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June 23, 2008 - 10:57 am

If you have the $ and details of the work you've done over time, a valuer can create a retrospective val. of the pre-reno worth.

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June 21, 2008 - 5:11 am

Do you have an income beyond the rent from the IP?

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June 20, 2008 - 7:19 am

From memory the ATO website has some fairly detailed advice on the issue.

I also recollect from some recent PR that it is one of the things they will be looking at pretty closely this cycle.

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June 1, 2008 - 10:20 am

Ozboy wrote:

I hope so, cause I will feel all intelligent if its legitimate

I am just finishing off renovating my own place with plans to move out, rent it out & buy another dump to live in & renovate that, using the equity from the re-valuation of my place.

Here is my complicated question:
Let's say the available equity allows me to buy ONLY ONE $500K property (the value is irrelevant to this question though).

Could I put a deposit bond down on a brand new, yet to be constructed, $500K property & also buy an established $500K property for renovating, assuming that the financial institution who I speak to about buying the established property doesn't look at whether I have a deposit bond on the new property pending future settlement? Or will this come up in the credit checking process?

Obviously the plan would be to hope for price increase so that I can 'flip' the new property before settlement, as I would not be financially able to settle.

Not complicated…was the stock in trade for various property marketers in QLD and Vic (Docklands). Lots of people lost lots of money (not the property marketers, obviously).

From a risk perspective, you need to ignore the fact that the deposit is in the form of a deposit bond. If you can't flip the new property prior to settlement (which you say you cannot meet), you've lost your deposit as the bond insurer will pay and pursue you.

It's a straight gamble on the bigger idiot principle……

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May 31, 2008 - 8:17 am

vockie wrote:

A significant amount of professional people attend 'seminars' to gain further knowlege and inspiration that you simply cant get from a book.  Think about how a university course is run for example.  It is generally someone in front of you guiding your education. If books were the answer, all schooling would be done via correspondence.  

Yeah. You don't want to worry about all that fancy readin' and writin' nonsense. Unsupported anecdotes and motivational music will teach us more than that book learnin'       

Seriously, you're not equating professional courses and university education with real estate investing seminars?  By volume, the latter are largely comprised of mediocre content, ra-ra performers and are closer to Amway presentations than to lectures.

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May 30, 2008 - 1:43 pm

Hmmmm….all websites run by right-wing conspiracy theorists, One Nation and League of RIghts fronts, and assorted nutters.

Must be on the money. That said, a little surprised how the legal fratentity and their learned journals managed to miss the coup d eta  that is occuring under our noses,

Clearly the most astute constitutional lawyers are building websites .

If you believe these guys AND enjoy investing in property, I have a bridge in Sydney I can let you have  

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May 19, 2008 - 1:40 am

Stuart Wemyss wrote:

Yossarian, that is a silly comment. If you knew how mortgage brokers got paid you would know that majority of lenders claw back commissions if vast majority of LOC is not utilised within a certain time. Therefore, setting up LOC which aren't used does not generate revenue in most circumstances. 

Most but not all, Stuart.

I know a fair bit about broker commissions, actually, and can tell you from personal experience it has always been a little lurk and not uncommon. After all, why do you think the utilisation requirements were brought in in the first place? Harder now (as I mentioned in my post)  but still occurs .

If you can suggest any other logical reason why someone would recommend fully drawing a LOC on settlement, I'm all ears

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May 16, 2008 - 11:33 am

Fairly common approach taken by mortgage brokers to maximise ciommission. Some lenders will pay on the drawn-down amount or a fixed % of the LOC limit, whichever is the larger. By drawing the whole lot at settlement and then immediately paying it back in, they get the bigger amount.

Slowly becoming harder to get away with…

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January 17, 2008 - 6:42 am

"Accessing your equity" always sounds better than "increasing your loan"

It's prudent to consider them the same thing.

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December 27, 2007 - 2:57 am

NikkiBlu wrote:

Hello all,

thank you for those with nice comments yes i too am extremely happy with were i have come from and were i am heading in the future.

