Forum Replies Created
I considered refinancing to bankwest (I think) a few years ago, purely because of the frequent flyer points program it was attached to, but after I did my sums the extra interest paid because of the higher interest rate would have bought the same amount of air travel anyway. I would rather have the cash instead of points. Ansett then went broke 6 months later and I would have lost all the points anyway.
Dont do anything purly for the points, fly buys points are worth about 0.7c each, and every time I fill up with petrol, I see someone buying a handfull overpriced snacks, I can only presume to get the points. Big deal, you get 10 bonus points (worth 7c) for buying a chocolate bar at double what it costs in a supermarket. (what th’??)
I have also heard that if you accumulate over a certain number of points from business credit cards, and probably IPs where tax deductions are being generated, those points may be subject to FBT.
Dont go there, it really isnt worth it.
Pete
For you or for the vendor???
You’ll be about $16,000pa in -ve cashflow, and thats before management, rates etc.
Think carefully…
Pete
Hi Michael,
The general equation for figuring out if a property will add to your servicability or detract from it is this…
Assessed annual rent – Assessed annual interest
(Rent received x 80%) minus (amount borrowed x interest rate+2%)
For example.
If you found a property returning $11,000 pa, you would have an assessed rent of $8,800pa. (80% of rent)
If you were borrowing $100k, at 6.5%, your assessed interest would be $8,500pa. (100k x 8.5%)
In this situation you would have slightly increased your servicability (ability to borrow more money)
Different lenders assess things differently, some might add 2% to the interest rate, others only 1%, some take 80% of rent, others more, some less, and different amounts on different types of properties eg serviced apartments are usually only 60% of rent received.
Pete
Thanks for the encouragement Phil,
Good to know that someone with runs on the board thinks Im on the right track, and thanks for the opportunity to test your book, got your email and will start reading it tonight.
[biggrin]
Pete
Generally you can only borrow about 65% of the pp on these, and then count only 60% of the rent, if you have no cash these will be really tough to buy.
Also as it is an investment only property, FHOG’s doesnt apply, so for a $100k pp, you will need probably 45k in cash, (35k deposit and 10k to close)
Pete
Fortunatley, I really mean that, they got the whole thing first go, and I am now 100%. I put on about 30kg after the op from the steroids I was put on. That day, I won the lottery, in health terms, everything works, no ongoing sideaffects, but as you say, gets the focus real sharp, real quick.
To me, being rich is not a financial goal it is a life goal, something that you cannot attain by owning heaps of houses, it is a deep satisfaction that you what you are doing/ have done is valuable. That may come from the relationships that you have built over the years. It may come from giving to charity, it may come from buying the rainforests so that they can be preserved forever.
To me TIME is the most valuable commodity. It is absolutley finite and you cant measure how much you have left, you can only look back and see how you have spent it.
When I was 22 I nearly died from cancer. At the time I thought I was invincible, new car, new girlfriend, new job, everything was cruising along. Until… Brian Tumor, operation in 2 days. That gives you enough time to say your good-bys and really reflect on your life so far. That is when I had a massive shift in my paradigm. I dont want to give my life away to some idiot boss who can replace me within a week, I want to spend the time that I have got, and nobody knows how much they actually have, with the people I love. Steve talks alot about PASSION, and what it is that drives you. If all you are after is a boat and a holiday, fine, but I am seeking to regain my life.
If you figure that between the age of 15-70 you have about 20,000 days, I dont want to waste another. I want to, as Kiyosaki puts it, “get out of the rat race”. That is my goal. For my passive income to be greater than my expenses, which will give me back my time. I dont want to “be rich”, I need to get a passive income of $50,000pa to cover my expenses. I wont stop there, but this is my first goal. I have about 30 pages of goals written down, that cover shares, property, business, options, how much I need and by when, and what I am going to do with the time I have bought back.
The goal I set after my operation was to own my own home by 30 (no debt), and everybody put me down and said I was crazy for even trying. some people implied that I had been ‘adversly affected’ by my illness. It was very hurtful that even my family tried to put me ‘back in my box’. I can still achieve this goal, although it is looking shaky, but my goals have somewhat changed in recent years as I have learnt more about finance and investing and how owning your own palce outright would be great but Steve would call it lazy money, but my new goal, from a few years ago is “FREE BY 33” in other words to be out of the rat race by age 33, and I have no doubt that I will achieve it, before time is up.
I believe that happiness cannot be bought, moreso happiness is the absence of problems, and money solves problems, and so money is therefore nothing more than a means to an end.
I hope that this touches a few people, it was hard to write it
Pete
Hi Intrinsic,
Yes a regulated loan is “regulated” by the UCCC, (Uniform Consumer Credit Code). Unregulated refers to loans for Business or Investment purposes.
There is a certain level of protection available to consumers under the UCCC, for regulated loans. If you are borrowing for business or investment purposes, it is assumed that you know what you are doing, so you get less protection. There are some loans that are availale only as regulated (eg most 100% LVR loans) and some that are only available as unregulated (eg self employed low doc at 65%LVR)
You have to sign a declaration when getting an unreg loan saying that it is primarily (50% or more) for bus/inv purpose, waving your rights under the UCCC.Pete
Thanks Julia,
Love the name, BAN TACS
Ps. Been to Beachmere, got a client there…
Hi all,
Another question for the Bird Doggers, do you only find property deals or do you also find wrap clients? or both?
In my profession I come accross potential wrapees, but dont have the ability to wrap them myself at the moment.
Anyone with suggestions on how to turn this into a deal?
[biggrin]
Thanks
Pete
Hello,
I also live in Brissy, and am interested in Wraps, but havnt done any yet. I also have access to potential wrap clients and finance.
PM me.
Pete
Hello,
I also live in Brissy, and am interested in Wraps, but havnt done any yet. I also have access to potential wrap clients and finance.
PM me.
Pete
Hi Julia,
so… If I buy my PPoR, live in it for 2 years, rent it out for 2 years, then sell, having not bought anywhere else, the gain is CGT free, is that right?
or do I need to move back into it for 12 months?
Thanks
Pete
Maybe Yack, but you have completely left out all the closing costs. Remember that the more you borrow (% LVR) the more you pay in closing costs. If you were to borrow 95% on a $250k purchase price, you are up for around 2.5% of the loan amount in LMI, which is about $6k, plus stamp duty on the LMI, plus stamp duty on the purchase (which varies state to state), but if you were in Vic which is the most expensive you would be up for about $11k, plus stamp duty on the mortgage amount, about $1000, plus any application fees, plus conveyancing, plus registration of the mortgage, plus rates adjustments, plus building and pest…. rule of thumb, you need about 5% of the pp for deposit (most 100% loans are for owner occ only) and an additional 5-8% of the pp for associated costs.
The biggest thing to remember is that having cash available is really important. Its like driving through the desert, you absolutly have to have enough petrol to get you to the other side, if you run out of petrol, you are in big big trouble.
If you run out of cash prior to settlement, you are in BIG BIG trouble.
Pete
it is available for owner occ only,
every 1% over the purchase price equates to 10% of the growth, ie borrow 104%, you lose 40% (or keep 60% – depends on how you look at it) its definatly not for everyone, but will suit some borrowers. there is also a 100% loan where you dont forgo any of the growth, but again only for owner occ. interest rate is about 1% higher than norm.check out:http://www.wizard.com.au/homeloans/rentbuster.aspx
