Forum Replies Created
- Originally posted by The Mortgage Adviser:
If people looked to education instead of trying to find ‘THE ANSWER’ in a single seminar, they would be much better served.
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I agree – they should get educated. But – if seminars are such a no-no in your book, then where are you suggesting that they gain the knowledge from?
Personally, I learn well from reading books. But not everyone learns best this way. Some people need a more interactive environment, and seminars can help them.
We all have different needs, and just because you or I may not *need* seminars, to write them off as a waste of money is to ignore that many people learn from them.
And this guy does seem to have learned enough to have then invested profitably in multiple properties. To my mind, that equals successful education. Tonnes of people have read Steve McKnight’s first book – but I bet you anything that only a tiny proportion of those readers have gone on to apply the knowledge. Does that mean it’s a waste? Of course not! It’s all individual as to who you are and how you learn best.
Originally posted by The Mortgage Adviser:Originally posted by Luci:(Just look at Kerry Packer. After deductions he apparently only has a taxable income of $25,000!)
Maybe because he only pays himself a small wage and does not collect dividends from his company share ownership and most of his assets and toys (cars, etc) are owned by the company.
Why don’t you find out how much tax his companies pay? He probably pays the equivalent of the Australian Current Account Deficit annualy!
Robert Bou-Hamdan
Mortgage AdviserOf course his company pays for everything… but everything his company pays for is *tax deductible*.
While officially companies are meant to pay 30% tax, after tax deductions the smarter ones pay very little tax. They are great at shuffling money. How they can declare so many ‘toys’ as a business expense is beyond me. And hell, if they do have a big tax bill they just come to an agreement with the government to pay only 20cents to the dollar.
It’s individual taxpayers who cop the full load and have no negotiation power.
***Not that I have any problem paying my taxes. Taxes are essential for the running of this country – I don’t encourage anyone to avoid paying them. But I am aware that there are a number of benefits granted to big business (and their super-wealthy owners) while this one guy is being jumped on over seminar costs, when he seems to have applied the knowledge to make money from which the ATO has benefitted.
Just like the government spends a lot more time and money investigating people on welfare benefits – people who are only just scraping by – while they turn a blind eye to the wealthier end of town who regularly claim $10,000 dinners as a business expense (and therefore get a tax deduction).
Originally posted by kay henry:Terry,
Unless the HK seminar attendees were forced into attending, then they can hardly cry poor when the spruiker goes down. Wouldn’t one know that if one paid 36k for seminars, then it would be a waste of money? C’mon.
kay henry
Have you attended a HK seminar? Then how do you know it was a waste of money?
The guy in question spent 38k over several years – so it was more than one seminar – and a university degree costs much the same for an equivelent period of time. Should university students also not be allowed to deduct learning expenses because, for that type of expense, it must be “a waste of money”?
The guy in question obviously didn’t think it was a waste of money, as he applied the knowledge he gained from the seminars to invest in multiple properties in a short period of time. Most people take longer to put together a portfolio of property (something like 90% of ‘property investors’ never buy more than one or two properties full stop), so it sounds like he was doing more than most with the knowldege he acquired.
Someone else going to the exact same seminars may well believe it to be a waste of time/money. Just like Steve McKnight has mentioned in this forum that sometimes he gets letters from people requesting a refund on his book because they don’t think it’s possible to get cf+ properties in this day and age.
Certainly some of HK’s practices are ethically dubious – but let’s not throw the baby out with the bath water. You’re never going to 100% agree with any one property ‘guru’ (or ‘spruiker’ if you prefer), much less agree with all of them. They provide different strategies, and it’s up to each individual to decide which strategies best suit them and their situation.
If the guy in question thought that his money was wasted, he would be suing HK (who I believe had a money-back gaurentee of some sort) rather than claiming a tax deduction.
And to reiterate the point – if the ATO is happy to take tax on the property earnings, then it is hypocritcial for them not to allow tax deductions for expenses incurred in the business of earning that money.
