Forum Replies Created
- Originally posted by vyaw2003:
We all seem to be aiming for the same goals here.
What banks have people found to be the best and the cheapest.
I think BOQ is pretty pathetic, they lost my deed during a transfer to a different lender.
Colonial- not too bad, they dont give enough statements and dont notify when you fall behind until you are WAY behind in repayments and slug some fees for their troubles.
Homeside (NAB)- good, free savings account because i have more than $35k in loans. This includes free internet banking, unlimited eftpos ($5), this is free with a loan under $35k. Overall not too bad. They anoy me when i ring NAB and half way through it becomes too hard and they transfer to homeside.Is there a cheaper lender out there?
What are the overalls costs to me to change lenders for a cheaper deal? What happens if i pay it off quicker, the savings would be minimal.You are probably going to get 25 different opinions about what is the best way to go here. I suggest read ’em all and make your own decision. Here’s my 2 cents worth.
It’s difficult to compare apples with apples. I have been with 3 of the Big 4, and am now with St.George (you may have read my posts on the the topic ‘finance simplification – under finance).
Their investment loan is called; Portfolio Loan – it’s an LOC, and I only get charged interest for the funds I use.
You can set it up with as many sub-accounts as you need. I have one sub-account for my Investment Loan (all my properties are grouped into this one account) and one for my personal day-to-day transactions. This makes tax-time a lot easier. Some people prefer to have a sub-account for each property, but the fees mount up.
The fees are $14 p/m per account, or pay a one-off fee of $200 p/y. This may be expensive compared to others? The fees on the investment loan are tax deductible.
The fees for changing the balance of the loan when/if you buy or sell a property is a mortgage stamp duty adjustment, and a prop valuation fee – there are no new loan application fees etc as I am simply changing my borrowing limit on the same loan.
Because the size of the loan is getting bigger, I have been able to negotiate a 1/2% less than the standard variable interest rate for the life of the loan. I am happy with that.
I think that most people on this forum would probably qualify for that – I don’t know what the qualifying limit is though.
I get a statement for each account each month (they post them to me here in L.A), and I have a St.G debit card. There are no transaction fees – only a charge for using another bank’s ATM. I only ever use a St.G ATM near my home in Aus.
The downside is they don’t have a lot of branches nationally, so if you are a prolific ATM user (I’m not), this may be a problem. I put everything on a Visa card and pay the whole balance by internet transfer every month, thus avoiding credit card interest. So my wife and I are virtually cash-less these days.
I do all my banking on-line.
I have found them to be excellent.Cheers,
Marc.
[email protected]Originally posted by ALBennett:Thanks for the comments. My wife and I are looking into our first IP early next year. We still rent at the moment, but in five or so years we would like to be in a position to have our own home, as well as atleast two IPs.
Yesterday I went out and bought Steve McKnight’s book ‘ from 0 to 130 properties in 3.5 years’. Im a slow reader, but it seems to have the same common sense as ‘Making money made simple!’ and ‘More money’ both by Noel Whittaker. Anyway, I’ll see how I go after I read a few more books. [hmmm]
All books you have mentioned are great. Read all of Margaret Lomas’ books as well.
I agree with all the other guys’ posts re: CFS.
These sort of outfits more often that not are working for a developer and will try to sell you an over-priced property.
Who’s paying for the tv ads? You.Cheers,
Marc.
[email protected]I’m not familiar with these areas, but the questions apply to any area that you are looking to invest in. Now comes the ‘due diligence’ to find out those answers.
A good place to start is look at the local council website or maybe a tourism website for the town/city. Most towns have one or both these days and you can get some good info there.
Things like population movements, what is the population, demographics, commerce and industry overview etc.
Other places to look –
Residex website for a ‘suburb profile’ – it may be free or you can buy one.
Some real estate websites can give you a basic suburb description also.
Ring a few local agents to see what the rent demand is like, what houses /units were selling for a few years ago. Agents also know a good deal about the economy of their area and they may help you here.
If you can go there, look for things like a new Maccas or KFC, shopping centres, new housing estates. These are good signs usually.
Look also for vacant shops, ‘for sale’ signs on houses -if there are a lot this could mean a problem with the economy.
I once found an area in country Victoria (on the internet) that was very cheap and rent returns were better than normal. It sounded good from afar. It was a 6 hour drive to get there and I’m glad I did as I found the town was dying and nothing was happening. The bank was selling it’s building, and several properties owned by the railways were for sale as well. The high school had closed down recently and the kids were being bussed to a bigger town not far away. hmmm.
