Forum Replies Created
People use Lease Options to get around the imposed Gov. laws (which ironically they can break legally!).
Rgds.
Lucifer_auYour assuming that first the market is a “efficient” market. The stock market is not efficient market and if thats not efficient (with all the rules, regulations and requirements) – then the property market is very inefficient.
Secondly many people buy property or sell property for totally emotional reasons, and because of the time it takes to sell a property there are inbuilt inefficiencies in the market (the more liquid the more efficient the market is).
And yes I’m finding CF+ properties with 5% deposit. Of course it’s hard , but if it was easy it wouldn’t be as fun.
Rgds.
Lucifer_auIt’s cooler than Qld… And wet like Darwin…
Getting back to investing… I still wonder about the ability of Tas to keep attracting people (only in the last 3-4yrs has tasmanias growth gone from negative – losing population, to positive – immigants come to tassie from Aust +Other).
Rgds.
Lucifer_auAt a bare minimum he should have a sperate trading account and a ER (emergancy) account, so if he ever has draw downs (when he loses money) he has got money in the seprate account to support himself. The best traders usually risk less than 0.5% when using their RE account (0.5% of protfolio on single trade). I suggest he checks out a guy called Van Tharp (excellent money mgm’t techniques for stocks/options/etc – see http://www.iitm.com/).
As for Diversification – some call it Dwarfication. because it can dwarf your returns. Also who decided what asset mix is best for him? I know some traders who have about 3% of their wealth in property. The rest is in the market…
Also what experience in property do you have? When I talk to potential investors I show them deals I have done (with figures – CoCR), how I have tried to limit their downside, I also show them potential deals I’ve got lined up or ones that I had to pass up. You also need to know how to structure the deal properly (with legal contracts).
If you can’t show them the above – you shouldn’t be raising funds.
You esp. shouldn’t be raising funds if you can’t detail the upside of property either.
Rgds.
Lucifer_auThere i a book by Dolf De Roos called “101 Ways to Massively Increase the Value of Your Real Estate”. Some people dislike the book becuase it too simplistic… But it provides exactly what the title says (so sometimes you can judge a book by it’s cover!).
Rgds.
Lucifer_auJust because you can find the properties dosen’t all ways mean that you can buy the properties. This occurs for a number of rrasons – for example the Mortgage Insurer might only alllow 4-5 properties to be bought in area (if over 80% lend). Also finding large cash deposits can be hard.
But of course always do you due dilligence first (which you are doing! Congrats!).
Rgds.
Lucifer_auTassie is good. All I am worried about is if the population starts to decline again….
Also perhaps (in the long term) tassie prices won’t rise as much as they have (tassie goes for very long periods with zero price rises).
Anyway Good luck.
Rgds.
Lucifer_auI agree with redwing. I don’t think you can get an extra $30 per week for air con. Also are people really willing to pay extra rent for landscaping when (if it’s units) it dosne’t really effect them?
Perhaps find some other CF+ property and make it neturally geared.
Rgds.
Lucifer_auYour dauhter will have to live in the property to be able to claim the FHOG. Also she will have to work and have 6 months of savings.
Use http://moneymanager.smh.com.au/tools/calculators/borrowingpower.html to check out how much you can borrow.
Please be aware that debt is like a double edged sword. It cuts both ways – and it can cut deep.
As for wether properties will crash or not… thats cyrstal ball gazing. And if you wait for the crash, eventually it will come – the question is who much of your most valuble resouces did you waste (your most valuble resouces is time – and if it takes 5yrs until the next bust thats 5 yrs. of time wasted).
I do see gorwth slowing, but I don’t see any high interest rates in 2005/2006, mainly because inflation is low, and spending has slowed. Look at long term interest rates there is much difference between the price for money now (variable interest) and the price of money 5 yrs fixed (fixed interest).
Of course on my side it’s crystal ball gazing – All I’m saying is that you don’t let your OPINON dictate wether you will start looking for investments know or in the future….
Hope this helps.
Rgds.
Lucifer_auWell you can buy some drink vending machines. You can buy them for around $600. In a good site you can make quite a few extra $$$. But the downside is labour intensive (but that shouldn’t matter too much because you are still in school and usually get the afternoon off).
Rgds.
Lucifer_auI’ll give a general, vague reply if you want.
Add an extra $5K for stamp duties (roughly NSW stamp duty will be $13,940).
Rgds.
Lucifer_auCan i legally break a contract?
Usually you get your solicitor to give a notice to complete to the old buyers. Uusally that gives them some extra time (you can’t just pull a contract and keep their deposit because for example the bank takes an extra day after settlement to get its act together). But it usually only happens after the settlment date – perhaps another way would be to tell them the bank is going to reposes the property in X days unless they get finance. (Your solicitor should work something out).Can i legally discourage original buyers?
