Forum Replies Created
LifeX
I’ve learned property and motivation techniques from an American guy Mark O’Haroldson over 20 years ago. He’d been doing it for over 25 years then. These techniques are not new.I studied objective setting and strategic planning at Uni, again the concepts are not new. To put an adjective in front of a term to make something look more attractive is purely marketing.
I agree, stealing others ideas should not be encouraged but there is nothing wrong with presenting general concepts in an easy to absorb fashion – it’s how we learn.
And in 20 years someone else will present it slightly differently to another batch of likely enthusiasts who have never heard of Burley, Robbins, Kiyosaki and the like.
Will you be saying those ideas have been stolen or repackaged.
Cheers
JeffHi bashiba
For the sake of determining whether or not a property is a good deal or not, treat the 20% drawdown as a cash deposit when doing your calculations. You are limited to how much equity you can draw down from other properties and the theory is that each deal should stand on its own two feet.
If you can eventually revalue the property and refinance to extract the original 20% deposit and you still have +ve cashflow you will then have infinite CoCR
Cheers
JeffWell done Afloat,
Good on you for venturing abroad. Seems like your post just created an instant demand for properties in Manchester – now watch the CG.
I once purchased a 2bdrm flat in East London for GBP70k in 1989. 100% finance from a building society and rented for GBP600pcm. Prices went down before they went up again but it was pretty much self financing anyway.
Good luck
JeffYou guys, there are so many people out there willing to express their opinions, especially on making money.
If you want to learn how to be a millionaire – ask a millionaire. (or should I say self-made millionaire so as to exclude those that have inherited or won it).
The motivational books are there to motivate people and make a buck for themselves as well. The basic recipe to the cake is the same, how it is presented on the plate will differ. If you can gain something out of these books then they have worked and there is no better way to really learn things than through repetition.
Don’t knock the guys for making a dollar.
Cheers
JeffHi Joni,
You can get info on individual properties such as rateable valuations and sales hitory.This is for a small fee via credit card.
They also provide a demographics report on the area for free. Worth a look anyway.
You live in Nelson you should try looking there first. Nothing like your own backyard. Look for the worst house in the best street.
Happy hunting
JeffRemember, a trust or company are taxable entities in their own right.
A NZ Trust would be taxed as a NZ entity in NZ. Distributions from that trust to say, yourself as a beneficiary would be taxable according to your place of residence – in your case Australia unless you were to move to the Bahamas or something.
There would be some form of non-resident withholding tax in NZ on your distributions but this would probably be offset against your Aus tax.
Any capital gains by the NZ entity would not be taxable in NZ unless it was deemed a property trader or developer.
Hence, you could defer any CGT until you chose to wind things up and distribute the capital back to yourself as a beneficiary living in Aus, or the Bahamas. This could be light years away.
Regards
JeffThe entry level for commercial property is higher than residential and therefore a greater deposit is required.
Most of the larger property investors make their money from commercial rather than residential. It is easier to look after fewer large properties and hence less tenants for better rentals.
Commercial tenants look after your property because it reflects on their business if they don’t.
Determine how much you can afford and what type of property you are interested in ie retail, industrial, office etc. Study up on commercial leases and get a feel for rent rates on a per square metre basis for both the type of property and the geographical area.
Always have an alternative plan for the building you buy if the tenant goes broke.
Remember their is a bargain in every market.
Cheers
JeffOkay guys,
Just turned down the offer of $850k because I decided I needed to find a better property or investment in order to move my money.
The agent is now desparately firing properties at me to look at so as to make the deal work – absolutely amazing what this commission selling does to people.
Anyway, you never know, he might just come up with something.
Happy investing
JeffI think minimogul charges $1500 flat rate for the bird dogging efforts.
2% is extremely generous. I might look out for some for you myself.
Hi again Jamestk
Capital Gains Tax doesn’t apply in NZ but may if you repatriate gains to Oz. I Suggest you set up an NZ structure ie Trust or Company.
Entry Fees on purchases are minimal – legal and finance mainly. No stamp duty. Of course you have the usual expenses as council rates and building insurance.
Exit Fees will include real estate agents commission as well as legal. Still no stamp duty. If you have been claiming depreciation on the building and you sell it for more than the depreciated or book value you will have to pay tax on the depreciation recovered. This is often offset though from losses on other properties.
Land Taxes were abolished about 20 years ago.
Duties – nothing really unless you die, then there maybe death duties. Not really applicable yet but don’t go dying on us to find out.
Compared with Aus there are presently greater deductions to be had in NZ. Interest rates are slightly higher but depreciation on buildings are at 4% diminishing value and you can separate the chattels such as floor coverings, stove, hot water cylinder etc and depreciate at even higher rates.
Go to http://www.ird.govt.nz for everything there is to know on NZ Tax.
Cheers
JeffI suppose your whole problem is being concerned about being sued. If you don’t do anything wrong you won’t have that problem.
I have property in company structures, trusts and in my own personal name, mainly for tax reasons. This way I could never lose the lot but I may lose some if worse came to worse.
Cheers
JeffHi Susan
Try http://www.dolfderoos.com for his REAP software (Real Estate Acquisition Programme) it’s an advanced version of PIA and you can add a picture and send it in pdf format. It will provide you with graphs, internal rates of return, cash on cash etc.However if you know anything about spreadsheets MS Excel has all the financial formulae to prepare your own analytical spreadsheets.
