Forum Replies Created
I am relatively experienced and have been in the game for many years, and my next property has been in progress for six months to date (no luck as yet). Some are only several months…….. When you have done the research, due diligence, you will know when you have seen enough and the right property. There is no magical number.
Further, no leg work is often (not always) selling yourself short.
This what I do not understand anymore. If they were a real business, their best interests, are your best interests. What happened to good ethics and morals. In that event, they would be trying to save you dollars not throwing the book at you. I appreciate they are in business to make money, but to show some common decency will not hurt the billion dollar bottom line. It is amazing how many people have to use sites like this to find out truths and demystify finances, what happened to the business that cared? Okay, call me old fashion.
Yeh Yeh, point taken big brother…..
Where do I sign, you had me at Hello…….
I have one of the SMSF trust deeds in my office. This company has been around for a long time and the deeds have been vet by many banks and accountants alike. To say any deed is a sure thing would be suicide, but from all accounts this firm has been and will be around for the long term.
Further, The owner is also very giving of his time. I have talked to him on several occasions.
I should receive royalties for this plug….
I think you may have missed the point,
What I am saying is that while Buffet says Diversification = ZERO. His actions spell out a different story.
Stocks = Check
Business = Check
Cash = Check
Property = CheckLet me make this clear, I only have admiration for Mr Buffet!
Matt, the concern is not the idea, but the critical remarks towards professionals in the game all while breaking one of the most critical rules in planning (diversification).
Since 2000, one corner of Buffett's Berkshire Hathaway Inc. (BRK ) empire has quietly built the nation's (US) second-largest real estate brokerage operation. Minneapolis-based HomeServices of America Inc. — a subsidiary of Berkshire-controlled Mid-American Energy Holdings — now has 357 offices and more than 18,600 agents. Last year, annual revenue topped $1.75 billion, up 19%, on residential sales of $60 billion.
Okay, so he owns a little bit of real estate indirectly……… we all have 357 offices.
Warren Buffet doesn't diversify? Have you seen his real estate? Not too mention his $37 Billion cash account that he had a problem with in 2006 and that he always maintains? Need I go on…….
Like you have mentioned, I think I will let you sort out the 1066 problems with this one.
Ben,
You have mentioned a relative may rent the property- I think you will find the ATO has issues surrounding non-arm's length income- both purchase and income must be from an unrelated party.
Most good banks throw in the offset account with all the other bells and whistles at no cost. It can be a fantastic tool once you know how to use it. That being said, it may not be as effective with two borrowers- i.e who gets to spend the cash?
The banks won't have to assess you for a deposit (after day trading), you won't have any.
I laughed anyway…….
I am not critical of the numbers, just the aggressive attitude towards Planners / brokers etc. not only on this post, but on others as well. I remember your unsophisticated investor post about professionals in the western suburbs…..
Further, you cannot simply come up with an idea just because the numbers stuck up, think of what would happen to the property market? Well, I would vote for you to become PM as this would make me horribly wealthy……
Another, surely you are not the person to assess the stock market on the gains made in the last five years (you must have seen there was a GFC), like all investments, stocks are also cyclical and long term. For the record, I am not a big advocate of stocks, but there is always room to diversify into the equity markets for the many. Further, if you use covered call options you can reduce losses on markets trending south……. it's not all doom and gloom.
Further again, I think you need to read through the Superannuaton ACT – particularly sections 67 (4A) and the many tests
1. Loan must be used to buy an asset (loan cannot be used to refinance an asset)
2. Must be otherwise a permitted asset (must comply with in house asset rules)
3. Asset must be held in bare trust……..
4. Super fund must acquire legal ownership…..And practically speaking, what about all the grey areas – capitalising interest, refinance, property crash, lack of at arms length transactions to release equity prior to meeting conditions of release, concessional contributions limits for people purchasing property $700k+ Please note that SMSF purchase of property through instalment warrants is heavily reliant on income via rent as it is an exclusion to deemed contributions (income test). But a PPOR will be deemed contributions reliant, and default on super fund loan and deemed contributions issues etc etc……..