Every industry has seminars, and if other industries are allowed to deduct theirs then I don’t see how the ATO can target property investors to not be eligible.
If you use said knowledge to earn money that is then taxed by the ATO, how can this not be considered a valid expense? 36k does sound pricey to me, but there are many people who would claim this kind of money who work in other industries. (Just look at Kerry Packer. After deductions he apparently only has a taxable income of $25,000!)
As for uni degrees – mostly taught by Academics with limited real world experience. Pretty pricey way to learn pure theory – better off getting hold of a textbook list and working your way through it. Only need a degree for accreditation purposes – which you may need if you want to be a doctor, but not if you’re a property investor.
If you pop down to the relevant council and ask, they should be able to give you the rate payer’s name and postal address. They may charge you a small fee for this service.
This information will only be as accurate as the ratepayer has kept council – the same address that the council sends the bill to.
If property seminars aren’t tax deductible, then does that mean we don’t have to pay tax on property bought/sold/rented?
Sounds like a case I’d be taking to court – if the ATO are happy to profit from the fruits, then they can hardly ignore the planting costs.
Unless in that particular case the guy didn’t actually make any money? Invested poorly?
It might mean that the bricks weren’t fired properly when created, and are therefore inferior in quality.
As the only place that the bricks are showing damage are on the steps (a heavy wear area, as well as weathered) it may not be a major issue. You may be able to work round it by rendering the brickwork, which will protect the bricks from more damage. As long as the bricks don’t suffer from any major impact (earthquake, cyclone, car accident…) they should be safe enough – even brittle bricks are pretty solid for normal usage. However, an engineer would be a better bet to know for sure.
If it’s a serious problem, you may be able to hold the building inspector libel for not mentioning it in your pre-purchase report.
Haven’t done it myself, but it shouldn’t be a problem if the granny flat will meet council requirements for housing and you get DA approval for any structural alterations.
Your council should have a document of their residential development requirements on their website.
I’d say big vs small isn’t the issue so much as good vs dodgy.
My partner has been working in construction for 10 years in the bigger end of construction (units, shopping centres, office blocks etc) as well as doing small residential for us privately as investment.
The key is to see what the company has done previously, and talk to past clients. This will quickly tell you whether they are doing good work or dodgy. Check not only the most recent jobs, but ones done 5-10 years ago, so you can see how the work holds up. What might look like a great new bathroom could be leaking in five years.
Small builders can be known to take on multiple jobs and skip from one to the other as well as larger companies, but you will probably gain more focused attention from a ’boutique’ builder. (Just make sure they are in fact a licensed and insured builder, and have been doing good work).
Penalty clauses are definitly a good idea. Labour and materials shortages will be the same for both small and large companies – though a larger company may be able to have more pulling power with sub-contractors (plumbers etc) because they have more work for them (so their jobs may be prioritised over the smaller company).
I don’t imagine that the smaller company would have “less middle people”, as they are likely to keep their permanent employee count low. A larger company is more likely to have enough employees on the payrole to include some specialists that a smaller company would have to contract on an as need basis.
Just remember, if you want a job done well and done quickly, you can’t really expect it to be done at a cut price rate as well. If someone offers something quick and cheap, it is unlikely to be the best workmanship – and we are talking structural issues as well as superficial.
As with any property strategy, this type of thing might work for some people – but will be a disaster for others. Some people are simply not renovation minded, and will end up wasting their time and money.
Biggest renovation problem in the area I’ve been investing in is that it is incredibly difficult to get tradespeople to a) answer your calls, b) give you a quote within a reasonable time frame, c)turn up when they’re supposed to, and d) give you a reasonable price for the job.
Simply sourcing quotes can take weeks, much less getting everything to co-ordinate together – as tradespeople tend to juggle several jobs at once so each individual job is spread over a longer time frame. There is also a skills shortage in most trades – not enough people to do all the work.
