[asdfParticipant@asdfJoin Date: 2005Post Count: 139]

August 12, 2005 - 2:00 am

I think a good financial planner/ accountant should add value to set your structures and investment vehicles up. Hopefully they can show you how others who may be more successful manage their affairs then it should be up to you to select the investments after doing your own research and due diligence. If you leave it all to your planner (not trying to generalise here), they’ll probably just put you into a few managed funds and olive trees (if you need the deductions) and gladly take their up-fronts and trailers. There are actually very good advisers out there who know their products very well but obviously its less effort to just throw clients into average products for average returns. I’m amazed how much commission we pay for the value add sometimes.

[asdfParticipant@asdfJoin Date: 2005Post Count: 139]

August 2, 2005 - 2:49 pm

Simon’s right. Its only a relevant interest that counts. If you don’t move into it, then it should be OK. I wouldn’t intentionally be defrauding the govt. Would hate to get an audit. Apparently they’ll ask ou to show proof like send in copies of drivers licence, change in electoral roll, utility bills…etc..

On another note, anyone have any thoughts/guesses as to when the govt will stop that FHOG hand out? It surely can’t last forever.

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August 2, 2005 - 2:41 pm

I’m not sure which part of Syd you’re living but you could probably get a unit for $350K with your deposit. This way your “dead money” rent is going to pay your P&I loan instead and you can start to build equity in your CGT free PPOR. Once built enough equity, set up LOC and move on from there.

[asdfParticipant@asdfJoin Date: 2005Post Count: 139]

August 2, 2005 - 2:27 pm

I believe Celebration, Home Buyers and Dale Alcock are the same mob. They seem to be the best. Had one done around 10 months in SW. Engaged Celebration to do another in April and almost caught up to other with Content when plans drafted end last year! They’re short the works – if its not brickies one week, its roofers or plasterers. Think the Dale Alcock guys manages their projects and subbies better than others but with all of them – expect at least 12 months.

[asdfParticipant@asdfJoin Date: 2005Post Count: 139]

July 21, 2005 - 8:13 am

Taxes are a necessary evil but where some countries’ highest MTR is 10-15%, I often wonder where Mr Howard is spending our hard earned dollars. Since I live here by choice, I shouldn’t complain too much but it sure sux when half your bonus virtually disappears before you.

I agree with most that Syd and Melb won’t take off in the next couple of years at least. I know a few people who just bought in high in debt to their eyeballs cos of exxy PPOR. Some may even have -‘ve equity but I try not to bring that up in dinner conversations. People just aren’t jumping over each other to get into the market. Well, not jumping over investors anyway. I agree with Michael that in this enviromnent if you find the desperate vendor, could get yourself a bargain. Anyone know a desperate vendor…..

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July 21, 2005 - 4:07 am

I’m also struggling with the same dielemma. From where I’m looking to buy and live, even the cheapest 1 bedder will cost me in excess of $325K. And unfortunately I cannot find a strategy in converting the equity in all my IPs to equity in PPOR so I don’t need such a huge mortgage to get in to the market. Only way to increase deposit is to sell IPs and trigger CGTs, incur selling costs….etc.. and I’ll be selling better growth prospects IPs to buy in Syd where predicted growth is squat didley over the next couple of years. Then again, no one has a crystal ball…

I think I might have to stick to rentville as its <$250/wk and I don’t have to worry about NTDD interest costs, strata fees and maintenance..etc.. My break even is something like $15K pa. Simply, I don’t think I will get that kind of returns in that unit over the next 2 years – lower Nth Shore. Any thoughts guys?
Should your decision to buy PPOR the same as IP? I just look at the numbers, holding costs and projected returns..etc… and it doesn’t make sense to me. Maybe I should be placing more emotions into the decision making seeing your home should be your castle…?

But I suppose will need to bite the bullet when this market picks up and buy that PPOR or when I get married, whichever comes first.

Confused.