Saved myself a lot of money I suspect. It was good experience and I had a nice trip in the country.
I have bought without seeing the property a few times now, but there was EXTENSIVE research and questions before-hand.
Keep in mind that if houses are cheap, it is very easy to over- capitalise on renos. Budgets for renos will have to be very strict.
Hope this helps.Cheers,
Marc.
[email protected]Originally posted by wealth4life.com:Hi GMH,
I think you are right in predicting that there is worse to come for the out west in SYD, my sister in Cambeltown is packing it big time as they have a house today worth $300k (was $400k) and now there debt is $325k.
Hi Foundation,
Yes lets see what people do this year at xmas to their little Aussie or Virgin low interest rate credit card – boy aren’t you glad you have one of those little babies, Credit card debt hit a new time high of 36 billion dollars – so i predict that Aussies will hit 40 billion in credit debt by January 2007 – go Aussie go, you little beauty, but hey why not its been a hard year so at least lets have a good Christmas.
L.A Aussie,
I don’t think the smart people are buying property at the moment, I think the smart investors are waiting till after xmas possibly May/June to start buying – the people and big developers I talk to are sitting on the fence ready to pounce on another 15% drop. Are they right or wrong, well lets wait and see …
D
sounds like we need to save a bit longer for those straw hats then?
I suppose the latest (and next) rate rise will have an effect in the new year. It’s good for some!Cheers,
Marc.
[email protected]can’t wait.
I agree with Richard; ask them if you can supply your own valuer and see what they say.
Beware.Cheers,
Marc.
[email protected]Originally posted by yessy:
hi everyone
i just bought my first IP, and am considering using my FHOG to buy my own place to live in for 6 months before renting it out. just wondering in general, how long did you guys wait before buying your second IP? at the moment i’m still learning as well, so i dont want to rush into buying the second IP. and there are still work that needs to be done with the first IP. So is it better to wait till that deal is settled before starting on a new one?any advice, comments are greatly appreciated[thumbsupanim]
To compare your progress to others is not a good idea. It is not a competition and there will always be someone who is doing more, and doing it quicker than you. Set your own goal; your own pace.
When I started, my goal was to buy one property every year for 10 years. I’m a bit ahead at the moment, but that can change.
There are many factors to consider before you buy again.
I would suggest getting educated on how to ‘crunch the numbers’ for the holding/purchasing costs/returns of an I.P.
Once you can do that then you need to overlay those figures onto your current financial situation to see whether you can afford to buy, hold and maintain another with safety.
Everytime I decide to buy another property I do a complete financial statement/analysis for my wife and I to ascertain how much we can spend, how much risk there will be and what the returns are on the property in question – what impact on our financial position is this next purchase going to have? I am risk averse, so I tread carefully.
Then I ring the bank. By this time I know what the answer will be.
It is a good idea to know all this before you ring them because they will ask you for the figures anyway.Cheers,
Marc.
[email protected]This is totally a guess as I have never bought/sold a house at xmas. I suspect that everyone is too busy getting ready for the big day and/or holiday trips, so there probably aren’t a lot of buyers or sellers around. If there are sellers, they are mayber either desperate to sell or just leaving the property on the market to see what happens. Maybe it’s a good time to go shopping!
Having said that, I live in a holiday destination (Mornington Peninsula) south of Melb, and over the new year break a lot of people are trying to sell as there are a lot of people on holidays and they go house hunting for something to do. It could then depend on where you are looking.Cheers,
Marc.
[email protected]Originally posted by summersky:You guys have all positive geared properties? My 2 are negative. How do you get a positive geared P and get future good capital growth ?
SummerskyI think you’ll find that almost everyone has or had neg geared properties.
That’s not so bad if:
a) you can support the cashflow drain,
b) the properties will experience good cap growth in the future.
c) add value somehow so you can increase rents.
Try to offset the negs by buying pos cashflow ones from now on, and /or aggressive debt reduction on the existing ones to decrease the loan interest below the rent income.Cheers,
Marc.
[email protected]Originally posted by Terryw:If you are going to use a LOC, St G have one of the best products – called the Portfolio. It can have many sub accounts (maybe one for each property), and these can even be in different names.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.That is the one I use Terry. I have chosen not to have a sub-account for each property, but that’s just me.
