Forum Replies Created
In Victoria, the law basically says that you can’t put an offer in without sighting the S32, and the agent is not allowed to accept it anyway. You also have to sign a declaration as part of a written offer to say that you’ve sighted it. whether or not this is strictly followed is another question, but personally I never put even a verbal offer in without seeing the S32, you just never know.
Not sure about other states though!Keep smiling
Felicity
My favourite is the phone call that goes something like this….
Are you interested in owning investment property?
Yes
Are you interested in someone showing you how you can own IP for as little as $10 per week?
No
(usually a pause)
Are you interested in paying less tax (the clincher!! []
No
(longer pause)
No??
No
But surely if you could find a way to pay less tax and use that money to buy IP for almost nothing, that would be a great idea.
Perhaps.
We have consultants in your area this week, what time of day would suit you for one to drop by and show you how this strategy can work for you? (got a good script there – positive expectancy)
Thank you, but I’m not interested.
But everyone is interested in paying less tax.
But I don’t pay any tax (stretching the truth a little bit here, but anyway…)
(long pause)
Oh. Thanks for your time. Goodbye.
Another one bites the dust….. heheheheheAt the point in this conversation where I’ve typed perhaps, I have also been known to go off into a spiel about why negative gearing as a strategy is flawed, and totally bamboozle them. But I don’t like to be mean to people just doing their jobs. [
]Keep smiling
FelicityHi Sooshie
Hang in there, it sounds like you’ve learnt heaps and are ready to move on in a big way.
Sorry to hear about your son, fingers crossed that it’s only Asperger’s. My nephew has that, and with some medication and careful handling, most of the time he’s been able to cope with day to day life. But it can still be tough. Now he’s quite a bit older (high school next year) you’d basically never know that he’d had it, he controls it so well.Keep smiling
FelicityHi Nessie
Have a look at http://www.vcpa.com.au/list_of_members.html
It’s really fabulous! It lists most of the regional newspapers in Victoria, and quite a few in Qld, NSW, Tas and SA too.Keep smiling
FelicityHi Aaron
A very good question!
One without a clear answer, it depends very much on your circumstances and your goals.
Steve McKnight usually recommends working with lower value properties, which in most places means regionals. Because the repayments end up being as cheap or cheaper than rentals, you get good demand from that perspective.
Rick Otton, on the other hand, works mostly in outer Sydney, which is definitely not as cheap! Repayments are higher than rental payments, but you have a large pool of buyers who are struggling to build up a big enough deposit to satisfy a bank.
There are pros and cons to both strategies.
In the end, you can make it work anywhere you choose to make it work, you just have to work out how.Keep smiling
FelicityHi Hils
No, this board is not related to the property investors forum on ninemsn. Steve McKnight set up this site for people with an interest in positive cashflow property, particularly his many graduates. The ninemsn site was set up many years ago by myself as an opportunity for people interested in investment property to swap ideas. There is no affiliation to any one author, seminar or property concept. Both great sources of ideas and information!Keep smiling
FelicityHi Bruce
Don’t take this explanation as all inclusive, I’m booked into Steve’s course in November.
How it works (roughly) is that you take some equity (say $100,000) and use it to purchase a cash bond. This may last say 5 years at 5% a year. So each year you get paid $20,000 of your capital back plus 5%. You can spread these payments monthly or whatever you want.
Yes, you are paying for that money at say 6%, because you’ve borrowed the initial stake of $100k, but the idea is that you’re purely trying to raise your serviceability.
Point to note – not all banks accept cash bonds as income for serviceability calculations.
Hope that makes sense, it is early.Keep smiling
FelicityHi Sooshie
You may like to talk to Michael Yardney at:
METROPOLE PROPERTIES
Suite 2, Caulfield Corporate Centre
875 Glenhuntly Rd Caulfield Victoria 3162
Telephone 03 9532 8889 Facsimile 03 9532 8887
Email: [email protected]
He’s been in property development for something like 30 years, and I believe offers a service whereby he can take a look at a site and give you feedback on whether the numbers stack up.
Disclaimer here – although I have been to some of his info nights and spoken with him at length about something my sister was planning, I haven’t personally used his services. But I found him knowledgeable and very helpful.Keep smiling
FelicityHi Kevin
You’re doing well so far, it sounds like you’ve pretty much grasped all these weird terms quite well! I have to point out, though, that not everybody uses them quite the same way.
But on the whole, I agree that most of the time when people talk about + or – gearing, they are talking about the situation without tax issues, whereas + or – cashflow tends to be the total end result including everything.
I know I started out with a property that was negatively geared but positive cashflow, I used to get so confused with all the terms!Keep smiling
FelicityWhereabouts are you Sooshie?
