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Hi Stuart,
And I thought you were a only ‘finance broker’ [bigeyes]. Jo thought I said ‘advisor’
Don’t worry I regularly grill my broker about how things are changing in the market place.
But yes I will read your articles more diligently from now on – all tests to see if I have read the articles can be emailed to me [biggrin]
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Misty/Redwing,
Consider buying Dales ‘TAx Battles’ manual. For $99 (tax deductible) you will get an extensive list of claimable deductions.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
HI Mel,
Totally agree with your comments – I guess the low 5% gives a safety margin over the long haul and provides a buffer for the lean times.
Lean times you ask – superannuation fnds in recent years would have been grateful for 5%.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Gatsby,
Read your property management agreement to see what is involved in ‘sacking your PM’ there may be some conditioons attached. I receommend a call to your state REI to see where you stand. Be aware soem PM agreements have a little clause stating they will receive their due management fees for the remainder of the lease even if you sack them – needless to say I delete this one.
Once you get all the information required then do ahead and sack them.
Recommend you do this all in writing to make sure you are clear.
I would also question (in a polite way) how much managememt of your PM have you done.
It would seem to me that you needed to get a little more involved as you may well have picked up the poor service.
Whenever we receive an inspection report we compare this with the previous and get in touch with the PM to discuss any differences and/or similarities. This way the PM knows I am checking their work too.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Misty,
Valuers produce reports for a whole raft of reasons one of which is for financial reasons (new purchase, refinance etc) and as such they are required to undertake ‘research’ to ascertain the true worth of the property.
Some valuers are more thorough than others and will study records of comparable sales in the area – they may well contact local real estate agents to see what recent sales (not yet on records) have taken place to assist with their valuation. This way they have the necessary proof to substantiate their figures.
I am also aware that some purchases do not necessitate a bank valuation and the bank will use the real estate agents sale price as good enough. Obviously your individual situation and the location and price of the property have some bearing on this.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Y,
Budgetting is a relatively straightforward process – whether or not it is successful depends on the accuracy of the data you input and the commitment you have towards the process.
Very simple process – analyse your spending habits and identify your income levels from all sources.
Then identify essential payments (loans, utilities, groceries etc.) and your discretionary spending and see how much you have leftover.
Check to see if this is sufficient for you to achieve your savings goal – if not you may have to do some ‘shaving’ somewhere.
Another technique is to right everything you spend over a typical fortnight and to see where your money goes – you may be surprised.
As ‘Duck’ said try MSN – Money magazine has a planner there http://finance.ninemsn.com.au/money/medic/budgetplanner/budgetplanner.asp
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Karl & Rita,
Duplexes are recognised by the council and various government authorities as being separate properties and as such the owners of each half will receive separate bills for things such as water use and rates, council rates, land tax levies, popwer etc.
Check wether or not you have to have a body corporate group anyway – in Q and WA 2 units in a strata is optional. However all said and done it would pay for the two owners to make sure the other is paying their building insurance – in the event of a structural fire it is highly likely both would be damaged to varying degrees.
It is possible to only buy one half of a duplex although from time to time owners may own both halves. There are a number of advantages to owning both halves and some investors prefer to buy and sell the pair in one transaction.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Evenflow,
Such arrangements are recognised by the ATO. I recommend a look at the ATO website ‘Guide To Rental Properties’
Apportioning expenses such as rates, insurance, taxes, repairs, interest etc is done on a propertional basis with proportion being determined by the amount of floor space typically accessible by the boarders.
I would recommend a chat with an accountant to fine tune the detail to ensure your definition of shared rooms is the same as the ATOs.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by Lizzy:Hi Jaffa,
There IS something about pictures, WHY? Because our subconscious only works in pictures, and not words, anything we see goes into the subconscious, thats why changing concepts and information into pictures STICKS alot better then words.Liz Wilson
Hi Liz,
A educational researcher has identified eight (and rising) intelligences that various people use when learning.
Gardner (the researcher) advocates a multi-sensory approach to learning with individuals focussing on their strength areas.
Recommend a google search on ‘mulitple intelligences’ for anyone who is interested.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Misty,
We use a section 15-15 income tax withholding variation to maximise our cashflow throughout the year. This approach is best used by PAYG income earners.
The process is relatively straightforward but it does pay to leave some slack in the system so that you have some leeway in your favour.
The variation is not an automatic right and as such the Commissioner is not obliged to grant your application. They can be put out if you owe tax at the end of the financial year – we tend to overestimate our income and under estimate our expenses to provide the leeway and leave all work related claims to the end of the financial year.
I have no doubt that you payroll officer will comply with an ATO saying ‘reduce Misty’s tax rate to x% effective’.
