Forum Replies Created
The most fundamental question is…do you believe you can achieve a better return somewhere else? If you believe you can AND you are comfortable with the associated risk, then go for it. Conversely if you believe you can’t, stick with the status quo.
Having said that, it appears to me there may be better opportunities available, however whether or not you take those opportunities will be determined by such things as your knowledge of those investments and your tolerance for risk. For example you might consider an ‘add-value’ strategy such as a duel occupancy property (which is relatively low risk) OR some form of small development (slightly higher risk)..
Cheers
GarryNow we know. I was rather surprised by the RBA’s move BUT not at all surprised by the ‘BIG 4’. My hope is that everyone can still afford to take some time off to enjoy the festive season…surely there will be no further rate rises in the near future.
A happy Christmas to all and trust you have a fabulous 2011.Cheers
GarryCheevesFinancial wrote:Yes, even domestic investors are finding property management to be the biggest issue. Sorry for leaving things out of the article. I didn't want to be too long winded, just general. I should really update that because you raise good points.
In Florida, we work in the SW Florida region (Ft. Myers/Cape Coral) we are achieving tenancy in under 30 days. It could be different with others. What we do is purchase small bulk from the banks. Large bulk doesn't really exist to us that much anymore. We wholesale them out individually. So there is an A to B transaction and B to C transaction. The bank is A, our firm is B, and you for instance are C. Once the A to B transaction closes we rehab the property to rentability. Our rehab team creates our budget before we put a hard deposit down with the banks. Once we close A to B, you would contract with us to form the B to C transaction. Your closing (if cash) would take about 20-30 days where prior to closing all of the rehab work is completed. Mostly cosmetic. In almost all cases, we have tenants ready by Day 1 of the C transaction. Not in all cases, but most. We haven't gone 2 months with consistent vacancy. The management company we work with has guys in the field all the time. They have their own handymen, and if something is needed by a licensed contractor, they provide the service calls. You can also purchase an insurance policy for about $350 per unit annually. This covers appliances, electric, plumbing, HVAC, Heating, etc. Taxes are broken down several ways…Ad Velorum, City, Schools, etc…Your water tax is covered under the city portion, same with garbage. Assessed values of real estate is way down. Taxes are very inexpensive in our area.
I hope this helps in clarifying.
Thanks,Mike
Interesting information Mike. I attended Steve McKnight’s market update last night and he is investing in Fort Myers also.
Thanks for additional info.
Cheers
GarryHi Pollynz
Yes it’s a little confusing and confronting when you are starting out. However once you do it a couple of times, you will feel much more confident and relaxed about everything.
Jamie’s comment is absolutely correct and you should certainly speak to you financier – preferable a good Mortgage Broker as they can offer a much wider variety of lending options.One suggestion…always set up a ‘buffer’ (ie have some cash set aside or access to cash via a facility such as a line of credit) in case things do not work out the way you expect, eg if your property doesn’t rent for a period of time.
Good luck
GarryHi guys
Can I suggest you contact Angelo Panagopoulos at Chan & Naylor. Phone number is 03 0510 2277. Angelo is a Chartered Acct and very experienced in property investment. Let him know I said to call (no kick-backs)…he will certainly look after you.
Cheers
GarryCase07 wrote:Just wanting to see if anyone has dealt/heard of these guys and their thoughts.I have recently been to a seminar and they seem very good but would like to hear from anyone who has hasd hands on experience with them.Any help would be appreciated.Cheers in Advance Case07
When anyone is promoting property AND they are paid by the seller/developer, they can’t be working in the best interests of the buyer. We’ve been offered deals by developers to promote property to our clients (and the commissions are very attractive), however have rejected them AND will continue to do so – we work for the buyer exclusively.
The moral is…be very careful!!
Cheers
GarryThack wrote:Is there anywhere the outlines the different rules that apply to Trusts or different structures & tax strategies for investing ? Any book you could recommend ?Hi Thack
A very good practical read is “How To Legally Reduce Your Tax…without losing any money” by Tony Melvin & Ed Chan (2010-2011 edition) – publisher is Harper Collins. A very good starting point and very easy to understand!!
Good luck
GarryHi Intrigue
Sounds like you have been given some very good advice here.
