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Robbie B
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April 30, 2005 - 7:18 am
I am not an accountant but I thought the loss carried over to offset any future capital gain. I didn’t think it was useable against income tax.
Robert Bou-Hamdan
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http://www.mortgagepackaging.com.au

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Robbie B
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April 30, 2005 - 6:39 am
So they organise the finance as well?
I wonder how competitive the products and rates are they advise their clients to take. Can anyone attend these meetings and, if so, when and where is the next one in Sydney?
Robert Bou-Hamdan
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http://www.mortgagepackaging.com.au

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Robbie B
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April 30, 2005 - 6:30 am
Whether you use a deposit bond, bridging finance or cash, if the purchase falls over after you sign the contract, you will still more than likely be up for 10% of the purchase price. Using a deposit bond does not avoid this. They pay out the 10% on your behalf and then chase you for the money.
There are some great bridging loans out there that will let you run up to twelve months without requiring payments. Obviously the interest will capitalise if you don’t make payments but it helps people get into their next home.
Serviceability is calculated on the ‘end debt’ so it is not as difficult to get approved. The end debt is just the amount expected to be owing after you sell your current property and put the proceeds towards your new property.
Also, youn could still ask for a long settlement or 5% deposit using bridging finance to reduce your expenses until you sell your existing home.
Talk to a mortgage adviser before doing anything.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 30, 2005 - 6:21 am
Neo, do you think your friend would be happier doing exactly the same without using a LOC and at a lower interest rate?
Robert Bou-Hamdan
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http://www.mortgagepackaging.com.au

