good one michael, thanks for that
cheers-
mini

re: how on earth do you get a loan, aren’t the three things the bank looks at equity (either in a house, or other assets, cash savings, etc), income (earned or investments) and credit rating. (no outstanding parking fines or debt collectors….)

and if you can make them happy about all three, they work out according to their formulae if they will lend you what you want. Of course lo and no docs are more lenient.

I laughed at the “we don’t give a stuff docs’ (private lenders etc, rates 8 or 9%). “

I wanna know more about them!

cheers-
Mini

>You might want to keep your ego in check.

ewww…..

>I’m a reasonably experienced property investor

bully for you.

>Excuse my ignorance but

excused.

>I would have thought doing as much due diligence from this country would be >nothing more than simple common sense

well, then, start using it then and stop wasting people’s time who are just trying to help you.

>I’m picking up a patronising vibe from you

which bit?

You’ve gotta admit that seeing as you’ve never offered any pearls of wisdom yourself in any of your grand total of 6 posts, let alone offered any information about yourself, one would have to be psychic to know that you weren’t an utter newbie.

>Other than that, thankyou for your advice – I have learnt a lot from it.

Too little, too late, as they say –
by the time I read the last line, I’d already picked up too many negative vibes from you and so sorry, but I don’t think I can be bothered with you any more. Was just trying to help. And besides, I’m not looking for a relationship right now. *cheeky grin*

Good luck.

cheers-
Mini

Hi there,

interesting point.
I always ask why the vendor is selling, too, and I have recieved such answers as ‘they have a $34K mortgage on the property hence 36K is their bottom line’. Or ‘the vendor owns 75 rental properties in the area, and is now in a home. his children are selling off some properties to be able to pay rates.’ (that property was really cheap and needed a lot of maintenance.)

Or ‘the vendor is going in to a home soon. She has to sell the property and disperse the cash to her children, otherwise the government will take her asset and use it to fund her stay in the home.’

or
‘They are selling the properties because they want to buy the ski-shop business’.

etc etc.
All interesting.

Basically, if I was the vendor, I’d give the agent a ‘reason’ to offer prospective vendors such as ‘the vendor is selling because they need the money to fund another purchase’ or whatever.

If I got the answer you’d got, I’d feel a mixture of ‘oops, the vendor’s fallen on hard times, and has to sell – pity for them’ – or else, ‘the real estate agent is trying to hide a fault in the property she knows about’. i would definitely get a builder’s report in that case.

I noticed that when you meet RE agents from affluent areas they are more fancy-pantsy. the cars, the clothes, the dismissive attitude.

Maybe, if you really wanted to know, you could ask to meet the vendor and ask them yourself.

cheers-
mini

>Thanks for your reply, but I’m still in the dark.

yep…

>1. I don’t have a trust set up in Australia or NZ. >This is why I was enquiring about them. Forget my >situation – can anyone tell me the advantages of >setting up a trust rather than investing as an >individual?

that’s a bit like saying, ‘forget my income, just tell me how much tax I have to pay?’ –
– it doesn’t make sense, because the answer is obviously *specific* to your situation – based on questions like how many properties you have already? how many you’re planning to get? whether you have kids, wives, beneficiaries, married, divorced? if you’re working in a high income job and paying a lot of tax? or not? self employed, or employee, or beneficiary? how much money your properties are going to make? if you’re planning on making a profit, or buying negatively geared properties and taking a loss you could offset against x, y, or z….blah blah blah…you get the picture.

The main reasons people set up structures is for ‘asset protection’ which means you don’t own the assets yourself, but you control and benefit from them.

You can either personally be the trustee of the trust (as well as the beneficiary), or else start a company where you are the director, and the company is the ‘corporate trustee’. A company is a legal entity which is not a person…and the tax dept. sees it differently to a person.

The other reason is to ‘legally minimise tax’. Although tax avoidance or evasion is illegal…but it comes down to the bottom line, the aim being that you start the structure if it will mean you are better off.

