Forum Replies Created

Viewing 20 posts - 81 through 100 (of 1,699 total)
  • Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Thanks! :-)

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Okay, I’m not a conspiracy theorist, but I have to admit to some serious reservations about downloading an untested app, without sufficient privacy laws in place now, and with a government that is making policy up on the run who is bribing us to download the app with promises of ‘we will let you all out of lockdown sooner if you have it.’

    This government isn’t high in trust stakes after the bushfire response. Trust needs to be earned, not given.

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    I think we’ve created a ‘success problem’, namely that while we might have low cases, the rest of the world more or less doesn’t.

    Can we live in isolation? Yes. Can our economy and pre-COVID-19 standard of living survive isolation? No.

    The question I keep coming back to is this… what happens when we open the borders?

    It seems to me that the lockdown was a very expensive way of getting the necessary stockpiles of PPE and ventilators to manage post-lockdown.

    – Steve

     

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Hmmmm. Even with the ‘brakes’ eased, the increasing loan book risk is likely to cause lenders to lower LVRs and increase credit qualifying criteria.

    Beyond that, is getting into more debt really the answer? Short term fix for long term pain.

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Yes, aside from financing (liquidity for commercial property is drying up), you need to assess a tenant’s ability to (1) pay the rent, and (2) pay the outgoings, and (3) survive post pandemic.

    Given commercial property is mainly about income, the quality of the tenant and their ability to pay is a real risk.

    It is likely that commercial property rents will decrease post pandemic given given vacancies are likely to increase, so be aware of that.

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Hi there,

    As outlined below, your company will need a registered office (CORPORATIONS ACT 2001 – SECT 142), which must be a physical address (i.e. where notices can be sent). It cannot be a PO Box (CORPORATIONS ACT 2001 – SECT 100 (c)), but it can be a home address.

    The requirements of a Registered Office are (CORPORATIONS ACT 2001 – SECT 144) are:

    Company’s name must be displayed at registered office etc.

    (1) A company must display its name prominently at every place at which the company carries on business and that is open to the public. (2) A public company must also display its name and the words “Registered Office” prominently at its registered office.

    Interestingly, CORPORATIONS ACT 2001 – SECT 145 goes on to say that only a public company needs to be open to the public.

    So, it seems that a registered premises for a PTY LTD company needs to identify that it is such, but need not be open to the public.

    If you don’t want to use your home address, and you don’t have an ‘office’ address, the common practice is to nominate the office of your accountant or solicitor. Note that you should have written permission for this arrangement. See CORPORATIONS ACT 2001 – SECT 100.

    Assuming you are on good terms with your adviser, you shouldn’t need to pay anything.

    All the best,

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Hi there,

    Terry’s thoughts are mine too – get some good advice from a lawyer, or an accountant, who knows about structuring. Some will over service and give you a structure that might be suitable for the Packer’s, but overkill for most others.

    I suggest working back from the outcome you want, to the best and most cost effective way to (a) protect your assets, and (b) legally pay the lowest income tax possible.

    You will need to consider at least  three aspects:

    a. Your business

    b. Your property investing

    c. Your personal wealth

    It may be you need a separate ‘structure’ for all three. Putting them all in the same ‘structure’ (i.e. in your own name, the same company, etc.) is something that smart people avoid as you end up compromising asset protection and tax planning opportunities.

    Without giving any advice, but as a discussion point:

    a. Business in one family trust

    b. Property investing in another family trust

    c. (a) and (b) provide distributions to individuals, with surplus money diverted to other investment entities

    As Terry indicated, expect to pay between $3k – $5k for advice, and similar again to set up new entities, and similar again for annual fees for accounts, tax returns, etc.

    Regards,

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Yes, that’s right. There is no ‘agreed’ industry-wide protocol for what expenses are included, and what are excluded, so the calculation cannot be applied comparatively with accuracy.

    Heck – that’s a lot of big words in one sentence. Just had my morning coffee and it shows.

    :-)

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Thanks for the question, and you ask something that seems simple but is in fact very sophisticated and compelling.

    Many properties have an ICR (Income Cost Ratio) which is negative (i.e. costs are higher than income), but that is due to their heavy leverage causing interest to be excessive. Other properties have higher hidden costs (such as body corporate, marketing, etc.). As such, operating (i.e. EBITA) rather than net income is the better base.

    That said, getting an industry-wide number is difficult, because different people use different cost inclusions (because their definition of operating varies). Consider two properties – one externally managed, one internally managed. The ICR would be higher on the non-managed property, but the investment performance could be compromised because the management attention is lower.

    All that said, for my US fund, we work on a gross margin of >60%. That is, operating expenses, including management, need to be contained at 40% of gross income or less.

    Thanks again for the question. This is the best forum post I’ve read seen for a long time.

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Thanks for posting the question.

    It is an interesting one and, without being a lawyer or offering advice, seems to be a matter of providing a safe place for your tenant to reside. If the asbestos is unsafe in its current condition, then I it would seem logical that the owner has responsibility for removing it safely.

    Of course, if the tenant was responsible for putting it there, or ‘disturbing it’ so as to now make it unsafe (whereas before it was safe), it might be a different issue.

    And then there is the humanity aspect to this. Would I want anything in my property that was a known risk to someone renting it? No. I’d quickly and promptly and safely get it gone.

