Forum Replies Created
Uh..1965+65 is 2030, just as a matter of interest. Those born in 45 have just about zero super and most of the boomers are going to have very little in super except for public servants who’ve had compulsory super since the year dot, but a lot of that’s govt funded. The population in Australia is higher now than it was in the baby boom and is growing, not shrinking.
And a lot of vigourous over 65s are enjoying a longer, part time working life as an option. It gives them their little luxuries, and their a social security bonus scheme for those who work beyond when they could claim the pension.
Nat_R is right – it’s going to be the funds inflow which will cause imbalances. Super funds are going to swing a big stick which may impact little investors negatively.
The public health expenses will be a worry, and they are political dynamite.
Frankly, I suspect that even if Steve’s net worth and annual income were quartered, (a) they’d be bigger than mine and (b) he’d be able to recover in a very short period.
Of course, that suggests that he has a poor talent in selecting business and marital partners. Given the posts to date, I’d suggest that Steve is not the one with this problem or track record.
Now, can we get back to property?
bruham, you are making claims to considerable wealth building talent – hard to have the $3M to lose, without such a talent – why not share some of that with us. As I have done.
The ATO really wants to know if you are doing this as a business. If it becomes your major source of income, you can bet that they’ll want to tax it as income.
As you can see it’s a matter of opinion, and of emotion. I tend to see change’s view that if you borrowed absolutely everything and still turned a profit it would be CF+. However, the simplest definition is that after everything including tax refunds if you ended up with a dollar, it’s cashflow positive.
I don’t think it’s important, what is more so is how it fits with your strategy and how repeatable the deal is. For YOU.
Best wishes, and welcome.
Perhaps before accepting or rejecting Kiyosaki’s theory we should consider what he said, rather than who or what he is?
Basic idea – millions of boomers retire, starting around 2010 at at 60, and accelerating thereafter. Pension funds need cash to pay the boomers and therefore start selling their stocks. Stocks go into free fall, panic, market crashes.
And for some reason real estate crashes too.
Now let’s inject a few facts. Superannuation schemes and their American equivalents are relatively new beasts – the boomers have less in them than they should. They’ll be on welfare, not pulling funds out of the market. Many of the heavily invested boomers got wiped out n the tech crash so their current holdings are lower than they might otherwise be. So withdrawals are lower than is being suggested.
Many more workers now all contributing to super at higher rates – there is more, and growing demand for shares. If the boomer funds have to sell, others are going to have to buy, putting a floor under the market.
Small quiz – what was the year of highest population increase in Australia? 1974! Those workers will only be 40, in the prime of earning life and 20 years to go to retirement when the supposed crash is happening.
Now suppose I’m wrong about this and the paper fortunes are wiped out. Real estate will go up as investors liquidate and search for a safer option.
And that’s why it’s crap – nothing to do with surfer wallets.
What the folks here are saying is that it’s not your calculations that are at fault, but your assumptions. Are you assuming that you must pay full price? Is there another way to structure the deal? Can you increase the rent/rental attractiveness? Can you offer something else to lower the price (eg faster/slower settlement, cash offer etd?)
In today’s environment you can’t just waltz down the street and hope to stumble across too much CF+ property. YOU’VE got to MAKE it happen, and that, when implemented, is truly liberating.
Take a deep breath and analyse the figures – are you actually in strife, and is it because of the investment property? The answers to these questions should help you figure out your next steps.
Andre
Australia has some restictions about foreigners owning real estate. Best for your buyer (not you) to ceck these out. It would be difficult for a bank to lend, the well endowed foreigner is a classic case for a wrap contact.
To all who are interested in direct US investment without bird dogging fees, I’d like to hear from you.
If there was enough interest, I would consider running a buying trip, connecting you to realtors, attorneys and accountants and financiers. In regard to the finance, I can’t guarantee that you will qualify, but there will be a range of options.
Contact me by PM and let me know the level of interest. I should note that given the level of effort involved you should be prepared to buy 3 or 4 properties (to a cost of up to $US120,000) to make the exercise worthwhile for yourselves.
If you guys would like me to attend the next meeting of interested people, I’d be more than happy to make the time to do so.
