[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

June 13, 2003 - 1:08 am

Hi,

I’m not a big fan of these as I view it like neapolitan icecream – it has a little bit of everything but not enough of anything.

A hybrid trust incorporates a mixture between fixed entitlements (like a unit trust) and discretionary entitlements (like a family trust).

I’m yet to hear a good argument for why a hybrid trust is needed, when a unit or a family trust seems to be a cleaner and better option.

I’ll talk about unit (fixed entitlement) trusts in the next newsletter.

For those interested in detailed structuring information, I draw your attention to the recently released Wealth Guardian product.

Regards,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

June 12, 2003 - 3:56 am

Hi,

Never let hype stand in the way of good sense.

And… if everyone is fishing in one market, go and find another.

And… frenzy preceeds market correction.

Well, that’s what I think anyway.

Bye,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

June 12, 2003 - 3:50 am

Hmmm….

Good questions, but out of my specific area of expertise.

However, I seem to remember something about owner builders haveing to provide a 10-year guarantee???

My neighbour is a owner:builder, I’ll see if I can remember to ask him.

Can anyone else shed any light on the matter?

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

June 12, 2003 - 3:48 am

Hi!

I’m back in the office for a day and then off to Mackay tomorrow for some R & R.

This is a very interesting post for a few reasons.

I actually believe making offers without seeing the property is not necessarily a bad thing, provided that you know what you are doing.

That is to say that there must be some due diligence over the property, which means an inspection by someone who knows what to look out for.

This may (and usually should) be a builder – however, once you’ve looked through a thousand or so properties then you get some idea of the danger signs yourself.

As for crazy prices… for +ve cashflow investors the yield is the most critical thing to review.

As for time… the less you do at the beginning the more you’ll have to do later when things go wrong.

If you are going to gamble… buy a lottery ticket. It’s a lot less expensive when you lose, and a lot more exciting when you win.

Happy investing!

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

June 4, 2003 - 7:44 am

Hi,

Thanks for making your post.

I want to make sure I understand… you have an existing property and you are planning to use (redraw/refinance) the equity in this to fund your land acquisition. The application of that equity will be via a LOC (line of credit).

If you do this then you will be able to pay cash for the land (if you need to settle) which will prevent you from having to set up separate finance in advance.

I imagine that if you do need to settle then you will refinance your land as a stand alone loan to free up your redraw (LOC) for other investments?

As a comment – it sounds fine, expect perhaps that you will need to pay establishment and other charges to claw back the equity in your existing property. Some lenders charge a facility fee whether or not you use the LOC – check this out.

I would advise that you should further develop your plan b (ie. make a plan c) just in case you cannot sell the land and you need to fund the -ve cashflow for up to six months+.

Check your affordability , together with how much you could borrow if you needed to establish separate finance. Eg, most lenders will place restictions on how much they lend for vacant land.

Finally, and above all, it’s critical that you have some kind of bigger plan for why you are pursuing this strategy.

Cheers,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

June 4, 2003 - 7:17 am

Greetings [8D]

Thanks for all your positive feedback.

I’m about to make a new post titled… “What the game was all about”. See: https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=1565

Hopefully this will clear up any confusion.

Cheers,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

June 1, 2003 - 11:31 pm

Hi,

You know… as I walked out of the venue last night – dog tired and almost hoarse – I didn’t think that I’d be functioning all that well today.

Yet, I was up at 7:30 and off for a morning walk, came home and I actually feel very refreshed.

And why not? I spent an amazing weekend with so many like-minded people who all shared a common goal.

I had an awesome time. Thank you all for attending… enjoy those key rings and let them be a constant reminder of what’s needed to be a success in real estate!

Have a wonderful day… take action now (right now) or else risk being a tyre-kicker!

Cheers,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

May 30, 2003 - 8:52 am

Hey…

I might come along too… but only if you’re nice []!

Bye,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

May 29, 2003 - 1:50 am

Hi,

The purpose of the article was to show how inflation needs to be considered when it comes to evaluating your property returns.

It’s not so much of an issue at the moment when inflation is at historical lows, but there is an potential issue with the handling of the taxing of the capital gain.

For example, no longer can you index your cost base, instead you just get a 50% discount. This might mean that in the long-term you pay tax on your inflation adjusted price rather than the real gain.

Your point about borrowing money to increase the return is well made. The example was not to show that profit cannot be made… just that profit is eroded by inflation.