Further again, again, you cannot ask the question what did your super make in the last 5 years? This is way to simplistic! i.e. investing is all about the strategy, Your portfolio should be diversified e.g You should have some, property, cash, shares , fixed interest etc. If you have a lot of property external to super and many $$$ in equities, who is not to say that all your super money is not invested in cash (low cost industry fund) – in this event a 5% return is fantastic. In fact, would it not be a good idea, in the event of a property and stock market crash, to have alittle in cash. You have to compare apples with apples.
Speak to people with large portfolio's of property and educate yourself completely so you can see through the sales pitch that is often delivered. Most importantly be patient, and contrary to your beliefs – learn the advantages of not paying things off. You require the mindset of the wealthy to play in this game……
Although Saka888 is a little ruthless, I am going to back his/her post, Property investing is about time in the game, With that in mind, you have many hours / days and years to research. In my line of work, I get a real look into the industry, you should not rely and put your faith in one system or operator. Education is important, but not at the expense of a majority of your wealth.
What I know. Most people must sell to put food on the table – "X" sold trusts and structures, "Y" sold positive geared properties, "Z" sold vendor financing, "H" sold new units b/c of depreciation, "I" sold his own development, "K" sold negative gearing, "D" sold a combination of these with options, and "A" sold mortgages. I understand we all have to live and earn an income, that is our right. This amplifies the importance of self education, to see through what is a sales pitch and what is not.
I would predict that 7 out of 10 people in the population have been set up, and are shocked to hear they have blown up to $500,000 in their life. What I think saka888 should say, "self education is important, or else, YOU can be taken by the financial sharks in the real world". That does not mean you should not pay for this gig mentioned above, but when you are well researched you are able to make an informed decision on whether the course is suitable for you. Congratulations saka888 on having the courage to post what others would not……
I worked with an SMSF specialist for a period of my life. What I found was that a SMSF purchasing a property is good, but not suitable for everyone. i.e. it is very good if your want to buy commercial property and lease it to yourself. What I did learn, Mum's and Dad's were often better suited to purchase external to super. Why do you want to retire with a stack of money at 65 when you can create wealth by property externally to super and retire at 40…….. For the young, I see the retirement at 65 years strategy as conceding defeat. Focus on plan 1: Retire young.
Any excess monies should be placed into an environment that you can access and move around, a SMSF has too many regultaions and too restrictive. Contrary to what you hear, you will pay a premium (thats right after purchasing the trusts and corporate trustees for over $2000, the bank will vet these for another $2000, the accountant will set you up for $3000 and the bank will charge you a premium interest rate and yearly fees (if you cannot borrow internally), the ongoing auditing and accounting is another cost and any changes to rules will require your deeds updated…….I am a Financial Planner and Mortgage Broker that has a large interest in purchasing property and the ability to do all this, yet I have not to date…… This must suggest something. Summary: it is a YES to some and a No to most.
In any financial plan, you should diversify with both shares and property, here's my thought. Allow your property acquisitions external to super (cheaper and easier) and purchase your shares with a low cost industry fund (For the record FSS are the cheapest in Aust. -Money magazine 2010, well performed also), and NO, I have no financial relationships with any financial institution. This is a general approach, with exceptions to the rule. i.e. purchasing a holiday house can be good with SMSF, particularly if it is somewhere you are to retire. Do your due diligence, I often see large financial errors by intelligent individuals, Don't get caught in the hype…..I am assuming you are a couple. That is the danger of taking advice from sites like these where all your personal details are not given. If you are a couple the above answer works, if you are single – then Terryw applies.
A super fund cannot purchase your PPOR, must comply with in-house Asset rules. That would also be a ticket for a massive property explosion. Further, property may still be purchased using instalment warrants as the regulations exist today.
I have noted you are quick to bad mouth groups such as FP's (generalisations are often dangerous). Many have never advised risky investments, in fact, like myself many do not charge a fee.
Check out the prices on http://www.trustdeed.com.au
You will find they are not the expense described above. Further, I have read through these deeds and they are reputable.
There are ways around land tax in NSW when you have properties in invidual names- not joint tenants(look at this first). Look at the family tax laws to have the names changed without stamp duty consequences, Then you can buy property at your back door again….. There are ways around everything, just keep looking and be innovative.
I agree wth above- company set up is not good.
ANZ does their vals with three different formats, computer, kerbside and full valuation- you can basically upgrade the val at the brokers discretion….
The problem is not the banks, remember the variance in vals is from the valuation company. Your broker will often give you a solution to beating the valuation problem…..
