Forum Replies Created
For my 2c worth – McKinnon area; I was priced out of investment property much due to its great public school.
Comparing 2004 and 2005 VCE performances of schools, McKinnon SC is way ahead of that of Frankston HS (great facilities though) and actually knocked Glen Waverly SC off its perch two years in a row.
CT
Terryw, I’m grateful for your posts.
My persistent questioning may put me in the broker’s ‘hard to please’ basket; he has not answered my concern on LMI. I have to watch not to trip myself up in the process of getting finance in terms of my credit profile. Btw, I don’t have idle $100K, I can assure you that it’s a dream i’m working on making real.
It’s good forewarning to us all to be aware of the pitfall of cross securitisation and to ensure loans are stand alone at best we can.
My partner have a normal discretionary trust for his trading business set up by our accountant many years now. He serves us well and I should give him the benefit of the doubt. From there, we’ll decide if he is capable of understanding our needs.
Thanks again Terry for the privilege.[thumbsupanim]
CT
I don’t know about profiting from other’s misfortune is the way to go here. It doesn’t sit right with me; if the shoe is on the other foot.
I may be a ‘loser’ in this area of wealth creation, I suppose it’s the price I pay. Anyway, it’s my 2c worth.
CT
I’m sorry for what has happened. Your posts mean a lot of people like me starting out.
It’s human to feel hard done by, I can’t begin to think for a moment if it happens to me and what I would do. Maybe it’s time to move forward and know there will be support if you look at the right places.
Chin up.
CT
Your in the right place.
Look up the people in that line of business in Finance, Accounting and Legal forum threads and PM or email them. It’s a first point of contact, then seek SA referals. Be a little specific and ask away.
Good luck.
CT
Can this be done? Sorry to sound stupid indeed.
ATO would ask if it is at all an arm’s length transaction – the ‘buying & selling’ within related parties (trustee, director of co, and individual all tangled up) to gain what seems to be a tax minimisation scheme.
I would do it if I can sleep at night.[worried]
CT
I agree with David.
Gross before salary sarifice amount should be amount to determine the 9% SGC. Otherwise you’re shortchanged. Check contract signed if you have one.
CT
Thanks heaps Terryw.
I read something along that line in Smart Investor mag, this gives me some confidence to ask the right questions when I (and spouse) meet with the accountant for drawing up a plan to accommdate the investment. Boy! It’s definitely a steep learning curve for me.
I’m in Victoria and have looked at banks, brokers, and the others (MembersEquity Bank). Banks seem a little arrogant, one general broker says to borrow 100% with LMI using our equity in PPOR, the No Doc borker says to borrow 70% no LMI with the help of ABN, while MembersEquity looks great from where I stand.
Can you say is one better than the other in terms of cost minimisation? The 100% LVR seems a little daunting for me. Sure, it multiplies one’s gain the higher the leverage, isn’t it one step forward, two steps back when costs are taken into consideration. I was told I ‘put the cart before the horse’ for my invalid mindset of creating wealth. Should I listen or RUUUN.
Much obliged if you can help again,Terryw. [exhappy]
CT
Hi all
I’m in the process of getting the structure and finance right. I’ve made an appointment with accountant, atm there is mix info from this thread.
From what I know, a discretionary trust quarantines losses for negatively geared IPs until such time that trust makes profit again. So it does not help most people creating wealth through buying assets for growth with low yield.
Terryw stated that:
If you take out the loan in the company name, then you will not be able to claim the interest, but the trust will.
Does it mean one is better than the other, in situation when you borrow for growth (-CF) investment strategy? The company claims interest deductions as expense but individual can only claim net loss from tax clawback…. Help, I’m confused.
For asset protection an individual acting as trustee can be vulnerable in our increasingly litigious society. A trust set up that way can be sued and the trustee made accountable. I hope I’m wrong for celeste case.
Putting both hands up here to say I’m incompetent in this territory. I appeal to the veterans here in this forum for some directions. I know we’re here to learn and mitigate exposure risk in investing, good advice is a starting point before anyone jump in and sign any documents.
CT
Hey Dare, I think heard this one before. It goes something like this – you signed up a No Doc Interest Only loan AND pay only a portion of interest and capitalised the remainder of interest to a later date.
That is to say, the method rely on deferring the payment of interest to a later date. Imagine rolling interest on interest; and thus resulting compounding interest effect at the end of each year. Sure, it looks good for for +CF and claiming tax for finance cost. But is it a viable method in the current ‘soft-landing’ of the property market in general?
Bearing in mind the Principal is NOT reduced at any stage until some time in the future when you refinance the loan (heavily banking on capital growth) to actually build any equity.
Mind you, there is no free lunch, the broker will come out grinning to be in repeat service to you. I’ll rather be a tortoise than the hare caught napping. There is a lot of spin out there, Dare, they are not acting in our interests as investors.
CT
Interesting thread, Dazz.
I’m a mum of 3 kids under 15yo and a schnauzer I love to have on board with the family. Also, I won’t have my mum home alone on the weekend. So, in 1999, we bought a near new 98 Chrysler Grand Voyager LE. It’s a comfortable taxi, but I hate the thought of parting with it for something less thirsty and burn $$ off our pockets.[glum2]
My hubby has a 97 Ford Transit Van and a 2001 Izusu NPR200 Truck for work purposes.
