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For your information we are 30 years old, live in QLD and earn a total of 160k pa (80/80) = DINKS. Our (my) year goal is to have a big enough passive income by age 45 to retire or semi-retire at least. I know it’s ambitious but where there’s a will there’s a way right!?
4. Put it towards property. Maybe a development.
Hi BNS, not only is there a way, but with the right approach by 45 your net assets should have doubled twice, at least that should be your goal. With your income you are in a great position. IMO PPOR is a very important part of any strategy you should employ. However a few words of warning. You should not be discussing tax strategy on open forums. The commissioner of taxation looks at “intention” when it comes to property. Therefor if your intention is to purchase a PPOR to make money, profit will be taxable. Sounds stupid, because everyone wants to make a CGT-free profit on their home, but that’s the trap, so keep it shut, rather establish irrefutable reasons to purchase a family home. I even advise dropping the use of the acronym which is derived from the tax act. If I was a tax investigator, the comments you’ve made on this site will be noted on your file.. forever! This may sound paranoid, but this advise comes from someone who has been investigated 4 times and seen a number of friends persecuted for acquiring wealth carelessly.
I’m continually bemused by the advice given regarding property investment. The reality is that there are plenty of investments and investment advisers to chose from (as proved by the response to your question). In reality though a good investment property is hard to find, more often than not it has to be created by value adding, which means research and work, a dirty word for many lazy investors. A lazy 8% income return should not be the only goal. Some will advise you to gear this for a 24 to 30% CG return, this makes no sense in a zero growth market. The right goal should be to compound capital. Once you set that goal, the right investment will reveal itself. Remember CG as many sell it, belongs to a dying generation, it is now a lottery, great if it happens, and should be considered a bonus, but shouldn’t form part of any investment strategy… ever.
Cheers
VandoVando | Surf&Yoga
Email MeExperienced property developer offers passive investment... 9.64% net PA, no gearing.
don’t be in a rush – make your first buy a cracker
Benny makes some good points, and I agree but I can’t help thinking this is a lot to take in for a newbie investor, as I said in a previous blog ‘make real estate your hobby or find a job in the industry’ and it will all make sense eventually. I would add a warning to Benny’s comments. The cheaper the property, the lower the socioeconomic area, the more problematic the tenants and the higher the maintenance costs. Also, more likely, is that the property next door, or worse, half the properties in the street, or the block you’ve bought in are poorly maintained or being trashed by tenants. You only need one and it’s going to effect the resale value of yours. So getting back to you question, yes where you buy is critically important. Do the research FIND A SUBURB THAT YOU LIKE and street where the residents are house proud, you’re only going to do this on the ground. There are some great tools available today on websites like OnTheHouse that show graphs of a whole range of things, growth, socioeconomics, home ownership %, etc. Learn to use these tools. Use RE agents by all means, to show you property but don’t listen to them for advice, they’re salesmen not investment advisers. Ask questions and develop a gut feel. 5-6 years out is a long time, many things will have happened and some investors will have doubled and even tripled their RE investments in that time. So consider getting in early rather than later, the market is lifting off a long flat curve after a major bust, here in SEQ at any rate.
Vando | Surf&Yoga
Email MeExperienced property developer offers passive investment... 9.64% net PA, no gearing.
Hi curious to know if there are any active aussie expats currently investing in the HK market here?
After 7 years in this great & busy city i’m now a HK resident & contemplating using funds here for an investment in the low end market, tuen mun / tsuen wan around the 3 million mark, Im aware of the 3% stamp duty, 30% deposit required & the likely 3% yield however I believe that the prices per square foot for established apartments has a ways to increase & catch up the the high prices that are being paid for new. I also think the Aussie should go lower in the next couple years once the U.S begins increasing rates which obviously would be good to hold an assets here in HK dollars as the currency is pegged to the U.S dollar. Anyway it’s early days & have a lot more research to do but interested in hearing what other experienced investors are currently doing here. Thanks in advance!Hi Stevie, I was over there for 5 years on and off trading and writing. I bought a unit in Discovery Bay, loved it over there, great facilities, 20mins from plane to front door by bus, great mountain trails and great expat community. I can offer you one piece of advice, try to think and work in one currency. When I was trading there, there was an inverse correlation between the HK (Us currency) and the AU$. Whenever I picked up on one currency I lost on the other, drove me crazy. The trading and banking system tools are the best in the world in my opinion and lucky you, no tax for investors, most tax efficient place on the planet, if it wasn’t for the fact I have family here, I’d be there with you. Enjoy and keep us updated on your game-plan.
Cheers
VandoVando | Surf&Yoga
Email MeExperienced property developer offers passive investment... 9.64% net PA, no gearing.
Hi Richard, You didn’t answer my question. However, since you broach the subject, yes apples and pears. Your ‘pears’ because investors who compare “real” property returns with “geared” returns will find their investments could go pear shaped :0. There are strict rules requiring Investment advisers, Investment Funds and Trusts to disclose real returns on property, which means you should also stipulate what gearing you use to achieve your “advertised” rates. Obviously a 75% borrowing on a property returning 7% net will provide a 28% return on capital invested. No offense, I’m a newbie on this site and I thought self promotion was frowned on.
