[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 9, 2003 - 12:01 pm

OK thanks Steve.

I am thinking of starting a new thread for ths actually.

Would love for you to join the debate.

I have nearly finished answering one of the questions “Is positive cashflow really for everybody?” on this thread:
https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=4437

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 9, 2003 - 11:43 am

Hi,

This worries me a little, when I read people like Josh write:

quote:

---

i have spent hours on end at well MAJOR property listing sites and found that none meet the 11 second calculation, however this is just making me more eager to find even one property.I am stabbing at every country town to see if i strike

---

Please note:

Steve has never bought a property in a *rural* country town! And I wouldn’t recommend you do either unless you know the place really well and do a lot of research before buying.

Steve only buys in *major* regional areas. How does he do it:

1) He has the ****TIME**** (and now that he is famous I have no doubt that people come to him when they have a good deal.)

2) He walks the streets. (Don’t quote me on this one, but I am pretty sure I remember him saying this.) You will never find the good deals on the net. In fact all the best deals NEVER hit the paper nor the interenet. However I must say that I have found PLENTY (or should I say my business partner) of properties that are +ve geared on the net but I wouldn’t buy any of them. Next time I come across them I will let you know where they are.

So what do you do? Well maybe we should leave this question for Steve…

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 9, 2003 - 11:32 am

Macdee
******

quote:

---

I say, I say,
Is losing your job the sdame as retiring, cos I’m almost there and need to know?
Cheers

---

Well it depends (however for most people the simple answer is YES).
It all depends on your “predicted” taxable income. You may have other investements that you may sell every year and therefore (hopefully) have good cap gain. However these gains would have to be huge, because 50% is discounted anyway.

Let’s keep it simple. Negative gearing is probably not for you if you are about to retire. (Again if you have a lot of equity and … OK foget it;)

Eigentum
*********

Yes you are correct but you must consider two other things:

1) Time value of money. Money in my pocket TODAY is better than in 5 years time (so to speak).

2) I would like to use the thinking of the positive gearers against them this time!

“It is better to pay a bit more tax on the gains, rather than have no gains at all!” [] (sorry couldn’t resist …)

So the advantage using this technic is:
– You save money each financial year
And as a bonus
– You even get somemore when you sell! How good is that.

For “some” people that is all they need, and they will be very happy with this method.

OK if you want to do a full “profit-loss” analysis , you may say “Hey, why don’t you get some positively geared properties. You get to extra cash every week AND you will make a gain when you sell.”

I would say. Agreed, BUT it takes a lot of *TIMMEEE* to find this properties, and remember these people don’t have much of that (otherwise they wouldn’t be earing so much. They have a job they MUST stay focused on.).

Also for positive geared properties, they *ONLY* (and yes this IS relative) put about a $1,000 in your pocket a year. So to make it worth while you need about say 20 of them . (again we come to the time factor, not only finding them but taking care of them.) And if you earn $100,000 or more does $20,000 really make a difference when it is taxed at 48.5%?

Please don’t get me wrong. If you have the time I am sure positive gearing can be fun! I am just trying to say that it is NOT the BEST solution for EVERYONE. And YES negative gearing (or should I say positive cashflow) DOES have some advantges for *some* people.

Finally if you do a full profit and loss analysis you will see that negatively geared (positive cashflow) properties well chosen will beat +ve geared properties anytime, hands down!(I have done this as an exercise and would encourage everyone to do the same.)

I guess the main theme in all my posts is that you MUST know what you are doing and WHY you are doing it. (and have a good chat at the same time

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 9, 2003 - 12:43 am

Good point xyz,

The “positive cashflow – negative gearing” only works *if* you have a good income AND not too much time.

And the risk is that you may loose your job …

The economy is actually very strong right now and is predicted to continue. Unemployment hasn’t been so low for a long time. But then again you never know…
The thing is, if there is a big depression and a lot of people loose their jobs then this will affect your everyday Mum and Dad who are renting your positive cashflow properties and they won’t be able to pay your rent either.

