[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 29, 2003 - 1:24 am

I have noticed that Arty has been ominously quiet today……….[]

[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 28, 2003 - 11:27 pm

Angelus,

It’s all about asset protection. There are a number of ways to structure your IP activities and as “Billfromoz” suggests, get good legal advice.

Your accountant can develope a structure for you that protects your assets against debt recovery etc. and in most circumstances can deliver tax advantages.

It will always come down to your situation as the cost/benefit of any structure is dependant on your circumstances. To set-up the right structure can be costly but the benefits of security and tax advantages can pay it back quickly.

See your accountant (I am not an accountant).

Good Luck
Milkman.

[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 28, 2003 - 10:45 pm

Tara,

Be carefull of partnership arrangements. It is better to partner with someone you trust(good friend). Legally you are tied to this person and your personal assets are unprotected.

It would be better for you to have some structure in place before entering into any agreements. Best to see your accountant and/or solicitor.

Good luck.
Milkman

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September 26, 2003 - 6:02 am

Boneman,

That sounds about right…again it would be better if someone with some legal experience can post a reply.

Milkman.

[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 26, 2003 - 5:53 am

Yestoo,

As Betty says it all depends on what the market will bear. The tenant is extremely important to you as they are your income. If you raise the rent and they leave, your exposure is greater.

You would probably try to hold the rent as long as possible, if it becomes unbearable either sell…..or do some minor improvements to the house in order to better justify an increase. Always create a WIN/WIN situation, your tenant wins by enjoying the new improvements and you win by covering your interest rate increase.

You will have to do the numbers but this can be a viable option.

Good Luck.

Milkman

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September 26, 2003 - 5:32 am

Polar Bear,

Man.[]………..that would turn a +ve gearded property into a -ve geared one.[xx(]

Considering the cost, it may be better to manage them ourselves until the portfolio gets too large. But then we may have some leverage with Property Managers….[]

Regards,

Milkman.

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September 26, 2003 - 5:20 am

Bear,

Your accountant is better at providing the answers about asset protection but it involves setting up trusts and companies so that there is limited/No liability and exposure. Can be expensive to set-up but this should be weighed up against the risks involved.

There is also clauses in loan contracts referring to “ALL Moneys”. This means that the bank can attack any asset you hold in the same name as the loan contract. A mortgage broker or solicitor can explain this better than me. There have been instances where this clause can be removed in a loan contract, the Bank may have to re-think their exposure but I have heard of some successes.

I am currently looking at “Asset Protection” and tax benefits before I start my purchasing splurge.[]

Regards,

Milkman.

[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 26, 2003 - 5:01 am

Bear,

Good question…..

On most loan applications there will be a clause that in effect says..”You agree that all the information provided in this application is true and correct”…and you sign it. Almost like a Stat Dec.

I don’t know the legal ramifications to this but it seems that if you lie and are subsequently found out, then the bank may be able to recover the loan monies by whatever means…

I think we all need to memorise this sentence….”I have no recollection of that event”

Best to get independant legal advice, just to be sure.

Also make sure you separate (protect) ALL of your investment properties as other properties may be taken to cover additional legal/closing costs for the Bank.

Good Luck.

Milkman.

[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 26, 2003 - 4:54 am

Judith,

You only “Make Money” on a Capital Growth Property when you sell it, you can’t use the money until that happens. Also you have to consider the large Capital Gains tax grab and other fees when you try to sell it. You also have to pick your time to buy and sell.

I was wholly “SOLD” on -ve gearing a month ago, but I realise now that there are other options.

I think that the best solution is a combination of both. It really depends on how much disposable income I have to pay a loan (+ tax relief) in the hope that my profit will come by way of a capital gain.

Each to there own, and as long as people keep posting their own experiences I will continue to learn….

“Gee I wish I had’ve bought that property in Essendon 15 years ago”……..

Regards,

Milkman.

[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 26, 2003 - 4:45 am

Jay,

I purchased “Wealth Guardian” from Steve’s site and it goes through in detail all of your questions.

It does use examples or Case studies to prove the effectiveness but they do stress that advice from your accountant about your own situation is required before proceeding with a purchase.

