Hi Yezzum,

“Given that the average salary in Australia is around $37K”

Not so – according to the ABS (Nov 03) the average adult full time earnings equate to an annual average salary of $48859 and the average full time adult total earnings equate to $51298 with the differential between public and private purse equating to ~$100/week.

“Surely all teachers are following a set curriculum so that all students receive the same standard of education across the board.”

In WA there is no set curriculum content and really hasn’t been for last 6 years (I understand other states are similarly placed). However there are expected standards of achievement we aim for for all children in key skill (as distinct from knowledge) areas.

Curriculum delivery has undergone significant changes as the world has become more aware of the brains thinking processes and the needs of the world has changed. Apparently we started to really learn how the brain around 10 years ago.

This, combined with the recognition that the worlds knowledge base doubles every 2 years or so, necessitate a shift in focus towards learning skills as distinct from learning finite facts ad infinitum as we did when we were at school.

This knowledge is having a huge impact on the teaching and learning styles – for some teachers more pronounced than others. As a broad brushed general statement – the changes are being more accepted at a primary school level than the secondary level – which is still heavily content focussed due to real and perceived constraints of higher education institutions.

One of the greatest challenges faced by all education systems is the rapidly approaching aging of the workforce – the average age of teachers in WA is 49’ish and the numbers entering the profession are likely to insufficient to offset attrition through retirement – let alone other departures.

As for are teachers paid too much (or worth it) really that is for individual community members to decide. I recently rejected a 10% pay offer over three years – I would prefer my 10% be used to pay for more teachers to reduce class sizes. But then I have my properties grown nicely for my future.

All in all – it’s the school principals who should get more []

By the way – I would love a bit of that $120K/annum salary for principals someone mentioned earlier.

Derek
derekjones1@bigpond.com

Hi ‘Face’

Capital gains liability is halved if the asset is held for more than a year.

The net gain (selling price – selling costs) – (purchase price + costs – depreciation claimed) X 50%.

This figure is then added to your tax return as income and treated in the same way other income sources and taxed accordingly.

Derek

derekjones1@bigpond.com

Hi Maria,

You will need to fully think this scenario right through.

Yes you will be able to use your partner’s rent as an income stream to create deductible expenses.

However, as I understand it, your deductions for costs will be apportioned against the part of the part of the property your partner uses – in other words you will not get 100% deductions.

In addition you will also trigger a CGT event which can have long term taxation issues.

I would recommed you discuss the matter with an accountant and balance up the long and short term gains with costs.

If cost sharing is an issue – maybe your partner could pay for all the groceries etc and live ‘free’ – thus obviating the need for any payment of rent, thereby avoiding a CGT event.

Derek

derekjones1@bigpond.com

Hi all,

“Clinton says for negative gearing to make sense, you need to eventually plan to recoup all those losses and more. The tax benefits are real, but shouldn’t be the primary focus. After all, if all you wanted to do was to save tax, you could go on losing money indefinitely. How smart is that?”

With careful property selection negative gearing is only a short (how long is short?) term issue.

Speaking from experience two of my previously negative properties are now almost positively geared after less than three years. One of the properties is less than 5km from Perth City and the other within 15km of Brisbane centre.

Oh and then there is the growth that needs to be factored into the renturn on investment equation.

Derek

derekjones1@bigpond.com

Hi Kaloni,

I too would recommend an excel spreadsheet – cheap, simple and easy to use.

Irrespective of which program you use the key is ensuring you maintain your records as the invoices and rental statements come in. This way you do not have an onerous task in front of you at the end of the financial year.

You are now running a ‘business’ and while book keeping isn’t ‘sexy’ it is essential.

And. speaking from experience, back you records up.

Derek

derekjones1@bigpond.com

Hi Chefman,

I understand where you are coming from. I like to control as much of my own destiny as possible and that is why I contact and pay directly for the valuation myself as I like to know the valuer has looked after me – rather than the bank.

For example I recently got some revaluations done so that at best I can buy something else or at worst lock in equity at this stage of the market. I monitored property sales in the suburbs involved and have been in direct contact with the agents who sold identical properties in the same complex, got the sale price from them, their names, phone numbers, an indication of what else is currently available in the area and the asking price of these properties.

I then contacted valuers from my lenders panel and contracted them to provide a valuation fro me – I also inform them the information will be provided for financial purposes. At the same time I gave them all the details from my research. This shows the valuer that I know the area, comparable sales and does not leave anything to chance.

I also had some long conversations with the REA and asking if it was OK for a valuer to contact them about the information they had provided me.

But was all to no avail as the value I obtained was a little HIGHER than the value I had put on my property.

Just shows I know nothing about values [].

I also embarked on a similar project with our own home. The difficulty this time was the narrow market and limited (one comparable sale in the local area) and the other local sale was approximately 5 years ago.

Derek

derekjones1@bigpond.com

Gee – that’s very clumsy of you Simon []

Derek

derekjones1@bigpond.com

Hi David,

The only point I would add to Simon’s comments is that a bank (and it’s staff) are hamstrung by their lending rules. These differ from bank to bank and as such you may find that you run into a ‘brick wall’, for a whole variety of reasons, earlier than otherwise may have been the case with another lender.

