How we bought 20 IP's in 5yrs

[bundy1964]

Originally posted by roughana
I am very interested to hear more about what structures are "wrong" for this type of migration. As well as what structures are considered "right".
Would you care to elaborate on this topic please?
This probably should be an entirely new thread and may already be discussed elsewhere, in which case please point me towards the proper direction.

Thanks,
Andrew

Here goes

Starting asuming couple with a high income earner and a low income earner and some little tax deductions ( children ). All property is -ive geared.

Buying phase -

Buy in both names - some -ive gearing benifits are lost as the loss is shared equaly.

Buy in the name of the highest income earner - best use of -ive gearing. Change of income may affect benifits of gearing.

Buy in a family trust - losses are carried over in the trust.

High income earner buys units in a hybrid trust - trust distributes income to the unit holder minus holding costs allowing -ive gearing.

Opps I didn't buy the right property for me -

Sell in both names - CG is shared by both.

Sell with the highest income earner - CG is all his/hers CGT of almost 25% can be expected.

Sell from a familt trust - CG can be shared around the lowest income earners saving on CGT. The little tax deductions can help share the wealth.

Sell from a hybrid trust - discretionary part of the trust could be used sharing the CG amongthe lower income earners.

Retiring on X number of properties in Y number of years by living on CG, also known as the Kevin Young method. -

Properities owed outside a trust - living expencess for a year are paid for by a loan against the CG of one property at a time. Draw down is tax free but interest payable on loan is not deducable. Asumes you will always have enough CG to live on and that once you have done it once on all your properties you can do it all again.

Properties owned in a trust - same as above but interest on loans is still deductable.

Selling enough property to pay all loans or to make properties +ive geared, I think we could call this the Jan and Ian method.

Single title holder - no sharing the load of CGT and no splitting of income for the resulting +ive gearing.

Joint names - split is 50/50 for both CGT and +ive gearing.

Trust - CGT is split best posiable way using as many people as practical. +ive gearing profits are shared among family members.

I think that covers it

Trusts do have a set up and running cost to be factored in as well.

bundy

 

[addicted]

wow thats a mouth full and very informative

 

[DanielB]

...and from me

Brenda and Les - thanks from me also. Your talk was inspirational! I guess what surprised me was how simple you have kept your arrangements. Your openess and candour was refreshing.
Donna - I think the book NE Renton's book "Investment Property and Taxation" or similar title.

cheers,

 

[kierank]

Right now, this thread has been read 12,019 times and the Forum has 2,259 members. That is, more than 5 reads per member. I know there are 'guests' but this is still an increadable number of reads for one thread ...

... or is Brenda (and Les) spending all day viewing this thread just to get the count up

Like others at the BIG Meeting last Tue, I really enjoyed the presentation and appreciated the way Les answered my three questions - even my Yes/No question, which took him 3 minutes to answer fully

 

[geoffw]

Originally posted by kierank
Right now, this thread has been read 12,019 times and the Forum has 2,259 members. That is, more than 5 reads per member. I know there are 'guests' but this is still an increadable number of reads for one thread ...

Remember that the number of "read" goes up even if a single member goes back into the same thread again.

This thread has been active for a while- so members have gone into the thread each time they log on and there's a new post.

So a single member may be responsible for 10, 20 or 100 hits on the thread.

 

[Sunstone]

Dear Geoff,

No matter which way we analyse it the fact is that Brenda is an inspiration to many and myself included are appreciative of the honesty and openness with which Brenda and Les share and help others.

I remember talking with Les and he made 55% more capital growth than I did in the last financial year even though I am pleased with my own growth and good yields.

Always gives us a higher target to sustainably achieve.

Cheers,

Sunstone.

 

[geoffw]

Sunstone,

My apologies if I made it sound a negative towards Brenda- I certainly did not meant it that way.

Brenda has done a fantatstic job, and I, along with many others. admire her for it.

My intention with my post was only to point out the dynamics of the numbers.

The thread has kept interest going for quite a period of time, and is deserverdly the most popular thread in the forum (well, I think it is)

 

[Sunstone]

Dear Geoff,

No issue mate.

Some of the methods that Les and Brenda use are different. But the journey and end result is what it's all about.

However they do use cross collateralisation which has dangers that you and I know about. We can all benefit through playing constructively the devils advocate.

Cheers,

Sunstone.

 

[Ruby]

Sorry Sunstone, you have lost me completely..........Geoff posted about the number of 'reads' on this thread. Did I miss something somewhere?

Ruby

 

[Kevin Hockey]

I'd like to thank Les and Brenda also for the Big meeting.

What I noticed the most was Les and Brenda had a plan for what they were trying to achieve and even if problems did occur they stuck with what they knew and how they had decided to do it. They treat it like a seperate business and have reaped the rewards.

