Forum Replies Created
Hi,
Call me old-fashioned, but this is a question you’d want to have answered before you bought, right?
What if you can’t develop and instead you’re left with the property and it’s -ve cashflow?
My advice:
1. Go to the council asap and work out what’s possible.
2. Compare that with what’s financially feasible.
3. Understand that professional investors don’t invest in a manner where there is so much uncertainty. Work out your plan, finance etc. as without a plan your success is more a matter of chance than choice.
It may not be too late to salvage the situation… but get active quick or risk doing your dough.
Good luck.!
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Failing a post of help here, I suggest you contact WA property investment groups and ask who they use.
One thing to remember is that trust law is 90% impacted by federal rather than state based laws since the biggest issue is usually pertaining to tax law much more than State based legislation.
Still, it’s goo to get some local advice – from a solicitor or an accountant.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
The key is to find reasons why/how it will rather than be resolved that it won’t.
The idea is that, provided (1) you had access to unlimited finance, (2) you could meet the cost of additional borrowing from profits, and (3) the properties were +ve cashflow, you could continue to buy because you’d always be making profits.
The problem is that more debt means higher risk.
Hope this has helped to clarify the issue.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Seek professional advice at tax time, but I’d be confident you could mount a reasonable argument saying that the costs were incurred in obtaining assessable income, especially since you have gone on to buy elsewhere.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Very hard to say David as you only you know your investing plan.
If you are after +ve cashflow then buying the property would seem to push you further away from your goal. On the other hand, provided the market keeps appreciating then maybe it would be a good capital gains asset.
One thing I would say though is that investing to save tax is like eating icecream to diet. It’s a poor strategy that sees more people fail than it does succeed.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Tony’s formula works for him, Terry’s formula works for him, my formula works for me.
The question is… what’s your formula and how will it work for you?
As I understand it, Tony made his up from scratch… you can too.
Great to seek some advice though and thanks to Terry for providing guidance.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
It’s not complicated… find a deal and then find someone who wants to buy the details from you. Given the substantial number of people who can’t find +ve cashflow properties, you should be doing OK quite quickly.
Ah, but don’t advertise on the forum here as (except in special cases that have pre-approval) it’s against the rules.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
quote:
but sorry to be the party pooper. The 11 second solution was only good when interest rates were at 5%. Now that they arent and if you are using interest rates of 7% you need to find a property with a gross yield of 14% to be positive cash flow.Bollocks. Actually, the 11 Second Solution was created when interest rates where higher than their current levels. The problem thesedays comes about through higher property values and finding deals rather than high interest rates.
The 11 Sec solution is a filtering tool for you to gauge a quick evaluation as to likely positive cashflow return.
CoCR is really the defining financial ratio I use to ensure I obtain an adequate return relative to the risk involved.
Finally…
quote:
People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.Yeah… I believed that once too. For example, if I saved $1 per day and earned an after-tax return of 10% per annum, then according to the calculator I’d be a millionaire on Feb 14 2060. That’s still 56 years away. Now, assuming an average inflation figure of 3% over that 56 years, in today’s dollars that be equivalent to $191,000.
Steady savings is needed as a discipline more than a wealth building vehicle.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
The best I’ve seen in Oz is ten year fixed interest rates.
What I do is know at what interest rate I can lock in my positive cashflow and still earn a good return. That way I can monitor what happens and be proactive rather than reactive.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
*sigh*
When you know what to look for deals are everywhere. Sadly, though, people don’t know what they don’t know.
These words often fall on deaf ears, but… opportunities are everywhere. The key is to (1) find a region you want to invest in; and then (2) look for problems.
Good luck.
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
I think that perhaps you echo a sentiment that a lot of people feel after reading the book.
Yep – it’s pretty hard, yet there are a number of factors that will time and time again prove that deals are out there. They are (in no particular order):
1. I believe the best way to make money in property is to find problems and solve them. As we move into a buyer’s market, there will be a lot more problems to solve.
2. As you’ve found – this +ve cashflow investing game isn’t easy. Those of lesser resolve will fall by the wayside, just like the ‘Andrew’ character that I outline towards the end of the book. Investing in property is already out of vouge, which isn’t a disaster… it just takes the hype away (a good thing in my opinion).
3. Despite being a bestseller, the majority of property investors still prefer the tried and tested approach to saving tax. Today, positive cashflow is better understood but is still a relatively niche market.
4. Don’t be afraid of change. Sure, the market has moved since I bought in Ballart in 1999… but the markey is always changing. Three years from now some people will be outlining how much success they have enjoyed while others are lamenting about missing out. You need to modify your investing approach to capitalise on opportunities in every market.
