Forum Replies Created
WOW…you’ve gone from $1M to $5M to $14M in 2-3 posts….at that rate, I would hand on to it too![biggrin]
Yes Jason, we know it’s going to happen. We actually bought it from a developer who went bust. It’s right beside the township. The surrounding development is all 1 acre down to quarter acre lots, and our property is unique and has wow-factor in that the views are breathtaking and are unable to be built out, and every block would have an incredible view.Does this mean the property is currently approved for the development you suggest? Or are you just hopeful because of the abovementioned attributes?
Cheers,
Jason.ok…so to clarify…
She is paying $250/wk or $500/f.n. on a wage of $800.f.n. If she rented, she would be paying $210 per week ($40 less than mortgage repayments). And getting $220/wk rent – to which she would need to contribute $30/wk to cover repayments.
So if she stays puts, her outlay is $250/wk and she is a home-owner OR she can rent & outlays are $240/wk (with possibility of $70/wk in extra Centrlink payments). Is this correct?
I think I would still stay put and pay off mortgage. I would also be asking the 16y.o. to fund their own “recreational activities” from wages they can earn from part-time work and/or get them to pay $20+/wk board.
Cheers,
Jason.[biggrin]Brahms,
I thought freedom5 was saying the friend was paying $250/f.n., which is less than required for the min. repayment, hence she is struggling to pay the mortgage. Not that the min. repayments were $250/f.n.
Is this correct freedom5?
Redhaven,
If the PPOR is actually worth $1M or more, another option might be to sell it and take proift of approx.$522K ($1,000,000-$240K-$238K = $522K). You could get a nice new PPOR in Redcliffe that you own outright and redraw on it + whatever cash you have left toward IPs.
The farm will eventually be approved for development, which will set us up very nicely, but until then (could be 5 yrs away)Do you have any guarantee of this timeframe? I only ask because I have friends who have received plenty of blue sky projections on what their acreage is worth (from $1.5M – probably realistic) up to $5M if development approved.
Only problem is that they have been waiting on approval for over 5 years now. I asked my mum about the area they are in & she said that they have been spruiking about development approval in that area for the last 30 years – and it still hasn’t happened.
Teviot Downs is out near North Maclean. It’s about 45mins from Brisbane. I found a website below of people doing a development there. It has a map & tells you features of the commuity, eg, shops, schools, etc. Acerage seems to start from $155,000 with average of $179,000.
http://www.teviotdowns.com.au/default.htm
I had a friend who bought about 5 acres + small 3 bedroom house for $170,000. From what I can gather, most of his neighbours seem to work in labouring industry, or truck drivers, or in construction, etc…pretty solitary people who like the acerage lifestyle.
Hope this helps.[biggrin][biggrin][biggrin]
It’s actually difficult to discuss this without further info, eg., how old are each of the children?
But, if I were in her situation, I would consider both financial and lifestyle issues.
Financial:
From the $800/f.n (in the hand), I’m assuming she is in the 30% tax bracket (with gross approx. $30K-$35K p.a).I’m assuming repayments on $150K (@ 6.5%) are around $185-$190/wk (let’s say $190). So, my first question is – what’s the problem with her paying $380f.n.? If she can’t, then this might force her to move in with parents.
However, if $220/wk is coming in from rent, it will cover repayements. But, she is payig out $210 per week in rent herself (more expensive than the mortgage repayents!). So, there are no real gains from positive gearing & no tax efectiveness from negative gearing. Therefore, I don’t see any real financial advantage in moving in with parents.
Lifestyle:
Moving in with parents might cramp your lifestyle somewhat (depending on your lifestyle). I hear other single mums reading this, laughing and thinking..”what lifestyle – I have 3 kids!!” But moving in with family could potentially save on child care costs. Only your friend would know the answer to this one.If your friend could afford $250/f.n., then she only needs $65/wk to make the repayments ($190/wk mortgage – $125/wk repayments. Could your friend borrow $65/wk from family instead and repay the debt when she has built up some more equity in the unit & when her cashflow situation improves?
Just a thought…
Anyway, there are people in this forum who are far more intelligent than me, so hopefully they will come up with some innovative suggestions for you.
Best of luck.[biggrin][biggrin][biggrin]
I just bought an IP for 200K with a rental appraisal done at 300 PW.Salespeople are great at offering blue sky rental appraisals. Do you know if you can actually rent for $300/wk?