Bye,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

May 24, 2003 - 7:38 am

Hi Polaris (and Insider),

I had a spare half hour so I thought I’d come online and answer a few posts. [:0)]

quote:

---

Why would someone give me control of their property for 5 years ie. lease/option it to me. Make no cashflow out of the property other than my premium and unable to sell the property for another 5 years because of my option?

---

In a lease-option there are two ways that you stand to make money as an investor.

Capital Gain

First you make (and lock in) a potential capital gain, which is the difference between your nett purchase price and the nett option exercise price you offer your client.

So, using Insider’s example of a $220k house, you might offer to sell it for say $250k on a lease option. This is the price struck at day one, and as such it doesn’t matter if the option is exercised day 1 or day 1,300 – the base remains $250k.

Positive Cashflow

The second way to make money in a lease-option is the positive cashflow arising when your rent received is greater than outgoings.

In the case of a $220k property, you’d probably be looking to receive about $330 – $360 per week as a rental in order to earn a decent positive cashflow return.

Limitations

The limitation in all this is the market rent. If the rents in the area you invest are say $250 per week, then trying to make paying $330 per week under a lease-option come out in a win-win way might be tough.

quote:

---

You find house worth 220K.

You then not buy the house but LO it paying the owner a premium 2-5K and pay him payments each week. Now how is the vendor winning. If he doesn’t own the house he has negative cash-flow and doesn’t win as you have a 5 year option which cuts him out of the appreciation. If does own it he may only recieve 5-6% PA which is not a hole lot better then a bank account.

---

The vendor ‘wins’ as such if s/he earns a +ve cashflow return. I agree, with a -ve cashflow outcome and a locked in capital appreciation, it makes no sense to use a lease-option in these circumstances.

That’s why it’s important to let the circumstances of the deal set the strategy that you adopt, rather than trying to adopt one strategy for all circumstances.

Has this helped?

Have a great night,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

May 21, 2003 - 9:17 am

Hi,

You need to make a decision… quickly.

If your contract goes unconditional then it means that you will have to come up with finance… that is, you can’t back out.

You need to work out the cost:benefit of each loan product and go with the one that best suits your investing purpose.

$200 isn’t a big penality, but I’m cunfused with the ‘5 years’ business. What happens after five years… do you need to refinance at the prevailing interest rate? Seems odd.

Five year I/O fixed… no problems. But five year I/O variable? Why not a 25 year loan with an initial 5 year I/O period?

OK – gotta get home or Julie will be most displeased. []

Bye,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

May 21, 2003 - 9:12 am

Hi,

That sounds like about $130k more than we had when Dave and I started!

Bye,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

May 21, 2003 - 8:49 am

Hi,

The long answer is that it is outlined in my 80,000 word book that is due out in August.

The short answer is:

Stage one: Earn salary -> invest salary -> make positive cashflow profits

Stage two: Earn salary -> invest salary -> make positive cashflow profits + reinvest profits

Stage three: As your profits increase, phase out salary without cutting lifestyle.

Now, there are many ways to invest. We started using wraps that allowed us to begin with a small amount of money.

The same opportunity exists today.

Bye,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

May 21, 2003 - 8:20 am

Ah,

Welcome to the problem of trying to organise finance. It has been a consstant source of frustration for me that financiers tell you one thing and end up doing something different at the 11th hour.

I can’t give you a recommendation as such, as I think that any lender will have trouble will stuggle inside one week (they need to get loan docs signed etc.).

As such, I’d be tempted to go with the I/O variable loan (the interest should be cheaper than it’s fixed cousin), but on the basis of understanding the payout costs should I refinance at a later date when you have more time up your sleeve.

That will mean you can still setlle on time but can also refinance later with hopefully no/low penalities.

Also – make sure your broker refunds any application costs for stuffing you around.

Good luck,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

May 21, 2003 - 5:28 am

Hi,

Cross-collateralising (CC) means securing one property using the title of another.

For example, if you have ten properties and all ten properties sit as collateral for any one mortgage.

Lenders do this so they have absolutely 0% risk in the loan. I fight tooth and nail to have my deals sit alone because I see CC as unnecessary.

Loans on wrap properties should never be CC as this would probably breach the Sale Of Land Act.

As for the 110% loan – yes, I’d say that the mortgage on the investment property would be secured against both the investment property and also you private home.

There will be no 2nd mortgage on your home… just a bigger $$ 1st mortgage.