I think a lot of people miss the point here. Suppose engative gearing is cancelled. It is HIGHLY unikely to apply to investments that already exist (they will be ‘grandfathered’ just like pre-CGT assets and just like they were when the Govt briefly eliminated NG in the past).
They key is what happens NEXT. NG lowers yields by supporting prices and its cancellation will lower demand for IPs and therefore for housing from those why invest to get tax returns (duh!) and those who need the concessions to invest. That may lower prices generally to a point where plain CF+ property is essier to find and creative CF+ deals are more profitable.
I can live with that.
You should also look at the option of putting the property into a trust (hybrid if you wish to negatively gear it). Also if you are an employee a simpler way is to salary sacrifice the interest payments, regardless of the joint title. Or so I’ve been told.
Think about the LONG term in your asset decisions and get advice,
Originally posted by westan:Hi Quggles
those are good rates (6.5%), do you know if the person who offered this to you has actually financed foreign loans ?
From my personal experience and those of people i’ve spoken to- in American everyone says “Yes” i can get you a mortgage , and then they run around to see if they really can , in nearly all situations they have failed to deliver. If yours can do 6.5% you have done well.yes, this bloke actually had lent to foreigners before (mainly English investors) and yes, you’re right – overpromise and underdeliver seems to be the name of the game there. Their banking and finance is real dark ages stuff.
The controlling trustee will appear in the trust records. I think you need some professional advice from a transtasman specialist.
I once bought a large property in QLD – except that I couldn’t get finance and the sale fell through. Imagine my surprise when I saw this very unique property mentioned in 0-130 properties: the Melbourne investor who was my competitor and who bought the place was our very own Steve McKnight.
So here’s the deal, Steve – just give me 50% of your profits on the deal and I’ll call that fair.
[laugh4][laugh4][laugh4]I can imagine what you might call it!
Yeah, i was offered 6.5% on 80% LVR. As I said taxes and fees were around $5k (I note Westan had managed to reduce this to $4k), which is a little too rich for my liking. I will consider it to build up a credit score. OTOH, if someone reading this wants to earn 8% on $500k, I’m willling to borrow it and invest it over there, with guarantees over here.
There’s no real difficulty GETTING finance, the question is whether it’s worth it. Westan, I know you talked to me about experiences but I don’t believe you have shared what the upfront and ongoing costs of finance are. If you’ve have better offers than I have, let us all know about it!! Everyone will be better off.
Originally posted by Brisbane 04:Hi Quiggles,
Thanks for your response.What sort of set up do you require for asset protection and purchasing over in USA.Thanks MartinMartin
I go for an LLC set up as a partnership. Read Kiyosaki on the subject (and Keith Cunningham). Operates pretty much like a discretionary trust over here, but there are important differences.
General appeal – guys, please check the extensive thread I wrote on the somersoft forum (referenced earlier) and it will answer most of your questions. also a bit of colour in the feb API, but some extra detail as well.
Happy to answer others.
Hey Dan,
Quiggles here. In order, if you bought a duplex for $10k you could expect zero rent. It’d either be a dump that needs about 30k in rehab to make it livable (and you can DIE in the weather up there) or it’s it a warzone and not even an ex-cop turned property manager would dare pick up the rent.
Rentals tend to be from 275 to 450 per month ($US), regardless of price. Traps are how many services you pay for, and these can be expensive (snow shovelling, trash removal etc).
Property managers range from about 8% to 12% plus the first month’s rent.
Insurance is about $700 per $40,000 property.
Niagara falls and Buffalo have about a 5 to 10 per xent vacancy rate. I’m gardually filling up my properties, but it’s taking time.
The taxes are the annual property taxes (school tax, city tax, county tax) and the landlord pays them.
Closoing costs vary – if you get finance over there, that attracts a big tax and an upfront brokerage fee. Then there’s legals, title insurance (critical) and disbursements. If you are paying a buyers agent, add that on top. At a guess, mortgage tax of about $2000, plus buyers agent cost plus my experience was about $1100 in legals including title insurance.
Other matters – you need to consider your investment structure, you need some understanding of what you are doing and you need to assemble a bit of a team. A lot of that can be done from over here by phone and so on, but it does help to go over there.
Hope this has been of some help. As I’ve said elsewhere, you should have ecperience in managing by remote control (like in another city) before traipsing off overseas.
Cheers, and I hope this helps.
