Forum Replies Created
I would have to say that it is very simplistic to think that you can sell the fact that a company has a profit of $5.6billion and climbing at a rate of 20% p.a.(not the spin on $3billion), and I should feel comfortable that they are adding real value to the community.
I never realised that you didn't include shareholder dividends as clear profit…….. Oh thats right, it's a banker explaining, and selling us the fact that all the fees and charges to bump up profits, are in fact good for us. We should just sit back and agree. Why not take another $5.6 Billion and give that to the shareholders and we will not include that money (it's only dividends!)…. take another $1billion just for your defense.
Firstly, I am not sure why anyone would want to go into an acquisition without an over-estimation on costs, I suppose this is me being conservative and why I do have millions today…….
I am not one to argue over $500 here or there, you can take off $10,000 on buy costs and the interest drops by $750. Not much change to the outcome,
Depreciation is 2.5% of the construction cost, I do not think the construction cost is the same as the purchase price, you will have trouble fighting this out with the ATO (remember I am conservative and do not like to mis-lead people, I will not assume people are on the top tax bracket but am happy within the 31.5% range).
Nathan, just because you bought three people properties in this area, doesn't make it a good buy? What did you earn from your investors for this effort. I hope you can tell us you didn't charge them $7k each so we can at least say your advice is independant/ transparent.
A large corporation that deals with our community in such a broad way has an ethical and moral obligation. Regardless of the outlay or rate of return, they are taking $5.6Billion from our community, this is not a service but a large withdrawal. Remember, this is not a start out business increasing profits by 20% and having little to no effect on the Australian public. This impacts on the entire community. Business can be a two way street, earn and be profitable, while also allowing for philanthropic qualities….. We all know a family that could do with a little extra help. Take a walk down to Parramatta Park and watch the volunteers feed the homeless with little to no funds. I understand economics, share-holders, capitalism etc. But at what point do we give a little back (or a lot in this case)?
I can tell you that STG that I have also had many difficulties with the tardiness and lack of care of STG, (I pre-warn my clients about the time delays faced when STG is involved). For want of a better expression, it sounds like you should go with the better of two evils….
That was a great effort for a first timer- Congratulations! You will go far in this game. Have fun!
Terryw wrote:Not sure why you want an accountant who operates nearby.These days you can do everything via email with no need to actually go in to see the accountant. Its not like getting a hair cut where you need to be present. Even if you did go in you would only go once or twice a year and the trip is tax deductible.
Why is it that everyone on this site sweats the small stuff- You have all missed a valid point. Who knows a tax agent in Europe? I will require one or two trips each year…….
A unit in Mt Druitt as a good buy?
Depreciation as a factor or reason to buy? Definately for the selling agent to market the property as a good buy (refer below to see this is not the case).
Good yield?
Lets look at this…Buy $230k and rent for $310- Her goes the positive gearing salesman again? Further to the fact that it is not good yield, it is in a low growth area. A development site like this is not exactly family orientated or like. Is this the type of property you want to hold for thirty years?
Lets look at this, Buy price for $230k, legals, stamp, LMI if applicable, pest, building etc Total $250k-
On $250k, Interest p.a. = $17.5k @ 7%
Expenses including strata, rates, management fee, maintenance, insurance, water = $5k
Rent= $16k at $310 (if you get a solid tenant).loss= $6.5k + the opportunity of Nil growth.
Oops, I forgot the depreciation, throw in building write off on this property value of say $1500.
Net Loss: $5000 p.a.
Stay clear,
Hi James,
A couple of questions:
1. What is your business?
2. What is the business you would suggest for the many viewers on this site?
Property has made me financially free! I grew up in the outer suburbs in Sydney with no cash behind me and I was on a PAYG income as a teacher. My Wealth was not created from my income or a wealthy up-bringing. Clearly, property investments accounted for my retirement at 34 years (or semi-retirement as most people point out). Now-a-days, work plays a role in my life, it defines me personally- I enjoy the thrill of helping and teaching. Financial freedom allows choices in relation to work, i.e. for the next 3 months I will work less and train to compete in Canberra Half Ironman (triathlon) and ski a little.
