Forum Replies Created
Yeah richo,
I also get a mixed response. Some people just plain scoff at what I say, others are sceptical, and a very small number are actually supportive or in agreement. In my office, I’d say that there’s only one other chap who is supportive and in agreement with me. I also don’t bother to give friends and family too much detail (except the girlfriend, where disclosure is mandatory!), for the same reasons as you.
And I think aussierogue’s got it right there. The problem is in the psychology of things, not in the actual act of investing in real estate. Most people are brought up to believe that they need to study hard, get good grades, find a good job, carve out a career, save some money and finally retire at 60. That’s what my mum keeps telling me to do. That’s how a lot of my friends think, despite their interest in investments, being sick of their jobs, etc.
I love this forum because it reminds me that there are real life people out there who are also doing the same thing.
Cheers
MHi Andrew,
I agree with you in many aspects. It’s a con where they are selling you a “valuable” product which is actually useless. Believe me, I’ve trawled through a lot of these things and just said forgedaboudid, and even blown some good money for nothing.
For example, the rubbish spam that I get telling me how I can make hundreds of thousands of dollars by sending “concealed cash” in an envelope to the 5 people on the list, bladibladiblah, is just a rip-off. The so-called “reports” you buy have no real substance, and it’s in essence a virtual MLM (I don’t personally have a problem with legitimate MLMs, but it’s just not my thing).
But there is a legitimate role for internet marketing. For example, Steve selling products on this website is internet marketing. So’s what another chap, Chris Batten, is doing (he sells reports on investment structures).
Taking it to another level, estores like Amazon, ebay and even websites for bricks and mortar shops like Dymocks and QBD Bookstore are involved in internet marketing.
I would argue that both Steve and Chris, and each of these stores, have legitimate products to market and sell over the internet. Why? Because it’s something that people want. And it’s not just rubbishy fluff that gives you a very general idea of what’s going on, but actually helps you with what you want to do, whether it’s property investing, buying a fiction book to read, or even to teach you how to market products on the internet.
Besides, if you have a legitimate product to promote and sell, why is it so bad to do so, just because you haven’t got a flashy brand name and an expensive bricks and mortar store? Isn’t the whole point of the investing game to generate multiple streams of income?
Anyway, that’s food for thought. Sorry if it sounds defensive, but I’m not – really.
As always, I welcome any comments, even if you disagree with me.
Cheers
MG’day luckydip (or brilliant),
I’ve just bought these two books (2 volumes) on internet marketing. I’ve yet to put the stuff into practice, but it looks really good!
It’s basically a compilation of advice from 61 internet marketing “gurus”, who explain step by step how they would get back up on their feet within 30 days if they lost everything and had to start from scratch again.
Unfortunately, I’ve been so busy at work lately, I haven’t had the time to properly read it or try any of the things they recommend.
Give it a go and let me know what you think, and how well you do.
Cheers
MHere’s the link:
Hi Rau,
That’s what the law says. And that’s also what the State Rev. factsheets say.
I know it looked like an anomaly the first time I saw it, but it seems quite clear.
The best method to put your question to rest is to call the State Revenue office in your State, and ask them that question. See what they say.
Cheers
MOnya Steve!
I’m inspired to finish off my own book now (although it’s on DIY residential property conveyancing), although I don’t think I’ll get as many sales as you’re getting
Hey aussierogue,
You’ve inspired me to jump on the bandwagon with my own century.
Also quite useless to poor Brent, apart from the suggestion to try an aircon shop – they may be happy to do the installation for you, even though you haven’t bought an aircon for them. It’s still money to be earned, after all.
Cheers
MKeep trying MissLily! Just a couple of weeks ago, I was looking at a decent townhouse which I decided to put in an offer for. I did my research and found that the exact same townhouse next door was recently sold a few months ago, and decided to use that as a benchmark (which incidentally was $50,000 less than the asking price on the one I wanted to buy). I called up the agent and guess what? Someone had jumped in on the first day the townhouse hit the market, and offered to pay the asking price!