I would also recommend you spend time with your broker to ensure they know what it is you want to achieve in the short and long term. This way you can get the ‘foundations’ of your finances in place at the beginning of your investment journey.

In many respects building your portfolio is like building a brick wall – spend time and effort getting the foundations right and you will improve your chance of success.

Derek

derekjones1@bigpond.com

Hi all,

An interesting thread – and as often is the case there are some divergent thoughts being posted – makes for an interesting world. Apologies in advance for the long post but I am trying to cover a fair bit of territory here.

Please note – I am a Support Member with The Investors Club so disclaimers apply and I have no intention of ‘advertising’ the Club but rather to clarify/correct some of the comments made by various people.

The ‘negative press’ referred to largely took place 12-18 months ago and coincided with the time that The Courier Mail uncovered the operations of Stamford Lyon and some other unusual practices in Queensland real estate, some of which involved some of the big banks. The Club also got caught up in this ‘news storm’ and was on the receiving end of a series of negative articles – but not related to the bank issue, nor Stamford Lyon.

The Ministry of Fair Trading (Queensland) got itself involved about the same time the publicity was at its peak. MOFT ‘investigations’ (to quote news article of the time) revealed no untoward action by the Club. ASIC were involved too and their ‘targets’ were a joint venture operation (which didn’t comply with the Managed Investment Act) and a program that provided subscribing members with a rental subsidy – this program had previously been approved by APRA. Discussions are currently underway to reinstate the rental program – this time ASIC approval.

In 9 years The Club has grown from very rudimentary beginnings to what it is today – a business but with the buying members as its priority – not perfect but with good intentions. Yes – it does earn a fee from each sale and as a Support Member I am quite comfortable indicating to members what it is – as it varies from property to property. At our local meetings we are also up front in explaining the fee structure to people so that there are no surprises.

The Club does share the broker’s commission and these funds go into maintaining the operations of the Club – I ensure that this is explained to members when discussing general finance options with them. As SMs are not licensed brokers and therefore we cannot discuss specific finance details – that is left to the experts.

The Club does not earn any ‘kickbacks’ from QS, property managers, solicitors or building inspectors etc. These are truly independent business – their relationship exists because of the bulk buying power the Club has and the discounts for members often obtained. Nothing more.

Do not forget that there are a number of full time employees who ensure the day to day operations of the Club function as effectively as possible, including such services as leasing coordinators to minimise rental vacancies and pre-settlement building inspections. These people also need to earn an income to support themselves and their families.

I can assure Adrian that there is no requirement to meet ‘sales targets’ but there is an expectation that the members interests be looked after at all times. It is possible this was the real reason your BM left the Club – being a BM (my wife would say an SM too) is almost a 24/7 job – it isn’t something that can be effectively done ‘part time’.

Working closely with my local Branch Manager I can assure you that there are a number of BMs and SMs who take this responsibility very seriously. By way of example one of people I work with had a similar experience to yours with delay in finance. As a consequence the vendor actioned the ‘finance clause’ and onsold the property outside the Club at a higher price. He too had paid for a trip to view – which I unconditionally reimbursed.

And before the cynics think I’m making so much I can afford it – my ‘profit’ over nearly 18 months is less than $1500. I have made considerably more from my properties.

Just as individuals have here been able to give examples of properties that ‘didn’t grow’ or where valuations were an issue. This needs to be balanced with the knowledge there are as many instances when The Club has sold properties cheaper (up to $60000 in one extreme case), or with higher specification levels, than local REA – and where good growth rates have been experienced.

Be aware the Club has a growth orientated investment philosophy and focusses in metropolitan areas where median prices are around Brisbane $350K and Perth $235K. In addition the ‘cheaper’ properties tend to get taken overnight – recently 8 $200K properties went overnight with 23 would be purchasers seeking to buy one of the units.

Don’t overlook the fact that valuations are not as reliable and consistent as some investors think. I have seen valuations differing by over 20% on the same property – this is not a unique occurrence.

As with any property purchase it is essential that individuals undertake their own research – for this reason would be purchasers can analyse any prospective purchase in the comfort of their own home. I can assure the readers of this forum that prospective purchasers are not placed under any pressure whatsoever to buy – and the SMs I associate with go to great pains to ensure that members are fully comfortable and informed with what they are doing.

In closing – do your own research and be comfortable in what you are doing – and there are many ways to skin the ‘property cat’. May we each enjoy successful investments.

Derek
derekjones1@bigpond.com

Hi David,

WA has a very centralised population base with 1.5M+ living in the Perth metropolitan area (inc Mandurah). The next biggest towns (Kalgoorlie, Bunbury, Geraldton, Albany, Busselton) each have 20K+ (but no more than 35K people. You then move into the 10k to 20k towns of Collie, Esperance, Broome and Karratha. Thereafter you are starting to get on the smallish side and potential growth (in the main is somewhat limited)

A number of ‘experts’ are still predicting sustained growth in Perth prices as there are a number of major investment projects planned in the next 10 years. Combine this with projected increases in population growth and you have recipe for success. The median price for Perth recently rose to $236K.

As ‘Aussies’ indicated if you are to invest from afar you will need to ensure you do your research and find a good property manager to look after your property.

Current vacancies in the wider metropolitan area run at 4.3% with some suburbs down to 0.8%.

Hope this helps.

Derek

derekjones1@bigpond.com