I’m not sure about the stamp duty savings…???… possibily on the registration of the mortgage, but this would not be a lot of money.

You can avoid CC by borrowing 80% of the purchase price and making it known in the strongest possible terms that the loan is to stand alone.

Bye,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

May 21, 2003 - 5:21 am

Hi,

What you wrote about your astrologer is one of the funniest things I’ve read all year [].

I am a little concerned that you are looking for a magic answer that means you can continue to live your life as you know it now and end up rich.

Let me be clear – that is about as realistic as believing the Seekers will have another #1 hit.

It’s disappointing that while you seem open to the idea of creative options, you’ve asked two people and now seem to think the idea is destined for the bin.

Whatever your approach this much is certain, unless you control your spending then you’re in BIG trouble. You’ve lived off your equity and when inevitability hits you will be in poor financial shape.

Your journey will need to begin with either spending less so that you income matches your salary, or alternative earning more.

But it’s a huge mistake to use investment income to fund the gap because you are not addressing the real problem. As I wrote in my book… that’s a band aid solution to a massive haemorrhage.

If you haven’t yet understood what I’m writing… the lifestyle you have now is probably the lifestyle you’d like if you were financially independent – yet you are living on borrowed time.

If you want to get out of the rat race in three years, then make a plan rather than looking for a quick fix or magic solution.

Bye,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

May 20, 2003 - 6:55 am

…he owns (or has owned) 230ish properties, so on this basis they all have to bring in an average nett passive income of $33.44 per week.

Bye,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

May 20, 2003 - 6:52 am

Hmmm…

I’ve never been to his seminar but I’ve heard enough on the radio to know this guy flogs -ve geared property to the masses.

quote:

---

He accesses your financial situation and work out a strategy for you to go into Negative Gearing properties.

---

…and probab;ly earns a commission for doing so off the developer, financial institution, insurance coy etc.

As such, it’s not something I’m interested in.

Bye,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

May 20, 2003 - 6:50 am

Hi,

What does this mean:

quote:

---

and my weekly income is in no way secure

---

I suggest starting by researching an area that you feel comfortable with, although opportunity exists everywhere when you can find a problem and match it with a solution.

Bye,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently

[Steve McKnightKeymaster@stevemcknightJoin Date: 2001Post Count: 1,763]

May 20, 2003 - 6:38 am

OK….

The verdict is in.

I went to the Peter Flanagan event (promoted by Break Free) this afternoon.

The quick answer is that it was well worth what I paid to attend… which was nothing.

Now, the first read of that comment might seem to indicate that I am being negative.

This is not the case. In fact I would recommend attending his free intro on the basis that if you walk away with one good idea then it has been worth the time investment.

Peter’s information is good, although it is unashamedly a preview of a 3-day event that costs a shade under $3,000 per person to attend + airfare and accommodation to the Sunshine Coast.

More Details

Peter is a guy that’s larger than life and was comfortable cracking a few jokes about his weight. He left school at age 15 to get a labouring job that paid next to nicks. He later returned to TAFE and then became a psychologist with his own practice.

At 35 years of age he woke up one morning, realised he was broke and then starting investing in property.

His first deal he bought at 30% below value and then lease optioned it back to the vendor who remains in the property to this very day.

Now he and his wife pocket $200k each per annum from their property business. They live on 37 acres in outer Melbourne.

Peter mentioned that he is not speaking for the money, which is always a cliche as if this was the case you would offer the big seminar for ‘cost’, which would be significantly less.

I’d just prefer presenters to be honest. For example, I run seminars to make money as another source of income to fund property acquisitions. Let’s just call a spade a spade and move on.

All up the seminar contained some good info. His ‘Pyramid of Success’ was worth attending for. Although if you want specifics then you’ll go home disappointed.

Some interesting stats were raised:

50% of retirees will live on less than 33% of their pre-retirement income (PRI)
43% will live on b/w 33% – 53% of their PRI
6% will live on b/w 53% – 99% of their PRI
1% will live on 100%+ of their PRI

As far as negatives… the presentation went on for about 1/2 an hour too long, the presenter tended to shout a little bit and some of the claims were a nonsense… such as “I’ve done all the (property investing) courses” and I charge $1,500 per hour for private consulting.

Overall though, invest the time but weigh up the cost vs. the benefit of attending the seminar.

Bye,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com

Success comes from doing things differently