Buying a company share unit is not so bad if you do your D/D.
They are usually harder to resell, and hence have a lower purchase price to compensate.

I don’t know the pros/cons of company share, but it’s better to get something strata titled.

The banks also prefer strata to company share if you are getting finance.

I have an IP that was my original PPOR. There is a lot of equity in the IP that I want to “transfer” to my new PPOR. I have not been able to think of how to do this. The original post hinted this was possible.

So how can I do this?

Dan, i don’t think it’s possible because it’s all about the purpose of the money, not the security.

But i think the point was that if you had the money, an offset account is a great option to park it in.

If you’ve sold an IP, you can park the proceeds into an offset account which is linked to your home loan.

Example, if you have $70k cash from the sale of an IP you can (amongst other things) either:

– Deposit it into a term deposit earning 5% which you’ll have to declare and pay tax on.
Not a good option.

– Pay it off your PPOR loan which means you can only access it again by redraw.
A good option because you’ve then reduced your non-deductable debt by $70k.

– Deposit it into an offset account against your IP loan on which you pay 7%, effectively earning you the same amount.
The best option because you have the flexibility to use it when you like and it’s putting your after tax dollars to better use.
Of course the whole idea is to have the least amount of non-deductable debt (loan on PPOR, car loans, personal loans, credit cards etc) outstanding.

St George give you an ATM card with VISA (debit) attached to your offset account so that you can have your $70k accessable from any ATM machine or a VISA transaction – imagine the frequent flyer points you’d get!

Julian re: the LOC as an offset account, i think that you could probably do this, i.e draw money down from your LOC, e.g $50k and then park it in an offset account against your PPOR.

But i’m not sure if there’s much point in doing this because then you’d be paying interest on the $50k which isn’t tax deductable because it’s not for the purpose of investing and earning you a taxable income.

So effectively you’d be paying 7% interest money that’s being used to earn you 7%.

Anyhow, this is my understanding of it, but perhaps someone more knowledgeable can confirm any of this.

[]

“How To Create An Income For Life”
By Margaret Lomas.
A fantastic book that is easy to read, written by a lady with lots of enthusiasm. For an insight to positive property, this could be your Bible!

“How To Make Your Money Last As Long As You Do”
By Margaret Lomas.
A good read, mainly for novice investors. This book is pitched at positive cashflow property investing. Written in layman terms and easy to read.

“How to Research and Purchase Investment Properties”
By Debra Lohrere.
This e-book is written by an Australian author. I found it extremely informative for a first time investor. It had a lot of useful information about the different demographic groups and showed how low end, median priced and high end properties can all be used by investors.

“Real Estate Riches”
By Dolf De Roos.
From the Rich Dad/Kiyosaki stable, but a New Zealand/Dutch writer, a nice inspiring and motivational read that says property is 10-100 times better than shares. I liked the 100:10:3:1 ratio – you may look at 100 properties, put offers on 10, arrange finance for 3, to actually buy 1, but that purchase should increase your net worth immediately by $x0,000’s. Says the ‘deal of the decade’ comes along about once a week. Also puts the case for Commercial property for experienced investors.

“Rental Property and Taxation”
By Tony Compton.
I found this an excellant book to help you learn the very basics of accounting toward owning rental properties and how it effects taxation. It goes into what you can claim, how to keep records. It provides practical and sound advice in an easily read manner. The reader is taken through the purchase, the tax return and the sale. A checklist is provided to help ensure that deductions are claimed in full.
This is a read for any owner of, or anyone considering purchasing, a rental property.
This book takes an unbiased and objective look at the tax effect of a loss from a rental property.

“Seven Steps to Wealth”
By John L Fitzgerald. Jargon-free, and presented in a “how to” manner, this book has some interesting ideas. Easier to read but somewhat lighter than Jan Somer’sbooks. A tad pro-Brisbane for some people’s tastes, but read it with an open mind.

“Renton’s Understanding Investment Property”
N. E. Renton
3rd ed. Information Australia. 2000.
Approx. $32.95
Nick Renton has produced an extraordinary number of books about law and investment in Australia, including titles relating to wills, negative gearing, family trusts, and the stock market. In this book, he explains the various aspects of property investing. It is not a “how-to” book, but more of a “what-is” book. Renton explains the risks and economic factors to consider when investing in property trusts, parking spaces, mortgages, and both commercial and residential property, amongst other topics. This 496 page volume is very thorough, but quite readable, although it probably wouldn’t make for the best casual reading. The occasional touches of dry humour I found surprising and delightful. Understanding Investment Property is ideally suited as a reference tool, for investigating different classes of property investment as opportunities become available. Hence you could probably just borrow this book from a library or a friend as needed, rather than purchase it yourself.

