their hands dreaming of a cheap smorgasboard of property.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
it has always irked me the tax exemption for religious organisations. my beliefs don’t seem to matter, yet if i slap on a white robe and force my beliefs down peoples throats I may save some tax.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
country towns are suppose to be the next big shift for the boomers – places like Bridgetown.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
there was a discussion on SS which in summary said it didn’t display the characterisitics of a town like Kal or Karratha i.e. it isn’t a high rent yield mining town. I haven’t researched the Ravensthorpe story yet so I am not even sure how far from town it is.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
no probs Mini, I look forward to many more spirited discussions!
Canadians also say “eh” I think… maybe just in some regions. a strange shared trait.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
calm down Mini – I didn’t seriously consider a trust in Bologivia (which isn’t even a country!) to be a serious option. Apologies for the accusation of tax dodging – my discussions with friends are frank enough to realise that minimisation and dodge is a fine line and perhaps I was a bit casual in this regard. If you didn’t want to take it offshore – well good luck with the positive thinking, IMO there is limited time in a day and you need to allocate it to that which will produce the most profitable outcome – tax MINIMISATION is not up there, as personally I belive it’s all been looked at before.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Michael – even at 80% retail I suspect your properties are still quite neagtive…. are you saying you refinance your other properties to cover your annual shortfall? The stamp duty and loan application fees would be huge wouldn’t they?
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Jayzac – I cannot see how you could build in the Anchorage now for $220k. The blocks (in the unlikely event you could actually get one) are $120-$130k.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
good grief MiniMogul… the effort you put into tax dodging must be mind boggling!
I am not a tax accountant nor a lawyer but from my limited studies pretty much any angle you look at has been thought of before and the door slammed firmly shut. And if it isn’t shut now it can be shut retrospectively. You’ve certainly got some guts to go down this path, the sort of advice that the average punter with a couple of mill couldn’t afford or have the means to defend. Thanks for the pointers though. I get nervous when people start talking of 49% ownership, trusts in Bologvia and any mention of the Bahamas!
Greg – once again I am not qualified in this field and you should seek formal advice, but I would very comfortably consider you a trader. If you bought with the intention of just developing and selling, which from your earlier posts I understand is the case, then yes I believe you are a developer / trader. You need to register for GST as does basically anyone that deals in property on a short term basis and your net proceeds will be taxed as normal income. The fact you have a 9-5 (IMO) is of no consequence.
Dazzling – if you have play money to develop for a hobby that’s great and power to you. Hopefully you can do some really nice designs that are sympathetic to the environment and enhance the urban streetscape, unlike a lot of the developer stock I see. Unfortunately most developers need to receive a fair return on capital (as it is a tough and risky business) and hence profit is the biggest factor to consider.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
am not sure if it is true or not… a girl I use to know worked for Visa… she said it was a non profit association that was set up by the banks. as it was non profit yet they clearing accumulated a heap of money, they had to get rid of it somehow. She found herself on some incredible junkets (they sponsored the olympics, so there were meet and greets on regular occasions etc).
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
all I am trying to say there Mini is that the way the tax system works means that a trader is taxed more than twice as much as an investor, therefore logically a trader needs to produce more than twice as much profit as an ivestor to have the same net profit. Unfortunately that’s a cold hard fact, so when crossing over from being an investor to a trader you have to be very sure you are going to go hard, because being a small time trader will see with you less dollars in your pocket than just sitting back and investing.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
it may well be true, but Hegneys have been saying this for some time yet the releases are still to catch up. trying to get titles is still generally a 4 to 6 month wait.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
12 months would be if everything went well (tho you may strike it lucky and do it in less) – allow up to 18 months just in case. the skills and materials shortage will only get worse as well.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
in WA I think you cannot sell an owner built house within 6 years of construction – something like that. In all reality it is unlikely you will be able to save money over the rates that the large project builders are getting anyway.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
“I am inexperienced with development, but I am very experienced with contracts, so much so that I could see the holes in the contract I was prepared to sign and ripped it up and wrote a much better one – which the contractor readily accepted as he could see it was far superior – not just for him but for me. It was also about 8 pages long instead of one, and we agreed on procedures for (almost) everything that could go wrong.”
Mini – what aspect of the work are you talking about here? I can’t envisage anything much that would require only an 8 page contract… demolition may be a couple of pages perhaps.
The biggest thing I think for people doing developments is the taxation implications. Take for example:
Joe Casual – works as an engineer and earns an income of $120k. On the side, he builds a house a year and sells one of his older ones. His turnover does not attract GST and he is taxed on normal CGT rates, so if he makes $100k, his total earnings are $220k and very roughly he would pay $45k tax on his income and $25k on his capital gaoin, net income = $150k.
Joe Wannabe – chucks his job in as he has heard of the fabulous lifestyle of developers. A typical development (not Minis – but 90% of typical city developments) struggle to make 20% gross. Being a developer there is no CGT exemption and you will be GST registered. so 54.5% of the profits are lost in tax (unless you park in a company or something, but eventually it will come home to roost). so to replace $150k p.a., and say a typical development takes at least 18 months, you need your development to generate $494k clear profit.This means you need a development in the order of $2.5m of hard costs, requiring 20% equity or say $500k at risk. Additionally you won’t have a cashflow, so need to be able to live off something and pay your mortgage. The mortgage interest rate will be higher as you won’t have an earnings record and will probably find yourself on low-doc rates. All this is just to achieve what Joe Casual is doing stress free, 9 to 5 and with nothing at risk.
Obviously there are ways around these things, perhaps keep working whilst you do it and just be a stress ball, ducking out on lunch breaks and having whispered arguments on the phone at work with contractors etc.
The main point is, once you cross from being a casual investor to being a developer, you need to do more than twice the amount of deals just to be in the same position.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
I don’t see the role of government to be telling me how much I should or shouldn’t spend. You must give some credit to people to be able to manage their finances. Otherwise we could have inspectors from the government going around door knocking and making decisions as to whether you have been a bad boy and need to return the new plasma. I wonder which govt that would be? perhaps we could have a parliamentary enquiry into it, then a state leaders meeting. I am sure the local council would like to raise some revenue by charging a small fee just to ‘cover costs’ – perhaps an annual $150 fee to come and check out your house and garage to make sure there are no new cars or TV’s? Or under the libs that role could be completely outsourced – we could set up a high speed link that beams pictures back to an Indian control centre… then when infringements turn up and you try to question it, the lack of sense that you get will just result in you paying the fine out of sheer frustration. Yeh that’ll put the screws down on the current account deficit… who needs Keatings floating dollar – let’s peg back to the US – 1 for 1.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
I don’t think years and years of excellent leading economic growth can be dismissed as a bubble. Hopefully with the control that is at their fingertips they will have the iclination to push on with reforms such as tax reform to boost the economy further. Skilled migration is another area… throw the doors open and get this country moving!
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
arbitragers play an important role in any market. if you believe you can grab something below market value then go for it… you just need to be sure you do indeed have a better use for the asset than the person that is selling it! I would have a guess that a lot of the ex-Henry Kaye stock was probably never worth what it was sold for – so to buy it ‘cheap’ is probably not so cheap. Anyone out there got some comments on that?
http://www.megainvestments.com.au
Extensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
