Alf,

I suggest that you draw a distinction between fishing for deals and then actually going into detail to evaluate them.

Fishing for deals

I use the 11 second solution to try and quickly gauge if the property is likely to be +ve cashflow. This is done when you take the weekly rent, divide it by 2 and then multiply the result but 1,000.

For…[Read more]

Fergus,

Perhaps some legal advice on this matter is worthwhile, however in the meantime my thoughts are that if you provide a residential lease which also includes a no obligation option to buy at a later date would not cancel your client’s entitlement to continue to receive the welfare payment.

However, vendor finance (when a formal contract…[Read more]

Matt,

The introduction of GST had an adverse effect on the laundromat industry as, generally speaking, 10% of the profit went up in suds.

This was because a $2 machine is geared to accept either one or two dollar coins. That is, you can’t put in $2.20.

It’s a massive jump to go from $1 to $2 or from $2 to $3 because of the GST.

As such,…[Read more]

Canadian Dave…

I was surprised when I first learned about assumable mortgages in Alberta as it is a new possibility for Australian investors.

FYI, the law here is that the mortgage here needs to be paid out (ie. clear title given) at the time of settlement (ie. when title passes).

In fact, the whole tertiary loan market (such as 2nds etc.) is…[Read more]

Klaus,

While the government can change its mind at any time, the FHOG was ‘budgeted’ in the last Federal budget until June 2003.

However, the $10,000 FHOG for new properties will be reduced to $7,000 (the same as is available for existing houses) from 1 July 2002.

Regards,

Steve McKnight

Hi Andrew,

I’m off to Brampton Island today, but just before I go, here are my thoughts on your post:

Your write:

quote:
1. The first and foremost is the asset protection of the investments. I have heard you and others all recommend looking at this process as a means to protecting your assets into the future. This would (as I see it) require a…

[Read more]

Regina,

Would you feel comfortable listing out the basics of your joint venture… ie. what are the responsibilities of each party, how profit / loss is to be distributed etc.?

I’ll provide some feedback with my thoughts on the set up and it would be an excellent discussion for people who have no experience in joint ventures too.

Thanks,

Steve…[Read more]

Regina

One trust per property is absolute overkill.

In Victoria (which doesn’t have the same limitation as Qld) David and I place between 10 – 15 properties per entity structure.

In Queensland, the problem as I understand it is not how many properties you buy in any year, but the number of properties that you sell. Accordingly, you need a…[Read more]

Hi Andrew,

I recognise that you are looking for an accountant to help you with wraps…

However, I believe that nearly all the work can be easily and effectively done in-house using a mixture of software and some basic systems.

I can help you further if you spell out the services that you are seeking as accountant to complete as a reply to this…[Read more]

Clive,

I’m not sure about the process for registering for Qld, but in Vic you need to fill in a form and lodge it (free).

Don’t quote me, but I think that there is no registration required in NSW, but the contract needs to include certain parameters that meet the requirements of the Code.

If you are serious about wraps then I’d recommend paying…[Read more]

Ritchie,

I think so. I saw on ‘The 7:30 Report’ tonight some discussion about the purpose of rising interest rates.

Of course, the purpose behind increase i/rates is to dampen consumer demand and pour water on an over-heated property market.

See my article in the ‘articles’ section ‘Making Cents of Statistics’ for more discussion about…[Read more]

Hi Alf,

Thanks for your feedback.

You write:

quote:
how about a negative geared property with a positve cashflow?

With respect, isn’t this an oxymoron, like ‘finding an honest policitian’ or ‘male intellect (so my wife implies [])’?

Really, the ‘negative’ in ‘negative gearing’ implies a loss or outflow. In most cases this is cash – or at a…[Read more]

Eric,

I haven’t read the book, BUT I do question the independence of the advice given.

I mean, what else is someone who profits from selling finance going to say about potential competition?

Finally, I sleep at night without moral issues with wrapping because I always seek to create win-win outcomes.

Bye,

Steve McKnight

SJ,

I think that it would be a good idea to get some advice from a Qld solicitor re: latest changes to property investing rules in your State. There are new regulations in respect to the number of properties you are allowed to transact in a period without an appropriate licence.

In fact, I’ll try to get a solicitor to make a post about this on…[Read more]

Matthew,

Why is there GST on your property acquisitions?

Provided that the investment property is residential and built pre 30 June 2000, I’m unsure why there would be GST applicable.

Do you have other advice?

Regards,

Steve McKnight

SJ,

I need a little more information before I can provide a meaningful reply…

1. What are the professional qualifications and background of your adviser?

2. What State do you live in?

3. When you went to see your adviser, were you seeking advice about asset protection or tax minimisation?

4. Precisely what do you get for your $800?

5. Any…[Read more]

Fergus,

In response to your questions, my thoughts are:

Qn 1: As much as you can get, bearing in mind your wealth strategy and also the relationship you have with your lender. In our case, we knew that paying off debt increases our cashflow and as such we were happy with a 20% deposit. This does detract from the available cash though.

Qn 2:…[Read more]

Mark,

Re: the long settlement… we asked for it!

We will be doing an 80% lend on this deal, which is our standard finance terms that allows us to continue to borrow money.

In this case, the lender that we are using is the NAB.

Can I ask who you have sourced at 80%?

Thanks,

Steve McKnight

Tara,

Three comments:

1. Know the difference between fact and opinion. Fact: interest rates are at 30 years lows. Opinion – how long they will stay there.

2. Good deals exist in all markets. Rising interest rates will kill some deals, but you can still buy today and lock in rates for five to ten years.

3. Accept the market will never be…[Read more]

Hi,

When I worte this post I did so as a case study.

Prior to starting the post I had signed a contract to buy it for $50,000 on a six month settlement, subject to (a) finance and (b) a builder’s report to my satisfaction.

Well, finance wasn’t a problem, however as the case study mentioned the building report came back with a problem with the…[Read more]