Hi Powmow,
I got my first property when i was 20. Many banks tried to tell me I couldn’t have finance – had only just finished university – and tried to tie up my parents as guarantors. I didn’t let them, and now I have a few properties all in my own name!!!!
Do your research, due diligence and all of that stuff – and get out there. You feel pretty damn fine when you have achieved things like this on your own. Happy house hunting.
LR[8D]

Hi Jay,

Bugger! I’m with ANZ also. I have not seen my latest c/c statement so I shall persue it, as I am meeting with the bank tomorrow anyway.

I feel that the banks issue confusing fees to keep us focused purely on bloody interest rates. At least we can calculate them, as opposed to working out the what ifs with flat fees.

Your preferred choice of card describes what I have in place (or thought I had up until your post) offset against a Premier Select ANZ One account. It’s the next best thing to a LOC. I also pay an annual fee of $295 to maintain a mortgage interest charge below the current market variable.

Thanks for the tip.

Regards, Phil

Thanks W, but all I really know is how to apply maths to some fundamental concepts.

“2) Are you also investing in investment properties or are shares your forte?”

I’ll answer this one first W. I have 5 IPs plus my PPoR. One IP is commercial and it’s cf+, but the other IPs are the sort that are only cf+ after depreciation deductions. My income is such that those properties are just enough to push me down to the 43.5% tax bracket, so at that point I stopped. The maths just doesn’t work so well if you’re not in the 48.5% bracket. I now have about $350k equity after sitting back doing nothing for 5 years, so I’m in the process of setting up a line of credit loan. I’m just starting to look at shares again, because it’s probably a good time to get a bit more balance back in my portfolio towards equities. If I pick the companies that are soon to go ex-dividend, then I should have a good head start. (ie 6 months worth of interest in effect)
I’m really no expert in share investment though. I made 50k in 98, 30k in 99, and lost 30k in the tech wreck in 00, all on a 50k investment, mostly on luck, good and bad. It was enough to tide us over while we started our new company, so I’m not complaining. Obviously with those numbers I was just gambling a bit with my 50k, but now I have to try to find something a bit more stable and sensible for my LOC. I’m only going to consider shares that can fund my interest payments, eg bank shares, with at least 4.5% to 5% fully franked dividends. (My LOC rate will be 6.1%, and you have to divide the ffd’s by 0.7 to work out the grossed up dividend.) At least with the LOC finance I don’t have to worry about margin calls. I just have to hope that the dividends and loan interest don’t get out of kilter too much. I figure that after 5 to 7 years I should have a good equity in income from the shares. I might still dabble with what’s left of my original 50k, but my work is such that I can’t afford to be too distracted by it. I’ve spent too much time as it is just planning what to do with my loc.

“1) I’m really keen to start investing into equities. What recommended readings/sites/courses would you recommend? How did you get started.”

As I wrote above, W, I’ve no right to make any recommendations. I was lucky enough to be given a fair bit of equity in my previous company, so I started when it was taken over and I had to sell my share of it.” Someone recommended http://www.marketmad.com recently but Crashy doesn’t think much of them. They are currently very bearish on banks btw. They want $990 for the first 13 months. There’s Crashy’s site of course. It’s always a dilemma; should you spend the money hoping to recoup it quickly on even the first trade, or do you just go with your own gut and maybe a bit of research. All advisers suffer from the same bit of adverse logic of course, ie if they are so good, then why do they need to sell their advice?

There are far more experienced share investors on this forum though, who I’m sure could give much better advice (about advice [] ).

“3) What is the most suitable structure with which to purchase shares in order to maximise nett after tax gains. I’m a PAYG with a salary of $150K, married with children.”

With that sort of income W, you could go a long way down the slightly negative, positive after tax type of property investment. You need to buy a lot further from the cbd now than I could in ‘98 to achieve the correct balance. You need at least 6.5% gross rental return to do that effectively, and it will only last for about 8 years before most of your depreciation runs out. Hopefully by that time you will have a substantial equity and your rents will have increased enough to keep the balance. With your income, you could probably buy 5 properties of that sort before your net taxable income drops to the 43.5% bracket. You would be net cf+ on each property though. I have serious doubts about this strategy in the current climate however; that’s why I’m going to switch to equities for a while. You have to want to keep working (and keep your job!) for that strategy to work of course.
I don’t think shares will ever offer quite the same “tax dodge”. You can get margin loans etc, and pre-pay interest, but if your shares are paying a reasonable dividend (I wouldn’t get a margin loan on one that wasn’t) then that will cancel out most if not all of your interest deductions. You can set up a family trust to minimise tax of course. It depends on the age of your children, and whether they are earning their own money. It’s most effective when they are all at uni, ie aged 18+ and not earning much of a PE income. It’s what I should have done about 5 years ago, but I suffer from too much inertia when it comes to dealing with accountants[].

Sorry to ramble on but I’ve tried to show all my motivations/ rationale etc.
Regards, Jim.

Nicole, it is essential that you make enquiries first and foremost as to whether you can obtain finance and what kind of LVR.

Many lenders have either turned their back on inner city units because of oversupply or else
substantially reduced their LVR.

Even more important is the fact that the size of the living area (not including the parking area and balcony areas) determines as to whether or not a lender is prepared to lend.

Pisces133

Hi Pinky – where are you located? If you really wnat rats, I can introduce you to the local chapter of the Aus Rodent Fanciers Society – heaps of like minded people who will help you get set up the best way for the little guys – and guy(boy) rats are in my opinion the best – much more chill than the little lady rats!!!![]

lmao @ One was 20 the other 22
this is naughty as it should read 20 too

I laffed at that!! Thanx for the answer…my blondeness was really suffering LOL Im useless at riddles but I love em…..go figure LOL

time for another one?

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

laura that was not only unwarrantted…it was rude

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

Thanks Taxman, I’ll pop in the 15% scenario as well when I can get my son off the other ‘puter with the db program on it.

Crashy you have to always include Medicare levy in any tax calcs, if your taxable income is over the threshold {$16284), eg you can never use 30% or 47% in any calcs. You know that of course, you’re only joshing!

Jim

Yes Crashy, that was the post I was referring to. I’m sure she meant what I’ve said above, that income gets the taxman snapping at your heels each year. Regardless of how well you invest the positive cashflow each year, you still have to pay homage to the ATO at your marginal rate before you can. What we need of course is an investment that pays 7% income plus 7% capital gain each year.
Speaking of which, I’m just in the process of establishing a LOC, and I’m considering shares that pay at least 5% ff divs as you recommend. I’m looking at least a 5 year time frame, so that hopefully the dividends will leave the bank interest behind, with hopefully a reasonable cg as well. I’m looking a bank shares, and maybe TLS (after the buyback distortion). Mr MarketMad is forecasting “major bear market malaise for the banks” in the near future though, but I suppose if my time frame is long enough it shouldn’t matter too much.

It’s a bit tricky applying for a LOC, as they don’t recognise any potential income from your proposed investments. How does everyone else handle that?

Sorry, I know it’s off the track but I may as well shove it here.
Regards, Jim