Wel you could give them a notice to complete, other than that tell them their is a cavet over the property. That may have other consquences though (i.e. did not disclose it before/during sale (so see your solicitor).As for your family problem, wy don’t you promise to give a % of the sale price on the home to the father, and do a deal with the new buyers so they pay more for the equip and less for the house. Tell your father the banks about to repo. anyway so he probably would get zero $ from it (a solicitor letter informing them that is also good). perhaps he will agree to lift the cavet. Also from memory Cavets only last a period of time too (check with solicitor).
As you can see you need proper legal advice.
Rgds.
Lucifer_auAs Steve says – go for the one that provides the nicest lollies.
From memory ClearDocs dosen’t provide any… [confused2][biggrin]Steve’s avice is very good.
Rgds.
Lucifer_auAs the others said ‘it depends on your goals’.
Some people just want enough to support their lifestyle if they were fired (where they would find another job quite quickly). Others use it to add extra luxuries (or other – education, etc) in their life (as an example the once in a lifetime holiday for the family every couple of years orpay uni fees for their children).
Then there are people who want an income for retiremnet, so their goal is to use the excess rent and capital gains to buy more properties – it can take a while, but it’s a long term plan (so they don’t really worry about it too much).
Others want to retire from their job, and so the idea is to replace their current income.
Then there are the capitalist investors. They do it because they love dong deals (artists make art because they love it, capitalist investors are the same). For them it’s not the income per say it’s doing bigger and bigger deals (they love the challenge, rather than the money). (please note I’ve decided to call these people capitalist investors for want of a better word – but these are the people who are never satisfied with their status quo and have a desire to do more than the year before).
So as you can see – it depends! The fun part is deciding in which category you want to go in.
Rgds.
Lucifer_auWhat was your first investment?
-> Coins (Mint – should of gone with Gold/Silver).What are your investment goals?
-> Well they were retirement. Now, I guess I just like the challenge.What’s the best investment decision you ever made?
-> To decide to invest. And to keep investing.What’s the worst investment decision you ever made?
-> A shop (but it was a good learning experience and cemented a good friendship!)Whats the biggest investment risk you’ve ever taken and did it pay off?
-> Saying yes to buying multiple properties and not having a deposit. But they were a good deal and found someone to go in with (it’s still paying off [biggrin]).What advice would you give to an investor who is starting out?
-> Many people think it’s the needing to know the technique or the proper company structure, etc but in reality the most important thing to do is to take action, most people only fail in the take action part, but unfortunately it’s the most important part.How do you react when things get rocky?
-> I have friends and advisors who have an expectation of me to be successful, so I try and work out how I’m reacting and wether it is appropriate. I also talk to them when I feel worried.What would you ‘never’ do with your money?
-> ‘Invest’ in a Nigerian email scam.Where do you source most of your investment information/reasearch?
-> Well I read alot (newspapers for general economy; Books and audio for wealth concepts; And I like using advisors too (mortgage and lawyers).How do you feel about investing overseas?
-> I’m sure I’ll do it. Looking at how easy it can be to find CF+ prop overseas (US, NZ) I’m sure I’ll invest there. Also I’m looking at China (or a bit longer term India) with a billion people I think 3/1 houses will be in demand in the future!What % of your investing is
Property?
Shares?
Other?
-> Mainly in property (90%), I’ll probably get into trading but right now I’m enjoying retirement.Rgds.
Lucifer_auWell it depends….
you didn’t put your cash down, but you did put your equity down, so it is good to run the figures on that (you could always people your money into other investments that give a higher return, so you should know what return you are getting). Check out http://www.jaffasoft.com
Rgds.
Lucifer_auWhile it can be bad if all your rentals go empty there are strategies for avoiding such a risk. The first is if you have a lot of properties then you will probably find that a % will always be rented, the second one is to buy cheaper properties as then you can afford the repayments if it does go vacant for a period of time. Alswo you can carry insurance whcih can cover vacancy (dependant on certain circumstances).
All in all I see rental income as being better than employment income, as at the very least if you can let the property out, you can always reduce the rent, so you can always get some $$$ for your property (at the very least).
I think your idea of using the money ($80K) to put into an offset account is excllent! What you can do is buy $100K house, positive gear it as fast as you can then go and then use your $80K plus your excess cashflow and add it to your next property. You could potnetially buy a CF+ property every year that provides you quite a high income! After a while you won’t even need your jobs income to reduce the loan amount!
Of course this is simply my opinon, but I think it’s a pretty good plan!
Rgds.
Lucifer_auROFL!!!!
Now he will never come back!!!!
Excellent!
Rgda.
Lucifer_auWell you could go a flat tax rate of 30% (through the use of a comapny), or go up the tax scales before and when you go past the 30% PAYG rate, you switch your income to the comapny tax rate.
We need more details of what he is proposing.
But I don’t think you should listen to him because it’s all illegal! All of it! Everyone pays their fair share of tax [baaa].
Rgds.
Lucifer_auIf yoiur a developer it’s better to put it in a company name. This will reduce your lawsuit exposure. Also since you developing you are considered to be trading stock (rather than just buying and renting out, etc) and you get some very nice tax benefits, so I would recommend a company.
I would see an accountant who specialises in taxation for developers (as opposed to a regular accountant).
Rgds.
Lucifer_au