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Robbie B
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April 30, 2005 - 2:48 am
If you have a PERMANENT part-time job, you might be able to borrow some money. I would assume you earn very little and after your living and uni expenses, I can’t see you having enough income to get a loan.
Your question has been answered numerous times. You need to earn enough income to repay the amount of money you want to borrow. If you can do this, you can borrow.
Without more information as to more accurate amounts, no-one can give you a definitive answer.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 30, 2005 - 2:42 am
Regarding your question as to whether to negative or positive gear, I would say positive. I do not see many valid reasons excluding seeking capital growth to use for further purchases or balancing a portfolio.
The more tax you pay, the more you earn!
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 30, 2005 - 2:35 am
Why don’t you pick one of the people who has been so helpful on here? Where are you based (not that it matters much these days)?
I think you also need an accountant and maybe even a solicitor to help you with some of your enquiries.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 30, 2005 - 2:27 am
There are no costs associated with the investment I outlined. You only have to account for tax.
I think majoh’s goal is realistic considering he seems to have a lot of income available to reduce the gearing and compounding will do wonders to increase the cash flow. Good accounting strategies will also help increase cash flow exponentially.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 30, 2005 - 2:06 am
Thanks Red, I kind of made the same assumptions.
Does anyone know if their management agreements are favourable or competitive compared to standard agents?
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 30, 2005 - 2:00 am
Red, your figures look fine.
One thing though…
You are doing returns on the IPs based on the outstanding loan amounts. IP 1 is only returning 4% on current valuation and IP 2 is only returning 5.56%.
The figures you have done show that the properties are positively geared which is great for cashflow but not the best as an overall investment when looking at the asset values.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 30, 2005 - 1:46 am
I guess you know that you will be paying interest on interest doing what you plan so your costs will be more than they could otherwise be.
If you have not done so already…
Have you looked at restructuring your finances to take advantage of potentially cheaper loans or interest only options which may improve your net position?
Have you considered restructuring your repayments to reduce your ongoing interest expense and further improving your net position?
How about using an offset account against one of your IPs which may improve your cashflow and deposit requirements?
Good luck with it all.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 30, 2005 - 1:19 am
Regarding your stamp duty question, it is only stamp duty on the mortgage which is not that expensive.
As you are concerned with costs, I would suggest losing all your expensive LOCs and using standard loans or setting up a structure with an offset account attached.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 29, 2005 - 4:28 pm
Does their information extend beyond negative geared property?
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 29, 2005 - 4:20 pm
What happens is the deposit (usually 20%) and any costs (like stamp duty etc totalling about 4% of purchase price) are borrowed using the existing security. The remaining 80% would be borrowed against the property you intend to buy. This structure enables you to avoid mortgage insurance.
An example:
Property 1 – Existing Property
$100,000 Loan
$200,000 Value
$60,000 Useable equity avoiding mortgage insurance
$36,000 Required to purchase new property (24%)
Property 2 – New Property
$120,000 Loan
$150,000 Value
The result is your existing loan of $100,000 still remains and you have new borrowings of $156,000 spread across two security properties.
Any good mortgage adviser could run you through this very easily.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 29, 2005 - 4:10 pm
This forum makes it hard. I had a single response to my request for bird-dogs in WA who deal with Geraldton properties and they wanted to sell me something. I wanted to offload something. Maybe someone would take up the opportunity and start some bird-dogging around Geraldton.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 29, 2005 - 4:07 pm
Originally posted by superman:
You paid 650k for assets that currently return >150k? Or you have assets currently valued at 650k returning >150k? There is a big difference.
Neither. What I said was I know that I can earn $3,000 per week (gross) without working or worry with a capital base of $650,000.
I suggest one of the following is possible:
a) Your math is wrong, i.e. the 650k is what you paid, not the appreciated value of the assets. Or you are talking gross returns and your nets are half.
b) You truly have found exceptional investments, but, but then by the precise definition of “exceptional”, they are exceptions to the norm and our intrepid beginner investor will not have a chance of replicating their performance.
c) This is an infomercial, soon to be investigated by ASIC.
a) Not applicable
b) Any investor can do this but they need at least $200,000 to be accepted
c) No chance but a reason why I will not publicly state what this COMMON investment is.
Finally, if 650k could return 150k before gearing, and someone has 65k, they could borrow 320k at the cost of say 25.6k (conservative) and return 75k, or ~50k after loan costs. So now anyone with 65k saved can retire well above the pension. If you are to say that your assets are exceptions, then you are also suggesting that majoh really has no chance of seeing the required returns, which was my point. Also, if that 3k is truly +ve you’ll be losing so much to tax, you’ll be compounding far below the 24% you claim.
No gearing is involved and your only problem would be tax. I consider this a good problem to have and the figure I stated is a gross figure. I did not mention compounding. It is merely an example of an passive income investment that is readily available to many investors that returns a great gross return with minimal risk (in my opinion). How you structure your taxes etc to not lose a chunk to tax is your problem.
Now I’ll bite my tongue. [blush2]
No need. I enjoyed the breakdown.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 29, 2005 - 3:46 pm
Thanks Rod. I just like trying to help people by providing ALL the information I think they may require and then some more that may be of interest or helpful in some way if I have the answers they seek.
I should probably let people here know that I have also decided to retire from being a mortgage broker in the very near future (a couple of weeks) at which point I will move into a different role still within the mortage industry. I am still trying to make up my mind as to exactly what position I should take and trying very hard to get exactly the position I would really like.
I am not taking on any new clients so I am certainly not here to obtain any financial benefit and my great little retail office in Darlinghurst (which I take great pride in) will probably become an internet cafe.
I purely restrict myself to providing information only these days.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 29, 2005 - 3:36 pm
Originally posted by brahms:
as Rob has said, other factors apply to any finance application.
the original question from uforia was concise – refering to mortgage insurance only.
get it??
Brahms, I must sincerely apologise for trying to provide a more complete and comprehensive response which incorporated responses to points made by some of the other posters.
You seem to be annoyed by this as I don’t know exactly how to take your comments – especially the “get it???” thing you do.
I just thought that readers of the forum would appreciate more than a single line restricted response.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 29, 2005 - 3:26 pm
Doing some rough figures, I would say a maximum of about $50,000 which assumes the following:
– your 50k income is a gross annual figure
– your wife is on unpaid maternity leave and her 15k is not used
– you have no credit cards
This would increase once your wife recommences work. Serviceability is calculated at your position at the time of application.
Hope this helps.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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Robbie B
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April 29, 2005 - 3:12 pm
Originally posted by brahms:
Rob, this forum isn’t about you….or me….
get it??
Actually, no I don’t ‘get it’. I thought we were discussing finance and I merely questioned one of your comments providing an example from my experiences to support my point. Have I missed something?
If you cannot or do not want to answer, just don’t. Your above comments make absolutely no sense to me at all especially considering we are in a ‘discussion’ forum where I thought people could discuss various aspects of related topics and were actually encouraged to do so.
Would you prefer I do not challenge comments I consider incorrect on this forum so those who read this forum leave with incorrect or poor information?
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.au

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