5. Focus on reasons for taking action, not doing nothing. There will always be valid reasons not to budge from a comfort zone, yet these same reasons are really invisible handcuffs that quite often keep people living in their own worst case scenario.
6. Finally, if you believe you can – you might. If you believe you can’t – you have no chance at all.
Thanks for your post. Hope you had a great Xmas.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
I think that the claim:
quote:
The long property boom in Australia is at an end and the blame is being heaped on one man’s shoulders: Henry Kaye…is about as accurate as:
quote:
ABC News, Australia’s main network television channel*sigh*
Apart from Alan Kohler insights, the rest of the article is hype and lacking in substance.
Where is the discussion about investors being able to equip themselves to learn from the mistakes of others rather than namecalling and fingerpointing?
To say that Henry Kaye was responible for the boom or the possible bust is one dimensional and shows a lack of understanding about how markets actually work.
Thanks for the heads up Rebecca… interesting to read what’s in the press OS.
Merry Xmas,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Ben,
Thanks for your post and welcome to the forum!
quote:
1. Am I missing something as far as getting the best return on this property? It is a 2 bdrm + a 1 bdrm with seperate leases. Sorry if there isn’t enough info here as I don’t really know what other info would be helpful. It’s not completely dedicated as an investment property as I lived in the 1 bdrm part for a year or so before coming here.[/quoteI think that the numbers need to speak for themselves. If you are not getting the kind of return you desire (note: most people don’t ever set a required return!), then you need to take action, with the ultimate action being to sell the property and invest elsewhere.
quote:
2. I want to use the equity (approx. $200,000) to buy one or two cheap investment properties in N.Z. Is this legally possible? What info do I need to read up on, and where can I get hold of it? I love N.Z and believe it would be a good place to buy.Yep – it is legally possible, but the laws are complex. In a nutshell, to aim a tax deduction in Oz for the interest you also have to bring to account the income too.
There are some creative ways around this, such as onlending the money to another entity and charging interest, and the second entity invests in NZ…
Be wary about investing OS though… the returns may be better but there are also more risk too.
Quote:3. If I’m applying for this type of loan, do I need to be currently employed to qualify? Or is the main requirement that the property will carry itself?Hard to say… you could do a low-doc loan at say 70% on valuation, but it would be a lot easier and smoother if you could prove your income (ie. have a job).
Hope this has helped!
Merry Xmas,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Swampy30,
My moto is buy the problem, not the solution.
Thanks for your post!
Merry Xmas,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
I’ve looked at them at various times and found that they would be negatively geared on the basis of an 80% lend.
They are properties that would be better suited for investors seeking capital gains returns and not wanting the usual hassles of tenants.
For cashflow investors, the deposit required to make them +ve cashflow would mean that the CoCR would be too low.
Merry Xmas,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Generally speaking, the cost of the asset includes anything related to its purchase plus costs associated getting it into a location and condition for use.
As such labour associated with hooking up an airconditioner in a rental property would need to be added to the purchase price and depreciated.
Nb: You can claim a deduction for expenses incurred in the generation of taxable income, to the extent theat the costs do not relate to priate or domestic activities.
Merry Xmas,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Vegemite,
I’d recommend paying an accountant to flesh out your options with you.
Depending on your situation, you might be able to gain some tax advanges by paying a dividend rather than taking it as a salary.
I think you really need some advice because:
1. It is not wise to operate a business and act as a trustee in the one company.
2. As outlined in WealthGuardian, it is not wise to buy appreciating assets in a company.
3. If you buy the house in your comapny and pay rent then it needs to stack up like any other investment. You may find that it is very capital intensive and a low CoCR.Merry Xmas,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
If you’re an Australian investor then you will also need to have a plan about how you expatriate your profits.
Double-tax treaties can be complicated, and it is best to go into complex issues with some sound advice first.
As for the area… I think that it is good to do your research from home, but before you buy it is wise to visit the region to see first hand.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Doing things like this to access tax benefits is not a sustainable way to invest.
The points made by mortgage hunter are well made… indeed, this looks like a scheme which is only entered into for the purposes of minimising tax – and as such, if ever questioned, is likely to attract the ire of the tax authorities.
Personally, if you do this then do it out of love – not out of some way to gain a financial advantage. Family squabbles about money are messy and can do a lot more damage than some token financial advantage.
Merry Xmas,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
I’m happy with this post and recommend Rachel as someone with integrity.
Regards,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