While I was disappointed on missing out on it, there was ABSOLUTELY no way I would have been willing to pay the asking price, or without being able to do any due diligence, for that matter.
Anyway, all I’m saying is that while you do need to be quick, due diligence, which takes time, is still important. Don’t blindly jump the gun unless you’re quite sure you’re not paying too much.
Cheers
MYou’re welcome guys. Don’t be afraid of asking questions. That’s what this forum is for!
Cheers
MSuperTed,
this section from the WA FHOG Act may answer your question (the Acts for the other states should be similar – check http://www.austlii.edu.au):
Section 7
(2) If the Commissioner is satisfied at the time of deciding an application for a first home owner grant that —- (a) an applicant is legally married but is living apart from the person to whom the applicant is legally married; and
(b) the applicant and that person have no intention of again living together as a couple,
the person to whom the applicant is legally married is taken not to be the applicant’s spouse.Which may mean that both you and your wife may each separately get the FHOG, as long as all the other criteria are satisfied and none of the disqualifying events occurred before you separated.
You can always give the relevant State Revenue Dept. a call to clarify whether or not you’re eligible, and what kind of proof you need to provide.
Cheers
MHi Jules1,
quote:
Jules1 said:
Does anyone know how I can get the FHOG if I want to buy an Investment Property before buying a home.The short answer to your question above is “yes” IF:
- you have never owned any residential property before 1 July 2000; AND
you have never lived in any residential property which you bought after 1 July 2000.Of course, you still need to comply with all the other eligibility requirements.
Also, if you buy an IP now, but decide down the track to live in it instead, you should be able to claim the FHOG on that property, because it would have become your principal place of residence.
Cheers
MIf you’re the lessor, the lessee should be paying rent for every single square metre that the lease covers, including balconies. Of course, market forces may dictate that you discount the rent per sqm for the balcony portion.
If I were you, I’d either go and do some thorough research to work out a fair market rental for your property, or simply ask an agent to give you a rent appraisal.
Cheers
MYou beaut! Thanks Mel!
I like the real life testimonials – they’re inspiring, because I can identify with some of them.
All the best coslett!
Oh and I forgot to mention that the primary liability to pay GST to the ATO is on the supplier (ie the seller). The buyer will generally pay GST by virtue of a contractual obligation – that is, the contract will say that the buyer has to reimburse the seller for the seller’s GST liability. In return (and upon receipt of a tax invoice), the buyer (if registered for GST) gets an input tax credit which can be used to offset against future GST liability (in some cases, I think even a refund may be possible!)
But check with an accountant before you take the plunge.
Cheers
MThe body corporate’s role is only to “run” the building. That is, get the lawns mowed, keep the books, pay common property insurance, etc. What happens in each unit is the owner’s responsibility.
This means that you need to hire your own property manager to find and manage tenants, or do it yourself (risky if you’re inexperienced).
The body corporate’s costs are reflected in the quarterly (at least in WA) strata levies that each unit owner has to pay.
I’d be a bit careful about accepting advertised claims on nett return – you need to work out all the expenses and work out a realistic rent you can get from the property, and compare this to the total cost of buying the unit (ie including stamp duty on the unit and the mortgage, bank & settlement fees, etc), in order to calculate your true rate of return.
Steve’s book has some simple tables and diagrams to help you work this out.
Cheers
Mleowson,
I respectfully think that you may be confusing what RK is saying about assets and liabilities. Early in his book(s), he acknowledges that his view of what constitutes and asset and liability is different from the accounting, or generally accepted, view. I don’t think that he’s saying you should prepare your accounts on that basis. He’s saying that you (personally) need to think in a different way about what constitutes an asset and a liability.
I like his teaching on this point, because it reminds me to evaluate whether a potential “asset” is going to put money into my pocket or take money out of it.
Then again, you are entitled to your own view, which is, of course, the generally accepted view, and the correct accounting meaning of those two terms.
Cheers
MHey I just bought the book yesterday – Dymocks Perth has lots of copies!