Cheers,
Marc.
[email protected]Originally posted by manofaction:Richest Man In Babylon should be compulsory reading before anybody ever recieves a pay cheque! [biggrin]
John Blackburn
http://www.propertybooks.com.auHere! Here!
Cheers,
Marc.
[email protected]Originally posted by crashy:sorry andy, you are mistaken. I agree a lot of shows DONT show the true costs, but this one does.
I watch it religiously. It is my bible.
Its a business model that does not work in Oz. Thats why Im moving to NZ.
http://www.posigear.8k.com
Positive Geared Share InvestingSorry guys – I’ve been scarred by groundforce, extreme make-over and the like. sheesh! [grrr] I love ‘reality’ shows (not).
I must admit I haven’t seen Sarah Beeny. Sounds good from what you all say.
Hey crashy; you’re not really going to move to N.Z are you?
The breathing tax is not that high yet.Cheers,
Marc.
[email protected]Originally posted by KALTS:Hey guys,
Has anyone heard of these guys? REIN = Real Estate Investors Network.
From the info ive found so far, they find properties that are in locations that are likely to have high capital growth, and they work out how to turn the property into a neutrally geared, or about $10/week negatively geared, based on your income and tax deductions received on a weekly basis, instead of at the end of the year.
I would not normally consider -ive cashflow properties, but considering the state of todays markets, i thought it might be a good idea to look into capital growth as well as +ive cashflow.Any ideas? i’d be interested to know if anyone has had any experience with them.
By the way, the last time i heard of these guys was about 1 year ago, but i was reminded recently because ive got one of their DVDs.Thanks
KALTSVirtually all of these companies doing this are working for developers who need to sell properties.
They usually try to sell you a new property that is probably (more than likely) overpriced, but it sounds good as you are going to get into an investment property for ‘only $50 a week’ or whatever figure they quote.
Did you get their DVD from the local fish and chip shop?
Ask one of their ‘consultants’ if they would mind if you brought in your own property valuer to value any property they steer you towards before you buy. If they say no – ask why not.
Better still – don’t talk to them at all might be prudent.
I suggest you spend some time and a little bit of money on your own financial/investment education and source your own properties. It’s not that hard and you will save thousands.Cheers,
Marc.
[email protected]Thanks redwing -good post. The Aus govt site is great.
I don’t agree with Paul Vivian though; I think it is the SCHOOLS that need to step up and introduce money management/savings classes for the kids when they are old enough to understand how to use money. I think that the Aus govt site would be a good start for the schools to use with the slightly older kids.
Unfortunately, a lot of people teaching at the schools have bad money habits themselves and couldn’t help the kids I suspect – blind leading the blind and all that.
My 5 year old son has already been ‘brainwashed’ by me for 2 years. He gets all my spare change and runs to his money box to ‘save for my house’ he says. It is a good laugh to see the looks on the relatives faces when they give him money on his birthday and they ask him what he is going to buy, and he gives that answer.
There is a great book written by the property guru/spruiker John Burley called the ‘Money Secrets of the Rich’.
It is written for Australian conditions so is relevant to us, and all the companies/websites quoted in the book are in Aus.
It is brilliant – it covers absolutely everything from getting your finances in order, to eliminating debt, even buying insurances and cars. There are also some ideas for investing at the end.
Whether you like John Burley or not, this book is a must read for the unsavable.Cheers,
Marc.
[email protected]The main problem in having land is there is no income, so your cashflow will be affected.
As there is no income, there are no tax deductions on the expenses to hold the land.i.e loan interest, rates, maintenance.
There was a guy here in L.A renting an acre/s of prime, inner city land to a bunch of home gardeners for years (it may have been on the news in Aus recently?) and he wanted it back for development when the lease ran out, so there was a big stink – a few celebs got involved. The gardeners’ livelihoods were going to be pulled from underneath them.
But that may be one way you could get an income from it – gardeners.Cheers,
Marc.
[email protected]Hi Matt,
I have the LOC that Terryw is talking about. I’ve had it for a number of years and I have found adding and subtracting properties no problem (I’ve only sold one).
I used to have separate loans for each property so the bank fees were high, plus more statements and different rates.
I keep separate finacial statements for each property on my computer (always have) but I also have software that can designate interest % split to each one, so it’s easy for the accountant at end of year.