I am not denying that a business can contribute to wealth (I see many people with this pedigree), but a stable income and an astute mind-set is all that is required.
Hi Matt,
My best guess is that they won't lift it above the reserve (all things being equal), they have clearly enough margin from the last above reserve rate rises (to think we were all feeling sorry for them facing higher costs). I dropped off my lunch on several occasions to the executive as I thought they were having trouble making ends meet…….. I will be asking for that vegemite sandwich back.
Same as above, I like to be pro-active except no API for me.
I noticed a post above x2, This is the type of spin I hear from many of my clients that were once direct clients of the bank. As a general rule the bank and its staff who have no idea about property investing guide people into products and encourage some strategies that although they seem valuable on face value, clearly send a person sideways. I am not sure why you would discuss paying weekly payments and putting more into the repayment($20) and in the same post direct someone to using an offset account. Tribulation was lost- but now you have got him setting facilities that are one and the same.
I would not use a LOC in all cases, both expensive and a little bit of a myth in many circumstances.
Hi Anne,
I was a local and grew up in the west- Rooty Hill to be exact. I have a very good understnading on the suburbs your are discussing, down to the streets and schools. I would be happy to discuss with you offline.
I am located at Castle Hill- so still around the corner.
Depreciation is a sales pitch, Yes it does provide increased cash flow but it is the side gig to what you are aiming to achieve. Further, you will often but not always pay a premium for new property (like a car except not a depreciating asset) and this will effectively diminish any gains you are making from your depreciation.
LMI is also a side gig to what your are aiming to achieve. When you enter the Investment Property (IP) world, think and behave like a business and you will succeed. If you see the LMI as an expense to the acquisition (that is otherwise tax deductible), and you complete the calculations on this fact, I know you will be pleasantly surprised.
I think you will find some tax avoidance issues here.
From original post, I'm not sure you should be worried about cutting losses if you are making gains? Remember tax is only paid on gains. Limiting tax is good with strategies, but avoiding is ………
Further, as mentioned above, selling may not be required?
Where possible, it is much easier if you can do internal lending, the rules laid down by the banks are too rigid and quite often waste your time.
Negative gearing will not reduce your income for the purposes of family tax assessment, unless you become a property business- this is where things become interesting….
I am not sure a LOC is most suitable, it is both expensive and has drawbacks in relation to tax deductibility that can otherwise be rectified by a term loan with an offset account…….. Think carefully before acting on this one.
Intrigue wrote:, if you are lucky and claim all tax benefits effectively the new home will only cost you approx $100pw paying a interest only loan.
Soo… I dont return any income on a weekly basis infact I pay, I dont pay off any pricipal so in 25yrs I still dont own it and I am solely relying on capital growth to return my investment of $100pw. Plus I take risk on it not been rented or decreasing in value and potentially risk my PPOR…. Why would I do this?I am confused with what you saying on this section of your post, but if you do not understand that this is how you make many dollars, you may be missing some fundamentals to investing. I am very happy to go off-line to guide you here.
Hold that thought, be careful what you read……
Landlord insurance is:
1. Rent default
2. Vandalism
3. Theft
4. Loss or damage to building and contents
5. Loss of tenant
6. Liability cover (covered under building insurance).As you can see, there is no need to cover your Mother. I am sure the insurers told you this as their duty of care would not allow them to deceive….
Evolve,
I appreciate your remarks, thank you for your kind words- very professionally responded.
Terryw,
For the record, I think you knew this would get me going……… My next post will be on trusts and legal structures as some pay-back (I will have the think of something controversial).
I am of the stayz brand. I use stayz for my holiday house leasing. I also have a website that advertises. My experience is that you eventually have regular holiday makers each year at the same period go through your property and can eventually go without the stayz option. I also enjoy the opportunity of talking to the people that go through my property. i.e. I have meet many wonderful families and have also stopped what would otherwise have been a train wreck…….