“Real Estate Mistakes”
Neil Jenman
1st ed. Griffin Press. February 2000.
Approx. $21.80
Neil Jenman is obviously revolted by the typical real estate agent approach. In this book, he goes to great lengths to explain why this approach is bad for buyers, bad for sellers, bad for agents, and unethical to boot. He convincingly argues that auctions are a bad idea for sellers, and likewise open inspections and mass advertising. He also provides useful tips for buyers to use when negotiating with unskilled agents and at auctions. This is not a book oriented around property investing, but around the buying and selling of one’s home. Jenman doesn’t advocate looking for bargains, paying agents cheaply, or seeking to pay much less than you might be able to afford when buying, and this is to some extent related to the book’s focus. However, the education afforded by reading this book will prove useful to all those who buy or sell property. An interesting read which tells you a lot of what you didn’t know about buying and selling real estate. I lent this to a friend recently who then advertised his house privately for sale at “offers around $515k”. I wondered about this, and nearly fell over when I found out he had negotiated with several interested parties himself and ended up selling it within three weeks for $565k ! He thanked me for the loan (of the book…). I don’t buy the Jenman system, which appears to be a variety of real estate agent which turns off as many buyers as it attracts, but I found the content of this book different, thought provoking and memorable. Not expensive at RRP $19.95 – recommended.

“Building Wealth Story by Story”
Jan Somers
Somerset Financial Services Pty Ltd. September 1998.
Approx. $26.95
Jan Somers is one of the high profile residential property investment successes in Australia, and this is the third in her series of books for encouraging others to succeed like she has. There are 101 different arguments for why property investment is worthwhile, presented in the form of short anecdotes. It contains nuggets of information that makes it worth reading, but the amateur “Microsoft Word”-type layout detracts slightly from the professional content. Somers’ approach is to build equity through capital growth, using rental income to balance interest payments in the short term – no predictive ability should be required. Her company sells financial software packages to assist with these calculations, and some of the anecdotes concern the software. The view that “anyone can do it” is emphatically presented, and would be a good introductory read for those considering or just beginning with residential property investment.

“Anyone Can Be A Millionaire”
by Sean O’Reilly.
Great read. He also does the occasional seminar and well worth attending if you get the chance. I liked this book because it was easy to read and covered property investment and shares, not just one or the other. It is basically about how he made his money by investing in property and shares and looks at insurance etc as well. It was only about $19 to buy so was fairly cheap.

“Rich Dad Poor Dad”
Robert T. Kiyosaki and Sharon L. Lechter
TechPress Inc. 1998.
Approx. $19.95
This book is the first in Robert Kiyosaki’s trilogy of investment guides. He is always very careful not to advocate a particular path to building wealth, but instead tries to teach a mindset for achieving great wealth. Specifically, the mindset of the very rich, based on his own experiences and the teachings of his “rich dad”. Rich Dad Poor Dad lays the educational foundation for the other two volumes, although it stands on its own as an eye-opening and very enjoyable read. Through defining assets, liabilities, balance sheets, and income statements in simple ways, Kiyosaki conveys the basics of financial literacy from the point of view that “cashflow is king”. It doesn’t try to be consistent with typical accountancy teachings, but strives to highlight the aspects of one’s personal finances that should be given priority. It’s a book that could’ve done with a proper editing, but has noble goals, and should be required reading for all those contemplating a life of employment, at the very least for the fresh perspective on investing that it brings.

“The CASHFLOW Quadrant”
Robert T. Kiyosaki and Sharon L. Lechter
TechPress Inc. 1998.
Approx. $19.95
In this second guide, Kiyosaki introduces four classifications of people based on how they earn income. These classifications form the quadrant for which the book is named. People “on the left side” of the quadrant earn income directly from their own labour. Those on the right side earn income through others’ labour. This book discusses the steps to take in order to move oneself from the left to the right side of the quadrant, particularly to the classification based around earning income from investing where the greatest potential income streams can be found at the lowest risk. Kiyoski seeks to help people understand themselves better, and through this understanding improve themselves to eventually control their personal financial situations.

“Rich Dad’s Guide to Investing”
Robert T. Kiyosaki and Sharon L. Lechter
TechPress Inc. 2000.
Approx. $21.90.
In Kiyosaki’s third guide, the final in the series to date, he tells the tale of how he learned his financial skills, both from his “rich dad” and through his own life. He notes that there is no magic formula, and becoming a successful businessman or investor is hard work. Kiyosaki discusses the need for planning, support from a clever team of financial/business professionals, and what different types of investors do (the best types of investor have more control over their investments). He now works at being the type of investor that takes companies public, profiting from the sales of their shares, but he has previously been the type of investor that buys into businesses, and this is the type of investor that he recommends for most people. This book solidifies the theories presented in the previous two guides, and gives real advice on how to “do” what the best investors do, compared with the previous books that focussed more on how to “be” a good investor.