A few years back we bought a block of (low-set) units in South-East QLD: 4 @ $65,000 each + one @ $85,000. Rent was $155/wk x 4 + $200 for the fifth unit – very strong ‘pure’ positive cash-flow!
We sold the units 18 months later and doubled our money – more good luck than good management as we bought for cash flow – not expecting the exceptional capital growth. These deals are becoming much more difficult to find unless you are prepared to increase your level of risk. However, these days we are still able to achieve strong capital growth and cash flow via a value-add strategy.
Good luck
GarryPS Terry is absolutely correct…yield does not equal profit
anelxander wrote:*I meant "Thanks God I found this network"Any time Alex.
Hi Luke
Thank you soooo much for your post.
We have two business associates who have just returned from the US and what you say is spot on. The old saying…”if it appears to good to be true, it usually is”. That’s not to say that there aren’t opportunities in the US, there are. However your warning is very well founded – thank you mate.Cheers
Garryanelxander wrote:Garry,Thanks very much for your opinion. It's Very helful ! I'm more than happy to keep attending to seminars here in Adelaide, and keep reading at the moment. I already had in my 'must-read' list the book you suggested. Thanks for that. I am also starting to make my research about Mortgage Brokers and Tax Accountants. I believe the main goal (financial independance worth it).
Can you tell us a little bit about your experience in the Real Estate world? if you don't mind
Cheers
Alex
Hi Alex
You are most welcome. My experience in real estate began many years ago with a disaster…my wife and I were ‘ripped-off’ by property “marketeers” in Queensland (we should have known better).When we attempted to take legal action, unfortunately we found out that these “marketeers” had done the same thing to many older folks (who were too old to recover) – many of them lost their life savings. That turned me off property for about 12 months, however we saw others making money so we decided to do what you are doing – educate ourselves.
After a few years (and the purchase of about 10 properties), we began running educational seminars and workshops to educate folks and hopefully minimise the likelihood of others going through similar experiences to ours. Attendees started asking us for help so we became Buyers Agents (now licensed in numerous states of Australia) and it’s great to watch our clients learn and build wealth using a ‘slow and steady, low risk’ approach to property investment. We went on to buy another 15 properties ourselves (as well as numerous properties for our clients).
If you’re interested, we have a FREE Report you can access by going to our website (www.ifyl.com.au)…this will also put you on our database to receive our monthly Newsletter.
Good luck with your education – you are certainly heading in the right direction. If I can help further or you have any questions, please let me know.
Cheers
GarryHey anelxander & Azz33
Starting out in property investment can be confusing and overwhelming – I completely understand. One very strong recommendation I would offer is to deal only with licensed professionals, ie people who are both legally and morally committed to helping you. When any organisation offers properties for sale, they usually receive payment from the seller of property (usually a vendor or developer). When this situation exists, I don’t see how they can be working to help you (the buyer)…because they are paid by ‘the other side’!
I suggest you continue learning by reading (if you haven’t done so already, you need to read “The Richest Man In Babylon”) and attending workshops and seminars AND get involved with a good mentor (someone who has many years personal experience) and/or licensed Buyers Agent – a buyers Agents is legally obliged to work for you. Believe me I know from personal experience that unfortunately there are many ‘sprukers’ out there who will willingly take your money…don’t become one of their victims!
Please let me know if I can help further.
Cheers
GarryHi Lisa
Some time back one of my clients had an interview with Destiny (the client was comparing our service as Buyers Agents and property educators via our Buyers Club with that offered by Destiny).
I gave him one piece of advice – ask the person who is going to train/mentor you one question…”what have you done in terms of investing?” If the person hasn’t ‘been there and done that’, how can he/she legitimately help you do something he/she hasn’t done him/herself?…if that makes sense!!
Cheers
GarryHi poldra
Throughout my many (wont mention how many) years of buying property, both as an investor and buyers agent, the one thing I’ve learned is that you need to understand the ‘negotiation game’ – some sales agents love to ‘play’.
While there is no acceptable excuse for a sales agent not to get back to you, when making a offer I always place a time limit on their response. Additionally I invariably have another property ‘on the cards’ should the time limit expire without communication by the sales agent…I can assure you the majority of vendors become extremely upset when they find out their agent failed to respond to offers on a timely basis!
