Go to:
http://www.somersoft.com/forums/

and do a search for “Steve Navra” and/or “cashbonds”.

They are ideal for someone in your situation who is asset rich but cash poor.

If you leave in Melbourne and are quick enough, you may be able to book into Steve’s weekend workshop which is highly recommended and all will be revealed to you. It will be the most eye opening revelation, that you’ll seek me out to give me a huge thank you! []

Don’t sell the house until you see uncle Steve otherwise you will be regretting it soooo much.

I agree with Gus and would give it a wide berth as it sounds like a total rip off.

You can buy a lot of books for $15k, alternatively you could use it as a deposit on a property.

Here’s a review of some of the more popular books around.
Out of them all, I highly recommend Jan Somers books for a tried and tested method of gaining wealth through property.

Happy reading []

“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.

Sounds a bit on the high side and the yield is pretty ordinary at 5.3% for this area.
If you bought up the road at Beenleigh or Logan, you’d be getting about 8%.

The problem with Coomera is that there is still a lot of land in the area that can be released. Obviously this will satisfy any future demand which will not be good for cap gains.

Is it possible to buy a PPOR in a trust structure and gain the same tax advantages (CGT exemption), as i always thought a PPOR had to be bought in your own name?

I agree with Terry and would invest in Dale’s “Tust Magc” book – i’m halfway through it and it’s got a lot of good info in it.

You’re right – i think they are rarer.
As they say, they don’t make waterfront land any more. Especially absolute beachfront which would have the strongest cap gains of all property.
But then again, you will also pay a huge premium to get one of these and yields will be very low at about 2%-3%. The baby boomers who are retiring soon and the sea-change movement have both pushed these prices way up.

I reckon cap gains on waterfront land are at least 20% more than on dry land. The Gold Coast is a good example of beachfront land gone crazy with some areas selling close to $10k per m2.

I’d also like to add extra info by saying that your selling price also has a base which includes the agent’s commission, advertising and conveyancing costs.

So with Michael’s example:
Total base cost = $110,500. Sale price is $135,000, so your gain is $24,500.

Sale price less conveyancing ($500), Commission ($3,000) and advertising ($1,500) = $135,000 minus $5,000 = $130,000.

So CGT wll be calculated on $130,000 minus $110,500 = $19,500.
Not purchase price ($100,000) minus selling price ($135,000) = $35,000.

Obviously it’s better to pay CGT on $19,500 than $35,000 so make sure you include all your applicable costs to reduce the amount between buying and selling price as much as possible.

As Ross said, CGT is payable at your marginal tax rate so it’s obviously best to trigger a CGT event in a financial year when you have a small taxable income, eg after retirement.

I agree with what the others have said, and recommend you DIY for the knowledge and experience gained, as well as to save some $$$.

I also receive their newsletter and have been to their seminars which is the usual spiel, i.e. “property is such a great investment, have a look at these statistics and oh, by the way we happen to have some properties for sale that match this criteria.”

Apparently the IC get their properties directly from the developers at a discount price, and then sell them to their members at an inflated price of amounts $20k plus.

They are essentially real estate agents that also guide you through the whole process and also organize finance and property management for you.

Also be aware about the ASIC investigation that others have mentioned.

Hi GUNNER,

I think you’re referring to “split loans” where loans are split between a home loan account and an investment property account. Repayments are directed to the home loan, and tax-deductible compound interest accrues on the investment property. Ultimately, the strategy makes the interest on home loans tax deductible.

The main lender doing it is Austral who have been guiding this test case for the last 6 years or so.
The ATO took their product to the Federal Court saying the capitalized interest wasn’t tax deductable, but in round one the judges ruled against the ATO.

The ATO then appealed which was heard in the courts on 11/04/03. Unfortunately they won the right to appeal against this earlier Federal Court decision that allowed “split loan” products. The appeal will now be heard in the High Court.

This case has been running for about 6 years now and i’d hold off in the mean time if i were you and considering it. But i guess you could still set it up in the mean time and if the ATO lose again, claim the extra interest in your tax return. And if they win, don’t claim the interest.

And of course, courts will merely apply the law as it exists, and if the ATO lose in court, they’ll probably ask parliament to change the law … in which case, due to the standard Westminster distaste for retrospective law, if you have it in place before then, you are unlikely to be punished or have to pay it back retrospectively.

Please speak with your accountant first if you are considering it.