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  • Profile photo of Steve McKnightSteve McKnight
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    @stevemcknight
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    Hi Louise,

    Thanks for your post and welcome to the property investing.com community.

    There are many seminars available on various strategies when it comes to real estate, shares, off-shore investments etc.

    At the end of the day you need to evaluate each course in terms at looking at the content, quality of speakers, the experience that they bring to the table and then match that with your own strategy, available resources (time / money) and also your knowledge shortfalls.

    As far as my opinion goes, I’m not overly flattered by the Henry Kaye approach. However, the last time I looked at it was a few years ago when it existed under another name… perhaps that tells you something? Perhaps not?

    I’m against the idea of buying property and then living off the equity (ie. redrawing equity to fund lifestyle expenses) because doing this will disqualify the interest component on that redraw from being tax deductible.

    I’m also worried that there appears to be some commissions that are earned when you invest / partner Henry that were previously disclosed, but only in the middle of a lot of paperwork.

    Having said this though, given the recent property boom, investing in Henry’s system three / four years ago in Melbounre would have seen you make a substantial amount of money. But then again nearly all property has performed well in that time.

    A question that should be asked is how will you be able to afford the investment in periods of higher interest rates, bigger vacancies, when the fit out dates and newer buildings are erected to attract the premium market.

    In short, while this is a little negative, at least considering the worst case scenario is appropriate no matter what investment you are undertaking.

    In conclusion, there are many ways to make money in property and Henry offers his take on the way he has achieved success as do I on mine. The truth is you can learn from everyone and so long as you properly implement the approach then you should be well poised to profit.

    $15,000 is a lot of money… a deposit on a house perhaps? Be sure that you’ll receive at least that much amount of value by being certain that you’re comfortable with his investing approach and that you will take action as instructed.

    Finally it would be remiss of me not to recommend my own ‘Property Master’s seminar’ as a great point to start. There is information on this site (via the home page) about this.

    I welcome other discussion on this matter from the forum, particularly those who have done one of Henry’s courses and can provide more insight on its usefulness.

    Regards

    Steve McKnight

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    Hello Jason,

    Thanks for joinging the community and for making your post.

    Let’s see if I can help you with your questions…

    quote:


    How do I go about getting financing for this ? Bank ? Finacial Broker? Mortgage Broker?


    Since the deregulation of the banking industry here in Australia there has been a boom in the number of lenders and the products that they offer.

    I believe that if you have an existing relationship with a lender then you should start there as a prior banking history doesn’t count for a lot, but it counts for something.

    Next I’d suggest a mortgage broker – they are paid for getting the deal over the line and can help you fill in the forms to ensure you get the best chance of success.

    As far as products go… you’ll probably need a standard mortgage loan for the home and then some sort of line of credit (LOC) to cover the renovation budget. If you own your own home then a LOC should be quite easy and pain-free to set up and most major lenders offer them.

    Of course another strategy might be to renovate and then onsell a property during the settlement period, in which case you may only need a LOC if you’s don’t plan to settle.

    Be sure to look at the worst case scenario if you can’t sell and make sure it’s affordable.

    quote:


    And with the way the financing is structured can I do this full time ?


    Only you can answer this, but I’d be hesitant to go full time until you have done at least one full deal. You may find you don’t like the risk etc. I’d try to go part-time to start with so that you have a mix of wage income to pay the bills (unless your wife can cover that + enough for your joint lifestyles). Lenders will like that regular income too… so if you plan to do this on multiple occasions then be sure that you have proof of regular income.

    It’s difficult to show that you are a full time successful renovator on your first deal.

    quote:


    My wife and I have just bought our first house for 250k and we owe 237k .I have done some renovations to it already and have had a real estate agent value it at a little over 300k so can I use this equity to start out?


    There’s a big difference between what a r/e agent values a property for and what an independent valuer comes up with. The lender will have their own valuer and to have them provide a figure will cost between $0 and $300, depending on the lender.

    I’d do this first so you know how much you can play with for your renovation budget.

    quote:


    As far as tax purposes what would be the best way? a company and incorporate it?


