Forum Replies Created
Hi,
I've seen the ads and website since they first started advertising. Anyone would think they had just 'discovered' options. I've been using them for 25 years. An hour with a good property lawyer will teach you plenty about options at about 4% of the cost.
Jenman also had something to say about them
THE HEARTY DROVER'S PIE
Stay away from 'The Science of Options'.
by Neil Jenman
Lately, you may have noticed some big advertisements which make strong claims about a three-hour property investment seminar. Something to do with "property options".
According to the ads – which appear in many of the major newspapers and take up full-pages in Australian Property Investor magazine – you'll be shown a "unique strategy" on how to control "multi million dollar" properties with "minimum risk and maximum return!".
The three-hour seminar costs $47 per person (or $57 for two). And, of course, it all comes with a "100% Money Back Guarantee!".
It's all supposed to be about sharing a "closely guarded system".
It's hard to believe that anyone, these days, can fall for such con-cliché garbage.
Okay, so what's the story with this mob?
Well, the seminar is simply a "sell" to attend another seminar apparently costing up to $30,000 per person – that's the one where you will supposedly discover the "real" secrets.
The advertisements do not mention the name of the presenter. He is simply referred to as "your presenter". The reason his name is not mentioned should be obvious. He's dodgy.
His name is Zaffar Iqubal. Sometimes the name Khan is added which then makes him Zaffar Iqubal Khan.
His company name is not mentioned either – there's just a web site http://www.sop.com.au
S.O.P. means Science of Options. That's a common spruiking ploy – make something seem scientific and then charge mega-thousands for revealing the secret of the science.
Well, there's no secrets offered here other than that Zaffar Iqubal has been twice bankrupted for failed business ventures and was, according to the authorities, also banned from being a company director in Australia.
He operates out of Queensland (another shady character giving the Sunshine state a bad name).
Zaffar took his dodgy suck-em-in seminar to Western Australia a few weeks ago. He didn't realise that the west has the best consumer protectors in the country. As soon as they got wind of him, they quickly issued a warning to consumers.
WA's Consumer Protection Commissioner, Patrick Walker, basically told Zaffar Iqubal to get out of the state – sort of like an old western sheriff.
So Zaffar high-tailed it back east in search of easterners to suck-in with his dodgy claims.
Tonight (June 12) he's presenting his seminar at the Gold Coast (and, again, on July 2).
Our strong recommendation is that you avoid this spruiker. He just wants your money – thousands of it.
Oh sure, it looks like $47 for the 'intro' seminar is a good deal. It's not.
For $17 less, you can do something we highly recommend.
Go to Arch's Restaurant at Mariners Cove on Seaworld Drive, Southport (opposite the Sheraton Mirage; just behind the Hogs Breath Café). Phone 07 5532 6380.
For $30, you can have the "Hearty Drovers Pie".
That's our excellent recommendation. Try it. It's the most delicious feed you'll ever have.
So, there you go – a full tummy and a full wallet by staying away from Zaffar Iqubal and his laughably named 'Science of Options'.
Hi Greg,
Don't panic. Remember what GST stands for – goods and services – not income.
Hi Bundy,
I'll assume the land you are buying is new, direct from the developer, and not 'secondhand'. "Secondhand ' land would not be effected by GST. I also assume you have a contract for the land and a building contract with a builder. The land developer and the builder might or might not be the same entity.
As you are probably aware the building contract price contains costs, most of which carry a GST component, which the builder will claim back as tax input credits. He will be registered for GST.
The land developer would be registered for GST and more than likely would have bought his land under the margin scheme. The development of the land would have incurred costs carrying a GST component. When he sells you the land he will remit one eleventh (GST component) of the selling price to the ATO and would have claimed back the tax input credits from the costs carrying a GST component during construction.
Therefore I would expect that there is no GST to be claimed by your entity. You are neither the land developer nor the builder. If you on sell the house on completion there will be no GST ramifications as it will be deemed to be a 'secondhand' home. Your entity will simply pay income tax on the profit. If you hold it as an investment and rent it out it will be treated as an investment property and subject to normal income tax and / or cgt rules if you sell at a later date.
Hi,
See my earlier comment in this post. Chan & Naylor have their head office in Sydney.