The other benefit is the bank fees are less, and because the loan is a decent size now, I have been able to negotiate a nice interest rate – 1/2% under standard variable for the life of the loan.
It has 2 sub-accounts (like an offest account) – one for personal stuff and the other for the I.P’s, with separate statements for each account.
When I add another property there are no extra loan application fees; only mortgage stamp duty adjustments for the new loan limit, and a property valuation fee. It is cheaper than applying for new loans each time.
Cross-collateralisation is no concern as I maintain a low LVR and have no worries that the properties will ever need to be sold unless I want.
I can change the credit limits between sub-accounts as I wish. I find this product lovely to work with.Cheers,
Marc.
[email protected]Originally posted by summersky:I realise now that I should have given out more info… that would have helped in the 1 st place.
I am 54 y.o, have 2 IPs already. Value of them together $600-$650k. Total debt still owing on them is $408k. But I have already milked equity on them to buy shares in an unlisted company….which produce a very slightly positive income( and even slighter capital growth!) that in turn helps me meet loan and other costs on these properties.I bought my 1st IP in 1999, the other a year or so later.
Since the years are ticking… I am trying to work out if now is the time to batton down and chuck any spare cash into super, or go for broke and use the $ to save for a deposit on another IP.I find it very confusing… and have been to several FA and Planners, but get the feeling that they are trying to sell me managed funds etc
Another said that my risk profile was out there. (Does that mean I’m out on a limb and too stupid to know the danger?!)[withstupid]My concern is that me popping salary sacrifice into my Industry super,doesnt have the benefit of gearing.. but does now have tax advantages. I know that there are no guarantees with property
either though.
maybe my expectations are too high… a planner once suggested that I will be happy on an income in retirement of $40. I begged to differ, and his reply was that many people set unrealistic goals for themselves. Wondering now if I am one of themIt sounds like you are heading for ‘paralysis by analysis’ there summersky. Formulate your own plan, get educated in that direction and stick to it.
Always set your expectations high – you may just reach them.
I don’t think 54 is too old or too late. If you are planning to retire at 65 you still have 10 years left, and you are already well on the way with your 2 I.P’s – well done so far – most Aussies don’t even have one. You can achieve an enormous amount in that time.
As for super v property, I tend to favour property as I am in total control, and the returns are still good when you consider ALL the factors of property – not just the ‘median’ capital growth that the media and the various institutions quote, and many planners say to steer you towards their ‘products’ . But that’s just me. I’m with redwing on that one.
You already have both vehicles working for you so why not just keep doing what you are doing? You may want to favour one more than the other over the next few years. With many property markets near the bottom of the cycle right now it’s a good time to buy if you buy well – education, education, education.
Personally, I have super, property and a few shares. For me, the super and shares are secondary, but they are steadily going up so I’m happy.
As for the financial planners, I believe the best advice will come from those that are charging for their time; there is usually no agenda to try and flog you a ‘financial product’ that they will make a commission on.
If you think you are stupid then guess what; you’ll be correct!
Keep up the financial education and keep making informed investment decisions of your own (with the forums’ help of course!!).Cheers,
Marc.
[email protected]On that note; why are topics closed, or locked?
Cheers,
Marc.
[email protected]Can you ALL stop preachin’ now? sheesh! [grrr]
Cheers,
Marc.
[email protected]Originally posted by mihjakon:Hi Mark ty for the reply.[biggrin]
We do not have any credit cards or car loans & the original parents loan was $50,000 have paid off $10,000 & trying to get rid of more(bank does not know about this loan from parents).
My problem is that with me buying & selling things it is up & down with some times $500 a month & then maybe $2,000 the next month then maybe zero the next so I cannot rely on it as I must take money from our buying & selling money to live sometimes (5 beautiful children) then cannot buy anything to sell so I must source things to sell before I have paid for them then start again but I will get up there with you guy,s its a matter of time or maybe a good backer lol.
cheers for your help, Michael & HelenGood to hear you don’t have the ‘usual’ loans holding you back.
The problem with all the ‘buy and sell’ income is, if it is on the side, you can’t use it towards applying for a bank loan. I am assuming you haven’t declared it and paid tax on it? (don’t answer that).
Also, it is inconsistent so even if you did declare it, the bank may not consider it in your figures. It’s a bit like casual employees applying for loans – it’s harder for them to get one.
Keep plugging away.Cheers,
Marc.
[email protected]