Cheers
VandoVando | Surf&Yoga
Email MeExperienced property developer offers passive investment... 9.64% net PA, no gearing.
i just get confused a bit …..check it out… does it matter really that your IP is negatively geared or has zero gearing (ie rent equals loan repayments) as the tenant (other people ‘s money) is paying the loan anyways…. and even at the end if hold for lets say 10years and then sell even at the same price as you bought… you still will make money as most of it was paid by the tenant….are we just being greedy here???!!!!!! INVESTEC
Hi, I know accountants that get confused about negative gearing. The best, first and most definitive book on negative gearing was written by a Sydney (Eastwood) RE agent in the early 70s, Don Johnston ‘How to get real estate rich’ its out of print, I can’t even find it on Amazon. It was my golden goose. My apologies but I’m going to capitalize this … NEGATIVE GEARING WAS DESIGNED FOR BULL MARKETS! … So that you could strip out the profits tax free by increasing your loan annually. It worked well right through the 70s and up until the Japanese banking fiasco in early 90s then CRASH. It might still be useful for SOME high tax paying investors … sometimes. The reason it worked was because property didn’t just double or triple, some property rose 1000% in less than 10 years.
Vando | Surf&Yoga
Email MeExperienced property developer offers passive investment... 9.64% net PA, no gearing.
Several high level friends of ours are predicting worse to come. Low Doc home loans forclosurers are increasing at an alarming level, with one mortgage management company telling us that the only department in their group growing is the bank closure department. Credit card debt in australia is at new levels reaching over 30 billion dollars and people aren’t paying their cards off but opting to get new ones with lower rates then max them out as well, some thing has to give here! The Perth boom is about to go the other way with reports saying that the average house sale is now dearer than QLD who has a larger population base. Banks are tightening their lending criteria and the valuers are getting harder on vals of residential properties. I am interested in finding out how many people that read these threads are really positive and what you believe is a good investment to get into. D
Sorry I don’t have time to read all the responses but what is worth noting is the massive number of hits on your blog which tells me there is still a lot of negative sentiment out there. As a technical analyst I would offer this view. Your comments are hearsay that runs contrary to “property” advertising evidence which clearly shows a substantial decline in fire sales. Couple this ‘negative sentiment’ with the ‘evidence’ and my suggestion as a successful contrarian… is gear up @ 5%, dig out the last of the deals and then sit back and take a holiday :)
Vando | Surf&Yoga
Email MeExperienced property developer offers passive investment... 9.64% net PA, no gearing.
Which author/mentor/trainer/coach/speaker etc strategy did you follow for the main property investing strategy that you are currently using?
Magic, Listen up! This is as good as it gets when it comes to mentoring. Study everything there is to know about property especially cycles, cycles and inter-cycles. There is no such thing as a mentor when it comes to investment. I’ve been investing for nearly 50 years, it’s competitive, one deal one buyer! I’ve been screwed so many times because I asked the wrong person the right question and they’ve ducked off and white-anted me. Learn to love the industry and make it your hobby, and become ‘money conscious,’ set goals and put in the hours and the deals will come. Get a job in the industry even and read the capitalist bible “Think and Grow Rich” Napoleon Hill, the father of wealth mentors.
Two things to remember, most people who claim they will make you money have got an angle – even Napoleon Hill got rich selling books. The second is ask the right questions and often that question should be “if it’s so good why aren’t you buying it yourself.”
And finally, the two best deals I ever bought were tired properties owned by RE Agents, go figure.Vando | Surf&Yoga
Email MeExperienced property developer offers passive investment... 9.64% net PA, no gearing.
Hi, sounds like you can buy to $600,000 (approved loan) plus deposit.
Good decision to look at SE Queensland, I’m on the Gold Coast and property prices are just lifting off the tarmac after a 10 year slump. The Gold Coast is always the ‘tail of the dog’ it takes off about a year or two after southern markets peak. Still some great buying here.Vando | Surf&Yoga
Email MeExperienced property developer offers passive investment... 9.64% net PA, no gearing.
Hey you tell me about it. What the f… is going on with the banks? Have they got any money at all?
I just had clients with $5m Net property assets, $150,000 income with a $300,000 facility. The NAB knocked them back for a $200,000 increase. Why? I suspect because one of the applicants were over 60. Something very sick here. I think they’re being run by kids that have never bought property, who use poorly constructed computer models based on the GFC.Vando | Surf&Yoga
Email MeExperienced property developer offers passive investment... 9.64% net PA, no gearing.
I currently have a about $60-80k in savings and have no loans. I am after some opinions on which is the best option? Do I buy to rent or buy my own home first as I currently rent.
Great question. I’ll try a short answer. Buy a home, don’t be emotive about it, consider it an investment. Look for a property with what I like to call an “addable value component.” This way you get a double bonus. First your home is CGT free and second you can add thousands of dollars to a property by renovating, subdividing, improving etc. all tax free. Be aware that your motivation must be to buy a home not an investment ;) or CGT will be payable.
Vando | Surf&Yoga
Email MeExperienced property developer offers passive investment... 9.64% net PA, no gearing.
That’s a great return James, where was it and what type of property was it?
Cheers
VandoVando | Surf&Yoga
Email MeExperienced property developer offers passive investment... 9.64% net PA, no gearing.
