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  • Profile photo of DerekDerek
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    What's the matter with paying fair market value?

    Profile photo of DerekDerek
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    @derek
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    Varies from state to state. Suggest you check out the relevant state government websites.

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    Seems to me you are over analysing things – your proposal makes no difference to your overall situation.

    Total debt, total asset value and total income all remain the same.

    A 'nothing' move in my opinion.

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    Most builders would have a 'fact sheet' style brochure/flyer which outlines what your contract price includes.

    Just be aware on most occasions the level of fit out is only moderate. 

    You will also need to look for site cost allowances, water connection, power connection, landscaping, taps, clothes lines and so on.

    Profile photo of DerekDerek
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    Floopdee wrote:
    do they get a cut from finding you the property?

    Yep

    Profile photo of DerekDerek
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    Hi Prudence,

    Rather tan trying to wade your way through all of the books – first work out which strategy seems to make most sense to you.

    I would suggest Steve's book/s from a cashflow perspective and Jan Somers books from a capital growth perspective.

    After reading these you may then have a clearer idea about which strategy suits you and your situation and then focus further reading on that theory/strategy.

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    Hi Harry,

    Your post is very heavily focussed on potential rental increases but does not seem to discuss any increases in property values.

    If your $20K investment can turn into a $50K/$60K increase in property value then it could well be worth the effort.

    When building your portfolio you need to lend money and having surplus income and asset value is to your advantage. Generally speaking you can accelerate the process through effective renovations.

    For what is worth. Of the two options buy and hold or buy, renovate and hold you have given the second one should be more effective from an investment strategy point of view.

    Profile photo of DerekDerek
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    Hi Yannjgs,

    Someone proposed a similar question in another recent thread which you can read here

    The 'other thread' made some really useful comments that you may find helpful.

    Having said that I do agree with Catalyst – why renovations? Sounds like your capacity in this area is somewhat limited at this stage and if you are thinking 'project management' type matters it sounds like your renovations are going to be big.

    Now I am not a renovator investor but I would imagine that the bigger the renovation then the greater the scope for price over runs, over-capitalisation and so on.

    Profile photo of DerekDerek
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    I am not an accountant but you need to fully understand the differences between what is considered a repair and what is considered a renovation.

    Renovations (improvements) are not deductible but the work would most likely be depreciable. See this ATO fact sheet for definitions of an improvement.

    Repairs, on the other hand, are deductible. The definition of a repair is very explicit and narrow. See this ATO fact sheet for definition of a repair

    Suggest you spend some time on the ATOs website or speak with your accountant to determine the difference

    Profile photo of DerekDerek
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    A couple of similar threads in Heads Up Section.

    Try this one

    or

    This one

    Profile photo of DerekDerek
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    Attended a CPD training day yesterday which focussed on the 'recently' released Australian Consumer Legislation.

    Interestingly the ACL comes into being, as a piece of legislation, as soon as an enquiry is made. A transaction does not have to be made.

    The legislation is quite explicit about misleading advice and the penalties severe if found guilty. Some of the stuff I read coming out of some 'professionals' is appalling.

    If people want specialist advice they should seek out a suitably qualified professional in  the field and be prepared to pay for it.

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    Hi Andrew,

    Some more ramblings.

    Education is seen as the panacea for many of society's ills – underage drinking, underage sex, road accidents and so on. Many sectors of society expect this stuff to 'taught; by schools. In many cases the material is 'taught' in schools at the same time as increasing numbers of children 'experience' something different at home and in their social network.

    It is a fact of life that there will always be some kids who don't do so well at the 3 X Rs. Unfortunately the ever-changing world we live now exposes their lack of prowess in these key areas through reduced work experiences and opportunities.

    You will also find teachers excursions etc now because (certainly in WA) there is an increased, and unreasonable expectation placed upon teachers to risk assessment plan for numerous contingencies when venturing outside the school yard.  I personally know numerous teachers who no longer go outside the fence because of the additional requirements placed upon them to risk assess everything. Having said that 'risk assessment' is part and parcel of many people's working lives now and it has become an unbearable cross to bear.

    For example I was speaking with a fire manager with Department of Conservation (WA) the other day and we were talking about plannign hazard reduction burns (I am also a Volunteer Fire Control Officer in my local area) and his risk assessment now runs to 60 pages and two weeks of work and the risk assessment gets passed through countless hands before the burn is approved.

    Now a lot of this extra work is attributable to the Margaret RIver fires of last year when a burn escaped. The trouble is the knee jerk reaction has created a double edged sword that will have a different effect on the community over time. 

    But back on topic – good teachers can do a lot of what you are suggesting. The key is that teachers should be allowed to teach and parents should work with the school (and not against the school as can be the way) and we will all benefit.

    Cheers

    Profile photo of DerekDerek
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    Cost of money (interest rates) is a small part of the whole equation.

    So many other aspects relating to borrowing money that need due consideration.

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    JacM wrote:
    Derek wrote:
    Sounds like its well overdue for schools to teach "life skills" so people can learn some basics of life, we have plenty of "smart people" with no street sense and it's really bad to see someone ripped off because they didn't know any better

    Good call Derek.  As you have previously been a school principal, can you provide some insight into how to make this happen?  I'm keen on doing my bit towards giving school children a bit of financial education, but the life skills thing is another area that is lacking.

    Why isn't anyone teaching this?

    Hi Jac,

    Long answer coming up.

    Just to make sure we on the same page we probably need to come to a common agreement about we mean by the term 'life skills' – for what it is worth my definition of life skills includes everything from social skills, civics, responsibility, respect, common courtesy, financial management, sex, drug and health ed and so on. 