So whether your positively geared or negative, you will be in the same boat, as far as I am concerned. (OK lets discuss it if you don’t agree, I always change my thoughts when I am wrong.)

However property is safer than shares anyday if you know what you are buying. Because people still need a roof over their heads!

You say:

quote:

---

How many forumites have vivid recall of October and November 1987 and its effects on property prices?

---

What happens if you DON’T sell, and wait for it to pass?

quote:

---

The inflated credit binge will come to an end, its not a matter if but when and all these high negative geared holders will fully understand the concept of leverage works two ways.

---

People buying +ve geared properties are also “leveraged” to the hilt …

quote:

---

Then the 11 second rule will apply to prime Sydney properties.

---

Agreed! even though I doubt this will ever happen…

BTW what types of property do you invest in xyzzy?

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 9, 2003 - 12:20 am

I suspect it has more to do with the school holidays than anything else!

(I think we have quite a number of parents here.)

Cheers,

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 8, 2003 - 12:21 pm

Hey, why are so many people on the defensive lately?

I was just asking! … Politely I might add.

I said:

quote:

---

I am giving you the benefit of the doubt, but an answer will help clear up things?

---

OK you have cleared things up! and I feel all the better for it. (yes really!)

Your software seems interesting. What does it actually do?

You said:

quote:

---

I don’t arrange mortgages… I show people how to structure them

---

This would make a GREAT!! thread. (or have you already discussed this here?)

Pin

p.s:
You said:

quote:

---

You are so wrong it’s not even funny

---

Since when asking questions is wrong? []

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 8, 2003 - 10:52 am

Here is a quick example on why negative gearing is soemtimes VERY good, depending on the persons situation.

This technic can only be used on newer type properties where depreciation is applicable.

The person that would be interested in this would earn more than $75,000 p.a. and doesn’t want to have more than 4 or 5 IPs. (However keep to the 3 most important ruls of PI Location – Location – Location. and maybe another one “Floor plan”.)

OK so let’s do some sums.

Scenario ONE

Earnings $75,000
Taxable income $75,000
Tax $22,600
LEFT AFTER TAX $52,400

Scenario TWO
– One negatively geared property
Rent = $13,000
Interest + Expenses = $16,000
Depreciation = $7,000

So this property cost’s you $3,000 p.a (i.e. Negatively geared!)

Earnings + rent = $88,000
Taxable income = $88,000 – $16,000 – $7,000
= $65,000
Tax = $17,900
LEFT AFTER TAX = $54,100

************************
THEREFORE having a Negatively Geared property will ACTUALLY save you $1,700 p.a. in tax!!

This is actually one of my favorites because these properties are normally “high growth” properties. This technique even though it is negatively geared is also known as “positive cashflow” because AFTER tax the property saves you money.

So please, STOP insinuating that negative geared props are ALWAYS bad. For some people they work great!

(Yes, and I will say it again. You will not be able to purchase more than 5 properties using this method as it will then become really negatively geared. However for “some” people this will work fine.)

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 8, 2003 - 10:23 am

Hi Bill,

In one of your posts you wrote:

quote:

---

You and a few others considered that I was teaching the experienced few, here, to “suck eggs” or that I have an ulterior motive.

---

And I have often read your posts where you say that you want to help people because you are a really nice guy.

I suscribed to your emailing list and it didn’t take too long before you started advertising for a property that was for sale. (Presumably one that YOU are trying to sale.)

So.

1) Are you sure you have no ulterior motive in helping people?

2) Do you still sell property?
(Notice I did not say “Are you a real estate agent?”)

3) Can you still obtain mortgages for people?

I am giving you the benefit of the doubt, but an answer will help clear up things?

Also how much does it cost to obtain your “mortgage software” and what does it do?

Answers to these questions would be of interest to most.

Cheers,

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 7, 2003 - 2:01 pm

Hi Crahsy,

Was just wondering whether they were *famous*. That’s all. So you would say that these are just ordinary people then?

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 7, 2003 - 1:59 pm

Even though the initial example is ridiculous. (Can’t beleive people would do that! They should have bought another property!)

