My advice
1. Read Peter Spann BEFORE you do anything.
2. If you REALLY want to buy now buy a 2 bed unit in your area. You will learn heaps in that time.
3. Its not easy managing a property. And buying one so far from home is a recipe for disaster. Its easy for people to take advantage of you when you are so far away.
4. Whats a few $000 dollars in positive cash flow if there is no growth.
5. I rather you succeed with a property at home than fail with one overseas and lose interest in property investing.
6. You have a very solid base from which to start.
7. You should look at quality assets.Yack,
Sounds like good advice. I’ve waited this long, a little longer in order to read Peter Spann first wouldn’t hurt. A 2 bedroom unit in my area wouldn’t be cash flow positive though. I looked in to Dee Why units and the best I could get was around $300K generating $300 a week in rent. For my money that’s not a wise investment. That’s negative gearing in a maturing market.
What can you do when your local market doesn’t give you the +ve CF properties you are looking for. Maybe NZ is a little too far abroad and I should source something in Aus, but local may not necessarily be the go. I do ultimately want to have some NZ properties in the portfolio though.
Open to any suggestions on what my first step should be. But I’ll read Peter Spann first.
Thanks in advance,
Michael.Hi Michael
For some up to date news on what the NZ market is doing, do a search for posts by minimogul and westan… wilandel have also bought properties there.
cheers
rBuying o/s is complicated and there will be extra costs with accounting remitting money, exchange rate fluctuations etc. Many people I have spoken to who have bought in NZ have said it wasn’t worth the hassle to buy just 1 or 2. I’m not saying don’t do it, just something to keep in mind.
Terryw
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[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
<<<<What can you do when your local market doesn’t give you the +ve CF properties you are looking for.>>>>
I dont invest for positive cashflow. I firmly believe in the strategy outlined by Peter Spann. I too have a full time job.
Please read Peter Spann it will become more clear. Its the stage of the market we are in. I dont intend to buy for another year or two.
Steve Mcknight has done well because he bought several years ago and his properties have experienced capital growth.
I would rather see you buy a 2 bed unit in Dee Why and have to contribute to it. You will be heaps better off in the long run. If you reckon prices will come down a little over th next 2 yrs (well I do). Then study the market and buy in a few years time.
If you do decide to buy. Buy interest only and pump all spare cash into your PPOR. The other good thing about investing in a good asset is that you will get a good tas refund.
Drop me a PM if you want more details.
Michael,
You seem to have magnificent enthusiasm for property investing so here is what you should do.1. To overcome any analysis paralysis/ procrastination, the only cure is the exact opposite. Make a clear decision and stick with it until you acheive your objective.
2. Then write down WHY this is so important to you.
ie: in 30 days I will make a decision. It will include the exact number of properties my partner and I need and by what exact date. It will also include the exact plan to get there.
(A conservative suggestion would be 3 million dollars worth of positive cashflow properties in 2 years returning 10% minimum cash on cash/equity return. And 3 million dollars worth of potential capital gains properties, purchasing 1 property per month to meet this deadline).And maybe I am missing something obvious, but why don’t you take out a 100% mortgage on your existing acreage and pay off your ppor. This would convert 100k of your non-deductible debt into deductible debt. This would
mean that you only then have $80k of non deductible debt which is only $2500 worth, at the high tax brackets, you would save a year by negative gearing………………………… surely $2500 a year ($48 a week!!!)isn’t going to stop you investing for 2.5 years?Decide this very instant the exact date when you will have a clear goal formulated, ……………..if you can’t do that and stick to it…..you have a serious procrastination problem.
CALL THE WITCHDOCTOR, WE NEED HELP….!!
You have a good contingency plan, NOW you get to do the fun part of a plan to making millions!!!!
[biggrin][biggrin][biggrin]
Live, Learn and GrowLifexperience
Hi folks
Can some kind forumite please teach me how to use the “colour” button to put that sexy red ink into my replies in a “Question and Answer” format??
I tried to put my last couple of responses to Michael Whyte (above) into the main body of his posts (his questions in blue ink, my answers in red ink) and it all went “belly up” on me. [confused2][confused2][blush2][blush2]
What’s the trick?
Cheers
Greg
PS: Once I learn how to colorise my responses in the main body of earlier posts, there’ll be no stopping me!! Watch out!! First colour, then different fonts and sizes. Wahooo!There are several buyers agents in here so dont be afraid to ask for help if you need it.
Dont think we are only touting business, we also are investors too and are always willing to help noobs to reach their goals.
Good luck and always look outside the area you live in. It got me going after my first ‘local’ investment.
Paid off my ppor selling my first ppor after 14 months. Then remortgaged(good debt not bad debt) the same amount and bought 3 small places in Qld for the same money with $365/wk rent instead of $220/wk for the same mortgage in sydney.
Anyway good luck and take the plunge.
DD
Don’t sweat the small stuff,and it’s all small stuff!!
Thanks everyone,
And as always its all sound advice…
LifeX, I stated my goal (albeit a very conservative one) in the first post of this thread. I am now in the process of formulating the specific plan of action I need to take to deliver that goal. I hope, once I start executing and learning, to revise that goal to something a lot closer to the one you hypothesised. But, thanks for the guidance nonetheless, I agree I need a plan and to take action. Also, the refinance of the acreage seems so obvious I feel like a goose for missing it. I’ll need a valuation to start with and then a loan, but that should be no drama. Thanks for the heads up!
DD, don’t worry the thought has already crossed my mind. If you could PM me with a breakdown of what you offer I’d appreciate it and add it in to the mix of options I’m considering.