    This is almost impossible to answer since ‘it depends’ is as close as you can get without knowing more about your situation. Having said that… I recommend going to an accountant and getting some advice before starting.

    Other Issues

    I’m a little bit worried that your timing might be too late in some housing markets given that the boom seems to be starting to level out.

    I don’t want to give you a reason to do nothing… but, be very careful about getting in over your head. That’s why before I mentioned that it may be a good idea to consider what happens if you can’t sell and whether or not you can afford to hang on given that you will be living off your wife’s income.

    Bottom line.. you need more of a plan.

    Finally, if you’d like more experience in renovations then I suggest you come along to the Masters seminar in November (Sydney). The Renovation Kings have an excellent presentation and I’m confident that you would recoup the cost of attending in your first deal alone.

    To find out more visit:

    https://www.propertyinvesting.com/files/content.asp?cid=mpi

    Bye,

    Steve McKnight

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    Hi,

    I have only heard what has been written in the paper about this issue, which is pretty much speculation at best.

    It seems to me that the government wants housing to remain affordable to the first home buyer, which is an interesting policy given the recent FHOG and also dramatic increases in property prices.

    I’ll reserve my opinion until I am able to read more and understand what options are on the table. Personally, as a cashflow investor, I’m not sure how it would work… but then again I don’t know all the finer details.

    I’ll comment more about this in future newsletters when more is known.

    Bye

    Steve McKnight

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    @stevemcknight
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    Hello Michael,

    Welcome to the property investing.com forum.

    After discussing your post with several independent people I have decided to edit your link as I feel it is disrespectful to community members.

    My reasons for this are:

    1. While you may have interesting and insightful comments to make on the forum, your only post has been to promote your own site and add no other value in return.

    2. Sooshie went to great lengths to independently review sites that she thought were useful. You have made an unsolicitored advertisement of your website which is in clear breach of the acceptable advertising policy. For more information see the Forum Rules.

    However I do encourage you to make posts on this forum and indeed promote your website in the acceptable manner which is by way of a signature file. This offer is made subject to:

    1. Future posts being insightful, helpful and generally beneficial to the wider community; and

    2. Your posts being subject to the same rules and constraints as all other posts.

    If as you say you have 30 years of experience then I’m sure that you have plenty to offer the members of this site. I would ask that you be respectful of the forum rules and adhere to our acceptable advertising policy.

    If you have any questions then please e-mail me at [email protected]

    Sincerely,

    Steve McKnight

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    @stevemcknight
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    Hi,

    Thanks for your post and welcome to the Property Investing.Com forum.

    You ask:

    quote:


    how do I know what I can and can’t afford?


    Answering this question will require you to identify:

    1. What your current level of savings is, represented by the difference between what you earn and what you spend. It may be positive or negative.

    2. Once you know this you will know how much you can afford to ‘lose’ in a negative return situation. The next step is to find an investment that you feel is well placed to earn capital gains – either because of its scarcity or its intended use.

    3. When you have an investment in mind you need to complete a due diligence over the financials to ensure you know exactly what you are buying (ie. the difference between fact and opinion).

    4. I’d also complete some basic “what if” analysis to determine if you can continue to afford the investment based on:

    A. How many weeks vacant can the property be before you hit the financial red line (income = expenses)

    B. The same calc. in A based on rises in interest rates.

    In summary – once you know how much you can lose today (on the basis of earning more capital gains later than you lose now in income losses, then you need to find an investment within this budget and then finally complete some “what if” analysis to determine that if things go worse than expected then you won’t be forced to sell.

    Thanks again for your post. Please post again [:)]

    Bye

    Steve McKnight

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    Hi Glenn,

    Light 5 hunjies and smoke them? [:O]

    Perhaps I need to get to Perth a bit more often…???…

    Why not go with the lawyer then… ’cause stuffing around is something to be avoided at all costs.

    It might be a bit more expensive, but not compared with missing out on a deal that could make $$$$ and pay for all those hunjies!

    Learn and move on!

