Forum Replies Created
Hi Carlin
Sorry to hear of your dramas with this individual. I went to a session held by consumer affairs on this sort of thing perhaps geive the them a ring the chap is helpful. I forget his name but if you are interested PM me and i fish out his name for you.
They did say that the RTT takes the view that everyone is fair and resonable.The other thing that stood out to me at the session is the amount of people (Landlords) that were there with similar stories to yours.
Due process had to be followed etc. As far as funds greater than the bond well that was the landlords problem (Court). And if the tenant cant pay stiff cheese basically.
Between the lines not worth persuing for the costs etc.
Something that was said:
Out of 100 tenants 80 tenants pay on time
of the 80 tenants 64 pay when reminded
of those 64 tenants 51 need a another reminder and pay
of those 51 40 need something in writing and pay
of those 40 32 need a verbal threat and pay
of those 32 25 need legal threat and pay
etc it goes down the line like this until you get to a professional evader of there responsibilities that knows the system back to front and never pays.There recommendation don’t get nice things for tenants they don’t look after them.For example if you provide a plasma TV they can replace it with a far inferior one if it is damaged etc.
Something to think about.
Best of Luck
StargazerPS.Im in Adelaide also.
Life should NOT be a journey to the grave with the intention of arriving safely in an attractive and well preserved body, but rather to skid in sideways Beer in one hand – Pizza in the other, body thoroughly used up, totally worn out, and screaming WOO HOO!”
Hi all
How do you find investing interstate from where you are in these smaller towns re: due dilligence etc.
Camder
I have been looking at this type of investment myself eg 3 units. Are they on one title or strata.How do you go for property management in these sorts of towns.
regards
stargazerLife should NOT be a journey to the grave with the intention of arriving safely in an attractive and well preserved body, but rather to skid in sideways Beer in one hand – Pizza in the other, body thoroughly used up, totally worn out, and screaming WOO HOO!”
Hi all
Thankyou all very much for taking the time to reply.
She is not one to sit down and read on this sort of thing at this stage and expects me to arrange things for her.
As much as i am trying to encourage her to do so.
I feel knowing her at this stage a deposit into a higher interest bearing account may be the way at this stage.
Property can deliver negative experiences and perhaps she is not ready at this stage.
Cheers
SGHi
I don’t think it is that far fetched TMA to just use purchase price according to what i have read. I am not saying its the best way.
Simply….Gross Rent/ Purchase Price
So as per our example:
290*52=15080/200000 *100=Gross yield=7.54%Including Purchase Costs
15080/210000*100=7.18%15080 less
pm…8%=1200
rates…2000
=11880/200000=5.94%net
=11880/210000=5.65% netAnother thing if had owned the property for a while are your getting lower yield because the value has gone up. Or is the yield calculated on the purchase price you paid?
Investment Detective looks interesting Steve thankyou.
Cheers
SGHi
I would like to see the following:
1) At what point should asset protection be a serious consideration. Some say before you start your portfolio others say a few in your own name then look at trusts etc.
2) The different types of Trusts and there Pros and Cons.
3) How to interpret info whilst doing the research. eg indicators that a momentum may be starting in price rises.
Cheers
SGHi Don and Liz
Thankyou for your thoughtful comments.
People say money follows management! Tenant selection, maintenance, maintenance programs, insurance, (landlords and building), finance (product selection) finance (debt reduction), record keeping and accounting, monitoring capital value and rental yields, meeting tenant needs to increase yields, exit strategies. You need to try and do everything you can to add value to and increase the yields
Not sure what you mean here is do as much as you can yourself or Use the right people for the and make sure they do it professionally.
Slection of professionals to be around you will be critical. Investigating and or creating the correct sturcture. Basically treat each property like a small business and be very business like in your approach.
Yes great comment to look at each property like a small business.
We are in the process of examining our entire portfolio and doing detailed profiles containing everything you would ever need to know about each property. We have the indentified the potential of each property and out goals for it.
This is the area i guess i need to chalk up on i gather you mean research and analysis.Could you elaborate a bit more i find this interesting on how people evaluate.
In 2003 we investigated and set up a structure in NZ. We did not buy our first property here until March 2004. We are currenlty holdinng 8 properties here without using any of our equity in our OZ portfolio. Each property stands alone so as prices rise so does the overall equity. So we have spread the risk around.
You say each property stands alone so as the value rises each has its own extra equity for further investment i guess. How have you found this to work if for example you did not have enough equity in one but enough in say 2 or 3 properties together.We have two seperate portfolios both of which are postive cashflow ( if you excluded our former PPOR). The NZ and the OZ properties pay for themselves and are showing capital growth. Investing in this way has given us the freedom to leave our paid jobs. We still have the security to return if we need to but that option seems less likely all the time. However, we are still very busy investing and concentrating on the portfolio.