Each option carries with it “Asset Protection”, “Tax advantages”, “Set-up costs”.

I recommend that you try to get a copy of this as it will at least provide you with the basics of each option.

Good Luck

Milkman

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September 26, 2003 - 4:37 am

TeacherK6,

I wouldn’t think that if they were ethical that they could charge you that fee…..

I would be trying to stress to them that you will be purchasing additional properties and if they would like to continue this alliance then the fee should be waived.

I don’t think any of us would mind paying a finders fee if you know they did a fair days work for it…….but to just charge it because they can…….to me is unethical.

Congratulations on your purchase and good luck with your furture purchases.[]

Regards,

Milkman

[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 26, 2003 - 1:53 am

Kristine,

It does beat the 11 second rule…..

$15,000 rent p.a = $288 p.w
$288 / 2 * 1000 = $144,230

$15,000 rent p.a. not total for 2 years.
Beats the 11 second rule, worth further investigation.

Milkman

[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 26, 2003 - 1:26 am

Urgeman,

You are right about the FHOG, it can’t be used for investment properties, can only be used for Owner Occupier.

Your strategy is similar to Steve McKnight where he rented whilst building his own IP portfolio. I suppose that this ensures that he is using his available cash reserves to buy and concentrate on IP’s rather than sinking his money into his own house. Renting is certainly cheaper than paying a mortgage (depends on size of mortgage).

I am in a similar boat as you, I am trying to purchase my first IP, I currently own my own house so I suppose I am in a good position, but it is still scary (especially with 2 youngsters).

Good luck and if you haven’t read Steve’s book I would recommend it for some inspiration.

Milkman

[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 25, 2003 - 6:17 am

Easy……..

2nd Place………….because you are now in second place and the guy you passed is now in third place.

Regards,

Milkman

[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 25, 2003 - 5:38 am

I agree with Arty.

The spotter wouldn’t be setting up the deal, only passing on information that is in the public arena anyway. That is where there involvement stops.

It may be different if you set-up a company name and have an ABN to accept payment for the fees.

It would be good to have someone provide some legal advice as I think a lot of the members of the forum may use this to generate more income.

Milkman.

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September 18, 2003 - 5:22 am

Suzieq,

You may be able to negotiate a smaller deposit, say $1000 rather than the 10% and negotiate a longer settlement period, in the hope that your situation improves over that time. If it doesn’t you may still have an opporunity to on-sell before settlement. It sounds a bit risky but you never know……..

Wish you the very best of luck.

[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 18, 2003 - 5:06 am

Arty,

Thanks……..and the cost would probably be tax deductable too….[]

[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 18, 2003 - 4:59 am

Arty,

If you find a good one (correspondance), can you let us know by posting it?[]

Certainly if it gives you even a limited insight into the industry (other than personal experience) I think it will be worthwhile.

Ciao.

[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 18, 2003 - 4:50 am

It wouldn’t hurt to have the “Off-the-plan” property inspected prior to settlement as long as there is a clause in the contract that if things were not built as planned you have some recourse. I don’t have any experience with these but if you cant afford the cost then the peace of mind might be worth it.

I would always aim to get a building inspection done before making an offer. You would really have to decide whether the repairs are worth it and whether it makes the property attractive at all! The price of $200(approx) is well worth it.

If the vendor or agent does not agree to an inspection or tries to talk you out of it then they may know something that you are about to find out.

Good luck.

[MilkmanMember@milkmanJoin Date: 2003Post Count: 22]

September 18, 2003 - 3:51 am

Same for me……..I am forever spurting the opportunities of IP’s. My wife is usually my rock and has (thankfully) in the past stopped my from investing in “Get rich Quick” Pyramid schemes.

She understands the concept of buying property but more with a Capital Gains strategy than income. I have tried to explain Steve’s concept but I need another method of enlightenment.

We are living off my wage while she brings up our children. I want to be involved before they get too old and this is really the best opportunity I’ll have (+ve Cash Flow).

I have just got her to start reading Steve’s book and hopefully she will start to realise that there are other methods to Wealth Creation.