Greg F, can’t wait to see colour in your replies [biggrin] and thanks for the PM, back to ya soon…
I assure you all that I am not your standard paralysed analyst. I am just a very careful investor who has a bare bones plan and is fleshing out the details. I really (and I mean REALLY) appreciate all of your assistance in helping me achive that end.
Thanks again,
Michael.Michael
I’d encourage you to get your hands dirty yourself, without using a buyers agent. It’s the best way to learn.
Cheers
rWhat’s noob mean?
If you’re going to set-up a trust, I just bought mine from Allan’s Off the shelf company & trust. Cheap, easy & quick http://www.alshelf.com.au.
I’ve suffered from analysis paralysis – but just purchased my first +ve geared property, settles 14th December (after going to Steve’s Master Class in October). I live in Sydney so +vely geared in Sydney was not an option, so I looked where I could get to to check it out if I needed to. I picked another state that I have family in that I visit annually. thought about NZ but decided I needed to gain experience in the fundamentals first. My next purchase will be in regional NSW again in an area where I have relatives. At least I can kill 2 birds with one visit.Originally posted by lifeX:And maybe I am missing something obvious, but why don’t you take out a 100% mortgage on your existing acreage and pay off your ppor. This would convert 100k of your non-deductible debt into deductible debt. This would
mean that you only then have $80k of non deductible debtHi LifeX,
While this suggestion seems so simple in practice it does not improve Michael’s non-deductible to deductible debt ratio at all.
The ATO will apply the ‘what was the money for test’ = to pay off PPOR therefore refinance on block not deductible. Even though the security is held by an ‘investment’ the purpose of the loan is non investment related and therefore the interest accruing is not deductible.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
derek,
Is that for real? Gee whiz, the ATO never cease to amaze me.So, the interest paid to a lender for a mortgage on an investment property is not deductible in this instance?
Is there any way to structure it differently.
like maybe take a LOC on the block and then put it into a term deposit and a few months later then use it to pay off the house.
Derek, do you have a link to the ATO reference on “What was the money for test”?
This seems to penalise people who pay their investments off before they pay their own PPoR loan. I can’t see the logic behind it.
Live, Learn and GrowLifexperience
Originally posted by Derek:Quote:While this suggestion seems so simple in practice it does not improve Michael’s non-deductible to deductible debt ratio at all. The ATO will apply the ‘what was the money for test’ = to pay off PPOR therefore refinance on block not deductible. Even though the security is held by an ‘investment’ the purpose of the loan is non investment related and therefore the interest accruing is not deductible.DerekHi Derek, LifeX and Michael
What if, before refinancing his PPOR, Michael checks with Bundaberg Council to see if the land can be rezoned Rural Residential etc? If the answer is yes, he can subdivide at his leisure and become a property developer. [cigar][cigar]Waahooooo!!!!
If, having set up his Family Trust to manage the development, he then refinances his PPOR and sets up a LOC with a defined purpose (ie., cash to proceed with sub-division) will the ATO then be forced to acknowledge the investment purpose of his ppor refinancing?
Cheers
Greg
PS: We’re giving poor Michael one hell of a “to do” list. On top of Peter Spann etc, we’ve just added Dale Gatherum-Goss’ “Trust Magic” and “Tax Battles” to his “must read” list!! [cap][biggrin][biggrin][biggrin][biggrin]
Well, started on my “To do list”, bought Peter Spann’s $10 mill in 10 years yesterday and have started reading it already. (Would have read more last night but my wife says I need to be “with her” when I’m at home and not engrossed in some book, so its lunch times only for a while).
Greg, I like the Rural Residential take on the acreage. 40 acres is a pretty sizeable parcel and that would make 8 nice little 5 acre blocks. Better check demand for these in the area first though… As I’ve said, infrastructure is catching up with that block and Bundaberg is definately on the rise so holding until demand catches up and agisting in the interim might be a good long term strategy.
Derek, that ATO test is a bummer. Trying to figure a way around it at present but coming up stumps. Maybe I can say the money was to “live” and then incrementally seep the “spare” bits off the mortgage with my monthly payments…
Thanks all,
Michael.Hello Michael…
Just be careful, tax minimisation is legal, tax avoidance ain’t. Don’t stretch white lies too far with the ATO.
Cheers mate
rHi Michael,
Just saw your comment on the bottom of your post, thanks mate!!, you bad boy he! he!.
Mike, i would focus on developing your acerage in Bundy, is that possible?, 40 acres can be developed into ????? can you give me more info please eg:
8 x 5 acres or 20 park res blocks @ 2 acres each … what will the council allow. I own 130acres of hill range 270 degree water views, 600m to beach next to Laguna. If you get the DA you can flick it and move on, or sell 50%, or develop, i’m getting excited already mate!!
Regards Phil … PS, forget about you mortgage for the moment unless you have twins as i do, focus on making money, Bundy sounds good but! its vacant land, and i know how that can hurt, you MUST turn it into some thing that is valuable!!!.
What about getting an architect to design something, Bundy is happening at the moment so strike while the market is positive, LIFESTYLE sale, health resort, aged care living etc … your $100k investment may be valued up to $10million, welcome to my world.[biggrin]
LifeX
The ATO looks at the purpose of the funds, not the security. If you increase your loan on an investment property to purchase a consumer item such as a car or home to live in, then the interest won’t be claimable. But if you were to purchase an income producing item, eg business, IP, etc, then the interest would be claimable. It doesn’t matther if the security is a home, an IP or a donkey it would still be the same.
So if Michael does get a LOC on his house to be used to subdivide the land, then it will be deductible.
Terryw
Discover Home Loans
Mortgage Broker
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
ok terry, I think I’ve got it.
Thanks
Live, Learn and GrowLifexperience
Terry, Michael does not need to get a line of credit on his house (principle place) to do a sub-division, think out side the square.
Regards Phil
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