Hi akeiva,
You seem to be confused between an investment property and undertaking a development project. Forget negative and positive gearing, that has to do with investment properties. You are proposing to undertake a development with the expectations of making a profit. It's the profit (hopefully) you will pay income tax on – when it is realised.
The entity (individuals, company, trust) which owns the land and undertakes the development will be what is taxed. I assume that same entity will also be the borrower and guarantor of the development finance.
You have said you are undertaking due diligence. Do you have the site under contract? Do you already own it? At present the name on the contract, or title if you own it, is the entity that will be taxed on the profit and borrow the finance.
I suggest you go to my website and download my free e-book "Getting Started in Property Development". Getting the right structure is something that should be sorted out at the very beginning – before even looking for a site. This is where a good property lawyer or accountant with experience in tax effective structures for investors and developers can be valuable.
Hi,
I'm not sure if this crowd has any connection to the previously mentioned Co-develop Australia but you really have to wonder about a website spruiking for property development clients where no names or background experience is given. And if they're not connected why would they ever use such a tainted name?
As a Brisbane developer of 27 years experience I followed the rise and fall of Co-Develop Australia quite closely. They were obviously running managed investment schemes, using promisory etc so it was inevitable that ASIC would come down on them like the proverbial ton of bricks.This current co-develop crew seem to be sailing very close to the wind in regards to operating managed investment schemes. I quote "syndicates that jointly carry out developments". I regularly come across operators who either purposely or probably through ignorance are contravening the Corporations Act, Managed Investments Act and the Financial Services reform Act.
Section 9 of the Corporations Act defines a managed investment scheme if it has the following features:
(a) people contribute money or monies worth as consideration to acquire rights (interests) to benefits produced by the scheme….
(b) any of the contributions are to be pooled, or used in common enterprise, to produce financial benefits, or benefits consisting of rights, or interests in property, for people who hold interests in the scheme ….
(c) the members do not have the day to day control over the operation of the scheme..Sounds to me like the proposed 5 or 6 person syndicates with co-develop running the show fit the bill. While real estate is not a financial product under the definitions of the Financial Services Reform Act, a managed investment scheme is (Section 764A 1ba). To deal in a financial product requires an Australian Financial Services Licence. The bottom line is if investors get involved in a scheme that is operated outside of these Acts and ASIC winds it up they will be the big losers.
In reality it is even more complicated than I have described. I'll leave discussion about registered or unregistered schemes, product disclosure statements, excluded offers etc for another day.
My advice. Don't get involved without top shelf legal advice by a lawyer who specialises in corporation law such as McMahon Clarke http://www.mcmahonclarke.com
Hi Clovies,
I'm not sure if this is the same crew as The Insight Group which is featured strongly as scammers on Neil Jenmans site http://www.jenman.com.au.
Hi AO,
The Land and Environment Court, the Planning and Environment Court (different titles in different states) is best known as the final arbitrator when there is a dispute regarding a development application (approval).
It can be triggered by an applicant who lodged the DA application or an objector who doesn't agree with a council decision in regards to an application. If an applicant has a DA refused by council he can appeal the decision and take it to court. If the council grants a DA and an objector disagrees he can take the council to court. In some cased the council and applicant team up against an objector.
In Queensland we sometimes have to publically advertise a DA application (sign on the land, newspaper ad etc) and call for submissions which could be in favour of the application or against it.
My record was an application which drew 153 objections and 311 positive submissions.
Even when you get a DA from council and no objections it's not necessarily the end of matters. I am involved in a $35 million project in north Queensland at present. Even though we had council and state government approval in October 2006 we still had to have it cleared by the Feds ( Department of Environment and Heritage) because of environmental sensitivity. It took 6 months and they could have overuled the council and state government at any time.
Hi Ming,
I agree with Marc's summation. What you're proposing is speculation, not investment.
If you really want undertake this I would strongly advise that you 1. undertake research to ascertain the likelihood of prices continuing to rise. 2. are financially capable of settling if you can't on sell.
Remember if you do on sell you will have to take into account legals and stamp duty on the purchase and commission and legals on the sale. This will dilute your profit.
Also if you are paying over the odds now or the market dips, the valuation on settlement might be less than the purchase price and the financier will only base their LVR on the lesser amount, leaving you to tip in more equity than you were expecting.
