[PHPParticipant@phpJoin Date: 2014Post Count: 111]

November 8, 2014 - 11:06 pm

Hey Tjay,

Welcome to the forum!
Like what Richard said, unfortunately, there is no lender that capitalizes the stamp duty cost into the loan.
Based on the limited information you have provided, your broker is setting you up for a 97% loan. This is due to the limited cash you have at the moment. Here is what I think is the breakdown of your scenario:

Purchase Price = $250,000

LMI = $6,700 (capped)

Deposit = $12,500 (5%)
Acquisition Costs = $11,000
Cash / Savings = $19,000
Shortfall = -$4,500

Hence your broker is asking you to come up with another $4k. How soon can you save up for another $4-5k? There are certainly some unconventional ways to do this. One is the way knightm did during his early investing days, the credit card option. Not really advisable but if this is the only way for you to get into the property market, and the returns outweights the potential loss in a short amount of time then you can consider these options. I would be very careful though with the property to buy and ensure thorough due diligence is done.

Cheers!

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November 8, 2014 - 2:09 pm

Interested to know too given that it has been around 7 years ago since the first post.

• This reply was modified 9 years, 5 months ago by  PHP.

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November 7, 2014 - 6:43 pm

Freedom wrote:

Do you mean selling properties for others Tamara? Because you are allowed to sell your own property without a licence aren’t you?

On this note, how many developers, or investors in Australia get there licence? Are there advantages/disadvantages?

Yes you can sell your own property via private treaty.
Not sure about your other question, what license are you asking about in particular? do u mean a builder’s license?

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November 7, 2014 - 3:36 pm

the forum will be more than welcome to help. kudos to you for actually signing up and posting a question. some people will normally be too shy to even post a question. u gotta start somewhere. and this is a good start for you. :)

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November 7, 2014 - 3:31 pm

Hey Colleen,

What does your due diligence tells you? Have you check the prices for comparable houses?
Have you look up the historical data for the area? Demographics, historical growth etc etc..
Gathering these data will actually tells you if the area suit will suit your strategy.

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November 7, 2014 - 11:04 am

What exactly do you mean Damo?

Do you want to set up a Trust to be used for investing? If that is the case, a good accountant can help you out with that. Look for the ones that is also a property investor himself and he can setup a Trust specific to you goal. You can also go to your local library and try to borrow this book about Trust. – Trust Magic by Gatherum-Goss.. a really easy to understand explanation of Trusts.

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November 7, 2014 - 10:04 am

Hey Damo,

I got this from another poster on a different forum. This is from Singo.
He put this extensive list together so all credits to him. Some of the books that he mentioned changed my life for real. My outlook in life is now different because of these books.

Reading books gives lots of ideas. I love reading and collecting books. Over the last couple of years, I have bought more than 40 books on property investing. 7 Steps to Wealth is the first book I read. John L Fitzgerald gave as a free gift in one of his seminars. From 0 to 130 properties in 3.5 years is the first book I bought. Now and then newbies ask what books to read and the sticky we have is 10+ years old. So I thought a list of books I have would be useful.

“This is my Property Investing Library

General
* My four year old property investor (Cam McLellan)
* How to build a multi million dollar property portfolio (Michael Yardney)
* Mastering the Australian housing market (John Lindeman)
* From 0 to 130 properties in 3.5 years (Steve McKnight)
* How to achieve property success (Margaret Lomas)
* Smart Questions Property Investors Must Ask their Solicitor (Robert Balanda)
* Property Investing for Dummies
* Ignite your Property Investment Mojo (Lenore Miller)
* A pocket guide to investing in Positive Cashflow property (Margaret Lomas)
* The investment property plan (Stephen Zamykal)
* 7 Steps to Wealth (John L Fitzgerald)
* From 0 to Financial Freedom (Steve McKnight)

Development
* Profit from Property (Philip Thomas)
* An intelligent guide to Australian property development (Ron Forlee)
* Australian Property Development (Ron Forlee)

Taxation
* Winning Property Tax Strategies (Julia Hartman, Noel Whittaker)
* Property and Taxation (Jimmy B. Prince)
* Claim It (Tyron Hyde)
* Rental Property and Taxation (Tony Compton)

Renovation
* The Renovator’s Survival uide (Amanda Falconer)
* Planning your perfect home renovation (Alex May)
* The Insider’s Guide to Renovating For Profit (Patrick Bright)
* The Beginner Renovator (Edward Mundie)

Property Management
* Managing your Investment Property (Rachel Barnes and Geoff Doidge)
* Simple and Successful Property Management (Leah Calnan)

Investor Stories
* Building Wealth Story by Story (Jan Somers)
* More Wealth from Residential Property (Jan Somers)
* Real Property Real People Unreal Profits (Geoff Doidge and Paul Eslick)
* The Property Millionaires Next Door”

Hope this helps!

