Hi,

Sooshie has good advice here (she’s not just an excellent cook!).

My input is:

1. If $1,800 was your limit then get out of the deal now because sooner or later interest rates will go up and if you’re forced to sell then you’ll probably lose money. The only saving factor here might be if you are looking to lock in for 5 years at a fixed rate of interest and plan to have more cash at that time to pay any extra interest.

2. Your ‘subject to finance’ clause usually stays open until you advise the agent (not necessarily in writing) that you have finance. Sometimes the wording says “finance by XYZ institution with ABC days.” Pull out the contract and read it over.

3. Any money ($300 application fee?) you paid to the boffin should be refunded to you given the service you received plus your other out of pocket expenses. Argue about this and go higher up the chain. If needs be threaten to go to the media, the ACC, Fair Trade etc. The negative publicity won’t be worth just handing back your money.

4. Hassle the fool who referred you to this guy to begin with. Go to his boss.

5. Is this property to live in or for an investment. If it’s an investment then please let me know what’s your strategy. I sense you are on dangerous investing ground.

Hope this helps.

Bye,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

A couple of observations…

1. A buyer’s (or a seller’s) market won’t last forever.

2. Your situattion might be helped by including a 24 hour ‘sunset’ clause in our offer… in that the offer lapses if not put infront of the vendor.

3. Point out that you are looking at multiple properties and the vendor that replies first will be assured a sale. That is, create some urgency for the agent to get the offer in.

4. Never deal with this agent again. I have made it a rule to only deal with agents of integrity and I’d rather not buy than give some smuck a commission. Find a property that you’d like to buy and then get your agent of choice to act on YOUR behalf when dealing with the dodgy brother.

Bye,

Steve McKnight

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

Hi,

Everyone is different, but I try to make at least $50 per week nett passive income per property I own.

Finding buy and hold deals that generate this sort of return is getting a bit more difficult than it once was, so you’re right that sometimes creative alternatives are needed.

Again, you’re right about the millionaire status. Personally, I measure +ve cashflow and let my nett worth look after itself.

We don’t live on paper… we live in reality where cash is paid for the groceries []

Bye,

Steve McKnight

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

I’m sure that you’ll get the presenter’s permission before doing this as no doubt the notes will be subject to various copyright restrictions.

Regards,

Steve McKnight

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

Hi,

This case was actually the one featured in my second (Feb 02) newsletter! To quote from myself:

quote:

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Ordinarily there is no problem having a split loan, but the facts in this case are slightly different to the normal in that the investment loan was not repaid in order to claim a higher tax deduction for compounding interest.

Furthermore, pamphlets produced by Austral outlined various tax advantages of their ‘Wealth Optimiser Loan’, including the following references: “a tax efficient loan”, “a tax reduction system which should prove popular in the 1997 financial year”, “gives dramatic tax savings as it often enables you to pay off your home loan within five years”, “increase your negative gearing benefits”, “you obtain increased deductible interest on your investment loan portion” plus specific references made to the capitalisation of interest during the period that all repayments are appropriated to the residential loan.

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And I believe probably fair enough too. It is a delicate line between taking advantage of a commercial situation and seeking to avoid paying tax.

There was no issue with the deductibility of the interest on the investment loan (since it was in essence an interest only loan) – just the compounding of the interest since there was no intention to pay it, just let it roll on until the home loan was paid off.

Indeed, there is probably no problem with a compounding I/O loan either, except where a scheme that is advertised as, well, tax effective is involved as well as a private home.

Irrespective of what happens next, the lesson is to be very careful when it comes to entering into a scheme where the dominant purpose seems to be a tax benefit.

Regards,

Steve McKnight

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

I really enjoyed your post []

I think it illustrates the attitude that many agents have towards tenants.

A good friend of mine yesterday was complaining that the real estate agent he rents through knocked on his door the other day.

It was answered by his sister who was out from the US at the time. Being told that an appointment had been booked, she let the agent in.

Shortly afterwards the agent opened the door to my friend’s bedroom and there he was with his partner asleep.

He was furious. The agent has issued an unreserved apology, but the violation has already happened.

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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Hi,

The confirmation e-mail with all the necessary information will be out this afternoon.

Bye,

Steve McKnight

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

Hi,

Contrary to public opinion, I am not totally anti-negative gearing.

However, I think that’s important to see a strategy for what it is, and re: -ve gearing, it’s about capital growth.

If your goal is financial independence then I think a better model is to build cashflow assets first and then reinvest in capital growth assets out of replenishing income returns.

This way it doesn’t matter if your assets increase or decrease in value as you always have the regular income stream.

This being said, you need to weigh up the cost of selling your home vs. redrawing the equity.

However, the question of keeping or selling should boil down to answering this question…

Will keeping my property bring me closer to, or push me further away, from my investing goals?

quote:

---

…I am living in my own moderate home and hold a portfolio of investment properties yielding me passive income.

---

So, does turing your property into a -vely geared property help or hinder you here?

Cheers,

Steve McKnight

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

Hi,

It’s not a matter of where, rather it is a matter of how!

Find problems and then match them with the appropriate real estate investing solution.

For example, you can wrap any value property – but the real art is finding a client that wants the property and can afford the repayments.

The problem solving here is finding the client, not the property. Hopefully this illustrates the point that it’s not really a matter of location.

This theme… problem solving to make money in property, is the central theme of the Property Masters seminar.

Bye,

Steve McKnight

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