“House Hunting”
Jerry Tyrrell
2nd ed. Allen & Unwin. 1997.
Approx. $16.95
In this brief but comprehensive guide, Jerry Tyrrell draws on his experience as a property inspector to provide step by step advice on how to purchase residential property. He discusses topics such as choosing a property, engaging professional help, bidding strategies at auction, legal considerations, choosing a loan, and moving in. There is an emphasis on the use of property inspections, and you may come away from the book believing that the most important step in acquiring property is the property inspection. However, the book gives a very thorough treatment to many of the issues, and may require later reference as a buyer steps through the purchase process in order to make full use of the book.

“How to Own Your Home Years Sooner!”
H. Gill and S. Therry
2nd ed. I.G.C. (Aust). 1997.
Reviewed: November 2000
Approx. $24.95
This short book covers the simple mathematical principles behind housing loans. From this basis, the authors explain the now well known benefits of Offset and Line Of Credit loans. Gill and Therry are mortgage brokers and they are apparently frustrated with how banks sucker people into home loans that cost them a lot. They outline the benefits of the different home loan structures available from banks, list the typical lending criteria used by banks and how to calculate them, show how to keep track of personal expenses and choose the best home loan, and offer tips for paying off a loan quickly. This book is great for those trying to tell the difference between the banks’ loans, and although is helpful for increasing investors’ understanding of loans, is ideally suited for those looking for a home loan.

“Investing in Residential Property”
Peter Waxman
4th ed. Wrightbooks. 2000.
Approx. $32.90
This book is an extended, scholarly discussion on the economic forces that affect changes in the residential housing industry. The subtitle of the book (Understanding the market in the New Millennium) more accurately reflects the contents than the title does. There is very little guidance on how to invest in residential property – most of the issues discussed are things that the average investor has very little control over, eg. current account deficit, interest rates, taxation or migration levels. However, this book teaches an economic perspective of the housing industry, something that is relatively uncommon. It is filled with facts, figures and tables, and at times can be quite overwhelming. I came away with an appreciation for how complicated the economic environment is, and the difficulty in making predictions about the medium-to-long term future of residential property investing. Although too heavy to be a beginners’ introduction, its completeness makes this book a worthwhile read for the investor serious about understanding the risks inherent in property.

“Making Money”
Paul Clitheroe
4th ed. (Year 2000 edition) Penguin Books Australia. 1999.
Reviewed: April 2001
Approx. $24.95
Eventually all media personalities get around to writing a book, and so it’s no real surprise that financial planner come television presenter, Paul Clitheroe, has become an author as well. The surprise is how good the book is. It isn’t light reading, but it is aimed squarely at the novice investor. Clitheroe covers both investing philosophy and technique, including topics such as saving, tax, property, shares, and retirement. Although his favourite forms of investing are superannuation and managed funds, he provides reasonable arguments for these without ignoring other alternatives. The more involved (and perhaps profitable) investing techniques are not really covered, but the level of detail provided should easily protect the unwary from some of the self-proclaimed gurus around. If you want a sensible backgrounder to investing in general, then this one is for you.

“Common Sense on Mutual Funds”
John C. Bogle
John Wiley & Sons, Inc. 1999.
Reviewed: June 2001
Approx. $56.00
John Bogle started Vanguard in the mid 1970s, the first fund company to operate a public fund based on a stock market index, and has been a crusader for index funds ever since. In this regrettably wordy and repetitive book, he provides a compelling argument for avoiding investing in actively managed funds, and details the historical and philosophical background of the Vanguard group of funds. His argument is addressed to those who wish to have their money invested without fuss for the long term: there is no way to tell in advance which managed funds will perform the best in the short-term, all funds will perform at best equivalent to the market before costs long-term, and actively managed funds cost substantially more than passively managed funds. Hence low- cost, passively managed funds, such as index funds, are the preferred investment vehicle. The argument and conclusion are supported by copious figures and charts, and as a result this book will appeal to the more academically-inclined investor.