As for my post above it is 100% true,

i did get the DVD when i was earning $11 an hour working in a juice bar, i used one of Jamie's strategies OPM (Other People Money) and i asked my mum and sister if we could pool our incomes and apply for a loan and buy an investment property in all three names. They agreed, we got a 106% loan, we had to pay LMI but we didn't have to save up for a deposit … we used my mums family home as security and were on our way…. and over the last few years we have brought a few and sold a couple made some money in between and brought bigger and better places…..

So yes i may sound like a success story copied and pasted from his website but i am a success … and no amount of tall poppy old school thinking will tell me any different..

Jamie's program is not for everyone… and I'm not here saying that it is … All i want to say is that there is another way…
Your past does not have to equal you future…Unless you let it….

 just because you parents and grand parents went to school got a job(Just Over Broke) had there own home as there only asset and retired on less than $20,000 a year does not mean that you have to as well.

Most people think that there family home is there best asset when if fact it is a liability , An asset puts money into your pocket (like a positively geared investment property) where a liability takes money out of your pocket.

So many Aussies think that getting a loan for $40,000 to buy a car is a good idea but spending $4,000 on education is a waste of money …. where is the logic in that ???

How many People spend 10's of thousands of dollars on a Uni degree only to find out a few years later that they dont even want to do what they have been studying for the last 5 years..

How you live your life is up to you…. if are happy to live a life of struggle then that is your choice … I'm just saying that it is not for me. i want a life of Abundance .. that is my choice …

I'm one of Jamie's DVD's he talks about a conversation he had with a mentor when he was just starting out…. Jamie used to believe that all rich people were greedy and were out to rip people off … then his mentor told Jamie that he was the greedy one.. being in debt and not able to even look after himself… where as his rich mentor earnt more than 40 times what he needed to live on … with that excess he was able to help more people …. Wealthy people create business that ive people jobs, they create Charity's that help the poor and underprivileged… Wealthy people have choice….

what would you do if a close family member got sick and needed $100,000 to get better would you be able to get your hands on that kind of money ? or would you have to watch them die… feeling helpless that you couldn't do anything…. creating wealth is all about choice….. 

I choice to create abundance in my life… and if that is what you want to do as well fantastic… if you don't, don't bag out people that want to make a difference in your life.

On that note…. im off to get back to enjoying Xmas with my family… which by the way was fantastic being able to spend money on my family and not having to rack up huge debt to pay for it ….

Have a wonderful Xmas and an amazing new year….

NikkiBlu  

Cliche-bot.

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December 4, 2007 - 6:24 am

Worth reminding anyone who comes across this thread that the Equity Finance Mortgage through Adelaide is for owner occupiers only , so not a solution for someone looking to use directly for an IP. Of course, you could refinance your PPOR into one to reduce your repayments and use the freed up surplus income to service said IP.

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December 4, 2007 - 6:11 am

A rare example of when I dislike being proved correct…..

Record trade deficit
4 December 2007

Australia's trade deficit blew out from $1.92 billion in September to $2.98 billion in October, the worst result in the 36 years that records have been kept. Total exports fell by 3.6 per cent with an unexpected fall in mining exports of 11.6 per cent and a drop of 4.5 per cent in manufactured exports, while imports were up by 2.3 per cent. Analysts say that the resources sector is being hampered by inadequate infrastructure as evidenced by delays of up to 15 days at Newcastle's coal port. The Australian dollar fell by 50 basis points in the hour after the trade data was released.

The Financial Review

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December 3, 2007 - 3:08 am

Clearly the comments on Kevin's Blog remind us what happens when you leave your password around for your 11 year old to find.

Yossarian

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December 3, 2007 - 1:49 am

Rus D wrote:

How can I borrow so much? It's because some lenders will look at the value and type of property owned and count a percentage of capital growth as income. That's how confident the lenders are that property is a good investment.

Hi Russ,

Care to name the lender that counts potential capital growth as "income"?

Yossarian

 

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November 29, 2007 - 7:22 am

foundation wrote:

Keep an eye out for the sucker. If you can't work out who it is, it's you.

A gem.