Where it gets gnarly is that companies (and trusts) cost a bit to run each year, because you have ASIC fees, tax returns for the company in addition to your personal tax return. My accountant is also my ‘company secretary’, because there’s all this beaurocratic palaver and compliance that has to happen.

i’ve heard of people with not that complicated structures up for several hundred a month to their accountant.

And if you have shareholders in your company it can cost several thousand to draft the shareholder’s agreement. it’s actually a bit ridiculous, unless you have enough properties to make it worthwhile – i.e. knowing how to calculate if it’s worth the cost or not.

so you need to know the answers to all those kinds of questions above to figure out with your accountant what makes sense for your situation.

Let’s say you’re not particularly paranoid you’re going to get sued, hehe, you have public liability insurance or whatever, and you aren’t making significant pots of money initially, then you might not bother with structures for a year or two. Then you’d also want to know if there was a downside or tax implication in the future if you later wanted to transfer ownership of your properties over to a trust you might create.

I can’t imagine having made the decisions I made for my personal situation without having consulted with a professional versed in companies and trusts, who is himself a property investor in Aussie, accounts my other business interests, and who is also in contact with my NZ accountant. my NZ accountant who i’ve used forever isn’t that down with property so I am actually going to consult with a different (specialist) accountant to do with that, who will get together with my regular accountant. I got the specialist’s name from a referral from another investor i respect, which is what it’s all about really…

I think the greener you are the more you need to consult with the best people you can get. I was green as when I bought my first property.

You could always get Steve’s product ‘wealth guardian’ which explains structures, the different types and how they work, how much they coast, and why and when you need them. it’s a book and a CD, like a seminar. Steve did it with Paul Harper who’s this gunny structures specialist based in Melbourne.

>3. I don’t have an accountant in either Australia or >NZ.

so you’re hopefully one of those people who does their tax returns themselves and is pretty au fait with the whole thing, rather than one of those people who doesn’t have an accountant because they’ve never done a tax return. doh. or somewhere in between.

>My experience with the average accountant is that >they don’t know near as much about tax and investment >properties as a seasoned investor.

totally. I mean, seasoned investors don’t use average accountants, they use experts. Don’t expect the local yokel to know stuff unless they’re an investor themselves. the best accountants for property are those that have property investments themselves.

>I’m sick of asking >accountants things and getting >vague and uninformed >answers.

so, accountants, plural, you’ve obviously been to more than one. OK so next time you need to get a referral for a good one in your area. In NZ I would check out the KPI magazine (subscribe to it) which is a specialist property investing mag which has lots of ads for specialists over there in structures, etc. You might want to figure out whether to do your structure here or there. or both. though, they can be costly – several hundred if not thousands to set up. you might decide not to do it right away. good luck.

cheers-
mini

“Sorry wont share how.
Sorry guys not telling how.”

OK, let’s all jump on him, hold him down and tickle him until he tells. *rolls eyes*

Or else just read Robert Allen books – I think one is ‘how to buy real estate with no money down’ and one is ‘no money down for the nineties’.

cheers-
Mini

deano,

yep you should find some good properties in the areasyou mentioned and their surrounding areas and towns too. Various industries going in.

Dunedin, yeah, i think I read that they had – or are having – an increase of several thousand more students.
Traditionally (in my day hehe) NZ student accom is a bunch of students sharing a flat, and the ‘new’ trend of purpose-built or customised student accom complete with broadband or whatever, I think is still a wee way behind how it is in Aussie. In fact quite a lot of trends in Aussie NZ hasn’t got yet, quite a good way of ‘predicting’ what will happen in NZ in the future I reckon.

bb,

wow! I’m amazed at what you wrote. Does this mean we won’t be arguing as madly as we used to?

!!! anyway,

re:
“What’s this year going to hold? NO IDEA.”

