Ooops – it looks like I had a typo in the first line and the auto editor kicked in.[bigeyes]

Derek
derekjones1@bigpond.com
http://www.mononpoly.tic.com.au
0409 882 958
Skype – derekjones2113

You also need to establish a direct link between the book (or course or seminar etc) and what you are doing.

Technically, as an investor, I cannot claim expenses if I bought a reno book as I don’t do renos. You need to be able to establish the link if ever you were audited.

People need to remember that just because the ATO paid or billed you in accordance with your own calculations it doesn’t guarantee that they have recognised all claims. The ATO now refunds or bills based on your documents submitted and then passes your paperwork onto te back room people where it may be comprehensively assessed. They use the dipstick method of auditing and one day your number may come up.

Derek
derekjones1@bigpond.com
http://www.mononpoly.tic.com.au
0409 882 958
Skype – derekjones2113

Hi Mcdeyess,

Anti NG’ers will use the ‘hope’ of CG as being one of the reasons why NG is not a surefire way to successful investment for the reasons Terry mentions.

I tend to disagree as such risks can be mitigated by good research and careful management.

I would also add that NG (per se) needn’t confine you to your 9 – 5 job for the rest of your life. By way of example my wife and I have equity of $1m+ and have set up structures and process along the lines of my comment in this thread https://www.propertyinvesting.com/forum/topic/24725.html which provides us with options.

Derek
derekjones1@bigpond.com
http://www.mononpoly.tic.com.au
0409 882 958
Skype – derekjones2113

Hi Markat,

Reading your post – you have assets valued at $800K and debt of $130K – is this correct? I will use these figures to demonstrate what you could do.

Having a large asset base and good equity position means that additional borrowings are relatively easy to secure. A good broker can assist here.

As Richard has indicated no-doc lenders will allow you to borrow additional sums of money based on your asset position. You will need an ABN and you can borrow 70% of the value of your assets less existing debt. You can go higher if you have had an ABN for at least two years.

You will, in all likelihood, need to refinance and assuming a 70% lend you could borrow $560K less existing debt of $130K will leave you $430K as additional borrowings.

This $430K can then become the cornerstone of additional borrowings in accordance with your investment goals, including additional property purchases to the ~value of $1.5m.

One option is to purchase additional property and continue the cycle ad infinitum.

Another option would be to earmark some of the funds for cashflow investments (possibly with margin loan added on) to purchase something like (example only – not advice) Navra Managed Funds which has averaged ~18%/annum over the last two years.

Assume you place $100K of your additional borrowings into something like Navra and the fund performs to its last two years average you stand to earn $18K – $7K interest nets you $11K.

The $11K can then be used to stump up additional NG properties and you can maintain you existing plan.

Another strategy is to use some of Peter Spann’s products which. from time to time, allow 100% secured borrowings to do a similar thing. This means that your $430K as above can then be entriely directed towards more property.

The surplus of income earned through this avenue can then be directed back to you as an income source or reinvestment as you see fit.

A further option would be to use some of the additional borrowings to finance JV developments where someone is requiring start up funds.

Now obviously there are risk issues attached to all of these and you would need to ensure that you have conducted due diligence to ensure that you are comfortable with such an approach.

Derek
derekjones1@bigpond.com
http://www.mononpoly.tic.com.au
0409 882 958
Skype – derekjones2113

Hi Balniks,

I believe you need to rethink your ‘adviser’ what he/she is advocating is tax avoidance which is illegal – sure minimise your tax but don’t avoid it.

There are sufficient legal avenues available to most tax payers which enable them to minimise their tax without havng to resort to the strategies your ‘advisor’ is advocating.

Start clean and the journey will be productive.

Derek
derekjones1@bigpond.com
http://www.mononpoly.tic.com.au
0409 882 958
Skype – derekjones2113

Hi Daniel,

You need to factor in the (likely) maintenance costs, the validity of the rent received (is it out of wack with the norm in the community), what is the economic stability/outlook like for the community, vacancy rates, growth prospects, value stability, finance issues (will bank/mortgage insurance provider recognise 95% as suitable security in this area) and so on.