Hi s,
If you want to email me from my website I'll be happy to forward you as many referrals as you want.
I only occassionally run property development workshops and purposely keep them small and interactive. With over 400 properties in the pipelene 98% of my business is developing property.
Hi Jillster,
I would recommend Chan and Naylor http://www.chan-naylor.com.au ph. 9510 2277 or
Gatherum Goss & Associates http://www.gatherum-goss.com ph 8813 0162
Bob Andersen
Positive Property Strategies
http://www.propertystrategies.netHi Scottybe,
In your example you cannot claim the interest as a legitimate deduction on that part of the loan to do with your pool or trip to Greece (non investment related expenses). Some LOC's let you split the loan into a number of seperate personal and investment accounts to help you seperate tax deductable and non tax deductable usage.
As to getting found out or not by the ATO – you might get caught or you might not. In a recent purge by the ATO on property investors plenty of people got netted for just that 'error'.
Bob Andersen
Positive Property Strategies
Hi Anita,
Terry is right.
An important thing to think about is dependent on whether you intend to sell the properties or hold for investment. There are different implications in regards to GST, CGT and income tax if you are a developer who sells or an investor who holds. Different structures are required to maximise the various taxation outcomes, particularly if you intend holding.
I'm not qualified to give specific advice on how to achieve that, particularly on a public forum, but after 27 years of development I have sorted out the answers. For the answers you need to take advice from an accountant or solicitor who has experience in property development and investment and the formation of tax effective structures.
Bob Andersen
Positive Property Strategies
http://www.propertystrategies.netHi Heather,
Rob Balanda, the Gold Coast property lawyer, has a CD on joint ventures. Also you might find some useful information on my website http://www.propertystrategies.net
Hi Johann,
Congratulations on your first property investment. I have been a developer and investor for 27 years and done properly, property development can be very rewarding.
Property development requires knowledge, time and money although it's not absolutely necessary that you have all three. For example you might have knowledge and time but might need to partner with someone who has the money but not the knowledge and time.
Undertaking your first property development incurs more risks than acquiring your first property investment but the rewards can be much greater. Investors who become developers usually do so so they can obtain investments at absolute developer's cost, instead of paying retail price like most investors. Developing your own investments can be a great way to build a sizable property investment portfolio much quicker than paying retail price.
Knowledge and experience can be the most elusive element to obtain and this is where you need to leverage off knowledgable and successful developers. Firstly I suggest you read any literature on property development you can get your hands on. There are a few Australian books written on property development including one I have written. The Australian Property Investor magazine is currently running a series of twelve articles on becoming a small property developer commencing with the September issue.
Next I would recommend you invest in attending a property development workshop where you can obtain direct, hands on knowledge of property development. Lastly you should seek an advisor or mentor to 'hold your hand' through your first one or two developments.
Feel free to check out my website http://www.propertystrategies.net . As a budding developer you might find it interesting.
Hi Carpe,
Joint ventures are always an option when you have substantial equity and are short on experience but the best financial outcome is always derived when you develop the project yourself. Not only that, its downright challenging and satisfying.
Successful property development requires time, experience and money. When you are short of any of those commodities you can leverage off those who can supply you with the missing ingredient(s).
The fact that you hold the site unencumbered will supply sufficient equity to satisfy the financial requirement. Most people, even when holding down a full time job, can usually supply enough time to satisfy a single project. What you need is to leverage off someone's experience.
You then need to decide how passive or how active a developer you want to be. You might engage an experienced development manager to do everything with minimum input from you or if you want to get in 'boots and all' you could consider engaging a property development advisor / mentor where you do the leg work, the advisor supplies the experience and knowledge and you receive 'on the job training'. Either approach will give comfort to the financier who often rates the borrowers experience on par with the project itself – particularly on higher LVR funding.
To help with increasing your knowledge base I'd be remiss if I didn't also recommend my book "Residential Real Estate Development – A Practical Guide for Beginners to Experts". After 27 years in property development and with over 340 dwellings in the development process at present I have managed to pick up a few pointers. Further information about this and also about passive and active development, development advice / mentoring and other property development matters is available on the website below.
Bob Andersen
Positive Property Strategies
http://www.propertystrategies.net