• This reply was modified 9 years, 5 months ago by  PHP.

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November 7, 2014 - 9:19 am

Hi Colleen,

To be honest I have not even looked at the part of NSW until you mentioned it. Is there a property there that you are keen to buy?

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November 7, 2014 - 9:16 am

Hi Karen and June,

If you can post more details about the deal then that would be great so others here can say their opinion about it and you can decide what is the best way for you moving forward.

Have you tried calling your banker or finance person about this? I’m sure they can offer you some advice with this.

Cheers!

• This reply was modified 9 years, 5 months ago by  PHP.

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November 7, 2014 - 8:30 am

I’ve always believed in the saying “When the student is ready, the teacher will appear.”
Doing your own research at first is the best option for now, browsing around forums like this is a good start.
Reading books helps a lot too in answering most of your questions. After having a bit of knowledge behind you, you can then decide if you want to go ahead with signing up to any program. More often than not, you can learn most of it on your own if you just keep on researching.

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November 7, 2014 - 7:48 am

Good point blackhotel. Properties with strong capital growth is really what makes you wealthy. This speeds up the property accumulation phase and you can potentially reap the rewards in a shorter amount of time.

Also consider diversifying your portfolio, analyse if investing all your money in one high priced property is the way to go for you or if investing in 3 mid price properties will achieve a better result. Again, each person’s circumstances is different so take all that into consideration when formulating your strategy.

Cheers!

PHP | Mortgage Station Pty Ltd
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November 7, 2014 - 7:38 am

There you go.. another person keen to help.. if you are not sure about anything. u can always come back here and post questions.

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November 6, 2014 - 3:45 pm

Richard wrote:

Earning good money as a day job, along with the stress involved, suggests he would look to make the most of this potential – sooner rather than later. Creating a plan with a defined outcome and time frame might be a better initial move, as this would spell out the most suitable investment for his goals, rather than his tax return.

Exactly! :) Good advice Richard.

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November 6, 2014 - 3:22 pm

hiiph wrote:

Hi PHP

My understanding is start investing with a property that give you +ve return i.e. rent received > interest payment.
Should avoid buying -ve gearing property as paying less tax is not the way to grow more passive income.

It all depends on your circumstances really, each person is different. Some people with high incomes invest in negatively geared properties to offset some of their taxable income, some people invest in positive cashflow properties to speed up the saving process. and also some balance it out by having 1 negatively geared property then buying two positively geared property to balance the loss.

Going back again, tax benefits should not be your only focus. Places with good capital growth is what will accelerate your property accumulation phase.

1) there’s a few buyer’s agent posting here on this forum. just look for them and call them up and see if they can help you.
2) i’ve heared of that software, i personally don’t use it. i have been offered to chip in for the membership with 5 people sharing one login details. i said no, i’ll just be searching by myself for the time being.

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November 6, 2014 - 2:25 pm

Hi There,

Assuming no existing debt and has a decent amount of deposit, with that income, he can start his investing journey as soon as possible. Before doing all that though, I suggest the following things:

1) educate yourself – forums like this one is a good start. ask questions, read more about it and then come back with more specific questions. Some good books are highly recommended. Do a search in the forum and you will find a lot of people sharing books, magazines and other resources that has changed their way of thinking for the better.
2) investing for tax purposes is not really a good plan. it might help you for a short period of time but property investing is not all about tax benefits.
3) start with the end goal in mind and be specific with your goals. You mentioned that he wanted to grow a property portfolio and be financially free, what is financial independence for you? is 70k a year passive income your goal or is it 150k a year? from here, you will formulate your own strategy on how to get to your goal. very important too is to set a timeframe for your goals.

Regarding your questions,
1) paying less tax does not make really make u grow assets. It will help u save faster as u will get more after-tax dollars that you can then use as a deposit to buy properties. this is really not a good strategy. as u read more about property investing, this view will change.
2) I do not know any good tax accountant in WA. accountants are not the only ones though that you should be focusing on for advice. u also need a good finance person on your side that will tell u how much u can afford and will structure your finances to suit your goals. a good buyer’s agent too can help in your search for good properties for your strategy, this will cost you though to employ them. u can also consider going to meetups and just mingle around like minded people around your area.