Negative gearing DOES have a VERY good reason to exist.

Depending on your income (and the type of property) negative gearing CAN(!!!) save you money.

Whether it is sustainable way of investing is another (completely) different question.

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 7, 2003 - 11:31 am

Hi Mini,

Thanks for giving it a go. I will reply to some points and make some other statements. I may have to make a second post later…

First I would say that I read the Today Tonight Q&A between Steve and TT. (http://todaytonight.com.au/factfiles/646144.html) and this reassured me, and helped understand where Steve is coming from. It is actually a VERY good read!

I would like to stress a few things however, when it comes to property investing. (Especially with positive cashflow properties.)

Steve said:

quote:

---

If you really want to do it and you are prepared to pay the price in terms of time and money I’m sure you will be a success.

---

Agreed!

I would like to stress the time factor. You NEED lots of it! Please remember that this *IS* Steve’s full time Job AND he has a business partner (Dave).

If you really want to get into IP you will have to get rid of your day job sooner or later.

IP requires a lot of work and research. (probably more that a normal day job.)

And yes, you will need access to some money somewhere, somehow.

quote:

---

I concentrate on larger regional areas, but the truth of the matter is that because good people live everywhere, opportunities abound.

---

This needs to be stressed! Very reassuring…

quote:

---

Personally, because I know that good people live everywhere, I’m interested more in the person than whether or not the town where they live has a KFC. Having said that, I don’t invest in rural property as it’s not my niche.

---

PLEASE REREAD THIS!!
This is one of the things that has been worrying me. People have been flocking to rural areas to find +ve geared properties, which they will most probably regret. (OK If you have bought anywhere in the last 2 years you will be fine, But I am thinking of people who come to this forum NOW and think “OK I have to buy something, somewhere, NOW!!” and go to woop woop to buy something . Only do so if you a ABSOLUTELY sure about what you are doing!!

quote:

---

I think everyone who invests in property needs to expect that sooner or later they will come across a tenant from hell.

---

This is not mentioned enough. Interestingly there is a thread right now that does mention this a bit: https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=4344

IN CONCLUSION

Most people don’t have the time to do proper research, and fully understand what they are getting into. So I am worried that they will go out and buy something just because property investing is the trendy thing. They most likely (after coming here) will look for a +ve geared property.

They will look far and wide and finally find something in some remote part of Australia, and because they have finally found *it* they will buy without doing due diligence. (this may not happen but this is what I am worried about!)

Also the thing with +ve geared properties they ONLY put something like $1,000. PER ANNUM in your pocket. (i.e. peanuts.) WHY?? because this is eaten up so fast by EXTRA expenses that you forgot to put into the equation.

For Steve this is a completely different story. He has the money and the backing. I am thinking about your average Mum and Dad here, who don’t know what they are getting into to.

Property is deffinitely the way to go BUT you will not become millionaires over night and you MUST do your due dilligence. It CAN be very rewarding however, BUT also VERY demanding!

OK enough for now. I feel that I have left a lot out, but I might write another post tomorrow.

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 7, 2003 - 11:00 am

Interesting.

Is this a consistent 40% per annum? And how do they do it (Options, futures, shares etc…)

Crashy, would you care to name who these people are (who average 100% p.a.). Are they Australians or Americans?

Also when you say they play around with 150K. Is that in total?

100% of 150K would be plenty for me with some still to spare!

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 6, 2003 - 12:48 pm

OK here is an answer!

Let me summarise.
– You have 2 kids
– You earn 30,00K p.a.
– You are reteried

Let’s see:
– Looks like a good pention to me! (or is it a wage??)

– Do you have equity in your own home? (What is your house worth and is there any mortgage on it. If yes, how much?)

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 6, 2003 - 7:03 am

Navigator? Ouch!

Wouldn’t suprise me if your financial adviser advised you to put your money there.

Don’t! You will loose so much money in fees.

The best advice I could give you now is to educate yourself. (and yes it takes time but will be worth it in the long run.)

