Hi SusanJ,

Thanks for your post and welcome to the forum.

Note: I have assumed that the property came with clear title (i.e. no existing debt), and that you want to keep it rather than sell it.

The easiest way forward is to seek out a mortgage broker to help you arrange a loan for $60k. As this is only 50% of the current value, you shouldn’t have too much difficulty in sourcing funds (subject to what you earn as an income).

As MH says below… what happens next is your solicitor arranges for the title to revert to your name (rather than joint names) on an agreed date when your loan funds become available.

If it was suitable, what I would also say to your sister is not to offer 50% of the $120k, but 50% of a slightly less amount to reflect that if you had of sold it then, because of sale costs, the actual monies received would have been less than 50% of the gross $120k.

Such an adjustment / negotiation seems only fair as you shouldn’t be penalised for deciding to stay in the investment.

Now – are you keeping this property as an investment? If so, what are you hoping to get out of it in terms of income and cap growth?

Regards,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Hi,

Welcome to the forum, and thanks for reading my books.

You have picked up on:

but don’t forget that:

As such, I’d suggest trying to find a deal that looks attractive and then shop it around. Perhaps even get in touch with another bird-dog and ask them to refer it to his or her (mini cough, splutter, wink) database for a cut of the profit.

Ultimately, someone else has ‘the market’ if you can provide the right deal.

Good on ya for giving it a red hot go. It won’t be easy, but it can be done.

Regards,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Hey mate,

You’re more than welcome! Please report back with your decision / research / more questions.

Regards,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Hi Olivereindeer (nice alias!),

I agree with Westan, since, from my experience it is better to solve a prior spending problem than it is to seek more money.

Having said that, books such as ‘The Richest Man in Babylon’ (which are a great read) suggest that you should pay off your debts at the same time as building your wealth.

To answer your questions though:

At least moderate results, provided you cease the behaviour that landed you in debt in the first place. It’s the old adage – to get out of a hole you first have to stop digging.

Borrowing may be difficult (given that your serviciabilty will be affected by your current debt). That leaves two choice:

1. Repay the debt
2. Establish another entity to borrow through and sign as a guarantor rather than the borrower.

This second option may still prove problematic.

Honestly though, I can’t promise beer and skittles, yet if you work hard there’s no reason why you can’t win.

Yes – get out of debt asap, especially if the interest on your debt is non-deductible.

That is, you may find that the best use of your money (talking after-tax returns) is to repay debt, as to repay $100 of non-deductible interest you will need to earn more in gross pay.

On top of that, also start saving at least 10% of your gross income so that you have some cash to get going once your financial situation improves.

Well, that’s a good starting point, but be more specific with your goals. For example:

* Who much cash do you want to have saved up?
* How much debt will you have owing?
* Where will you be living?
etc. etc.

Finally, now or never indeed! Cease the motivation to take drastic action, as there is never a better time to get started than right now.

Regards,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Hi Salla,

Welcome to the forum and thanks for your post.

You ask a question that must be near the front of every homeowner’s mind – namely, what to do with an asset that might be earning equity but which is not performing from a cashflow perspective.

Furthermore, approaching retirement, you no doubt sense that equity is not as ‘useful’ to fund ongoing expenses as is a regular cashflow, mainly because once spent, equity is now expired whereas cashflow is of a recurring nature.

Two important issues to weigh are:

1. Are you willing to take a lifestyle hit to rent out your home to move to ‘lesser’ accommodation?

2. How much equity should you redraw to fund other investments.

The answer to the first question is an issue of lifestyle and the way you are acustomed to living. Only you know if you can ‘downsize’ (in living) to ‘upsize’ (in income).

The second question is a matter of crunching the numbers to see how much extra interest your equity redraw would cost you to access funds to invest. This is where planning is needed as opposed to investing on a whim.

As for loopholes etc., best to see an acocuntant for the specifics, but generally your home (i.e. principal place of residence) is not taxed from a cap gains perspective, but then again, neither are the improvements generally tax deductibel either. Things change a little if you rent your property, especially if it is for an extended period of time.

Good on you for thinking about such issues, and best wishes for your new career as a property investor!

Regards,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Hi,

Thanks for your post.

The typical profile of a +ve cashflow house is one that presents with problems, as it is by solving these problems that enables you to ‘make’ a profit by adding more in perceived value than actual cost.

As for land tax – it is a cost of business as such and needs to be factored in. It can be minimised in many ways, including holding property across various states.

Regards,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Hi,

Yack – I started in 1999 mate, not 1997.

In any event, why am I selling some properties? Because I can make more money elsewhere on a comparable basis to the ‘real’ return on my money (allowing for the equity tied up in the asset).

My opinion is that the market is poised to redistribute wealth away from those who rely on chance to make a profit, towards those who have a degree of skill and a system behind their methodology.

In this regard, I agree with Yack – in particular:

Well said!

Regards,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Hi,

Buying a shelf-entity can save a lot of time and money, but be sure to shop around as:

* not all legal documents are the same.
* the price is competitive

In particular, if you have unique requirements then I’d suggest paying extra and getting something tailored.

Regards,

Steve McKnight

P.S. If you’re interested, we use Shelcom in our office (they give free lollies that Dave quite likes). Their website is: http://www.shelcom.com.au/default.htm

**********
Remember that success comes from doing things differently.
**********

Hi,

Interesting post.

Does the lender know you have purchased all these properties? If so then I’d provide them a summary of each loan and how it relates back to the enquiry.

Sometimes it pays to make the first move – it’s called attacking the fatal flaw well before it even becomes a problem.

If they don’t know about the other properties and you want to keep it a secret then you may be in a little bit of a bother. Perhaps think about setting up another entity and going guarantor rather than chief borrower. Having said that, your previous history will still show up…

I think openly working with the lender is your best bet.

Regards,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Hi,

My contribution to the discussion is simply to share how surprised I was when, several years ago, I looked into buying a block of apartments and was told that they came furnished.

I was astonished because I had not encountered this before and I put it down to being a Qld thing. When I did some more research I was told (but never confirmed this) that when a furnished item breaks (or breaks down) then you have to be the one who replaces it.

As such, if you buy a property with old furnishings, then what might seem to be a blessing might actually be a bit of a liability.

On a sep. note, it seems that a lot of NZ property comes furnished as the defaukt. Not all the time, but certainly not uncommon.

Personally, I’d be open to the idea, but i would look for a way to not have to pay for repairs or breakage etc under the principle that hire cars aren’t treated as respectfully as owned cars… if you get my meaning [wink4]

I guess in the end it’s a numbers game in trying to get the biggest bang for your investment buck.

Thanks for your making an interesting post.

Regards,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********