You say you looked at MYOB, this is accounting software – another one to look at is http://www.cashbook.com – very easy cashbook to use.
Most of this software will only provide for one entity unless you purchase an Accountants version $$$. You don’t need to separate each property as an individual entity, only as a separate asset in the books. The software will provide information for each separate bank account. Aside from the cashbook you will also need a depreciation schedule or assets register so you can track your buildings and chattels and the amount of depreciation claimed each year.
Other software out there is PC Property Manager which is good for monitoring individual rentals, R&M, rates insurance and interest etc on a per property basis.
To do any more than this you may as well become an accountant and get the general ledger software is well.
Best to leave that side of it to the Accountants and concentrate on doing deals instead.
Best of luck Susan
Regards
JeffHi Craig,
There are deals all over the place you just have to think outside the square.There are various ways of improving the cashflow of a property which won’t be obviously present. For example, splitting a property to make two residences; adding a minor dwelling; converting a garage into a sleepout or granny flat; subdividing off a piece of the land and selling it to reduce the capital cost; converting a residential dwelling into a commercial or office premises; and sometimes even just giving the place a coat of paint will enable you to attract a tenant at a higher rent.
While I agree with George that you shouldn’t limit yourself to NSW it is always best to look in your own backyard first.
Keep looking until you get a feel for it. Something will eventually come your way, but when you see it don’t forget to make an offer.
Happy investing
JeffHappy Birthday Steve and congratulations to you both for your milestone.
It’s nice to have such a sizeable passive income and now perhaps, more time to spend doing the things you want to rather than have to.
I hope you managed to lock in the interest rates on some of your mortgages. It’s amazing what a 1% change can do to your passive income.
May you have and continue to have many more successful ventures.
All the best
JeffBlueroc,
I believe the “capitalising of interest” that many property investors were doing only went to court for a ruling last year. I read somewhere that the NZ Tax Dept (IRD) was watching the outcome of the Australian Tax Office court case closely. Try checking the ATO’s website for some info.Regarding property in joint names. When property is held in joint names it is treated as a partnership. It is generally accepted that the splitting of income (or in your case – losses) would be 50/50 unless stated otherwise.
Remember, partnership agreements do not have to be 50/50. You could look at formalising a partnership agreement and use say 80/20.
Another suggestion is you look at refinancing and purchasing more IP’s.
If you leave the properties in joint names and choose to sell one or more of the Ip’s to reduce the loans the CGT and any future taxable income will continue to be split between you and your wife thus reducing your overall tax.
Nb:”Can anyone tell us if the capital gains from the sale of one property can be deferred or transferred when holding multiple properties”. – I heard somewhere this is done but can’t remember if this was Australia or not.
And a further word of advice, don’t lose any sleep over this, it’s not worth the stress.
Cheers
JeffKay Henry, thanks for your post. I’ve been buying cashflow for years as the nickname suggests. However, there are rare occasions when I have sold properties and occasionally I have regretted the decision.
Kiwi-Fulla suggested getting the property revalued but I’ve already been down that road. The $850k offer is a premium above what a valuation would come out at. Unfortunately the valuers look at historical sales in the area to draw there conclusions.
The offer net of commission would be about $825k. At a rental of $65k pa means a yield of 7.88%. If I was to sell I’d have to find a deal with a yield better than this. An 8.88% yield would mean a rental of about $73k pa and at 9.88% a rental of $81.5k pa.
It looks as though I should only sell at this price if I have another property to buy at 10% or better – alternatively, I countersign and look for a better price.
Decisions, decisions. They’re even harder when be pressured by an agent.
Thanks for all your posts
JeffThree questions you should ask yourself in the following order – and put it all in writing.
1. Where are you now? – present situation
2. Where do you want to go? – goals and objectives
3. How do you get there? – the planRemember that when you set your goals they must be achievable, quantitative and include time constraints (eg I want to own 4 investment properties to a value of $800k by May 2006). By setting goals in this way you have something to measure against to see if your plan is working.
Good luck
JeffThanks Derek for your thoughtful input but alas no, I’m not working the Pub – I’d be drinking the profits.
Anubis, I’m tending your way. Might just hang on and go through the rent reviews. G7 made a good point, I could always countersign at $900k + and see what happens. Will probably be asking the same question again though.
I’ll have to drink on this, I mean think on this.
Cheers
JeffHi James,
Another site to check out for NZ property is http://www.open2view.com Most of the real estate agents advertise on this site as well as their own.There are a couple of “hot spots” in NZ, Queenstown in the South Island and Mt Maunganui in the North. The areas command low yields but growth is phenomenal.
Westan seems to have the NZ market sorted.
Best of Luck
JeffWhen the bank manager told me the serviceability was tight I asked to see his claculations. I found he had not correctly put all my income into the nifty little cashflow spreadsheet. He also made a snide remark about my income compared to his own. A touch of tall poppy syndrome perhaps?
Embarrassed as he was he still rejected my loan application. However, I then had the correct information which was suitable at another bank.
This was all some time ago and incidentally, with a few bank mergers and acquisitions I ended up a customer back at the same bank, just in time to celebrate the guys DCM (don’t come Monday)
The lending institution you are with may have done their numbers and decided they’re over-exposed to lending in the sector you’re in, or even just residential property in general to that matter. Unfortunately the banks have to diversify their portfolio as well to minimize their risk – they just don’t admit it.
Regards
Jeff