“Family Trusts”
N. E. Renton
2nd ed. Wrightbooks. 2001.
Reviewed: September 2001
Approx. $27.95
Nick Renton has again written a very detailed book to help investors understand the intricacies around an aspect of Australian law. This is the most popular general book for understanding how to use trusts, but it has a bias heavily towards family trusts, as indicated by the title. So if you aren’t interested in setting up a family trust, you will have to wade through much irrelevant material. Another issue is the dynamic situation with respect to taxation of trusts recently. This book was completed after it was determined that legislation to tax trusts as companies was to be postponed indefinitely, but not all of paragraphs in this book are as recent – this minor fault is not a concern if you read the whole book. Until specialist books or pamphlets are prepared for different investors and their needs concerning trusts, this is an essential text to read before meeting with your accountant or solicitor.

“Smarter Property Investment”
Peter Cerexhe
Allen & Unwin. 2001.
Reviewed: November 2001
Approx. $24.95
This down-to-earth book, written by ex-solicitor Peter Cerexhe, contains something for any but the most experienced property investor. The focus on both residential property and buying for investment makes this book especially valuable compared with other property or investment books. Areas covered include tax considerations, CBD vs. suburbs, steps involved in buying well, and various strategies for different types of investor. This book may scare off the novice investor, and does not contain any ground-breaking new approaches, but strives (and I believe, succeeds) in being sensible. It is especially suited towards people who already own some property and want to invest in additional property.

“The Richest Man In Babylon”
George S. Clason
Signet. 1988.
Reviewed: December 2001
Approx. $16.95
Beloved by millions, this bestselling book reveals the success secrets of the ancients and has been hailed as the greatest inspirational work on the subject of thrift, financial planning, and personal wealth.
George Clason, credited with the production of the U.S.A’s first road atlas, was an avid publisher, and created a number of pamphlets on financial self-help. Many of these pamphlets (originally written as long ago as 1926) have been collected into this book as chapters. Also unusual, is that this book is basically a work of fiction – each chapter tells a different story based on characters from Babylon. Arkad the money lender, Dabasir the camel trader, Sharru Nada the merchant price, and others tell their tales of how they overcame adversity and became successful. Although this theme is presented repeatedly, it is still an engaging and interesting book, and reminded me of Rich Dad Poor Dad in many ways. Clason presents his advice with equal parts of motivation and education, and should capture the imagination of those who have yet to establish a financial plan.

“The One Minute Millionaire”
by Mark Victor Hansen and Robert G. Allen
This book gives a fantastic insight into joint ventures and how team dynamics can work. Very inspiring too. If you are doing or contemplating Joint Ventures, this is worth a read.

“The E-Myth Revisited”
by Michael Gerber
Michael Gerber dispels the myths surrounding starting your own business and shows how commonplace assumptions can get in the way of running a business. Next, he walks you through the steps in the life of a business – from entrepreneurial infancy, through adolescent growing pains, to the mature entrepreneurial perspective, the guiding light of all businesses that succeed – and shows how to apply the lessons of franchising to any business, whether or not it is a franchise. Finally, Gerber draws the vital, often overlooked distinction between working on your business and working in your business.

“How To Be Rich”
J. Paul Getty
Jove Books. 1983.
Reviewed: February 2002
Approx. $15.00
Self-made billionaire Paul Getty was once credited with being the richest man in the world, and here he presents some of his philosophies on life. The book is not titled “how to become rich” since that isn’t its focus, and contains Getty’s advice about the sort of person you should be, if you are rich or to be rich. Intelligently written, it presents the gritty reality of Getty’s accomplishments, and the good and bad sides of being successful in business. Although targeted mainly at the novice in business, it has wide appeal, and in separate chapters also covers Getty’s opinions on investing in stocks, real estate, and fine art.

“The Millionaire Next Door”
Thomas J. Stanley and William D. Danko
Longstreet Press, 1997.
Reviewed: May 2002
These are the real secrets of America’s rich and not so famous. The authors are academics who have conducted several surveys of affluent America, and have discovered that a majority are not living a glamorous lifestyle, but instead are obsessively frugal and avidly investing. They have the appearance of a traditional worker husband-homemaker wife couple, living in an average home in an averagely decent suburb. The authors suspect that the internal drive that makes them live this relatively humble lifestyle is responsible for their prodigious wealth. The chapter on how children of wealthy parents fare is very telling, with those who become dependent on an easy life finding it hard to become motivated to create their own success. Although more descriptive than prescriptive, this is an interesting look at how the average successful people live, and good for investors finding it hard to defer lifestyle purchases.