    Education about life skills should come from all sectors of the community rather than a single group such a the school system. Collectively we can wield a positive influence but as individuals (or single groups within the community) we face a daunting task.

    In my opinion each sector of the community is now relying upon others to do what used to be their responsibility with the consequential breakdown with the end result lots of people (as a general term) don't do their fair share. 

    In past kids arrived at school reasonably well prepared from a life skills perspective. The school and parents often held similar beliefs about life skill matters and a mutual partnership, with home and school working from the same page reinforced learnings at home and at school. The end result was the kids were well rounded and, in most cases, good citizens when they came out the other end.

    Today it is quite a different story. Increasing numbers of kids start school without many of the basics and can start behind the eight ball when the arrive at school. It is not unusual for some kids to start school without knowing what a book looks like, how to have an age appropriate conversation, how to behave suitably in a social situation, or simply how to do their shoe laces. 

    As an example the WA Health Dept did an analysis on the effectiveness of heath ed about 20 years ago. They found health ed was a waste of time because what was taught in schools was largely ineffective because of the passive nature of the learning activities but more importantly the 'good health'  messages shared in health ed were not reinforced at home where the behaviour was different to the message.

    And therein lies the real issue – the disparity between what 'society' wants and what society 'delivers' in real life education back in the home environment. This is not about who is to blame but rather what the collective 'we' will gain if we are all on the same page.

    Having said that schools can, and should, pick up their game too. Some schools do try and provide some entrepreneurial experiences and widespread exposure to life stuff but these are generally offered in the later years of schooling when many habits are embedded in the kids.

    I would rather see a review of the curriculum and start throwing stuff out and replacing it with more current and dynamic learning experiences beyond the 3 Rs which currently dominates the education agenda through NAPLAN.

    I genuinely wonder how long it will be before society wakes up and realises NAPLAN has an adverse effect on education. The tests tell teachers nothing they did not already know and NAPLAN has now become the curriculum – making it so narrow that the importance of life skills is diminished.

    At the same time a new generation of teachers is required – stats show the teaching profession is aging and many have endured countless changes, with questionable benefits, to such an extent they have become tired and dispirited. 

    So in answer to your question – I would start with your own kids and make sure they are exposed to the skills you want them to experience. As parent this should be your primary aim – get your kids on the right track and you have fulfilled your parental responsibilities to them. They will then be on the track.

    In terms of how can you help the local school – that becomes a little more difficult. Any curriculum changes take years to implement and can generally only be done through state authorities.

    If I were you I would grab a copy of the Vic Curriculum (it is probably online somewhere) and look for across the curriculum examples of where life skills makes an appearance. Then see where you could have an input, work out how you make the experiences real life, get a few plans together on paper, and speak to your principal and classroom teacher.

    See if you can do some teaching – but even this has become a little more difficult in recent times. Working with children certificates, a crowded curriculum and some intransigence will give you a challenge.

    Hope this helps.

    Profile photo of DerekDerek
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    aussieguy2000 wrote:
    Sounds like its well overdue for schools to teach "life skills" so people can learn some basics of life, we have plenty of "smart people" with no street sense and it's really bad to see someone ripped off because they didn't know any better

    Hi Aussie,

    Hear what you are saying.

    As former school principal I can assure you that many teachers are insulated from the real world and could only relate to this sort of stuff on a theoretical level. For example I often see, on different forums,  comments like ' schools should teach financial education.'

    Trouble is I have seen the financial situation of many teachers. Their lack of a sound financial base shows many don't have a great understanding of financial matters. The security derived from earning a regular wage, paid every fortnight without variation for 52 weeks of the year can be deceptive.

    Sure there are exceptions but in the main ……………..  

    Profile photo of DerekDerek
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    Now we play the BS game of banks PR Spinners getting the message out, "we need to recognise funds are more expensive" & "we'll need to consider all factors before determining how much we can pass on" & so on.

    Bottom line is any pass on will be extended – the big 4 will probably pass on a similar rate cut – the announcements will happen about the same time (ex ANZ) – the rate cut will come into effect at about the same time. 

    If I sound a little cynical – it is because I am.

    Profile photo of DerekDerek
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    Hi Ralph,

    One step at a time.

    Make sure you get good professional advice. Is your accountant mate really up to scratch – I don't mean that as a negative comment moreso about just getting you to look past your friendship and look at the accountant underneath.

    Maybe look at their financial situation – consider their personal wealth plans – their breadth of investment experiences and so on.

    Maybe set yourself a defined period (say 6 months) to get this side of your investment journey set up correctly.

    Irrespective of your age – a $1m is a healthy sum of money so due care and attention to detail at the moment is to your advantage.

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    Seems the property is no longer available.

    Read here.

    Profile photo of DerekDerek
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    Hi SImon,

    One step at a time. Get the divorce settled – take a breath & then revisit your question.

    While you are 'waiting' re-evaluate your existing portfolio. By your admission some worked and some didn't and it would be to your advantage moving forward from here if you were able to identify why some worked and others didn't.

    At 49/50 you may need to look at slightly different strategies to those you employed before. If this is the case then consider spending some time getting your head around the 'new' stuff.

    All the best.

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    Hi Jewel,

    Don't get fixated on t he one property. If the vendor is not going to budge – send a letter to real estate agent formally advising you will withdraw the offer in X days and will make an offer on another property.

    You have gone through a huge learning experience with this first property – use it to your benefit and keep shopping. The number of buyers will start to dry up soon as Christmas approaches and you find you start to have an advantage in negotiations, particularly with other vendors.

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