Keep smiling
FelicityMy guess is GE.
I started an application with them 3-4 weeks ago. At that time their rate was 7.74%. In one week it jumped to 8.? % and then 9.2%.
And just to REALLY cheese me off (I was still making a reasonable spread at 9.2%) – they then told me they would no longer do 90% LVR in the area I had bought in. GRRRRRRRRRRR
I could cope with the higher interest rate and reduced spread, but if I have to find an extra 5% every time, the return drops quite a lot. It started out as something like a 50-60% return on my cash, then dropped to low 30%, now it’s down to just over 20%. At this point I’m saying yes but trying to source finance elsewhere as a possible last minute replacement – borrowing 80% LVR at 6.24% is at least nearly 30% return.
Sorry to waffle on so much!!Keep smiling
FelicityI’ll be brave and plunge in!
My first comment is that a lot of the information is similar, which in fact I find reassuring! But the strategies employed are different. On a very basic level, Steve seems to prefer long term wraps, with the intention of having cashflow for up to 25 years from each deal. These are usually sourced in areas where the wrap payment is similar to or lower than standard rents.
Rick tends to work more towards buying more expensive houses (eg capital cities) and wrapping them with a view to being refinanced out in a couple of years time.
In terms of content, I find Steve’s information is more along the lines of detailed ‘background’ stuff, eg legals, obtaining finance, that sort of thing. Rick’s is more of a ‘hand holding’ exercise, taking you step by step through the process of how he wraps a house.
For this reason I think they’re both fabulous!
So my comments probably haven’t helped at all!!!Keep smiling
FelicityIt’s definitely horses for courses.
If you’re happy to stay in your job and let your wraps business tick along, then you can reinvest the money in the mortages.
For me, I want the monthly cashflow to replace hubby’s income asap, so I will use the profit each month to help buy more properties. Then when cashflow has hit a high enough level that hubby doesn’t need a job any more, I’ll start to pay off debt.
With my current loan, I’ve been asked which account I want to deduct my monthly payments from, so I’ll arrange for my wrap buyer to pay into that account, therefore the profit each month will be accessible.Keep smiling
FelicityThe children are calling, so this will be short and sweet.
Best words of wisdom I can give you – START.
I know too many people who go into analysis paralysis mode, study every option, assess risk factors – and never actually do anything.
Work out what you want from your first investment property, cashflow, capital growth or some of both, work out where you can achieve that and with what sort of property, work out how much capital you need to do that – then when you have that much, DO IT!Keep smiling
FelicityThanks for your reply on this Steve, you’ve given me some ideas!
Keep smiling
FelicityThanks for the feedback Steve, sorry to have confused you! I’m a little confused myself!!! [
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For now I will certainly insure the property up until settlement, but from my phone calls on Friday it’s the next step that’s the tricky bit. But perhaps if I already have insurance in place I’ll be able to negotiate a bit more. Sometimes it seems that ringing up and speaking to a call centre person at random isn’t always productiveKeep smiling
FelicityI did mine snail mail a month or two ago, got it in around 3 weeks.
One thing you must watch VERY carefully with this, particularly since the changes to the privacy act. If a client obtains their own credit report, you are NOT ALLOWED to view it or retain a copy of it. Otherwise you are breaking Baycorp Advantage’s copyright. They retain copyright, even though the client gets the report.
Now, I suppose nobody can stop the client waving it under your nose and you happening to see the details on there, but you certainly wouldn’t want to have a copy kept on file if anyone ever comes looking.
Just something to be aware of.Keep smiling
FelicityOne of the hardest things to define, when it comes to negative gearing, is what exactly is negative geraing?
For me, it means a property that costs you money to hold.
My husband has a large tax bill, and we used new properties with big depreciation claims to reduce his tax levels. Overall, we were a few dollars in the black each week, so it wasn’t costing us any money to hold them. With recent growth in Melbourne, we now have lots of equity to use as security for a LOC which I’m using as deposits for wraps.
I have to say that this method worked up to around 3 properties, but eventually you pay no more tax and so can’t use the deductions, so it’s only a partial plan.
Having said that, though, I certainly believe that what we did was a good move at the time we did it, and has made things a bit easier for us now. At the time I don’t think we were ready for anything more!
If there’s one thing I’ve learned with property investing, there’s definitely more than one way to achieve financial independence, you just have to find the way that works best for your own personal circumstances and mindset.Keep smiling
FelicityWoohoo!!!
Thanks!! []Keep smiling
FelicityThanks for the response.
I wasn’t planning to enter the house when the people were there!
I only thought that if you did have problems, they had to leave etc., then it might be better to have a key to open the door once they’d left than wreck the door with a crowbar….Keep smiling
Felicity
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