So yeah, read.. ask… research…

Cheers!

PHP | Mortgage Station Pty Ltd
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November 6, 2014 - 9:59 am

Hey scottyboy,

typing all that down means you really have thought all this through. kudos to that, some people just don’t give much time and effort in writing everything down and tracking their income and expenses. Just to help with the numbers.

Note*
You mentioned you are expecting a pay increase of around 15k and you are also mindful of a household income decrease of 20k. So this sort of balances it out. But lets just prepare for the worst and just consider a household income decrease of 20k.
Can you please provide your individual income? I know you mentioned 115k combined gross income. but we are only reducing her income alone. Also, with the baby, the monthly allocated expenses by lenders will change in value. Their calculation of a couple with no kids expenses is obviously lower than a couple with 1 dependent. Take this into consideration too.

Regarding the old car, you also mentioned that you have 5k owed to you that u can get back. If you sell your old car and get the 5k owed, you will have 10k to buy the car that you need for the family keeping in mind the baby coming soon. This way you will not have to touch the savings u have set aside.

Cash Position = 33,000 (20k+13k)

5,216 (monthly income)
-3,716 (monthly expenses)
——–
1,500 (leftover for savings)
+1,000 (added if personal loan is paid off)
——–
2,500 (increased cashflow savings with no debt)
+1,516 (add back rental expenses if you decided to buy PPOR)
-2,200 (very rough calculation of monthly repayment on a 470k-480k loan, Security value 500k, LVR of 95%)
+1,083 (250k a week help from your sister. assuming she will stay with you)
– 300 (Council rates, etc and cash reserve for extra expenses)
——–
2,599 (Leftover per month)

This is where there’ll be a problem, if you want a house similar to the one you’re renting now with your sister. I am guessing, the property that you will be looking at will be around the $500k price range. FHOG is only for new houses, in Campbelltown area, most of the new houses are sold up pretty quickly and the ones left are the House and Land package which will make you wait for about a year. Your deposit alone is not enough to qualify for this price range, you do have the serviceability though and getting rid of the personal debt will increase this too.

at this point, the best option for you really is to sell the car, and continue saving. your problem now is to convince your partner that selling the car is really beneficial for you. As mentioned above, in 5 years time, the 50k value of your car now can only be down to 30k or even 20k depending on how u use it. Alternatively, in 5 years time, you could be in a better position with a few IPs or your own house + IP.
Obvious choice I hope.

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November 6, 2014 - 7:32 am

Freedom wrote:

Catalyst, do you happen to know if there are any meet ups in Adelaide, or if anybody could Skype in to one in Sydney? Struggling to find them over here!

Hey Freedom,

I think you will find it hard to Skype in to one of these meet ups. First is they are normally just casual meet ups, no hard selling or anything like that. Just a group of property investors or would be property investors sharing ideas and stories. And it is normally held in a club so people can have dinner and a few drinks while discussing things. I am sure there will be more meet ups in Adelaide.

• This reply was modified 9 years, 5 months ago by  PHP.

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November 5, 2014 - 6:00 pm

using a BA in QLD is a good idea. especially if you are not familiar with the place. Like Richard said, most of the transactions are done off market and only those with good connections will have access to this deals.

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November 5, 2014 - 5:41 pm

Hey,

Have you considered an equity release from your other property? If there’s enough equity in your property now, you can potentially buy another IP without using your savings with this process.

Regarding the use of credit cards and balance transfers, this is usually not advisable as this can really hurt your credit scoring and all credit applications will reflect on your credit file. this could mean lenders will see you as a high risk borrower with so many credit hits in a short amount of time.

I would suggest talking to your finance person/broker regarding your plan. Give them your scenario and discuss your goals with them, they can give you options on how to go forward with this.

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November 5, 2014 - 2:05 pm

Hi There,

i would start by working out how much I can afford. A good mortgage broker can work this one out for you pretty easy and advice you on how things should be structured given the goals you have in mind.

Once you know how much you can afford, this will filter the areas that is out of your affordability scale.
Why do you want to invest in properties? Answer this and this will formulate your strategy moving forward.

Cheers!

PHP | Mortgage Station Pty Ltd
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