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August 16, 2013 - 10:43 pm

Hi Chris

Sure happy to elaborate.

The first thing to say about "trading properties" is that a fair whack of money is lost in doing so.  You pay stamp duty to get in, you pay selling agent fees and capital gains tax to get out, which erodes a fair whack if not all your profit, and them you have to stump up stamp duty to get in again.

Did you know that in super, after you've held a property for a year, the capital gains tax is only 10%.  This is a far more appealing figure if "trading properties" is the approach.

An asset base can be built far quicker (than trading properties) by buying, adding value (eg renovation), revaluing and refinancing to pull out the equity to fund the deposit on the next one.  Because no sale takes place, no capital gains tax is payable, but you are still leveraging the increase in value of your property.

In super, you use money you otherwise couldn't touch till retirement age, to fund deposits and buying costs of property.  Assuming we are talking residential property, the bank will loan up to 80% of the purchase price.  As a rough guide, it costs about $60k of superannuation money to acquire a property worth $250k.  The tenants then pay it off.  In retirement, you either live off rents or sell a property or two and pay yourself a lump sum.  Going back to those figures, you essentially swap $60k for an asset worth $250k.  That is essentially a return of over 400%, before you even factor in capital growth of the property in the years to follow.  I don't know about you, but I don't see retail super funds producing that kind of a result.

It is a very powerful thing, taking control of your own super and using leverage (borrowings) to get into property.  The earlier you start, the more powerful it can be.  The money is stuck in super anyway – you cannot pay it to yourself for living expenses until age 65, so you might as well put it to good use and make it grow in the meantime.

In addition to this, acquire more property in your own name outside of super.

Hope this helps.

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

August 16, 2013 - 10:52 am

Essentially yes, though you would then need additional money to pay for stamp duty, building and pest inspection, solicitor/conveyancing and bank fees.

Would be good to understand what your objectives are though.  It might be that you are focussing your eyes on the wrong kind of property for reaching your goals.

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

August 16, 2013 - 10:49 am

Hi Kallan

You have said the magic words…. money in super.  Would it be rude to ask if you know how much is in there?  This will help us see how many properties you could buy straight up front with the funds already in your super.

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

August 16, 2013 - 10:44 am

Hi Spongy, may I ask if you know what it is that is frightening you?  It might help to define that first.  eg Frightened of adding more debt to the portfolio, frightened portfolio will be negatively geared, frightened of choosing the wrong property etc etc.

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

August 12, 2013 - 12:37 pm

Something else to be aware of is that if you have the right providers on your team, you can learn an awful lot from them when purchasing property.  I have learned a heck of a lot from my mortgage broker, property lawyer and accountant over the years. 

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

August 10, 2013 - 3:57 am

You almost need two people in the mix there; property savvy financial planner and also a property savvy accountant.  I'll PM you recommendations.

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

August 10, 2013 - 2:45 am

Hi Josh

What is it you would like your accountant to do?  Is it that you'd simply like them to be aware of all the relevant deductions, or are you wanting them to guide you with strategy? 

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

August 10, 2013 - 2:42 am

Hi Bricman,

I assume you've doorknocked the neighbours to ask?

You can do a title search for about  $17.  You get a copy of the title which shows name and address of the owner.  Then you could write to them (or see if their phone number is listed on http://www.whitepages.com.au)

To do a title search, visit https://www.landata.vic.gov.au/tpc/  and click on "Titles and Property Certificates".

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

August 10, 2013 - 2:36 am

Hi Sil

Rather than decide that your strategy is Sunshine, it might be better to define the goal and then choose a suburb and strategy that will allow you to achieve the goal.

For instance, the goal might be "to make a gross profit of $40 on a property deal within 12 months".  You'd then choose a suburb where a renovation would enable you to deliver on that goal (or a subdivision or whatever).

Is this property part of your "assembling enough property to live off when I'm retired" phase?  If so, you might care to consider setting up a SMSF and using your superannuation as deposits on property.

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

August 7, 2013 - 5:41 am

You don't necessarily need the broker to be based in Sydney, you just need them to be awesome.  You can do all your communication via phone and email.

Richard Taylor is excellent

https://www.propertyinvesting.com/user/qlds007

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

August 3, 2013 - 1:28 pm

I didn't keep the brochures but pretty sure when I read them the reason I had to disregard this insurer was because they didn't include excess water from overflow from gutters in the flood definition.  Pretty big issue if your properties are in areas of high rainfall.

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

July 31, 2013 - 10:10 am

Why not just buy property with 100% finance which has sufficient yield to pay for itself.  That way you get to keep the property as well.  Having your cake and eating it too, so to speak.

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

July 31, 2013 - 10:07 am

Don't do drugs.  Don't do mining.

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

July 31, 2013 - 10:05 am

What's not to love about investing in property in a SMSF?  Since your SMSF only has to fork out for 20% deposit, stamp duty, solicitor, bare trust setup and mortgage setup fees, you can essentially swap a pile of money for an asset worth four times its value (eg swap $60k for a property worth around $240k) and then the tenants pay it off.  Meanwhile the property, all going well, also goes up in value each year also.  Even if it didn't, may I point out that simply the act of buying it and deciding to let the tenants pay it off has multiplied your money by 4.  That's a 400% return.  Show me a retail fund that can assure you that it can produce such a return. 

Of course you can flip property.  Remember to factor in the CGT (which is lower in super anyway).  Just be a bit careful of how often you flip.  Wouldn't want the ATO thinking your SMSF is running a business.

My favourite topic last year was acquiring property inside a SMSF.  It's also my favourite topic this year.  I wonder why?   

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

July 24, 2013 - 1:39 pm

Strange.  Normally insurance is an annual premium.  Who is arranging the insurance for you?  Have you requested a copy of the insurance policy and most recent receipt?  This will show you if the insurance is current, and also how much the complex is insured for.  You will want of course to ensure that you are insured, but also for a sufficient amount should a demolish and rebuild ever be required.

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

July 24, 2013 - 10:33 am

Scott No Mates wrote:

Next time around, will be looking at electronic combination locks ie swipe card type where they can be reprogrammed for the next tenant. Less than $300/lock.

Love it.  I'll be implementing the same any time I am faced with changing locks.  Good idea!

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

July 23, 2013 - 1:23 pm

HSBC does expat bank accounts.  You can set it up from an Australian branch.

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

July 23, 2013 - 1:19 pm

There are enough legislative things landlords have to comply with that cost money – I don't think changing the locks is necessary unless you have a particularly worrisome ex-tenant.  People have better things to do with their time than break into places they used to live in.  Plenty more to do with your time.  Playing X-Box  takes up a lot of time, apparently.

If a previous tenant is prepared to use a copied key to gain access, they probably know how to pick locks anyhow, in which case changing the locks is a bit pointless.

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

July 15, 2013 - 8:20 am

Wow. Talk about choking on holding costs. Regardless of whether that is the QLD standard or not, that is a high percentage. Council rates on my properties are at 0.33% and no body corporate.

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.

July 13, 2013 - 12:15 pm

From my observations, it will only have an impact on rents of similar types of dwellings (so the 2 bedder apartment/unit market).

Houses around will do their thing almost independently.

Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone Me

VIC Buyers' Agents for investors, home buyers & SMSFs.