    Bye

    Steve

    P.S. Brent in our office wants to know what a ‘hunjie’ is. And to think… he’s going to Uni… what do they teach the youth of today anyway?

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    @stevemcknight
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    Hello Glenn,

    Welcome to the Property Investing.com community and thanks for making your first post.

    You ask:

    quote:


    As this will be the first time I have engaged a lawyer/soliciter, my questions to the forum are:

    1. Do the fees seem fair?
    2. Are there any special questions I should be asking?
    3. Should there be a separate trust for rentals and wraps?


    Well, here’s my opinion…

    1. Fees

    $225 per hour seems steep from first glance, but if the solicitor has information that you don’t then perhaps it is value for money. For example, my wrap library is proced at just under $2,000 which some people will feel is expensive, but if you use it and make $30,000 on your first deal then it’s cheap, right?

    So I think that the answer re: fees is dependent on how soon you will use the information and the degree to which your are committed to your plan.

    I would say though that if your in Victoria then I’d just use our solicitor and if in NSW then Tony Cordarto seems to be the recognised expert.

    As best I can tell, these guys won’t charge for a contract provided you use them for conveyancing… at which point they are more expensive than average, but they provide an above average service.

    Special Questions

    I’d like to know what the “letter of advice” you’ll be getting is… is it just a written summary of what is said at the meeting? Or will you be receiving something more?

    It’s difficult to provide more help here because I don’t know what you already know!

    I am wondering what it is that makes your lawyer an expert in wraps… what special knowledge does s/he have? How many vendor finance deals have they handled?

    Be sure to ask the impact (if any) of your proposed trust / company structure on the legality of generally buying houses (such as the use of nomination clauses etc.)

    3. Separate Trust

    Perhaps… perhaps not. Personally I’d so no since I don’t see a reason to differentiate.

    I tried to in the beginning, but a few tenants became wraps, so then what could I do?

    However, I would say that you should replicate the structure when you feel you have more to lose than to gain.

    It’s a costly exercise to replicate.

    OK – well, thanks agan for your post and I hope that this has helped.

    Bye

    Steve McKnight

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    Hi Felicity,

    Thanks for the clarifying post.

    In fact, this site does not necessarily owe any affiliate to me and I certainly don’t want it to be the “Steve McKnight” site – such as Somersoft is Jan Somer’s site etc.

    I’m more than happy to be an expert, but all visitors should appreciate that my thoughts are my opinion and need to be considered and debated rather than swallowed as unquestionable fact.

    This web site facility is available to any and every investor – and while the theme is +ve cashflow, I welcome any posts on any matter relating to property investing.

    Indeed, I welcome constructive criticism about me [:)], since I’m always trying to improve too.

    Bye

    Steve McKnight

    P.S. Re: land tax – I understand it to be a State by State based tax and that there is no connection between databases. That is, NSW land holdings are not added to Vic. to form one assessment base, rather there are two assessment basis.

    The rates, thresholds etc. vary from State to State too.

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    Hi Rick,

    Didn’t see your segment unfortunately…

    I had a similar response to the ACA thing that I did, which was great but I did get sick of answering the phones [:)] Months and years later you’ll still be getting people calling and tyre kicking…

    Perhaps the way to go here is to try and stratify the database by State and then make it available to members of the Wraps Assocn, who can contact the buyers direct and negotiate something.

    The Code of Conduct would protect against mis-use, and it would be a tremendous service to existing members.

    Be careful about the privacy issues though… that’s a potential landmine.

    Congrats on your TV segment.

    Regards,

    Steve McKnight

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    @stevemcknight
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    Hello Jarrod,

    Thanks for your post and welcome to the forum.

    Let’s see if I can help you with a few of your concerns…

    quote:


    I have a quick cash deal that I would like to complete on a property in Melbourne’s northern suburbs. I have a few problems with the deal, that I thought someone from the forum might be able to help me with.


    It might be wise to spell out a little more about what you mean by ‘quick cash’ – as these days that tern can mean a number of things. I expect that you mean a flip, that is, buy it and then resell it during the settlement period.

    quote:


    The property is being sold because the owner has relocated to another state. It is a brand new house from a house and land package. The house is valued at 225,000-235,000 and I believe I can purchase it for about 195,000 based on conversations with the owner.

