Ah, I’m told the sky is grey and appears blue. Well there you go, a definition that fits the facts. Logic is preserved.

As much or as little can go on behind the scenes and giving money away for free is still lost money. Of course it is possible there is some legislation that allows them to make money only if they give it away as a loan, but…[Read more]

[biggrin] Following the flock?

Yeah, the flock I’m following is called rational economics and it exists in the real world where money has value.

The simple logic of the loan doesn’t make sense. Simple logic is that they hand over $$$ and that’s all you pay back over 20 years. As stated that will inevitably lead to a net loss. That’s…[Read more]

Management breakdown? I don’t doubt it, but I would have thought giving money away for free would put a bit of strain on any business model regardless the management.

Assuming they weren’t giving money away for free (ie the borrower in some form or another repayed more than they borrowed) I agree there could have been substantially improved…[Read more]

I can’t believe anyone gave IFHL even a passing thought!

Honestly if anyone was ever selling snake-oil Derivex were. Upon hearing the term “interest free home loan” I looked them up. I was hoping to find out how they intended to make money. When I read their babble and jargon rubbish my spidey senses tingled and I switched off.

If it were…[Read more]

I was going to invest heavily in:
Emu farms (Emu farms? What were you thinking Marge?)
Olive groves (mmm olives)
Australian Films (they always do well)
Borrow against my IP to pay out my PPOR then pre-pay my interest by the end of June for a fat refund (and then move off-shore to avoid the ATO)
Buy off the plan using a bank bond then on-sell at a…[Read more]

Hi,
Gee do I detect a hint of distaste for professional property developers?

Anyway. I believe,as with all things, the best way to approach something like this is to research and lay out a plan.

There are, believe it or not, DIY books about building and project managing a property development. They clearly outline everythign that needs doing,…[Read more]

Hi,
From my research a good starting place is to take 5% of the property value. This gives a rough $ value to adjust based on surrounding conditions.

This is assuming a house with 3 + bedrooms in a large city.
eg: 3br house in Melb suburbs = $300,000 price. x5% = $300/week.

That is pretty rough working and you may need to adjust up or down from…[Read more]

A personal comment regarding the drops (and rises) reported in house prices:

To say Sydney house prices have dropped up to 40% implies that all houses are created as exact duplicates of each other. Comparing prices of houses is pretty much always an apples / oranges thing. In general you can get an idea of the order of magnitude a house price…[Read more]

The real issue of course being that if you can buy the property at $250k when it is valued at $300k means the valuation is wrong and it is actually $250k. After all if you paid that much the bank has to assume that if they sell it they can only get that much as well.

The market sets the true value, not the banks or valuers.

Last things I would do:
1. Update car, take a holiday. (that’ll come later with investment income)

But yeah, any personal debt, then I’d buy a PPOR with cash = put all my current rent money into investments = pay down investment mortages, I don’t need a 100% offset because my partener works for a bank and so all fee’s for draw down, revaluation,…[Read more]

Never Sell?

I agree so far as I would prefer to own more assets if/when possible. However, if you never sell you miss out on being able to afford more assets.

If you have bought negative geared property and never sell then you’d have to wait until you’d payed down enough of the loan that it has become positive before you could service more…[Read more]

Hi,
To keep it simple (assume sufficient growth in equity each year):
year loan interest pay
1 $100k $7k $93k
2 $200k $14k $86k
3 $300k $21k $79k
…

After each year you are still liable for the previous years loans. Each year therefore your money availble for living is decreased by the previous years interest.

When do you pay…[Read more]

Oh, and stop feeling guilty about making money. That’s a Foolish Thing ™. If you do feel guilty use your money to start a business and employ people to be productive.

I never have and never will feel guilty about making money. I will only feel guilty about actions I take or action I fail to take. I don’t know about you but I’ve had to work…[Read more]

Funny thing about taxing “the rich” is that it means you end up taxing “the poor”. To top it, the real rich just move their money away so you can’t tax it.

For example, as a contractor I started a company out of the Cayman Islands, opened a bank account there and got payed through that co into that account. Normally this wouldn’t help, but I…[Read more]

You haven’t heard the least of the deal
I think I got in at the beginning of the end for project builders. That is after the initial rate hikes Devine (who I’m going through) brought out a stack of offers to keep marketshare. They’ve just done their financial year take and realise they can’t keep pouring money into home development so have…[Read more]

I just did a quick search of apartments in Brisbane between $300k and $400k and found many 2 bedroom apartments, even 1 on Mary street, asking less than $360k and some offering ensuite, gym, pool and so on. I would say M on Mary is over priced. Why pay $60k more for an apartment with 1 less bedroom and you have to wait 2 years to rent it out or…[Read more]

1 bedroom apartments are hard to sell (relatively) because they have a limited market. For this reason you get low capital growth.

If you were to look me in the eye and ask “Surrey would you recommend buying this unit?” I would respond “No. I wouldn’t even have looked at it based on my criteria for an investment.”

The reason being that at…[Read more]

There is a thread I started on this sort of thing in the developing made easy forum.

But I am settling on a new house:
Land: $87,500 (810sq metre)
House complete ready for tenent: $183,500
Total: $271,000
House size: 214 sq metre = $855/sq metre (approx)

It means you don’t need a great wad of free cash sitting doing nothing for the 2-3 months until settlement. It also gives you those extra months to save more money for deposit or reno.

The initial deposit on exchanging contracts is just there to commit you to the deal. The LVR is worked on settlement value. That is if the bank will lend 95% =…[Read more]

Excellent reply. Thanks.

That’s the sort of stuff I need.

I can understand additional cost now. I think from the above the majority of apparent extra cost is from the doubling up of expensive areas.

Kitchens and bathrooms would be far more expensive than say additional bedrooms or living rooms. All the extra plumbing, wiring and…[Read more]