Good luck with your offer.
Cheers
Garry
Web: http://www.ifyl.com.autribulation wrote:HiI have read the book, looked at the forums, spoke to accountants and still feel lost.
How do you start off when you have a large mortgage already. My acct advised not to negative gear and wait a few years. I am not one that can wait.
Any advice would be welcome and maybe I will have a 'lightbulb' moment.
Thanks
Hi tribulation
It can all become a little overwhelming – particularly when starting out. There are several things to remember:
1. a large mortgage does not necessarily mean you can’t invest. There are 2 key issues here: (i) how much equity do you have? and (ii) can you afford to invest – do your numbers.
2. can you pass the ‘sleep test’? In other words, will you be able to sleep at night with additional debt?
3. identify your objectives, eg is your primary goal cash flow, capital growth, are you looking to renovate, etc?
4. educate yourself, research, research, research THEN take action!
5. if you’re inexperienced, get yourself a good mentor. A professional Buyers Agent can help here BUT with one caveat…make sure they have personal property investment experience. There are many mentors supposedly showing folks how to ‘do it’ YET they have never ‘done it’ themselves…something wrong with that!!Finally, my moto is: “don’t wait to invest in real estate, invest in real estate and wait” BUT you must know what you’re doing first OR seek professional help.
Great investing
Garryjacqui_03 wrote:Hi Garry,When you say must not be linked do you mean they have to be separate loan facilities or not crossed collaterised?
Eg. I have homeloan with LOC both with the same security but have IO investment loan another bank? Would that be suitable if I applied for a ruling?
Can the wages/rent just credit the home loan offset account and not get directly paid onto the loan? Or would the ATO not like that as you are technically not reducing the principal only saving on interest?
Thanks,
Jacqui
Hi Jacqui
By ‘linked’ I mean they must be totally separate loans. While you can certainly apply for a private ruling based on your situation, this strategy MUST be established ‘with all the ‘t’s crossed and ‘i’s dotted so I would strongly suggest speaking with someone who knows exactly how to do it. They would also be able to answer your questions (which I’m reluctant to do as there are tax/legal issues involved).If you’re looking for someone in the know, contact Jenna Ford from Chan & Naylor Finance (Chan & Naylor are accountants as well as finance brokers) Ph: 02 9391 5008 Web: http://www.cnfinance.com.au. Jenna is based in Sydney BUT that will not be a problem. Let Jenna know I said to call – she will certainly look after you. By the way, I receive no financial benefit from Chan & Naylor.
All the best.
Garryniffnuff wrote:Sorry to Hijack the thread but do you know of any good independant accountants on the Nth end of the Gold Coast garry??Hi niffnuff
I do know a few accountants on the Gold Coast, however I’m not confident in terms of their experience/knowledge. The organisation I would suggest is Chan & Naylor in Fortitude Valley Phone 07 3252 8777. I’ve had dealings with them in Sydney and they are very professional.Cheers
GarryYou’re welcome cheersy. Hopefully you know a good accountant…let me know if don’t. Good luck!
Hi Jacqui & Cheersy
This strategy can be a very good one, however Terry’s advice is spot-on…you need to seek professional advice.
Some general comments include:
* you need to ensure your primary purpose is NOT to gain a tax advantage
* the interest will only be deductible if the original interest is deductible
* you require 3 loans: Home Loan, Rental Property Loan and Line Of Credit (LOC)
* rental property loan should be interest only
* interest and all other costs are paid from the LOC
* all rental income to be paid into the home loan
* loans must not be linked, ie they must be separate accounts
* beware of financial institutions offering these types of loan products – could compromise the dominant purpose
* nexus is critical (eg don’t use LOC for other purposes)This is an intricate area of property investing and needs to be set-up correctly. SEEK PROFESSIONAL ADVICE!!
Trust this helps.
Garry
Hi Tina
My reply may well be too late, however I’ve been investing in property for 20 years and I strongly recommend that if you want to invest, spend time educating yourselves. If you are time poor OR inexperienced, use a licensed Buyers Agent. Even then, do not invest without understanding why. Please let me know if I can help further.
Great investing
Garry
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Professional Buyers Agent