    The problem is I would like to sell the house straight away but I am concerned the closing costs will make the deal not worth much at all.


    Hmmmm – it’s an interesting situation here. You have found a potentially under-priced property (I would due more due diligence to establish this) and you seem to have a sale figure in mind too (again, I suggest more due diligence to get a more reliable figure).

    Your due diligence is designed to remove ‘approximates’ and thurn them into certainties. For example, stamp duty at $195,000 would be $7,360 + a $570 Transfer Fee.

    The more you know about the figures the better your investment decision would be.

    As for the other costs, get written quotes and turn estimates into definites.

    Now let’s look at those numbers, working backwards…

    Sale Price $235,000
    Closing Costs ($7,930)
    Legals ($500)
    Landscaping ($3,000)
    Agent’s Commisison ($15,000)
    Purchase Price ($195,000)

    Balance $13,570

    Now only you can make a decision as to whether the investment is worth the risk… but if the place sells for less than $235k then in my opinion you are starting to look a bit skinny.

    Alternatives

    Perhaps a better idea is to try and buy an option over the property at the low price and then sell the option to someone else. This raises some issues about being a licensed real estate agent that you should investigate… but it may allow you to by-pass stamp duty and also agent’s costs if you can deal direct with the buyer.

    This means you will have to mount your own advertising campaign, but more work will probably mean higher profits.

    Exit Stratgey

    If you go ahead, I’d also work on Plan B for the investment on the basis that you have to close… what would you do with it then and what would the financial consequences be?

    I commend you on finding a deal, but would encourage you to work hard to develop a realistic plan that deals with more certain numbers and evaluates how easy it would be to find a seller willing to pay $235k in a presumably new housing estate where builders / developers might be cutting deals left, right and centre.

    Good luck. I’m sure the forum would love to know how you get on.

    Bye

    Steve McKnight

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    Hi Michael,

    As I type this I am doing the editing to the soundtrack from the Australian Property Investors Melbourne seminar.

    I’m up to my review of Wraps (Session 10) where I go over my 17 point system for wrapping. This is available to WSR purchasers in the upgrade area (Wrap-ersise).

    As for a flowchart… I have something that I can put together and upload into the upgrade area… I’ll try to do it next week when I’m back in the office.

    Finally, thank-you for your contribution to the forum – it’s great to see other people lending a helping hand and learning from the experience too.

    Have a wonderful day.

    Bye

    Steve McKnight [:)]

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    Hi Kita,

    Thanks for your post and welcome to the Property Investing.Com community.

    Re: your question about wrapping…

    You can do either, but I have used it to fuel the cash needed on other deals. This allows you to finance the deposit for property #2 from the wrap deposit received from property #1 and generally fast track your property investing empire.

    Hope to see more posts from you again soon.

    Bye

    Steve McKnight

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    Re: your question about the FHOG.

    I think that it will remain at least until the next election unless the housing market cannot be slowed by higher interest rates at which point the government has an excuse to act quicker.

    I wouldn’t expect it to be eliminated, just either reduced or means tested.

    My remember… this is only my opinion [:)]

    Bye

    Steve McKnight

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    Hi Michael,

    Thanks for your post.

    This topic is now covered in much detail as part of the Masters seminar (about 26 pages of comprehensive notes!). It is also briefly covered in the Wrap Library.

    As such I don’t plan to recover it here and potentially dilute the value of those products. AD… you can look forward to receiving all the information in Sydney in November!

    However – I would say that the structure that we use is a company / trust multiple entity version.

    We look to replicate the structure when we feel that we have more to lose than the cost of setting up a new structure and maintaining it with tax returns, ASIC lodgement fees etc.

    Have an AWESOME day!