Cashflow is but one part of the equation.

Derek
derekjones1@bigpond.com
http://www.mononpoly.tic.com.au
0409 882 958
Skype – derekjones2113

HI Jenny,

Ask said agent for the necessary form – they will have such a form given there will be times when they win someone’s custom from another agent.

At these times I am sure they could whip the paperwork out before you could blink.

Failing that – read your agreement and take noteof the fine print.

Failing that contact state branch of REI and ask if they have copy of form or know where you can get one.

Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113

Hi Roodog,

Ahhh – I have made the connection now.

In terms of rental returns – the article I mentioned makes the point that rental returns and capital growth are generally speaking negatively correlated – that is, when one is going up the other is going down.

If you investigate this point further it stands to reason.

People who cannot afford to buy will rent and when more people have to remain as tenants there is greater pressure on rents and vacancy rates decline and rent (in real dollar and percentage terms) increases. At these times growth generall slows (fewer buyers) while rents increase (more tenants).

On the other hand as more people can afford to purchase property there is increased pressure on stock and buying prices go up.

These broadbrushed comments mirror recent (and distant) times in property.

As it currently stands vacancy rates in most cities around Australia are generally at very low levels as investors close their wallets and the market stagnates. This is causing upward pressure on rents with the eventual result (all things being equal) that property will become a more attractive investment to the greater masses once again and they will return to the market.

Perth is somewhat different – to a certain extent as we have enormous growth rates while at the same time vacancy rates are declining to a level where they are very low. The key point is that growth is staill far outstripping rental increases hence the falling returns.

In a long winded way – yes renting in Perth and investing in the ES is not a silly suggestion. And yes – if you bought some time ago you would be appreciating the recent gains while now making a bit of hay with increases rents in recent months.

Certainly in our case our portfolio has reached a point where it is almost neutral (based on purchase price). We have insured this position this with some cashflow investments in managed funds.

Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113

Hi Perthman,

Been on long holidays so I have only just had time to ‘join in’ here.

The signs you and GMH mention should give every new Perth ‘investor’ cause for concern. The upbeat attitude about the Perth market is very similar to that experienced across many eastern capitals around 2003.

I might also add that some of your arguments can also be extended to regional parts of WA.

Me fears most of the current raft of purchasers are those who make their investment decisions based on what is reported in the popular press and are herd followers. This is very similar to those investors (and I use the word lightly) who bought at the top in eastern states markets and who are now sitting on minimal or in some cases negative equity, or those who purchased shares at the height of the 87′ crash.

Why did they purchase? Because the popular media was reporting the massive gains being made by other investors and they thought ‘profit’ was a foregone conclusion. It is this type of investor who is making offers well above asking price, or alternatively meeting exorbitant asking prices. As someone who has an eye to what is happening in Perth – some of the advertisements I see in the weekend papers simply do not make sense.

A more informed investor, on the other hand, will do their own research and will attempt where possible ahead of the herd – thus they experience the greatest gains of all. A more informed investor also knows that everything goes in cycles and that every asset class has it’s day in the sun and also in the rain and is prepared to work within these constraints and with this knowledge to the fore.

An article I read today mentioned that the rental returns in Perth are now the lowest of all Australian cities. Now I am an out and out ‘growth’ focussed investors but one also has to consider the cost of holding an asset and in Perth at the moment these are (generally) too high – even allowing for depreciation the holding costs are enormous.

In conclusion – Perth will come to a halt and when it does there will be some sorry people. Many of these people will be burnt and they will then run around telling friend that ‘property is not a good investment’ – in reality their research and decision making processes are flawed and some inspection of themselves is in order.

Cheers

Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113

Hi Ozi,

Got to give them credit, they are persistent.

Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113