Forum Replies Created
Hi Jawz,
Just as an aside comment – have you looked at the area and asked the question “Is this where we want to live?”
While the purchase price may sound attractive are you and your family going to be able to live there with the ‘limited’ (an assumption based on price) services available in the area.
I would also suggest that the entry price is a little high given the substantial works you have identified as being required.
You could be making a $25K expensive mistake.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958A couple of clarifying points;
The latest newsletter refers to total purchases of ‘just over 7000 properties’ – certainly not 9000.
Strategy is not rocket science – just proven over a long period of time. Given 30% of members are repeat purchasers something must be working. One of the strengths, from a members perspective, is the multi faceted services provided for members. These services are provided without obligation and people are free to use their own banks, solicitors etc
The Investors Club doesn’t mark up prices – anyone at the ‘what shall I buy stage’ has free access to the Club stocklist 24 hours per day and has ample opoprtunity to use any real estate website to compare prices. There is absolutely no pressure – which, for some people, is hard to reconcile as some do want that nudge to get them going.
And finally to Rob, I wonder if your ‘bagging’ has anything to do with the rejection you got from The Club when you expressed a wish to become one of our recognised brokers and the subsequent rejection I sent you in an email around the end of Feb/early March of 2005.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Originally posted by richter:10 year’ish end goal – to have $3M property portfolio that will double next growth, sell 30% of properties to pay off remaining and then have the rents as income for rest of life. Is this a feasible way to go.
A comment on the strategy – very Jan Somers. Not a problem just check the remaining rents will be sufficient for your preferred lifestyle.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Redwing,
The book did not contain anything new for me – but then I am up to my eye balls in the information anyway. For a first time investor or someone who wants another piece of reading material – you would have to ask them for their comment.
Penguin Chick – Club fees are explicitly state as an answer to question 22 on the most frequently asked question list – this is freely available to anyone who asks.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi all,
It seems as if ‘steady’ has opened up a can of worms.
There are a few qualification required here.
Steve Navra is not participating in a scheme of tax avoidance – he has a private ruling from the ATO verifying the legitimacy of the approach he uses. Steve will also, as part of his service, arrange for a similar ruling on your behalf as part of his service.
Steve cashbond approach utilises equity that may otherwise be locked away to buy a cashbond which then in turn is used to increase serviceability. This is something he does for his clients – people who as a rule of thumb are very financial savvy and can see the benefits of this type of approach.
Steve is also the first to admit that living off equity approach requires a tighthening of the belt in low growth periods.
As for The Investors Club – we have moved on from the 7 properties scenario. That figure was initiated when properties were $150K each – we now suggest a higher (equity) valued property portfolio in proven areas to reflect the changed nature of the property market.
We also have in-house software to model the effect of the ‘living off equity’ approach. The modelling includes, if you wish, some additional borrowings to pay the additional interest.
Using reverse modelling for my portfolio using past 30, 20 and 10 years suburbs statistics and average wages the system does work. And my LVR, using this approach, will be considerably (and I mean considerably) less than 80%.
The approach is not dependent upon doubling every seven years – individuals can play with the doubling rates to their hearts content – and see what effect this has on their portfolio.
For those who do not believe it I suggest you go back 10 years and ‘buy’ a median priced Brisbane house and then a further 5/6 median priced units – then do some maths and regularly draw out an average wage (as a starting point) and see how you go. Quite simply it works.
We also have access to statistical information about rental increases and the part that this plays in assisting with portfolio management.
Additionally some (not all) of the draw downs are legally tax deductible. See an accountant to determine which ones.
As previously stated do not dimiss the concept – sure it is not for everyone but (generally speaking) individuals also bring other assets and income sources to the ‘retirement table’ when they arrive there.
Besides you can always focus on acumulating a high valued growth portfolio and explore the options when you choose to leave the workforce………you could always do a Jan Somers and sell a couple to payout loans and live off rent, or sell the lot and lose half in CGT or get a guaranteed income and rely on the pension which is $21K/annum provided you have no income or assets.
The only point I agree with Rob on is ‘it is about quality not quantity’ it is what we tell people all the time.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958I believe a few people use a software packgae called ‘Devfeas’ to do feasibility studies on their property developments.
Look at http://www.devfeas.com.au
If your ‘would be’ partners are first timers it may be that the step you are ready to take (based on your previous experiences) is just too big a leap for them at the beginning of their investment journey.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958HI Benali,
I appreciate the question was directed at Depreciator – but using the examples given you cannot avoid CGT.