BTW, I say this and my partner works in the construction industry (carpenter by trade). Even with his contacts and experience, renovation has a tendancy to blow out.
Doesn’t mean you shouldn’t renovate for profit, just always allow a huge margin for time/money blow outs and make sure it will be worth it.
Depends on the cost of your house (sliding scale of charges and rebates in each state).
“Landowners are generally liable for land tax when the unimproved value of taxable land exceeds certain thresholds. In some states there are deductions and rebates available, depending on the use of the land. Principal places of residence are usually exempt from land tax although this is subject to certain qualifying criteria, which vary between states.”
NT doesn’t pay land tax at all. http://www.nt.gov.au/ntt/revenue
NSW has land tax even on your principal place of residence. I could be wrong, but I believe the charges are generally highest in this state.
http://www.osr.nsw.gov.auSouth Australia: http://www.treasury.sa.gov.au/revenuesa
Queensland: http://www.osr.qld.gov.au
ACT: http://www.act.gov.au/government/taxation
Tasmania: http://www.tres.tas.gov.au
Victoria: http://www.sro.vic.gov.au
Definitely negotiate a discount one way or another – and expect that you’ll probably also have to give one if you ever sell.
One thing about building/pest inspections is that in these days of litigation they have to note down each and every minor detail that could possibly cause a problem, even if it’s only a slight likelihood. If something comes up in your house that wasn’t in the report then they’re potentially liable for not reporting it.
Not that I’d say that termites are ‘minor’, but most houses that’ve been around a while will have had them (in QLD and NSW anyway). It freaks people out, but that’s because property is such a huge investment and we hate dealing with unknowns.
I don’t know the area either, but on top of what others have said:
You could start promoting your house yourself (in addition to the agent)
– drop flyers in mail boxes in the area,
– post on community/tafe/uni notice boards,
– email all your contacts letting them know that you have a house for rent if they (or someone they know) is looking,
– contact a large employer and find out how they house people on transfer to Kalgoorlie (maybe they can pass you details on to any new employees).I wouldn’t assume that the other buyer has done their due diligence just because you’ve been told they’re a property investor (the fact that he has made an offer when he doesn’t have access to adeqaute finance might be a warning sign).
I agree with Robert that you should make an offer lower than the highest auction bid (or lower than the alleged ‘investor’ bid). House price is about supply and demand, and it sounds like you may be the only interested party if this ‘investor’ falls through – in which case they may be happy to just round the deal up.
Worst case scenario: they say ‘no’ to your low bid, and ask you to reconsider your price offer.
As far as capital value goes – sounds like a case of instant equity!
If you’re considering development – as buzzwells mentioned you need to see what the council will allow in your area.
Also look around and see if the property/suburb is likely to garner interest from developers in both the near and distant future. See what other developments have occured in the area, and if your property will be suitable. You also need to consider neighbours who might prevent a development that would affect their own privacy and/or home value.
There is no point in renovating if you are considering developing it or selling to a developer. The small short term increase in rental payments will probably not make up for the upfront expenses.
You need to weigh up how much it is negativly geared, how much you can afford to be out of pocket, and whether this will still be a profitable deal if you don’t sell/develop for 6 months/ a year/ several years. Factor in potential interest rate rises, and the costs you will incur to buy and sell (and capital gains if you do this in a short period of time).
At first glance, it sure looks like a good deal.
All this will be specific to where it is that your land is being built.
A duplex is only a good idea if you are building it in an area where duplexs are considered acceptable housing – otherwise you may find it would be more financially beneficial to build free standing homes (which means you could actually subdivide and build one at a time – might be easier on getting lending), a row of townhouses (innercity type development), or a small block of units. Then again, you might be in an area where every house has a huge backyard, and that’s the way the tenant likes it – they might turn up their nose at a split block.
