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Originally posted by hodgson:
I just joined up yesterday and I was having my first glance through the post. I’m thinking seriously about my first +ve cf property. Would love to hear any tips for a first timer. I’m married and we have a -ve geared property together but was thinking that for tax reasons it would be better to put the next property in my name only. Therefore I can eventually give up work.
greenhouse[suave2]Heather Hodgson
Hi Heather,
I noticed there is a slight but significant difference between your two posts.
Is current property negatively or positively geared?
Derek
[email protected]Read my comments? Think I can help you? PM or email welcome.
sorry about typing error. Negatively geared!
greenhouse
I would get your goals set first heather. It may sound silly, but knowing what you want, by when, why, and what you will do to achieve it will make every future step easier.
Regards,
SiThanks Si! Has anyone had any sleepless nights about the amount of debt one has with owning a few properties? I didn’t until I spoke to a financial planner? Her view was that house prices will go down therefore losing money on property. I was really enthused after reading Steve’s book and now I have a little doubt creeping in. I did drop Steve’s book 0-130 properties… into my bank manager to read. He seemed interested and will read it over the weekend. I’ll be keen to hear his thoughts as he’s the one I’ll ask to finance me.
greenhouse
Hi Hodgson,
Don’t forget generally speaking a financial planner has little understanding (or interest?) in property investing as their [rimary income source is from selling managed funds. Sure there are exceptions, but they are just that, exceptions.
I am sure there is a growing school of thought that shares may outperform most property in the medium term on purely raw returns and growth.
However what some ‘expert financial’ planners overlook is the power of leverage and the increased returns this can provide on your money. As a matter of interest ABN Ambro (???) recently complete a long term comparison between shares and property and foound that since the 1920’s each asset class was neck and neck around 11.3% compounding per annum. Add the power of leverage to property and you have a clear advantage.
As for ‘worries about debt’ this is only natural – most people I work with feel the same way and until you come to grips with this it can be particularly disconcerting. By the way I felt the same way for the first $300K of deductible debt.
You need to understand that the debt you are currently considering provides you with access to a growing asset as distinct from a depreciation gadget – there is a huge difference.
Consider also that your bank manager may similarly not be the best person to help you with your finances. I strongly recommend you also speak to a broker so that you can compare the total package. Using a broker enables you to establish a relationship with a finance expert who can access more than one bank’s product depending upon bank policies, and your circumstances, at the time. For example my loans are with three different institutions.
Derek
[email protected]Read my comments? Think I can help you? PM or email welcome.
I disagree about most financial planners.
What you need to ask is how they are paid, and there should be disclosure about this, especially if they are ‘selling products’ for commission.Law now isnt it? lol gosh I should know.[tongue]you need someone that you are comfy with and who has the same sort of vision, shop around ask questions some do have certain fields they prefer. Some will tell you that you need balance in your portfolio (I agree) but you dont have to agree or go with recommnedations but why pay em for advice yo dont use?
If you are not satisfied then say so and negotiate the price you have to pay.
no one is infalliable. My bank manager told me not to lock in interest rates becuase they wouldnt rise, guess what they did! guess what I didnt agree with him and I locked them, I determined I needed to do this while I restructured things.
Margaret Lomas had a vision that when she started her branches they would have people in them that had completed and were compliant (financial planners)and had the same visions and enthusiasm….it is taking a bit longer to accomplish but I beleive she is pleased with the results. (actually she is I asked her)
Enthusiasm is great, keeping up the momentum is harder.
I dont care what people say, I look back at all the places I wanted to buy and could and now think oh dear….I cant afford that now! None of the homes, or land blocks I ever looked at have gone backwards. I even bought an over priced block when I was young and naiive – took a few years but im happy with the result. I didnt lose. Mind you I didnt have to pay interest on the loan either!
Elves
” a blind man may see what a sighted man may not”
Hodgson,
I cant see an error if your taking that first big step into property Investing. And it is a big step some people have found it easy and some people have just been completly put of by IP,s because you have a resposibility to your tennent,property manager and your family.It can put stress on you if you cant afford the repayments (No tennant) and repairs and maintanance must be included in a positve cash flow property PCFP.Just an example i read about 3 months ago a tennent asked the landlord to fix a hole in the carpet in his lounge room the lanlord refused, the tennant soon after tripped and injured himself and successfully sued the landlord for a large amount of money ($100000 i believe).
Sorry i am not trying to put you of IP’S but it is good to go into it with full protection (Insurance)+ gared properties are out their i have 4 curerently and as i have said on my previous posts its he most amount of money i have ever made in my life! And fortnunatly i have very good tennents which i look after. Any repairs that are needed i have them fixed promptly. You would not believe the service i get with just offerring a gift to my property manager and tennents (Movie tickets,Shopping Voucher) and this is tax deductible.
I suggest setting up a trust first, and then reading some books talk to an accountant and your on your way. A good broker will give you lots of options and a lot of valauble information. and of course dont forget the great people on this forum.
Cheers Dom [biggrin]DAAJ suggested starting a trust fund. What are the benefits of a trust fund?
greenhouse
Hodgson,
Trust funds are basically a protection from someone suing you(Accountants use these) and can be used for tax savings.Check out the search facility on this forum and type in trust or trust structures.You will see the benifits and non benifits a trust can help you with depending on your situation.
Cheers Dom[smiling]Trust Funds are a necessity when sidestepping crippling Landtax.
hodgson,
The last two posts are absolutely correct, and only part of the story.
Trusts have a variety of benefits.
They do not pay tax, tax is only paid when profits are distributed from a Trust.
You can establish a set of beneficiaries (such as yourself and your kids), so tax is reduced across people.
Due to this beneficiary system, they get around death duties should you die.
You may wish to consider buying a book on the topic such as Renton’s Trust book (bookstores) or Dale Gatherum-Goss’s Trust Magic book (http://www.gatherumgoss.com/shopping.htm).
Cheers,
Aceyducey
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