Why would residential IP owners need workers compensation insurance? Sounds like BS to me.
Hi Turnby,
In SE Queensland you could try the following:
– Beenleigh
– Inala
– Goodna
– Ipswich
– Logan (generally)
– Teviot Downs (in Beausdesert shire)Or if you want to get an ok return with no risk, just put your moey in Easy Street Financial Services online account. They pay 5.65%p.a. paid monthly. No fees. Money at call when you want it.$1,000 min. balance.
Good luck with investing.[biggrin]
Hi Turnby,
In SE Queensland you could try the following:
– Beenleigh
– Inala
– Goodna
– Ipswich
– Logan (generally)
– Teviot Downs (in Beausdesert shire)Or if you want to get an ok return with no risk, just put your moey in Easy Street Financial Services online account. They pay 5.65%p.a. paid monthly. No fees. Money at call when you want it.$1,000 min. balance.
Good luck with investing.[biggrin]
If you ask fund managers, the smart ones will tell you that from a valuation point of view, it makes SFA difference if oil is $45/barrel or $50/barrel. it just seems over $50/barrel has a psychological effect at the moment…
Also, high oil prices could be used to support a case for lower interest rates…so it’s not all bad news.[shocked]
Nat R… full story below…
Some loans are just pie in the sky
Author: Noel Whittaker
Date: 24/02/2005
Words: 700
Source: NCH Publication: Newcastle Herald
Section: Business
Page: 53NOTHING gets the adrenaline going more than the thought of money being given away, and judging by the talk in the internet chat rooms, the offer of interest-free loans from a company called Derivex has really touched a chord.
And why wouldn’t it after all, if you could borrow $500,000 or so, free of interest, and deposit it in one of those online savings accounts offering a safe 5.25 per cent you could give yourself an easy income of $26,250 a year.
We all know there is no such thing as a free lunch, so how does it work and where’s the catch?
Unfortunately, I am, along with several financial analysts and TV journalists, still trying to find out. I’ve spent hours reading the material on their website, and have spoken, or should I say listened, to Derivex’s CEO, Trevor Cohen, for more than half an hour on the phone, but am still none the wiser.
Their old website made sense. It appeared they were using Islamic principles to make loans because it claimed they were able to offer zero rates of interest in exchange for a fixed claim over future income and capital.
The figures quoted were 25 per cent of net residual capital value and 75 per cent of net residual income value.
There is nothing particularly new in this. The Koran forbids the charging of interest and there are many highly reputable Islam-based organisations that make interest-free loans on the condition that the borrower and the lender both share in any profits or losses arising out of the deal.
When I asked Cohen to elaborate on this participation in the profits he claimed that this particular website was two years out of date, and that the new loans worked on different principles entirely.
Now the loans are supposed to work like this. They lend, say, $500,000 interest-free, and the borrower pays this back over 20 years in equal instalments at 5 per cent of the amount borrowed.
This creates a guaranteed 20-year cash flow to Derivex which they reckon they can use to borrow up to $1.6 million on various money markets.
They maintain they can invest this money to return at least 9 per cent per annum, which would be sufficient for them to show a hefty profit on the transaction.
Of course, this raises some interesting questions.
Who will lend $1.6 million against a future cash flow of only $500,000?
What is their skill in investing money to achieve a consistent 9 per cent per annum, and if they are so good, why offer loans interest-free? They could make much more profit if they charged even 4 per cent.
Derivex were going to launch their product late last year but put it on hold after ASIC asked for more information.
ASIC is particularly interested in interest-free loans because last year its Pie in the Sky winners were two so-called interest-free loan schemes that persuaded more than 400 Queensland investors into investing $4.6 million.
The hapless investors were told that if they bought a car through a car buyers’ club, and borrowed a little extra from their financier and invested it offshore, the high returns would repay their car loans.
You can guess what happened. The offshore investments were duds.
ASIC executive director of consumer protection Greg Tanzer said: “It’s high time that people realise that loans without interest are just pie in the sky.”
At date of writing the market was still waiting for Derivex to prove they can do what they claim. Their launch date continues to be delayed and requests from reporters for permission to do a story are refused.
I have long believed you should never go into a deal you don’t understand and remain as sceptical as ever.