    Bye

    Steve McKnight

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    Hi,

    As outlined at the recent Masters events there are four outcomes that can be achieved from property investing…

    1. Positive cashflow: As the name suggests… after tax +ve cashflow
    2. Cashflow Positive, Income -ve: negative income as property expenses > property income. But after depreciation and building writeoff allowances are offset against salary income, the overall outcome is +ve.
    3. Negative Cashflow: negative income and -ve cashflow after tax (own property from as little as $9.65 per week!)
    4. Capital Gains: Simple enough… after tax +ve nett capital gains. Can occur in addition to 1 to 3 above.

    I guess to be comprehensive I should also add:

    5. Capital Loss: Property depreciates in value or where the overall negative cashflow is not greater than the capital appreciaton.

    I recognise that it is confusing… but has that helped?

    All concepts are fully expained during the Masters event!

    Bye

    Steve McKnight

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

    Success comes from doing things differently

    Profile photo of Steve McKnightSteve McKnight
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    Hello Ian,

    Thanks for making your post and welcome to the Property Investing.Com commmunity.

    quote:


    Anyway my situation is that I have enough equity in my own home to borrow 110% of an investment property. Therefore when calculating cashflow on prospective properties the loan repayments include all the costs of purchasing the property. When doing this I am unable to find anything cashflow positive. My question is this, and I guess I’m looking for a yardstick here- am I being unrealistic with my expectations? Should I be paying a deposit and/or purchase costs out of my own kick so that the actual loan is less, and overall the property is then more likely to be cashflow positive? What do you think???


    You raise a very interesting question.

    I think that finding a positive geared property and also gaining a 100%+ lend is a very difficult task. The 11 Sec. solution assumes that you will contribute a 20% deposit – that is, your loan will be about 80%.

    I think that the answer to your question requires that you separate your property investing into at least two distinct phases.

    Phase One

    Finding properties that in the ordinary course of events would provide positive cashflow based on an 80% lend.

    Phase Two

    Working out the best and most creative way to finance those properties.

    Doing this will at least allow you to find properties that in the ordinary course of investing would be +ve cashflow.

    Cash On Cash Returns

    If you use 100% financing then you really can’t calculate a cash-on-cash return as it is infinity.

    Perhaps a way forward is to assume that you contribute x% as a deposit and then annually adjust the amount of your deposit by your interest so that you work off an accurate denominator.

    The danger in what you are describing here is that you become so highly leveraged and may be prone to a collapse in a high interest rate environment.

    I think that you will be OK so long as part of your strategy also involves a plan for repaying the debt and bringing your overall borrowings down.

    Perhaps look at the 100%+ financing as an interim way to get into the property and then soon after look to pump some equity in that will:

    1. Improve your cashflow return
    2. Reduce your overall credit risk from overgearing

    I believe buying properties based on 100% lends is a dangerous strategy given the liklihood of capital appreciation becoming flat and potential interest rates rises.

    Has this helped?

    Regards

    Steve McKnight

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
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    Hi Sooshie,

    Sure… I welcome people to link away.

    Bye

    Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
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    Hi Daniel,

    Welcome to the Property Investing.Com forum and thank you for contributing your post.

    I have a few minutes now and I thought I’d try to answer a couple of your questions…

    You ask

    quote:


    Is there more differences which would be significant enough to know about? I am particularly interested in the taxation or non-taxation of money received after refinancing a buy-and-hold type property to release equity. Dolf de Roos says it is not taxable, since it is a loan. How does the ATO see this?


    With respect to the American guys who come out here, there are many differences between investing in Australia and in other places.

    That is, while the psychology of investing is the same and generally speaking we use the same phrases with different words (eg. settlement vs. close), the actual ‘how’ to do it is very different.

    Especially when it comes to tax and property law.

    In relation to what Mr. de Roos says as quoted from you, he is right when he says that the money (ie the equity that you are redrawing) is not taxed as you have not disposed of the asset. Capital Gains Tax is triggered when you sell rather than refinance.

    However, there is another dimension to this issue which may not be discussed.

    While the money may not be taxable, depending on the use of the money then the additional interest resulting from your refinance / redraw may or may not be deductible.

    If you use the money to pay for lifestyle related expenses, such as a trip around the world, then the interest on the refinance / redraw is not deductible.

