Hi,

That sounds like about $130k more than we had when Dave and I started!

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Ah,

Welcome to the problem of trying to organise finance. It has been a consstant source of frustration for me that financiers tell you one thing and end up doing something different at the 11th hour.

I can’t give you a recommendation as such, as I think that any lender will have trouble will stuggle inside one week (they need to get loan docs signed etc.).

As such, I’d be tempted to go with the I/O variable loan (the interest should be cheaper than it’s fixed cousin), but on the basis of understanding the payout costs should I refinance at a later date when you have more time up your sleeve.

That will mean you can still setlle on time but can also refinance later with hopefully no/low penalities.

Also – make sure your broker refunds any application costs for stuffing you around.

Good luck,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

What you wrote about your astrologer is one of the funniest things I’ve read all year [].

I am a little concerned that you are looking for a magic answer that means you can continue to live your life as you know it now and end up rich.

Let me be clear – that is about as realistic as believing the Seekers will have another #1 hit.

It’s disappointing that while you seem open to the idea of creative options, you’ve asked two people and now seem to think the idea is destined for the bin.

Whatever your approach this much is certain, unless you control your spending then you’re in BIG trouble. You’ve lived off your equity and when inevitability hits you will be in poor financial shape.

Your journey will need to begin with either spending less so that you income matches your salary, or alternative earning more.

But it’s a huge mistake to use investment income to fund the gap because you are not addressing the real problem. As I wrote in my book… that’s a band aid solution to a massive haemorrhage.

If you haven’t yet understood what I’m writing… the lifestyle you have now is probably the lifestyle you’d like if you were financially independent – yet you are living on borrowed time.

If you want to get out of the rat race in three years, then make a plan rather than looking for a quick fix or magic solution.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Hmmm…

I’ve never been to his seminar but I’ve heard enough on the radio to know this guy flogs -ve geared property to the masses.

quote:

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He accesses your financial situation and work out a strategy for you to go into Negative Gearing properties.

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…and probab;ly earns a commission for doing so off the developer, financial institution, insurance coy etc.

As such, it’s not something I’m interested in.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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OK….

The verdict is in.

I went to the Peter Flanagan event (promoted by Break Free) this afternoon.

The quick answer is that it was well worth what I paid to attend… which was nothing.

Now, the first read of that comment might seem to indicate that I am being negative.

This is not the case. In fact I would recommend attending his free intro on the basis that if you walk away with one good idea then it has been worth the time investment.

Peter’s information is good, although it is unashamedly a preview of a 3-day event that costs a shade under $3,000 per person to attend + airfare and accommodation to the Sunshine Coast.

More Details

Peter is a guy that’s larger than life and was comfortable cracking a few jokes about his weight. He left school at age 15 to get a labouring job that paid next to nicks. He later returned to TAFE and then became a psychologist with his own practice.

At 35 years of age he woke up one morning, realised he was broke and then starting investing in property.

His first deal he bought at 30% below value and then lease optioned it back to the vendor who remains in the property to this very day.

Now he and his wife pocket $200k each per annum from their property business. They live on 37 acres in outer Melbourne.

Peter mentioned that he is not speaking for the money, which is always a cliche as if this was the case you would offer the big seminar for ‘cost’, which would be significantly less.

I’d just prefer presenters to be honest. For example, I run seminars to make money as another source of income to fund property acquisitions. Let’s just call a spade a spade and move on.

All up the seminar contained some good info. His ‘Pyramid of Success’ was worth attending for. Although if you want specifics then you’ll go home disappointed.

Some interesting stats were raised:

50% of retirees will live on less than 33% of their pre-retirement income (PRI)
43% will live on b/w 33% – 53% of their PRI
6% will live on b/w 53% – 99% of their PRI
1% will live on 100%+ of their PRI

As far as negatives… the presentation went on for about 1/2 an hour too long, the presenter tended to shout a little bit and some of the claims were a nonsense… such as “I’ve done all the (property investing) courses” and I charge $1,500 per hour for private consulting.

Overall though, invest the time but weigh up the cost vs. the benefit of attending the seminar.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Lance!

Mate – I was thinking of you just the other day… I thought you had dropped off the planet!

I’m pleased to hear of your continued success.

Thanks for your feedback.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

quote:

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Now am I correct, we pay interest only on the amount drawn from the LOC. Plus the IP mortgage of course.

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Some LOC facilities also have an access or facility fee that’s payable regardless of the drawdown.

quote:

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Also, is the interest paid on the LOC tax deductablt or (this is were I am really unsure) is it part of my PPOR and not deductable?

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As I outlined in the last newsletter. providedyou apply the LOC funds for investment purposes then the interest should be deductible.

quote:

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One last question, the LOC has our PPOR as collateral (right?), are we taking any ‘big’ risks with our PPOR or is this the safest way to borrow against the PPOR. Appart from setting up a trust.

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Higher debt generally means more risk. What’s important is to be sure to invest in an asset that has a cash-on-cash return in excess of the interest rate you are paying on your LOC. This won’t eliminate the risk, but it will reduce it.

Have a great day,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

Be sure to check out:

https://www.propertyinvesting.com/strategies/creativefinancing

There are many things you can do…

1. You could try to buy a cheapish property on a long settlement (6+ months) and then do some renovations in the meantime.

2. Wrap / lease-option a property.

3. Buy something, particularly a commercial property, and ask for vendor’s terms []

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi Mannie,

Thanks for your post.

Most insightful!

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

There are usually trust grouping provisions for land tax that means splitting entities offers little benefit.

Still, as the system is not self-assessed, it’s a little bit of ‘catch me if you can’. I’d only set up another entity if the asset protection made it necessary.

Michael – thanks for your excellent posts.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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