Judge for yourself. Just go to http://www.derivex.com.au/company/ and click on How It Works. Just allow plenty of time you’ll need it.
Noel Whittaker is joint managing director of Whittaker Macnaught Pty Ltd, AFSL Number 246519. Email [email protected]. This advice is general in nature and readers should take their own expert advice before making financial decisions.SURPRISE…SURPRISE
yeah right…how do you get out of debt when you have stuff all cash flow?….accumulate more debt..???? [blink]I don’t think so!
I’m with you Dazzling…
Kerri-67…You just write to the author, editor, or publisher (whichever applies at the time) & ask them to clarify. In my experience, the ones who are professional will take the time to respond to your inquiry.[rolleyes]
Given your situation at the moment, you should be happy to be able to hold onto what you have got, rather thinking about further growth. Take some time to consolidate now & there will always be other opportunities later.
Best of luck.[biggrin]
I’m hearin’ ya, eeshole…
At the seminar there was nothing groundbreaking, just very general strategy to buy off the plan on long settlement with deposit bond, then revalue just before settlement, borrow 80% of valuation (which hopefully given capital growth in the past year or so should be enough to borrow the entire original purchase price), then revalue again every year, then build your portfolio and draw out the rising equity to fund your lifestyle.Just in relation to the strategy being proposed by the seminar (above), I just wanted to show my ignorance and ask a question. Obviously this strategy has worked for some (many???) but I assume they went through brokers and/or low doc loans? Re: the revaluing before settlement – I was recently talking to a lender from one of the major banks and they said part of their risk management strategy is that they will only ever value the property you are buying at the settlement price. i.e., if you agree to buy at $200K (even with 12 months settlement), when drawing up the loan docs, the bank will only value at $200K (even in 12 months time). So, I assume you would have to go to another lender (broker) if you wanted to revalue and borrow again before settlement.
Can anyone clarify this?
Cheers,
Jason.Love the “how do we get paid” page in this link…classic…[evilgrin]
eeshole,
Some of the properties I have come across are being sold by the vendor on sites like http://www.owner.com.au so they are easy.
Otherwise, I try to arrange to inspect the property at a time when it is most likely the vendors will be home. As you say, a lot of agents will try to control the process & want you to inspect on weekends, when they can ask the vendor to not be there. But if you can get in when vendors are home it is easy to engage them in casual conversation as you are walking around the property and once they feel comfortable with you, they tend to disclose a fair bit.
Also, I go to a fair bit of effort to play dumb initially. In my experience it tends to disarm the agents if they think you are a bit of a sucker (as opposed to thinking you are a shrewd investor).
When it comes to investments, I’ve always tried to remember the saying….”the greatest trick the devil ever pulled was convincing the world he didn’t exist”.
Good luck with investing!!!
With the last 3 properties I have looked at, I have started by asking the vendor.
I’m constantly surprised by what vendors will disclose to you – e.g., how long the property has been on the market (even when this is 6 mo. or more), why they are selling, even what the lowest offer they will accept is!!!
Failing that, i try to focus on a particular area and I keep a constant watch on new properties that spring up on the websites & in agents windows.
Another strategy I have is to find a property that recently sold in the area you are looking to buy into. I set up a separate email address so that I can contact agents and ask them to email me similar properties to the one they just sold. This way, you know pretty soon after a property has hit the market. But you need to send this request to all the agents in your area ‘cos you never know who people will list with. Hence the separate email account!!!!
Hi Michelle,
I am involved a partnership, similar to what you are descibing & it is an excellent arrangement that has provided an opportunity for both parties to purchase an assest that neither could have afforded alone.
We have some written agreements between us that our solicitors are happy with and we have changed our wills to protect the other party in the event of our deaths.
I think only you can judge if you should do buiness with your firends. I chose to do business with my friends because:
1) I have known them for a long time in various contexts (eg, work, socially, in “good times & in bad”) and I trust them.
2) They both have stable, reliable incomes of a similar level to mine.
3) They have a similar investment philosophy to me and we all have an equivlaent level of (un)sophistication when it comes to investment.
4) They live about 1km away from the IP we bought and they know the market in this area very well. Also, they were happy to provide the property management function for free. I provide the “financial function” of balancing our spreadsheet every month that shows who has contriubted what amounts to the property in terms of repayents & any cost of repairs.
We have really good, open communication which I think is the key to our success.
Cheers,
Jason.