As with all matters tax the onus is on you to get it right.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Mark,
People Unable to Purchase Property by themselves.
That is people who may have an asset but no income or vice versa. I suggested such an artcle as more and more people (especially in the current market) may find it difficult to get started and will need to join forces with someone else to qualify for loans etc.
Tenants in common issues will arise and this has been covered in an earlier API article. But from memory the financial side of things not quite so much.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Wezwaz,
As an aside most ‘financial literacy’ I have read suggests that to determine your capital base needs in retirement you will need 20 X annual income. This allows for a dividend and preservation of the starting capital.
For example someone wanting $50K (before tax) to live on will require $1m capital base.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Stuart,
I must admit I have only skimmed your articles (you can throw rocks at me if you wish) as I have a good broker who does the hard work for me.
Have you considered;
– a ‘puppies’ article?
– a living off growth article?
– disentangling cross collateralised loans?
– banks capacity to foreclose on properties if you are in default with multi properties and multiple lenders?
– issues associated with the recent CBA parents heldping kids loan product?
– lo doc/no doc indepth analysis?
– offset/line of credit advantages & issues?
– improving serviceability measures?
– someone asked about a cocktail loan (high rate for IP and low rate for PPOR) – is this reality/legal etc?PS Jo I believe Stuart is only qualified as a finance broker and as such is unqualified to write on CGT issues & wouldn’t be allowed to comment on tax matters per se.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Newgen,
What are you on?[biggrin]
As there is a change of ownership on the two titles I would suggest that normal CGT and stamp duty rules would apply.
Finances would need to be rearranged, where appropriate, as the lenders would require mortgage security over the property they financed which would need to have your name on the title papers.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Russ,
Kay has hit the nail on the head.
But have you also considered the need to sell your property – if I remembered correctly you have been trying to sell this for a while so is an extra week or two going to make that much difference.
Maybe meet the buyer half way at 3 weeks.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Jaffa,
You also need to work out how good a text based learner you are. While so much material is presented in written form it doesn’t necessarily mean it is the best way of learning.
Based on your ‘teacher’s’ comment I would suggest you may be better off reading the material and, instead of writing it down and rereading, draw pictures, flow charts, tables, graphs, mind maps, brainstorming charts, diagrams, labels, talking to others about it, reteaching someone else, group study sessions, and so on.
Consider a regular pattern that suits you – are you a morning/mid day/afternoon/night owl person (when do you do your best work?) – this is in all likelihood your best study time. Consider having some one beat music in the background on a low level so that it doesn’t intrude into your consciousness.
There is also research thats says a review immediately prior to bed is most likely to help embed the new knowledge – just don’t have a TV show in between.
And finally be confident.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Steve,
Steve’s book advocates one way to invest in property – I suggest that you read a couple of others that discuss alternative viewpoints. You may well find there is a better way for you – then again you may come back to the Steve Mc way too.
Nonetheless another viewpoint will make you a more balanced investor and more likely to succeed in the long run.
Recommend books by Jan Somers and also a scan in ‘Heads Up’ which has a ‘sticky’ with some book reviews as the first post.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Fjfcm,
You can either change your ways or throw everything in a shoebox and give the box to your accountant.
I keep an excel sheet for each of my properties and record the income/expenditure details on the day they arrive in the post. This way the task doesn’t seem to be too onerous.
I also keep Quciken books for my other stuff and all in all the accountant is very happy with the paper trail.
However all said and done a software package will not cut the mustard if it is not used regularly.
I can easily justify the changed habits (I used to be a little messy) with it either saves me accountants bills or it maximises my deductions or I have nothing to fear from an audit. As far as I am concerned all good reasons for being a little regular with my paperwork.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Wezwaz,
I assume you mean $300K unencumbered.
I suggest you get in touch with Steve Navra at http://www.navra.com.au – he specialises in doing precisely what you are asking about.
As to whether or not you can do it with only $300K – Steve (or one of his employees) would be the best person to discuss that with.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Connie,
There is always more than buying property than running the ’11 sec rule’ over it – you need to see what employment prospects are like in the area, towns population, inductry base, infrastructure, economic foundations, long term growth prospects and so on.
It would seem to me that you have done an awful lot of ‘book learning’ and the time has come to buy a property after doing a reasonable amount of research and investigation. Your learning journey will only be completed when you buy that property. You will also find that most learning will take place when that property is bought as there is only so much the books can tell you.
I recommend setting yourself a deadline to have purchased property number one by ……..and bear inmind you are not a ‘property investor’ until you own that property.
Hope this is provides you with that ‘little kick in the pants’ it seems you need.[biggrin]
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