    All that said, if you are in any doubt then a call to the relevant tenancy dispute helpline in your State would be worthwhile to see what the protocol is. You might also want to have an ‘informal’ chat with your insurance company.

    Regards,

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Thanks Watto. You’re right. Typo fixed. :-)

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Properties in regional areas tend to be more income orientated than growth orientated, but of course that is a generality, not a rule. Student accommodation is definitely an income maximisation strategy though.

    Some questions I would work through:

    a. Who is going to manage it, and at what cost?
    b. Who is going to buy it off you? It will need to be another investor? How will you add value or create a compelling investment opportunity to achieve your exit?
    c. With a 10 year horizon, and with a growth focus and a passive mindset, might you be better off with the classic “worst house, in the best street, in the best suburb you can afford” approach?

    The approach I advocate today is this:

    a. Spend less than you earn to create savings (or cash surplus)
    b. Use the surplus as capital to invest
    c. Invest for growth – either active and quick turn, or passive and generic growth
    d. Once you have accumulated enough capital, redeploy to income (commercial property)

    Regards,

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Howdy ajg71. Thanks for the post.

    Here’s the process to think though:

    1. Are you investing for income (cashflow), or for growth returns?

    2. Are you a passive or active investor?

    3. What is your timeframe (investment horizon)?

    4. What is your risk threshold?

    5. How much deposit do you have, and what is your borrowing ability?

    Answer the above and I’ll reply with more info when time permits.

    – Steve

    P.S. If you’d like a free coaching session to talk through this then email the guy I recommend as the best property coach of my material: [email protected] and tell him that I said it was okay.

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Hi Flynn,

    In the US there is what is called a 1031 like kind exchange, where you can roll a property’s realised gain in to another purchase. Australia does not have such laws, although there is capital gains tax rollover relief if you sell a business (in some circumstances).

    To answer your other questions…

    Is now a good time?

    Well, it depends on your approach, in addition to your level of skill and experience. Now is a poor time if you are speculating and low on skill, but if you are educated and experienced, then there are always opportunities to make money.

    1% rule

    Once you find a property that meets the 1% rule then you need to do further due diligence on the property to make sure the information you’ve been given, and you discover, supports the purchase. I have a resource called STEPS that walks you though the 12 STEPS process for how I recommend you complete due diligence on a property acquisition.

    Utilities

    Different jurisdictions have different rules. Make sure you know what the rules are in your investing area.

    Offer Price

    You should offer a price that is commensurate with the risk, and allows you to make your required return.

    Bye,

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Thanks for sharing your story. I’m really proud of you, and for you. Well done.

    Blessings,

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    I have been advised that the best option would be to invest in my personal name as it is easier to borrow and trusts do not necessarily have any tax benefits.

    An accounting structure summarises the way you own and control your wealth. The two options, from a high level, are: in your own name, in another entity (that you control).

    The right structure is one that allows you to minimise your tax, maximise your asset protection, within the budget you have available to set it up and run it, and appropriate for your wealth creation plans.

    As you can imagine, that last paragraph permits a variety of scenarios to all be both right and wrong, depending on the individual.

    Owning real estate in your own name is definitely the cheapest option as far as set up and ongoing costs, but it comes with the lowest tax minimisation and asset protection options, and it also makes it very hard to scale. That said, if you want to negatively gear, then it is the best option available so you can offset the property net rental loss against your salary income (and with the Libs now returned there is no risk of this changing in the next few years).

    Hope this has helped.

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Hi Kade,

    What advice have you been given?

    You could try my accountant, Mark Unwin (MJ Unwin & Associates) to see if he can help.

    Just know things could change depending on who is elected and what policies they get through.

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Heck, this IS quite a story. It’s definitely one to get some legal advice on, but being a cowboy, will you be able to recover and collect anything even if you get a judgement? Is there any kind of insurance you can claim on? Government building scheme?

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Hmmmmmm. I’d be going to good ol’ Google…

    This one seems to rate well:
    https://www.oneflare.com.au/greenconcepts

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Hey Mark,

    Thanks for the post. Wow. There was a bit in there!

    Ive wanted to get involved in property ventures over the years but I cant borrow money because of my employment status and what most people at property seminars dont understand is that in order to play capitalism you need CAPITAL.

    Very true! You need money to deploy – either yours (equity, savings) or someone else’s (JV, money partner, lender). Otherwise, the best way I know to create capital is to use the internet to monetise knowledge.

    I have only one asset my apartment on the gold coast where I live with my family.

    Hmmmm. This has me worried. Smart investors don’t use their homes as collateral unless absolutely necessary. It sounds like with a wife and young family, you need this home and you shouldn’t invest with assets and capital you can ill afford to lose.

    You listed various options, but I am worried that options 1, 2 & 3 will be too capital intensive for you given you available cash and borrowing capacity. That said, perhaps scope some projects and see for yourself. As for tax liens, that boat has sailed – with the AUD lower and yielding assets in demand, the opportunity that was there re: tax liens in 2009 is not the same as the opportunity there in 2019.
    Side note: you may find your ITIN has expired, or is about to, expire. They are only good for a finite period of time and have to be renewed.

    It sounds to me that if you want to deploy your capital in real estate, then I would consider being someone else’s money or JV partner (noting what you said about not relating well, and hence the legal agreement will be important), or else buying in to some kind of listed / unlisted REIT structure.

    All the best,

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

Viewing 20 posts - 81 through 100 (of 1,699 total)