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June 2, 2005 - 11:19 pm

I had a couple of those and solesly for Credit Cards only. Seeing I’m onmy IP acquisition phase, I’m trying very hard to not be tempted by these new c/cards companies offering zero/low interest for 6month transfers..etc… I’ve got enough IP queries on my file as it is and try not to sign the bank’s finance applications unless I’m pretty sure I’m going to get the loan. I hope WBC is not putting those queries up simply cos you’re late in paying. Maybe theres actually no way they can record that in your file and simply entering that query so that others can see it. Pretty sly way of trying to let other lenders know you’re not on time with the c/card payments. Let us know how you go.

[asdfParticipant@asdfJoin Date: 2005Post Count: 139]

May 31, 2005 - 2:00 pm

Thanks for that Terryw. Might be a bit troublesome to show audit trail for rent to come from family/friend but for all purposes, I could argue that its just like any other IP. Might continue to use parent’s address for correspondences with ATO/electorate so it doesn’t create alarm bells with me claiming deductions from IP owned by the trust which I’m also living in. I know a lot of accountants are not big advocates of this strategy so will see. Thanks again.

[asdfParticipant@asdfJoin Date: 2005Post Count: 139]

May 26, 2005 - 7:12 am

Hi Babu88,

Just with your comments below:

“The brief answer to this is that when the property becomes net positive cash flow in the future, the trust will then borrow the funds to re-purchase the units from the one who owns them (this person will pay out his loan with the bank).”

I read that in Trust Magic as well and was trying to work out how it would work operationally. The way I see it, you would need to approach the bank (or another) to re-finance and will probably be hit with discharge fees and new mortgage duties to replace me as borrower with the trust. Is this how you see it too?

I know this is off topic but do people out there pretty much think TR2002/D2 kills the availability for a borrower to rent from the hybrid trust? I’ve read a few posts here and majority think apart from get your own advice is that one should be careful and at least attempt to show that tax is not the main reason like not only buying that one IP in the HDT. In reading this TR though, it pretty much kills it for unit trust arrangements. Any thoughts much appreciated – even if you know someone who knows someone who may be using this structure. Thanks in advance.

http://law.ato.gov.au/atolaw/view.htm?find=%22Home%20Loan%20Unit%20Trust%22&docid=DTR/TR2002D2/NAT/ATO/00001

[asdfParticipant@asdfJoin Date: 2005Post Count: 139]

May 24, 2005 - 2:24 pm

Candy,

i too live in Syd and have IPs in WA. Theres is simply no way I will do this without a PM. They charge more than over here – up to 8.5% plus GST but negotiable if you have a few IPs. I have built a good relationship with mine and she gets on top of problems ASAP. Especially with this storm they just had. Also helped out in organising the pre-work and finishes for project homes we’re building. She is truly gold. And if there are any contractors/tradies out there who would like a change of lifestyle or looking for work – head over to WA. Especially the SW – they have work there lined up for the next 18mths. Awesome beaches and magnificent wines. Can’t beat that. Unfortunately I have a desk job

[asdfParticipant@asdfJoin Date: 2005Post Count: 139]

May 23, 2005 - 1:15 pm

Thanks for all the info guys. Ohblessed, can I ask what “county recorders” are? I’ve looked at the land titles office but looks like I need to pay $8 everytime and then I suppose I need to try to locate the owner through the white pages. Will give it a try. Cheers

[asdfParticipant@asdfJoin Date: 2005Post Count: 139]

May 19, 2005 - 3:27 pm

Thanks Mortgage Adviser. You must be a night owl just like me!

[asdfParticipant@asdfJoin Date: 2005Post Count: 139]

May 19, 2005 - 2:45 pm

Hi guys, thanks for the ideas. I know my accountant is a bit conservative and not too IP savvy (time to change accountant me thinks..) so not sure if she’ll be confident on the draw down equity from IP, loan to trust on a higher rate part for trust to then acquire IP (with added borrowings). I think the rent from trust part (as long as its market rent) should work but does it work better if its a company trustee compared to a personal one? I know some lawyers have issues with contracting with oneself even if you are acting in capacity as a trustee. (I only have a disc trust with personal trustees so will need to set up a corp one). Has anybody’s accountant advised otherwise?? Obviously I’m not asking for advice but just general banter. Might sit down and actually throw some real numbers into it and weigh it up against the PPOR CGT exemption. Then again I’m looking in Syd so theres probably not going to be much CG for a couple of years yet and market rents are half the size of mortgage repayments. Thanks again guys. Much appreciated.

