Forum Replies Created
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.comSuccess comes from doing things differently
Hi Glenn,
Light 5 hunjies and smoke them? [
]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.comSuccess comes from doing things differently
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.comSuccess comes from doing things differently
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.comSuccess comes from doing things differently
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.comSuccess comes from doing things differently
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.comSuccess comes from doing things differently
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=wrapintroquote:
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 planningThere 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.comSuccess comes from doing things differently
]
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