Well done Don and LizPlenty of people will advise you on your properties and many parties have an interest in your portfolio ie managers, the bank etc. However, you are the only one that has made a serious capital investment and have the most at stake.
Yes plenty have and some are good and some not so good.
Insist on the highest standards for your property in every area
Do you mean with maintenance, property management etcWhat have you found the best structure for what you have done?
Do you use trusts etc?
Cheers
SGHi people
Thanks for your responses.
Don and Liz could you elaborate a bit on your reply to spread the risk and concentrate on he management.
Yes it is to get motivated as i have been still this was because i had structured incorrectly and was bascially at the banks mercy at the time.
I have rectified this now so i am looking at which direction to take with the equity i have.
NG doesnt seem to be as attractive due to recent changes to tax thresholds/depreciation changes etc
So i am also trying to see what direction to take. PG property is predominantly rural.
Commercial property i dont know enough about and i beleive the leases are more involved and the risk is higher of vacancies.
Shares i don’t know alot about except straight out buy and hold long term blue chip type.
I feel i want to increase my cashflow rather than dipping in my pocket as i have been doing up til now for the IP.
At the same time if the cashflow improves then a better quality property and location would be considered.
Then of course things like asset protection come to mind and some say you should have a trust etc. So you have to weigh everything up.
I reckon i need a mentor to give me a push along but hey hard to find.
Cheers
SGHi loungeact
I was in similar circumstances when i was a bit younger than you.
The promise i made myself was that mum would never not have a roof over her head and the residence would be as close and handy to amenities as possible.
We bascially shared, with her pension and my small wage and what was hers was mine and vice versa.
After having bought and lived in a small unit we sold it and bought a house with a granny flat and this served us well. It gave her security and comfort and also company and she enjoyed seeing the grandkids.
She has passed on now but i have no regrets with the decisions that were taken at the time.
Cheers
SGHi all
Interesting views there seems to be two camps.
The yes its great
The No its a a recipe for disaster.Steve Navra has been a strong advocate of this strategy. No i haven’t done his course or met with him.
From other posts i have read he does advocate
1/3 Proeprty 1/3 shares 1/3 cash but most important keep your equity working.From what i have read it appears to me that living off equity requires a reasonable asset base.
80% LVR is ok in the property providing you mix in the other two.
What i have difficulty with is the shares part as if you got the money in there the shares could go down and you are buying with borrowings.The cashbond is for servicibility issues.
So to live off equity takes a bit more balancing and juggling than straight out living off income.
If you get the LOE right the tax paid is less vs greater income. Leaving more money in your pocket.
Do others see it this way?
regards
SGHi all
Thanks for your responses much appreciated. i am finding to hard to get my head around this trust thing. If someone could explain in laymans terms it would certainly help.This is my understanding so far:
Trusts are use for:-
Asset protection
Distribution of funds to minimise tax.
(I have read on some posts that the proeprties may be at risk in a trust as well if the trust is sued)…This then get me a bit confused.A trust is made up of
Appointer
trustee
benfeciariesthere are three types of trust
Family trust
Descretionery unit Trust
Hybrid Discretionery TrustOnce a trust is established any current properties incurr normal sales costs if transferred into trust.
If PPOR tansferred into trust the costs involved but can rent back of trust.
Further purchasers acan be bought by trust. But you are the person that is the appointer and the trustee?
How are the loans handled do they have to be refinanced and trust borrow the money or a new loan created for trust properties.
If properties NG then cannot offset losses till sale. Interest etc not tax deductible.
There is a way of doing according to investors? i get a bit lost with this one.I am looking to buy “trust magic” hope this will answer my questions but if anyone wants to have a go?
I have not purchased any property because of this i want to try and get the structure right.
Spoke to my accountant he said i don’t need a trust. AHHHHHHHHHHHHHHHHH.
Anyone?
Cheers
SGThanks for your response Rob
I would not bother with a LOC but take another loan as a split instead.
Sorry Rob i am a bit lost here could you explain this to me.
regards
SGHi Rob
I always try and leave any investment property at 80% LVR with an interest only loan if there is a non-deductible debt. I also try and place as little debt against the PPOR as possible.
OK. Lets get down to some numbers i guess as i undertand better your directionI was actually going to increase the Loan to $120000 as to have a $20000 buffer also adding new pergola may need another car in the near future etc.
This would look like this:
PPOR LOAN…..120000
In offset account…..20000
This would be an interest only loan.in case you move later.