    However, if you buy income producing assets where there is the appropriate connection between investing and earning income then the interest will be deductible.

    The last thing that I would want to do is have a whole lot of debt that is not deductible that I then have to repay with after-tax dollars.

    What I am saying is beware about using equity to fund lifestyle expenses.

    quote:


    I also see australians talking a lot about wraps, yet americans (I hang out in US forums a lot) don’t seem to mention it. What is a wrap?


    I have explained this at:
    https://www.propertyinvesting.com/files/content.asp?cid=wrapintro

    quote:


    And foreclosures? How do they work in Queensland or generally in australia?


    I’ll tackle this in an upcoming newsletter, but for now let me just say that the privacy laws in Australia are a lot more strict than in the wild west that is North America.

    The best way to pick up a bargain is to find a motivated seller via agents rather than lenders.

    quote:


    What about the business behind mortgages, such as if the banks sell them to investors after a short period.


    I must confess that I am not the expert on this, although I haven’t heard of banks selling thier loanbooks to private investors before. But it might happen…

    quote:


    What about asset protection? If I have a Pty Ltd company with one property in it, it would protect me from being sued from anything related to that property, (with exceptions according to ASIC) right? WHat about protecting our empires by attacks from outside? If I have the same property inside the company, and I am found liable for something outside this property/company, how can I protect it from being taken?


    Whoa, whoa… let’s take a pause for a minute as this question cannot be answered with a three line response.

    The issue you describe here is broadly called structuring and encompasses:
    – Asset protection, and
    – Tax planning

    There is no ‘right’ answer when it comes to what structure is best, but there is a way to control your assets and not own them via a complex company/trust structure.

    But this is quite expensive to set up so you want to be serious before proceeding.

    quote:


    And what about these tax differences? How does GST affect us? and CGT? How does the residential tenancies authority affect us? Can we hold security deposits (bonds) from other investors when entering a deal? Or is it required to send them in to the RTA?


    Daniel, you are asking all the right questions but I tell you what… instead of just providing you with the answer how about you try to find out and post your reply. I’ll check it for you and provide some further feedback as I do.

    One final point – if you are serious about investing and will be back home in November, then I suggest that you book a seat at the Property Masters seminar on 9 & 10 November in Sydney.

    I can tell that you will profit greatly from attending.

    Hope to see more posts from you again soon.

    Once again, welcome aboard.

    Bye

    Steve McKnight [:)]

    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 Regina and Ziz,

    Here’s a few things to note about land tax…

    1. It is generally calculated on the unimproved value of the land component of the property and as such disregards the value of the property entirely.

    2. In Victoria, there is no land tax payable by the investor. There is a form that your buyer completes that advises the SRO that they are the beneficial owner. (This is a real bonus)

    3. It is a tax deduction – which at least softens the blow a little for people with genuine positive cashflow.

    Regards,

    Steve McKnight

    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,

    I thought I’d provide a little light reading for a Friday arvo…

    A few years ago I purchased a property for $38,000 when the original list price was $50,000.

    I then turned around and wrapped it to someone else for $65,000 – only to have the original real estate agent call me ‘unethical’.

    I was gobsmacked and speechless, since this agency charges above market commission on the basis that they provide a better service.

    “Surely”, I said “I offer a different product and a better service and charge a margin accordingly – just like yourselves.” I also pointed out that the repayments that I received were still less than the rent that would otherwise be payable.

    I suspect that what the agent was really saying was that he couldn’t get the price, so how could I?

    Was I unethical…????… Well you need to decide… but the property two and a half years later is valued at $67,000.

    It seems to me that people are quick to point the unethical finger when the buyer is paying seemingly above market value for a property, without understanding that it is a win-win outcome over 25 year agreement and that the buyer gets all capital appreciation.

    Just another example of the victim and poor me attitude that afflicts a few people who expect others to constantly bail them out of trouble. It suits them while it suits them and then it’s someone else’s fault when they have no more need.

    Bollocks to that.[:P]

    Have a great weekend – go bombers [:)]

    Bye

    Steve McKnight

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

    Success comes from doing things differently

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