“Money Secrets of the Rich: Learn the seven steps to financial freedom”
John R. Burley and Bruce Whiting
Treasure Chest Unlimited, 2000.
Reviewed: October 2002
Approx. $27.95
Financial seminar guru John Burley’s book for the Australian investor is a motivating description of a programme for financial self-improvement. Written in a casual but thorough style and filled throughout with pithy quotations, it guides the reader towards higher levels of investor skill. Burley’s seven levels of investor range from non-investor (zero) through the passive investor (three) up to the capitalist (six), and supplies strategies for moving step-by-step up the ranks. Copious tips and web site references are supplied for almost every significant financial topic, eg. buying a car, choosing health insurance, or selecting positively geared property. I believe that this book contains the substance of Burley’s seminar series, normally costing thousands of dollars, and will be educational for Australians at almost any level of experience.

I also attended Steve’s Melbourne seminar and thought it was very creative and educational.

Steve is an absolute genius and gives very good advice. The weekend seminar costs $286 and really just covers the venue and the buffet lunch that is included – excellent value.

If anyone is serious about investing, i highly recommend this seminar above all others.

As Terry says, Steve advocates investing in high growth suburbs for capital gains and not cashflow as this is the true way to become wealthy.
He also has an interesting formula for valueing property called rental reality, details of which can be found at:
http://www.somersoft.com/forums/

Do a search for “Steve Navra” or “cashbond”.

Cashbonds are also a useful tool for those who have hit the DSR wall and are asset rich but have problems servicing debt – ideal for those who are “asset rich, cash poor” like retirees.

If you use Steve’s structure for investing, it’s possible to double your wealth every 5 years assuming you invest in growth properties that grow at 5% per year. This can be easily achieved if you buy well located property as the average for capital cities has been 7.9% over the past 20 years.

The best thing about his strategy is that it is very low risk and also about diversification. The only reason he personally invests in property is to offset his huge gains from shares through negative gearing.

Steve does not advertise at all – all his business is word of mouth and through recommendation as he’s made many, many people financially independent on passive incomes of over $100k p.a. I would highly recommend anyone who wants to retire wealthy to use his strategies and become a client of his soon. He says that he may soon stop new clients coming on board and concentrate on his existing clients.

He has also launched a share fund that looks like a winner. NO fees are charged unless he out performs the All Ords and there are no exit fees either! It is an income fund and will return at least 10% per year. At the moment it’s on track to return over 100% this year!

He has turned the fund management industry on it’s head and will give the industry a huge shakeup with his new fund. Look out for Steve Navra on BRW’s Rich 200 in the coming years as he’s surely Australia’s own Warren Buffet and will also create millionaires of many of his clients.

Hi Ozchick,
This post looks similar to your situation:

http://www.somersoft.com/forums/showthread.php?s=&threadid=8145

If this guy can do it, so should you:

http://66.111.38.199/forums/showthread.php?s=&threadid=7947

It’s a shame that you earn a decent income but don’t have any savings or assets.
I think you need to educate yourself by reading “the bible” called “More Wealth from Residential Property” written by Jan Somers.

The fastest way to get where you want is to move out of your rental and rent a cheaper place while you save your heart out for the next 12 months. Put away 30% of your GROSS wage by automatic transfer every payday so you don’t see it.

Borrow as much as you can and negative gear – ideal on your income.
You should be doubling your wealth every 5-6 years if you do things correctly.

I’ve just rang for some quotes among the main landlord insurance policies including AON, CGU, Terri Scheer, QBE, St George Bank and Westpac; and i’ve decided to go with Westpac.

They are the cheapest and offer the best cover for $179.04 p.a or $14.92 pcm per property.
Most of the others range from $220 – $300 pa.

This policy covers the main stuff you need including malicious damage, rent default, loss of rent, theft of fittings & fixtures and legal liability. These things are all covered even if caused by the tenant and/or their visitors.

Be careful with AON as they will void a policy if the tenant is registered with TICA.

Bad luck, it sounds like you were exceeding the speed limit by enough to get a suspension as well.
I thought it was 30km in Victoria, or did they change it?

I have not had any good experiences with police and do not respect them at all.

They are a brotherhood that believe they can do whatever they want because, hey, who you gonna call and complain to?

It’s good to see the Ceja taskforce are prosecuting police for selling heroin, killing witnesses and numerous other things like taking bribes etc.

A good mate of mine has a cop for a brother and he also sells marijuana and brags about keeping money they find on raids.

Don’t forget about CGT.
It may be better to transfer them over 1 at a time in seperate financial years to limit this amount.

East coast CP has also been a victim of the current boom albeit without the frenzy in some pockets.

In the good old days, a rough rule of thumb was 5% for residential and 10% for commercial.

However yields are now down to 6%-7% in a lot of areas because of increased prices where the rent hasn’t kept up.

Quality property such as in Chapel St, South Yarra sells on yields of about 5%.

I think shop tops are always worth a second look because of the dual income streams available from the shop and the seperate residence.