Incidentally, can anyone shed some light on which is more fuel economical vehicle – LPG, diesel or Dual Fuel?
I used to envy mates on high salaries maximising their tax clawback and justified their new vehicles very 5 years or so. I wonder if they miss the point of chasing tax dollars which can be better used to financed property. Or maybe, I’m just what they’d call a …. frugal spender? Then again, from what I can follow from this thread, it’s all not what it seems…
CT
I know how you feel, islandgirl. I’ve done most what newbies do to arm themselves with knowledge.
I felt my foundation shaken, as most would like to believe Positive Cashflow Properties motivation and its worth in gold. Then, along came others with their refined researches and due diligence proved building wealth is a personal thing (with their experience come the judgment); there’s neither a right nor a wrong way to approach it. In the end, the well informed (not the faithful follower) will achieve their goals in a timely manner and justify to have done so with their successes.
I’ve bought, read and listened to Steve’s materials. Personally, I have to stress, I agreed with Lomas and Wakelin approaches and have accepted the fact the positive cashflow properties are rare (and may lack growth potential in the long term). So, it is imperative one needs to set the right goal using the right asset class (not just properties, I hate to say) to arrive at the short, medium, and long term projections that matters.
Given that I’ve been forwarned by my accountant, I have decided to go into property in the coming months with my eyes open and regardless of the market performance. As Wakelin puts it; “Slow and Steady wins the race”. Hmmm, better stop here… it sounds a bit like a testimonial for their services.
Please keep an open mind and listen to many opinions to make an informed decision that you can call it yours.
CT
So.. CATA, for the first time investor trying to get it right, to create a portfolio later; does it mean that using a trust is basically for asset protection and income distribution.? The catch is to justify the initial high setup and running costs, not to mention insurance for income protection and higher finance fee etc..
Can you tell me if CGT can be exempt if you have the buy and hold stategy & roll into self managed super fund as the current Budget announcement about to come into play.
CT
I’m sorry to say you’ve just been sucked in by the unscrupulous writer that twisted the fact to create sensation to tarnish Jenman. Do trace the original article about Jenman and read it before you jump into conclusion.
CT
Been to one seminar by Investor Direct a few weeks ago, would it be the one you mentioned, Coopranos?
I found the Residex information insightful; but the finance strategy very high risk, especially for the new investors. Therefore, it somehow tarred the image of Metropole for me personally (they referred me to Investor Direct).
So, I’m as much in the same boat as you are. I urge those who have used Buyer’s Advocates to give some input on do’s and don’ts, and if their investments met their origianl expectations on returns and growth after their purchases.
Maybe it is a hard pill to swallow and admit to have paid too much for the service? I would be annoyed even the thought of it, won’t you?
CT
I quess I’ll reply as no one can offer insight.
I’ve since found a reputable lawyer (Skrine Malaysia) myself through the web. He is as thorough as it gets. It has been the best slept few nights I had since he was able to answer all concerns I have in the deal.
Btw, I was told only to use the buyer’s lawyer when the transfer of title invoves relatives and loved ones, definately not to your average tenant.
Losing the plot for some that have the urge to plunge into action, for fear of missing out, without doing the full diligence on risks vs. returns. Some marketers touting the ‘armchair developer’ method is the way to go; who are they kidding??
Generally speaking you may be right, but the astute investors aren’t the herd, they will no doubt stand a better chance to reap the reward on their skills of reading into their well researched vehicles of investment.
Just yesterday, my accountant warned to steer clear of the property market. Though I do not entirely agree with him, it is clear that returns on All Ords, Indexed Funds, as well as Listed Property Trusts in the long term, i.e. the past 16 years, compared favourably to direct property investment. Obviously he has not owned an IP, I take that into account in his advice.
In the end, the prudent will be rewarded. I would not discount the importance of spreading the risks in different asset classes. And, again, to diversify within any individual asset class (residential, commercial, ownership boundaries, units, houses, inner cities or regionals etc. in property investing alone) to spread your exposure risk to come up well ahead.
So, for the unwary, tread carefully. If not, there will be a definite shift of wealth from the impatient to the patient investors, as Warren Buffet put it so aptly. [smiling]
CT
chookie, your answers lie in the replies so far.
Don’t forget to check out the line of credit that can really last the distance in terms of investment financing. Some LOC have the option of splitting the loan to meet your purpose, PPOR or IP. There is no need to refinance every time you find a new property to add to portfolio.
Just have to do your sums and be goal orientated… the all important delayed gratification can not be discounted.
Good luck in your research.
CT
Well said BeauMonde.
Steve, I admire your commitment. I read with interest people generouly sharing their experiences in reaching for financial freedom from a reputable website. Add a freedom of speech with a dose of due diligence make it so potent.
Only regret not finding it sooner. So, thank you for making the learning process smoother with great resources and a forum for backup when we hit hurdles.
Cheers and well done
CTI once sold my ppor with MPRE (exclusive listing); the agent also brought other MPRE agents (about 10 of them) in the region through the house initially so that they’re familiar and able to deal on my behalf.
The house was sold within 4 weeks in a down market. They were terrific in negotiation and have thorough research data on comparables. I quess some agents are better than others, so interview & ask before you sign.
All the best.
