Hi all,

My accountant informs me that all of the ‘searching for houses and associated expenses stuff’ cannot be claimed as a deduction. It is however – according to him – a cost that can be set against a capital gain when I sell a property down the track.
He tells me that as my primary income is from my Ambulance employ (the forty hour a week kind of stuff!!!) that trying to con the tax office into allowing all sorts of travel as an allowable deduction in my property investing business might be a little hard to push.!!!![]
That’s my two cents worth – so keep all of your receipts and stuff – we do!!
Cheers
Lisa R[]

LOL @ diclem. Hmm dirt. You mean when we argue…y’all dont hear us yelling? no matter where u live…LOL

Hi,
Try http://www.mainroads.qld.gov.au site. They have an auction coming up of 5 surplus to requirements government properties on 28th October. Auction site is 10th floor main roads building, 477 Boundary Street, Spring Hill, Brisbane. You may want to contact them if you want details – 3834 2229 (Brisbane area code = 07?)
Good luck
Kat

aussie….we DONT need to talk about carltons “slight” non winning streak…now…..DO WE? *glaring*

~ If at first you dont succeed…destroy ALL evidence you ever tried to begin with! ~ :þ

why not just pick the closest senior citizens home and see them directly about going in half a day a week to visit those with no family.
Or a local animal shelter..go and see them direct and offer them hands on volunteering.

You dont need to go thru an organization to volunteer your services…just ask at any charitable centres if they need help []

~ If at first you dont succeed…destroy ALL evidence you ever tried to begin with! ~ :þ

quote:

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Hello

I am looking for some feedback as to the following scenario. A room/ apartment in a hotel ( fairly large group) , guaranteed lease back by hotel , net return last year 655 per month. Cost approx mid 150’s

Are there any pitfalls with this type of investment , ie what happens if Hotel goes broke, problems with the hotel owners whom are obviously far , far bigger entities

Thanks

NSD

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Fudge, you are forgetting tax in your plan 2. You don’t have the interest deductions to counter rent, as you’ve paid off the loan so quickly.
Don’t forget, also, about time value of money. The figures over 25 years disguise the huge effect of inflation. In plan 2 you are investing a lot of dollars from today, next year and the year after that, as opposed to plan 1 where you are spreading your dollars over 25 years. It’s not just inflation. In plan 2, you are giving back dollars that could be earning 7%. You only save 3% when you pay back principal, as I’ve said before. You should perhaps be looking at just figures for the next 5 years. 25 years is stretching it a bit. Your rates will increase, your rent will increase etc etc. You are ignoring depreciation as well in your calcs. This has a big effect on your early cash flow.

Jim.

F&B, as C2 says, you can change tack whenever you wish. Just do it, and develop strategies and goals as you go, but let them be dynamic, depending on how your equity and income progress.
My comment on the inflation issue is based on the simple fact that your interest costs just 51.5% of 6% after tax, which would be close to inflation.

As a budding accountant, here’s a little assignment for you: Work out your future net worth after 5 years if you (a) pay all your positive cash flow back into the loans as principal payments and
(b) if you use them to buy blue chip shares directly, that all pay at least 4.5% fully franked dividend, and capital appreciation on average say 7%

Assume the IP appreciates at 7% also. Provided you have a 5 year time scale, then the shares should hopefully achieve that as well.

My point is that principal payments are in effect only about a 3% investment after tax, but if you pay into an investment with 7% capital gain as well as dividend income you will do a lot better. While it is nice to reduce the debt to increase your saftey buffer, a more agressive approach may end up with a much larger future worth. With a 5 year time scale, this approach is not so aggressive. I suggested shares rather than property, because you can start the 7% compounding immediately, eg each month or 3 months. The effect would be similar if you could keep the property acquisition going with a reasonably short time span, but while your cash is sitting in an offset account, or as principal reduction, then it’s only earning 3% after tax, ie it’s not being leveraged. As soon as you own more than 20% of your property, you are increasing your safety buffer, but decreasing your earning potential.

Hope this makes sense, even if it’s not sensible! Jim

Hi Nats,

Please e-mail me before you do anything. I have experienced as you describe and would be happy to share what I have learnt from my past week.

All of the advice in the other posts is correct to your situation. Mine is one of very recent expeience.

Kind regards, Phil