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November 27, 2007 - 7:05 am

Scott No Mates wrote:

It may not be a direct correlation however it is closer than any relationship between wages, cpi and rent. That is, as an investor would you be happy that ROI is dropping? (regardless of whether you consider rent in isolation or as part of the combined capital & rental returns)

I might have the wrong end of the stick here, but it seems an implication of your hypothesis that should all the investment properties in Australia change hands tomorrow for, say, a 20% premium on their sale price/value 12 months ago, that this would have a greater impact on the ability to charge more rent than the renters' capacity to pay.

Put another way, if the investment community's capacity to pay (i.e. borrow) increased by 30% and the renters' capacity to pay (i.e earn) didn't, that the former would have a greater impact than the latter and that rents would still go up. 

Regrettably, the fact that it would be desirable for a proposition to be true is not support for the proposition that it is.

 

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November 27, 2007 - 6:49 am

wezwaz wrote:

So Yossarian, you believe, given time, Rudd will turn the current account deficit into a surplus?

He's going to bring interest rates below 5% and make it so everyone can afford the house they want. I'm looking forward to this. I'll hold off buying my townhouse for the time being then.

Far from it.  That particular cat is out of the bag, running around the house and swinging from the curtains. The key issue for Rudd should be to get the current account issue back on the agenda and start to plan for the day with the mining boom is no longer paying the bills.

You remember the days when our political leaders planned for the future beyond the next election and were prepared to tell their constituents what the didn't want to hear….that's what we need now.

Interest rates have another .50% to go over the next 6 months just based on the heat in the economy. The momentum gathering over the last few years can't be managed quickly without risking some serious hurt. With luck Rudd's first decision will be to do the common sense thing and delay the big ticket spending items until the economy stops racing.

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November 27, 2007 - 4:45 am

Scott No Mates wrote:

Have I missed some basic prinicple here? Rent tracks wages. What happened to the arguments of ROI & yield ie rent reflected as a % of the property price – whose growth far outstrips CPI or wages growth.

Are you saying that movement in rent is a direct function of movement in the property price?

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November 26, 2007 - 10:52 am

I'll happily deliver a touch of reality:

*in spite of a huge mining boom, Australia is running a current account deficit the largest in its history (funny how that particular measure has gone out of favour). In other words, when in the best position in a lifetime to sell more than we buy, Howard has ignored addressing the fact that we are continuing to run up the international credit card. If the US economy slows and China's output eases, watch the number increase…..
*related to the above is the massive increase in govt spending and middle class welfare which has a gone a long way to overheating the economy and in spite of the RBA sending out lots of warnings, Howard proposed to increase the pressure with $40 odd B in additional cash added to the system. The only way the RBA won't move again in February to have another go at slowing spending will be if the banks move independently to pass on their increased funding costs caused by the US sub prime crisis b4 Christmas – I'd bet on most doing something over the next two weeks.
*the average Australian can no longer afford to buy a house. A plasma TV sure. Cheap gear made in China, lots. A roof over their heads…wait until your parents die.
*Howard has reduced our spending on education to well below the OECD average and into banana republic territory….but the sills crisis is someone else's problem. In 10 years time and in the absence of a change of attitude or government, we'd have a bunch of unemployed truck drivers who used to make $100K a year in the mines and no engineers, scientists or tradies to build the next industry. Remember when we used to worry about being China's quarry and Japan's beach rather than celebrate it?
* in short, Howard was Menzies. Managed to ride a boom but did nothing with it but make people feel better about their present but neglect their future. When his legacy is written it will be one of wasted opportunity and a minor tax.

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November 23, 2007 - 7:46 am

dreaming wrote:

All of the technical analysis doesn't calculate human emotion and the fact people want their own home and piece of dirt and will do anything to achieve this.

This is closer to theology than to economics.

Make no mistake, the capacity of the punter to buy property is a function of the preparedness of someone else to lend the money. That particular money-pump is slowing at a significant rate and both the price and availability of credit in now and for the next 12 months will be very different from the circumstances of the last 5 years which have driven demand.

There is no magic pudding.