Congrats guys and Thank you for your openly providing so much valuable information.

Kev

www.nundahrealestate.com.au

 

[Sunstone]

Dear Ruby,

Sorry Sunstone, you have lost me completely..........Geoff posted about the number of 'reads' on this thread. Did I miss something somewhere?

Really a non-issue. Just we have such a great community and Geoff and I were just being polite to each other.

Back to the great Brenda thread............


Brenda,

What sort of education are you giving to your children to encourage them in the right direction?

Cheers,

Sunstone.

 

[Brenda Irwin]

Sunstone, I tell my kids if they don't do their homeschool they won't get a good grade, then they will have to be employed to clean all my ip toilets.

Seriously, we try to include our kids in all our purchases and running of ips and try to educate them that Dad's atm will not constantly keep giving out money for them to spend if there is no money in the account.

They are both little bargain hunters and came home the other day with their trophy of 2ltrs softdrink 'on special' for only .99c.

They also love to play cashflow, kids and adults versions, they are aged 9 and 11 yrs.

Cheers Brenda

 

[Sim]

So what have you been up to this month Brenda ? Still buying ? Still selling ? Both ?

 

[D.T.]

Hi all,

From what Brains said:

I think the point is not how many IPs but what total value of IPs does one want. If you go to the west coast of Tassie you can buy 20 IPs for about $300k. While in Sydney you would be lucky to buy a 2 br flat for that amount if youre within say 15km from the CBD.

I'd have to say i'd prefer the Sydney unit. Assuming that 20 IPs in Tassie are really 300k yielding 12% that'd be 36k a year in rent you're receiving, year in year out. Assuming the Sydney unit is going up 12% (very possible). That'd be 36k the first year, 40ish the 2nd and so on. I know which I'd rather.

-Regards

Dave

 

[brains]

I dont think Sydney is going to increase at 12% every year for the next 5 years or whatever. It will be flat for years after so much demand has been sucked out of the market in this latest boom.

 

[Peter Parker]

I agree with Brains.

Then there is the uncertainty of Sydney capital growth (at least in the next few years) and the risk you're taking in the Sydney property being negatively geared and buying when yields are historically low.

Assuming there isn't too much building activity, Sydney rents are more likely to increase faster than Tassie rents, but it will be a long while before the yields of both properties (current rent/your original purchase price) are the same.

But I must admit that Tassie doesn't turn me on either. Maybe your own state's best, Dave!

Peter

 

[Brenda Irwin]

Gee Sim, I couldn't remember where I was with ip investing and had to go back and see what I'd already posted.

I should begin with the end of this financial year. Due to the sales of the two ips, Les (hubby) got to pay tax this year but it was only approx $420. I lost some of my carried forward losses but finished up with still appox $18k in losses to carry forward into 2004.

We sold the ip in Upper Mt Gravatt for $220k after we paid $105k for it in 2000. Various reasons for selling not the least of which was a road caveat on the property for an extra few lanes of traffic to be taken from our front yard in the near future.

We used the profits to pay out the loans on 2 of our ips, so now we fully own 5 ips plus our PPOR.

This month we have a contract in place on an ip in Murgon, Qld for 67k, currently rented for $110pw and to be increased to $120pw in Dec.

Also have another contract on an ip in Ipswich for $170k but owner wants $185k, we have left the contract in place for another week in case the owner changes his mind. Rental would be in the area of $180pw. Not a great return but ip is on a prime quarter acre unit site.

To date all our ips are still all tenanted and the rents are increasing in line with local markets as each rental contract comes up for renewal. Our debt has reduced to $1.1m and value is well over the $2m mark. It all takes time but we're getting there and our 5yrs of investing will not have passed until Jan 2004 so we will have more than 20 ips by then.

Cheers Brenda

 

[Kevin Hockey]

Pay the 185k Brenda !!!

Kev

www.nundahrealestate.com.au

 

[Teresa]

Originally posted by Brenda Irwin
[ then run up a phone bill and speak to the property managers in the area. They are a wealth of knowledge & you might find a good one that way.
I have 1/2 doz I have never seen but they bring good cashflow.

Hi Brenda, I've just read this thread through its entirety- Again!

Do you have somebody else look at the property or do you put full trust in the property manager?

Thanks for taking the time to share your knowledge - this is a truly enjoyable and informative thread.

Teresa

 

[Teresa]

Brenda,

I just thought of a few more Q's, I hope you don't mind.

What are the major repair and maintenance costs you have been faced with and has insurance covered these?

Are there some types of repairs and maintenance that come up on a frequent basis?

What type of insurances do you have?

Surplus is what is left from wages to repair & maintain 20IP's!
Thank goodness insurance covers most major costs but little fixets can add up if you don't watch it.

Thanks aheap,
Teresa.
You should write a book.