I think that even if I had a good amount of Aussie $$$ to spend (as compared to NZ prices are still comparatively higher) I don’t know if the bargains have started popping back up yet as they probably will when everybody en masse starts to get jack of property and says it doesn’t work any more. on that day there will be more sellers than buyers. Maybe that day is approaching and maybe that will be the day I enter the aussie real estate market.

In the meantime i’m still focussing on NZ but i see the same thing happening as happened in Aus, just a couple of years later – prices are moving, so yields aren’t as good as they were, but you can still find some bargains.

cheers-
mini

i have bought three houses so far sight unseen. Photos
– yep, but take them with a grain of salt, because they can be too low rez to show the bad bits. Actually when I show people my houses i show them the ‘agent photos’ and then i show them the ‘reality’ photos (which are a lot worse!).
the agent isn’t lying, but low rez wide-angle photos just tend to look too good.

i get a builder’s report and as well I have long conversations with the builder after. Also I have conversations about the merits of the property for rental with a rental agent who assessed it – one who’s not selling you the house is best because they should be impartial.

Where i live is inner Sydney and if i only could buy where i could physically inspect, (factoring in one’s schedule, budget, etc) it would limit me. i wouldn’t be here today let alone in the property game with three IPS in less than a year, if i hadn’t bought sight unseen.

the first house i bought, i have still never seen – it is full service managed and has rented ever since i got it. it’s a gorgeous villa, had been well maintained (even the builder was surprised!) I spent $800 on it to fix a couple of things and off it’s gone making me money. I value my time too so the less I have to do with the property the better. i was lucky with my first one and probably not as careful with my second.The second one, at 16K I thought I was getting the bargain of the century, and it came complete with tenant paying 90 per week. I got complacent, didn’t do enough due diligence – did builder’s report, but not enough of the ‘how’s the street and the area?’ kind.

problems began on settlement day when the tenant left, and no rental agent would accept it for rental!!! So we went over and did it up, new fireplace, polished the floors, curtains, painted. Looked fabulous. Got a great tenant despite the fact that we also discovered in the meantime that there were gang-members in the same street. OK they were next door! But as I actually went there to do the house up I didn’t notice anything so I am actually not worried about that really.

So if buying sight unseen it can work out good but if you don’t ask enough questions or do enough due diligence, you could have some interesting surprises.

Also while I’d buy houses under 50K sight unseen i wouldn’t buy houses over 200K sight unseen. Then again i would tie them up with a contract just on the numbers and get them building inspected before i bothered to go check them out myself – I’d almost put myself as the least qualified person. I’ve ‘loved’ houses that were total dogs, so now I don’t even bother with ‘love’ really when purchasing.!!

the third house i bought I again bought sight unseen and in the same town as my number two ‘seminar’ house (which has come good. and which i call that because of what it taught me.) and only 3K more at 19K, but in a better area and has been rented the whole time for 115 pw, after i did my ‘standard’ renovation on it. This wouldn’t be a high standard for Sydney or melbourne but it certainly is for this area.

so out of three houses i bought, only one I have actually been inside.!!!!!!! That was the ‘seminar ‘house. The other two, i have still never been inside, although i have driven by, seen good quality pics of the completed renovations, taken the rental manager to lunch twice, and looked for more in person in the area since then!

I wouldn’t recommend buying unseen for everyone but the reason it actually works for me is that there’s a certain style and vintage of house that I am buying in my price-range and actually they are all pretty much the same. they generally all have wooden floorboards underneath and were solidly constructed, and so in a way that’s Steve’s advice – get experience first. Yet my point is that if i hadn’t bought sight unseen i wouldn’t have bought at all.

Also since buying there I have been there and got to know the area so it all seems much less daunting, I trust the builder’s report guy, the rental manager, and even the agent there now. so I feel confident buying there again not to mention getting the same knowledge in other areas.

My next area i am keen on is one I actually visited on holidays and got a vibe for while i was there. I fully expect to ‘buy first inspect later’ as long as i continue to have a full-time ‘life’ and property is just a way to store and grow wealth.

blah blah blah as usual
cheers-
Mini