If you are going to go into property remember the 3 most important rules:
1) Location
2) Location
3) Where it is!

Pin

P.S: Incase people take me too seriously the “3 important rules” ARE important, but there is a lot more to it than that.

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 6, 2003 - 1:57 am

Hi Wilandel,

Well said!

However when you say

quote:

---

make a real effort to only post about things that will REALLY benefit someone

---

Can warning people and telling them to be cautious, be benefitial? I think so, but what do you think?

If you are about to buy a newish property and I tell you to check for termites and you tell me: “Oh don’t be so negative, this is a newish home “. and then find out later that the house is full of them. Would my warning have been benefitial to you? It sure would have! (and yes termites can find there way into a house within a year or two!)

What I am trying to say is “Accept the warings and the coutions” when they come and instead of labeling peope as “NEGATIVE”. Lets discuss it in a courteous manner.

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 6, 2003 - 1:47 am

First I would like to thank Steve for re-opening this thread.

I can understand where Pinky was coming from (even though her second post was disappointing.)

I have been reading this forum from when it was first started less than 2 years ago. There where good times and bad times but generally speaking I have enjoyed coming here and reading the posts.

Over the last 2 or 3 months however I have found this forum “not so interesting” and perhaps for different reasons than you think.

Mainly because there haven’t been good debates for a while….

I can understand that people just starting in property investing will look up to you and agree with all that you say, however there are many of us here who have a lot of experience in PI and know exactly what we are doing even if it is different from your strategies. We haven’t writtem books nor do we conduct seminars, but does this mean we do not know what we are doing or saying?

Some people have made some pertinent remarks but have been “wiped out” or labeled “Negative” because they haven’t said things nicely.

So this is what I would like to do (if you agree Steve) to take on a few debates. It will be nice and kind but factual. You will also have to explain yourself in a few areas. We can set it up so that you and I are the only ones that can post (and there will be a “linked” thread where other people can discuss what we are debating.)

Some of the things that I would like to discuss are:
– Positive cashflow. Is it really for everybody?
– Different times, different strategies?
– Does a million dollars in property with a million dollar debt make you a property millionaire?

In some of these debates you will have to explain a few things, because I am worried (NOT negative!) that some people are getting the wrong message and will find themselves in serious trouble soon.

An honest factual courteous debate. How does this sound?

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 6, 2003 - 1:16 am

xyzzy,

You have heaps of experience. So please put this to rest. Is it possible to make over 40% p.a. CONSISTENLTY and PREDICTABLY?

OK you have been doing this for 25 years so it must be working for you, but is 40% realistic or is it more like 5% to 15% and some years 40%???

Cheers,

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 4, 2003 - 10:50 am

Hi everyone,

Actually I am glad Matt brought this up because I have been wondering about the same….

I have nothing against Crashy. Infact I find him very helpful… but I couldn’t quite reconcile his website with what he had written on this forum a few months ago.

I think the key is in the words “Stop Working” which is VERY different from “Retiring”.

So Crashy is correct, even though it is a bit cunning.

Richmond, I think that your remarks about “bordering on defamatory” are far fetched. What Matt has pointed out is FACTUAL and was written in an elegant manner.

It is actually a good opportunity for Crashy to explain himself, which he has done succesfully.

I for one am pleased that this subject was brought to light because it was always at the back of my mind.

I am sure Crashy has a lot he can teach us, even though he comes across over zealous some times…I give him a lot of credit though for launching out on his own.

Also concerning this “calls” business (3-6% per month). If it that good why isn’t every one doing it? and if some are making money from it there must be others loosing? so what is the score?

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 3, 2003 - 1:14 pm

Thanks for your replies Crashy.

So are the TLS shares only worth it because of the buyback or is it a good investment in and of itself?

Pin

[pinit2000Member@pinit2000Join Date: 2003Post Count: 85]

October 3, 2003 - 12:54 pm

Hi Crashy,

What do you mean by.

quote:

---

You might save yourself $180k in tax but in the meantime you could miss $250k in easy income

---

Do you mind expanding on this a little.

Thanks

Pin