It’s really eye-opening. I think the best thing about Steve’s book is that it shows you that it can be done – it’s not just a nice theory.
That said, I think Steve also acknowledges that there are other aims which you may have when investing in property, which are different from his – he simply isn’t as interested (if at all) in those other objectives, since his main aim is to get cashflow positive properties.
But to answer your question Fizman – I think you have to pay the interest in a tax year in order to claim the deduction in the same tax year (ie I agree with Terry). Accrual accounting doesn’t apply to natural persons.
However, I think your idea is a good one – you are essentially “transferring” the interest deductibility from the IP to the PPOR. So it sounds good in theory. You’ll probably have to sit down and crunch out the numbers to ensure that it works in practice, since there are a lot of other variables that come into play (eg IP price, interest rate, term of loan, rent income, etc).
Cheers
MWestan’s got a great idea – why doesn’t your friend do a deal with the granny and move into the property? It’s not ideal, but keep in mind that there’s no minimum time that you have to live in the property as your PPOR in order to qualify for the FHOG. If you make a bona fide bash of living in it, and it doesn’t work out, well, you did genuinely live in it as your PPOR. You’ll need to change your mailing address in order to help prove it. I’m not saying that you can “fudge” it and move into the house for a month just to go through the motions – that’s asking for trouble. You do need to have a good bash at genuinely living there.
As someone else mentioned, you could also try to reason with the granny and her relative. The reality is – she is in breach of your agreement (no eviction isn’t the answer!), and her actions have cost you $7,000. So both of them need to act reasonably to you too – it’s not fair for them to demand that you bend over backwards, and don’t offer any compromise. So as Adam.E suggested – get a deed drawn up, confirming that she owes you $7,000, which will be paid out of her deceased estate, maybe with an interest component to cover the cost to you of getting the money later (or the cost of borrowing $7,000 to pay back the FHOG). It’s no skin off her nose now. The only risk is that there might not be enough left over to pay you out.
If her relative is the one causing all the trouble, and reporting you to the State Revenue Dept., I may want to consider taking action against the relative. That is, let the granny stay on, but threaten to sue the relative for inducing a breach of contract by encouraging the granny to stay on (assuming your original lease agreement made it clear that you needed to live in the property to get your FHOG, and she agreed to vacate for that reason), but at the same time offering a compromise. You will need to get a lawyer to help you. But I think it’s better to pay a thousand bucks for legal assistance, rather than risk having my mug splashed all over the TV and being portrayed, rightly or wrongly, as a granny evictor. Some people might not mind the latter, but it’s a lifestyle choice!
It might be helpful to put the terms of your proposal on paper (keep it really simple!), so that they can take it away, read it and think about it.
In my experience, I find that staying calm and not getting angry or aggressive always helps defuse a potentially unconstructive situation.
Good luck.
Cheers
MIf you’re running a business, and you don’t have an ABN, I think that the customer is required under tax law to withhold some money (10% or 48.5%?) and remit it to the ATO.
I’m not sure though – maybe a tax accountant on the forum can help.
trueblue – I’m not sure if you can claim input tax credits with merely an ABN, unless you’re also registered for GST.
That’s the other thing – you can get an ABN without being registered for GST. However, if you register for GST, you have to have an ABN – in fact, they’ll give you one.
Cheers
MI think that they’re quite big in Queensland. Apparently they develop these massive apartment complexes.
Sorry – that’s all I know.
Legally, you could probably evict the granny, but from an ethical perspective, I’d be reluctant to do so, especially since the eviction process may become drawn out and nasty. It’ll be on your conscience if she carks it due to the stress of the whole fiasco.
I think that your friend is caught between a rock and a hard place. The easiest thing to do is probably to give back the 7G’s, and explain the situation to the State Revenue department so that they don’t wrongly accuse him of falsely claiming the FHOG and whack him with fines and penalties.
I think the moral of the story is that if you’re buying a property and claiming the FHOG, you must insist on vacant possession at settlement. Don’t try to be too clever and think you can have your cake and eat it. Because you could get burnt!
Cheers
M