Building costs will vary depending on where you’re building and what material you use. For example, brick is generally more expensive than timber but if you are near to a brick manufactorer and far from timber supplies then the transportation costs may even things out.
It also depends on whether you’re doing a cheap house or a trendy house. The style in which the house/s are will affect both capital value and rental return. What might be cheaper upfront may be more of a liability in the long term.
Builders charge incredibly varied amounts depending on where you live. In Sydney it can be hard to get a new bathroom for less than $30,000 – while in some areas you can get a whole house for $60,000. It’s a supply and demand issue, and it is incredibly difficult to get a good tradesperson in Sydney without paying a high premium – in other areas a builder might be glad to be working at all.
Best thing is to study the area, and get some quotes based on what else is around.
You’re right in that it is sure going to take you more than a few hours searching the net to find cf+ positive properties.
However, they are out there. March issue of property investor has some Residex stats of the year leading up till September 2004 for rental returns postcode by postcode. Plenty are cf+.
But, as mentioned by others, there are higher associated risks to capital gain/loss. These are mostly small rural areas that make the population more volitile and reactive to any change in the economy. With a large proportion of the country in drought (and the El Nino drought due to hit us again soon) you need to be aware of any area that relies on agribusiness.
Population decline is also a major issue outside of metropolitan areas, with the young moving off to the cities and often not returning, and the established growing old.
You have to weigh up the pros and cons for yourself – but it will take more than a few hours on the internet!
And there are many reasons why people don’t buy – also already listed. If you move to a mining town on a two year contract, are you going to fork out thousands of dollars in fees, interest and tax to own your own house (and possibly lose capital value when you sell) – or will you rent?
In small towns incomes are generally smaller, so people find it harder to save a deposit to buy their own home. Young people generally don’t want the commitment of owning until they’re ready to ‘settle down’. People who work as ‘casual’ may have trouble gaining mortgage approval even if they are on a good income, as banks won’t consider it a ‘stable’ income. The self employed are in the same boat. It won’t even occur to some people to consider ‘buying’- they may enjoy switching houses every few years as their lifestyle changes.
Originally posted by Qlds007:Kerwyn
You just dont get do you.
Non disclosure is a simple act of FRAUD.Topic closed
Cheers Richard
richard at castlewhite.com.au
Email me for details of our Qld wrap CD which gives you a full Installment Contract.Perhaps you don’t get it, Richard. No one has said anything about not disclosing the information.
When you apply for a loan, you fill out the paperwork and the bank evaluates that paperwork (to give them false information would be fraud, but no one is suggesting lying to the bank here).
They also do a valuation on the property, and decide whether the amount you are paying for it, vs the amount you are borrowing from them, gives them adequate security should you default.
Then they say ‘okay’ (or ‘no’) based on the information you’ve supplied – but they don’t give you any actual money until they have read the contract (in which the full details of the deal are DISCLOSED) and double checked that your info is correct.
If they are happy to okay that the property is worth $118,000, and are satisfied that you have the required $10,000 for associated costs (which is clearly being paid by the vendor), and that you are able to service the loan – that is their business decision.
I’m sure the vendor will have no problem with you dropping them a note or a quick phone call to mention the offer – as long as it’s not construed as a pressure measure. Just be friendly, positive about the house, and say something along the lines ‘I’m not sure if the agent’s had a chance to tell you, but I put in an offer for X amount’.
I guess it partly depends on who you are trying to sell it to as to where you advertise it.
The majority of people looking to buy will either go through agents or look online via one of the big property websites http://www.domain.com.au and property.com.au. Locals may notice a place is for sale by the for sale sign out the front.
If seeking property investors, maybe find out how much it costs for minimum space advertising in Property Investor magazine. Seeing you’re not a commercial entity, they may offer you a large discount. I used to work for a specialist magazine, and sometimes we’d give discounts of up to 65% if the person was a good enough negotiator.
You may be able to cut your costs further if you find another seller interested in going halves on the space with you.