[asdfParticipant@asdfJoin Date: 2005Post Count: 139]

May 19, 2005 - 2:41 am

Hi guys, Thanks for both your responses. I think I do want that cake and eat it too. I really want to access that equity but have that equity be tax deductible also. I think Terry may be right, the only way to do that is either to sell or with the joint borrowing scenario. I suppose the trick is to increase the IP loan and for the increase to be a good (deductible) debt. However it won’t be if the equity is used to buy PPOR. Robert, i need to investigate that offset structure a little more perhaps offsetting interest may achieve the same economic outcome? Thanks again guys.

[asdfParticipant@asdfJoin Date: 2005Post Count: 139]

February 16, 2005 - 2:55 am

Hi Stargazer,

Check out http://www.vanguard.com.au. Not sure how big they are in Oz but in the states, they are huge. Look up index investing in google to get a feel. Essentially investing in these is simple and based on premise that funds managers do not outperform index in long term – I’m talking 5-10 years plus and even if they do, not by huge returns. Might be able to do it for a couple of years in a bull market but very hard to consistently pull it off. If you can find one, let me know. A simple investment is look up stock code STW – you’re buying the ASX 200, pays franked dividends also. Think their website is streettracks.com.au. Price just tracks the ASX 200 which is benchmark for most fund managers. Then you’ll get share type returns in the medium to long term like you read in the papers cos thats where they get their performances from – these indexes. From 99-03, share market pretty much flat but from end of 03-05, its pretty much delivered an annualised return over those 5 years consistent with equities long run averages. If you think you can out smart the market by picking sectors, stocks…etc.. go for it. Else, go index and put it in the bottom drawer. Boring I know but horses for courses.

Good luck

[asdfParticipant@asdfJoin Date: 2005Post Count: 139]

February 15, 2005 - 4:00 pm

Hi guys,

This is my first post so be gentle. I think this forum is great to pick up valuable info on IPs. I’m still relatively new to IPs but have in the very short time done found a little success compared to my previous experience with the share market. I was trying to pick stocks back in 99-01 during the tech hype. You’d be up $30-$40K in a week then give it all back and then some. I’ve learnt the hard way that unless you have inside information (which is illegal), its hard to outperform the index in the long term. You could try to profit from quick rallies or ranges but that just mean you’re a short term trader and you never win in the long run anyway unless you’re very disciplined in cutting losses. I work with some pretty good traders simply because theres no emotion and its not their money.

I think the sharemarket is toppish at the moment but I’m sure theres still value out there like our resource sector. If you’re going to start picking stocks, then research is the key. I suppose its the same as due diligence in IPs. Otherwise, buy an index fund (low fees) or margin lend STW (Streettracks ASX200 shares) or buy an instalment warrant over it.

Historically, returns on shares are a couple of %s higher but I still reckon leverage in property is the greatest. To make money in sharemarket, holding blue chips are safest but its like an income play so you want to throw in some growth stocks in there but LVRs on those are sometimes only around 50%. There are lots of products that provide both 100% gearing and protection but interest rates on those are very high. More suited to those on the TMR.

I think diversification is probably the key here. There are many alternative investments out there. A lot with capital protection and hedge fund style and also income not necessarily from property but in terms of leverage, nothing like property.

Someone mentoned o’seas shares. Now I haven’t done my research in terms of whether Asia, Europe or US is better in terms of value but I’m pretty certain for sure that you guys should consider averaging in on USD assets. Historically, the dollar trades around 0.67-0.73. If the asset doesn’t do as well, you’ll at least have the currency to maybe compensate. Obviously a double whammy if it keeps going up and your assets perform poorly.

I suppose I could ramble forever but seeing this is a property forum, have a good night.