Yes if i move later i can leave the loan as is and the interest become tax deductible if i change the PPOR to an IP and use whatever funds i have in the offset as a deposit. This is only to have the flexibility to do this i may not i may just pay the PPOR of. Once you pay down a LOC then in most cases the option is to sell as you have small tax deductible debt if you held on and big non tax deductible.
The Question i guess is would the whole 120000 be tax deductible if changed to an IP or only the 100000. I would also need to get it revalued for CGT purposes.I would not bother with a LOC but take another loan as a split instead.
You have lost me hereThere is no real need to take the maximum unless you intend to use it or foresee some problems where you may need it.
My thinking was to have deposit available if opportunity presents itself. By taking from LOC then the interest is Tax deductible for the draw down.It is not that expensive to increase your loan if you need to and it can be done very quickly. Also, under the right package, it will not cost you anything except the stamp duty on the mortgage for the upstamped amount.
Yes
The greatest benefit to you will be how you use your finance package.All income and rent from all sources should be deposited into the offset account.
I have been told that for the ATO it is best to have everything seperate even the rent should go into the account which pays the expenses for the investment property. If a shortfall occurs the LOC would pick it up and the interest is tax deductible.Minimum fortnightly direct debits should be setup from the offset account ATO?
to only pay the interest on all the loans (including the PPOR).
Only PPORIf your total borrowings are more than $500,000, you should get a rate of 6.62%. If less, it should be no more than 6.72%. Most packages will not include the value of the line of credit in the total borrowings to get better discounts.
YesCheers
SGHi all
Robert good to see you back although i read that you may be going to greener pastures.I ask the questions in light i have transferred my IP to another lender. This IP is 80% LVR.
My PPOR is with my current lender but it makes sense to me anyway to transfer my PPOR over to the new lender because of a package arrangement so no ongoing fees.
Now i am looking as to have my Loan on my PPOR which is say a 1/3 of what the value of the property is so it is currently at 33% LVR. If i borrow the whole 80% LVR on my PPOR then i would have the Loan say $100000 on my PPOR and the rest in a LOC say $140000 which is the same rate as variable and this would be for investments only.
If i borrow the lot then i pay stamp duty etc on the whole amount which may sit there for a while.Or should i just borrow and refianance the my PPOR with a smaller LOC and top up as required.
My PPOR loan would have a Offset account linked to it.
Cheers
SGHi all
Well i have had alot of calls soliciting and i use to do it myself.
The thing is that most have a script or some info that allows them to move foward as in
“are you the home owner”? answer is always NO i rent the place. End of call they can’t get your business because you are not the owner.So listen for the first question and you are never the owner or the person in whose account the name is in.
Sometimes i make out i am a dorky teenager. Sorry Dads not home ring back call finished…lol.
Guess what i hardly get any calls now apart from the occassional local charity which is ok.
Have fun….
Cheers
SGHi Mini
“An exchange of energy”….great stuff and excellent way to look at it.
Cheers
SGHi Mini
Thanks for your input i always find your posts refreshing and have a get up and go slant to them which is great.
When i said it’s not for me that is in the context of spending thousands. I have heard of seminars for $3000 i at this point cant justify that.
$500 and knowing and recommended by fellow investors would certainly worth looking closer and as you say just for the experience of it all.
As i said at this stage books and other investors have been of help this is not to say that reasonably priced seminar to me is out of the question.
Mini how did you handle this: This is what i find difficult.
You ask and seek information from fellow investors that have much more exprience and knowledge. They give up there time and help with opinions and offer some advice etc. Being not as enightened as the other person/s how does one recipricate to say thankyou i really appreciate your time and input.
Do you understand what im saying like here you have a multi millionaire giving you advice you are just starting out what can i possibly offer that person in return.
Maybe i have a problem expressing myself? What are your thoughts.
Kind regards
SGHi all
Does it really matter how many properties you have. Its not a race and not everyone is in a position to run out there and just buy buy buy.I find it hard to agree with the sought of amounts charged for some seminars.
When a person is making so much out of there own investments and they genuinely want to help i feel that charging thousand excludes the very people that may need the start.
Sure people will find the money and increase the wealth of the presenter. The old do wahtever it takes type stuff. Put it on Visa etc. Show your serious etc.
These high net worth people that attend well its probably a tax deduction to them. Why not give someone a big discount for every say 10 high net worth person that books.
I can’t justify it to myself to spend thousands on seminars.
No disrespect to anyone i guess its just me. I have bought plenty of books and spoken to other investors and have found that a big help.
Regards
SGHi all
Well i was at a party one night had a few and cracking plenty of jokes and generally carrying on.
A woman came up to me and said ” I can see You’re nuts”…[ohno]
Got me thinking for a few seconds…lol
cheers
SGHi
Les K:
May i ask if your properties are in a trust or bought in own names.
Cheers
SG