By living in the property for some time only reduces some of your CGT liabilities as any gains made while the property was an IP will be taxed either using an apportining approach or through the valuation method.
You also need to remember that tax avoidance is illegal whereas minimisation is OK. Your examples are all about avoidance – certainly not a path I would go down.
CGT can be minimised by selling in a low or no income year.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Tony,
You can also try the following website;
http://www.realestate.com.au/cgi-bin/rsearch?a=loan&t=res
It gives you opportunity to play around with all sorts of figures and permutations.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi BA,
So if I reduce my tax by, for sake of discussion, $2000/annum and hold a property that grows in value by more than that – I have saved tax while still making money.
There are other ways to make money in property investment besides cashflow.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Pct,
Welcome to the forum – there are some other recommended readings found on a ‘sticky’ in the heads up section.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Eric,
Why not do both?
Use the surplus cash to pay down some non-deductible debt and then set up a line of credit/equity loan to do the renos.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Originally posted by richardsydney1234:Also you can only make money and pay tax or lose money then save tax.
That is not strictly correct – I save a bit (a little bit too I might add) on tax and make my money through growth.
Jason,
You will find that if you ask some questions then you could well find that people here are more than willing to answer your questions. Bear in mind that there are different ways to invest in property and you need to be in a position of knowing what yoour preferred property investment goals and strategies are.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi BA,
Try this link for some more discussion about the relative merits of various books.
https://www.propertyinvesting.com/forum/topic/6845.html
Will now lock this thread in an effort to keep all ‘book’ discussions in the one place.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Peter,
Just had a quick read of the NSW Office of Fair Trading website and the tone of their document indicates that deposits are not ‘fixed’ in NSW either.
In particular these two lines;
Once you have made an offer on a property, you may be asked to pay an initial deposit. (at time of completing O and A)and
At the time of the exchange you will be required to pay a deposit, usually 10% of the purchase price. (At exchange of contract time)
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Robbie,
Welcome to Australia and also to the forum.
Are you wanting to buy a property to live in or as an investment. This is an important piece of information as your needs will be slightly different.
If you are wanting something to live in I would suggest find an area that you are personally comfortable with and rent a property in the area for 6 months. This will give you ample opportunity to find out for yourself whether or not the suburb suits you and your needs.
If you like the area then you can extend your lease by a further 12 months and really get to know the area. While looking around you will get to know the market and you will start to recognise good deals when they are available.
You will also find that it is cheaper to rent than buy in most suburbs at the moment – so your levels of savings should also benefit by some time as a tenant.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Bigfella,
You can claim the interest on the deposit from the time that interest was incurred.
Even though the investment is yet to earn an income the purpose of the loan is to purchase an investment – so costs are claimable. Just be aware that not all accountants are aware of the Steele case and will refer back to the ‘it hasn’t earn’t any income yet’ line.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Bigfella,
Line of credit accounts can be problematic from a taxation point of view.
There is a certain attractiveness to mixing personal and investment expenses which leads to major difficulties at tax time. Any repayments made are apportioned across both private and investment expenses rather than the tax payer being able to designate repayments as being for either private or investment costs.
Additional funds are best parked in an offset account as they are cleaner to access and the impact of interest reduction is retained.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Martine,
Would also recommend you invest ~$100 in Dale Gatherum Goss’ ‘Trust Magic’ – get the information direct and in a clear concise manner.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Originally posted by Still in School:though after doing further research, my research and talking to locals is, that the property market is being driven up by investors,
Sounds like a ‘cashflow property’ induced bubble SIS – who is going to be left holding the asset when the bubble deflates?
In larger, more stable and sustainable, areas there will be homebuyers entering the market. Give me the security of a sustainable area any day thanks.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Lisa,
Many ‘experts’ would argue that the house will perform better for you in the long term. However this is a somewhat simplistic view as the key ingredient is the value of the land upon which the property sits so in effect you can have either.
There are some key matters that you will need to consider before choosing whether or not a house or unit is better for you.
With a house as an investment you have the advantage of being in total control and not be answerable to a body corporate group. Outgoings are generally not as significant as for units.
With a unit as an investment you are controlled to an extent by the body corporate and as such ‘improvements’ maybe tied up in red tape for a while. The body corporate fees can be on the high side but these do include building insurance usually include ground maintenance and the like – so they are not as huge as may first appear on the surface. A unit may also be in an on-site mamaged complex which has the added advantage of having someone on site full time looking after your place – these complexes usually have a waiting list of tenants if the facilities are attractive and thus vacancies are minimised.
Hope this helps
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958
