My Story
- Thread starter Nathan
- Start date
Have done that in the past as well
Top up and access new or additional equity to fund further purchases
Living Off that Equity (in a manner) is for the future
9 Ip's by 23 is quite amazing. Well done.
Forgive my cynicism (I am the most cynical person on this site), but a coupla numbers seem wrong here.
First, on a wage, how is the car tax deductible? I guess a portion of it might be claimable against the IP's if you visit them each year.
Second, assume your income averages $90k per year (between $80-$100k), your weekly gross is approx $1,730. Let's call it $1,750 p/w in round numbers.
I don't know the tax rate on that wage, but let's assume 30% including medicare levy (I'm guessing; could it be a bit more?), so your nett weekly wage is $1225 approx. (tax is $525 in this equation; could be a tad high?)
NOTE: Where payee earns more than $1600, the weekly witholding amount is calculated as follows:
— Where the tax-free threshold is claimed with leave loading: $505 plus 48.50 cents for each $1 of earnings in excess of $1600, rounding to the nearest dollar.
— Where the tax-free threshold is claimed and no leave loading: $502 plus 48.50 cents for each $1 of earnings in excess of $1600, rounding to the nearest dollar.
— Where the tax-free threshold is NOT claimed: $616 plus 48.50 cents for each $1 of earnings in excess of $1600, rounding to the nearest dollar.
Your properties are costing you $800 p/w; that leaves you with $425 to spend, which is a decent amount as you are living at home, but then you have a new car every year (you are 23 and started driving at 18, so one per year), which would require borrowings on to keep up this pattern, unless you are saving cash to top up the diff between the second hand car you've sold or traded, and the new one? But after petrol, rego, insurance and repayments, it's gotta be $200 p/w on a $30k car?
Then, you are still getting on the turps with the mates, I cannot do it for less than $150 per night out when you include food, taxis, drinks, cover charges etc. And going on holidays every year as well which cost pesos.
Maybe the board at home is free?
There will be a very nice tax return I hope; do you tax vary this?
Hey Everyone,
Would like to say thanks to all for the kind words, even more motivating.
Also reply to Bayview,
Yes close with your numbers...
I get $14k of my wage as car allowance, so i claim all my car expenses against this, making that 14k pretty much tax deductable... the remainder of it, is taxed at normal rate. I generally get my whole tax cheque back, last year i got taxed on $22k or something silly and got like a poor persons tax relief. With the new car, i previously used tax returns and get new car after tax time, like spend $5k or 10k on car, after selling whatever current car i have at the time. I currently hold a 2.5 year old one (cant afford another new one atm). As to board, well i now live in the house by myself, and my outgoings are, utilities (2500pa?) and groceries. When i go out with mates genrally go 2 bottleo and pick up a case of JB Black doubles and take home to start the night happening (cheaper).
But summing up, yes its a tight ship @ present and gets scary at times.
Would like to say thanks to all for the kind words, even more motivating.
Also reply to Bayview,
Yes close with your numbers...
I get $14k of my wage as car allowance, so i claim all my car expenses against this, making that 14k pretty much tax deductable... the remainder of it, is taxed at normal rate. I generally get my whole tax cheque back, last year i got taxed on $22k or something silly and got like a poor persons tax relief.
With the new car, i previously used tax returns and get new car after tax time, like spend $5k or 10k on car, after selling whatever current car i have at the time. I currently hold a 2.5 year old one (cant afford another new one atm). As to board, well i now live in the house by myself, and my outgoings are, utilities (2500pa?) and groceries. When i go out with mates genrally go 2 bottleo and pick up a case of JB Black doubles and take home to start the night happening (cheaper).But summing up, yes its a tight ship @ present and gets scary at times.
Nathan,
Congratulations on your achievements to date. You have done extremely well for your age.......as a matter of fact you achievements at your age puts you the 1 in 100,000. Well done!
For what is worth....I would concentrate on managing your risk as you have a serious negative cash flow. I am not usually bearish....but I am seeing a severe storm in the horizon.......this credit crisis has caught a lot of people unaware. Take it from a old man (I am 41) who lived through the last recession in 1990...it can get tough for a few years. I know you have said that you buy 20% under the market but the locations you are buying...properties can take months to sell if at all and at severe discounts so your profit could be rapdily eroded. In 1995, you could buy houses in Mt Druitt for 65k....now they are about 220k.....who knows where they might be in another 2 years. The moral of the story never be forced to sell....as losses only occur when you have to sell at all costs!
Would be interested what risk mitigations strategies you are using.
Please don't take this as criticism....it is simply a observation I am making. For the record I too invest at the bottom end of the market spread across NSW, SA, and VIC as does Bayview for cash flow. I have taken profit on one property to ensure my LVR is extremely conservative (about 31%) to ensure I ride this storm out. I have aso stashed a lot of cash in Offsets for emergencies as well as LOCs across 3-4 different banks.
Having said that I may have gone quiet on the property front.....but I am actively trading Covered Calls (Options).....this is another back-up for income if I do happen to lose my job, which in this environment is very possible if you work for Commercial type of organisation.
Cheers
Sash
Congratulations on your achievements to date. You have done extremely well for your age.......as a matter of fact you achievements at your age puts you the 1 in 100,000. Well done!
For what is worth....I would concentrate on managing your risk as you have a serious negative cash flow. I am not usually bearish....but I am seeing a severe storm in the horizon.......this credit crisis has caught a lot of people unaware. Take it from a old man (I am 41) who lived through the last recession in 1990...it can get tough for a few years. I know you have said that you buy 20% under the market but the locations you are buying...properties can take months to sell if at all and at severe discounts so your profit could be rapdily eroded. In 1995, you could buy houses in Mt Druitt for 65k....now they are about 220k.....who knows where they might be in another 2 years. The moral of the story never be forced to sell....as losses only occur when you have to sell at all costs!
Would be interested what risk mitigations strategies you are using.
Please don't take this as criticism....it is simply a observation I am making. For the record I too invest at the bottom end of the market spread across NSW, SA, and VIC as does Bayview for cash flow. I have taken profit on one property to ensure my LVR is extremely conservative (about 31%) to ensure I ride this storm out. I have aso stashed a lot of cash in Offsets for emergencies as well as LOCs across 3-4 different banks.
Having said that I may have gone quiet on the property front.....but I am actively trading Covered Calls (Options).....this is another back-up for income if I do happen to lose my job, which in this environment is very possible if you work for Commercial type of organisation.
Cheers
Sash
Hey Everyone,
I get $14k of my wage as car allowance, so i claim all my car expenses against this, making that 14k pretty much tax deductable... the remainder of it, is taxed at normal rate. I generally get my whole tax cheque back, last year i got taxed on $22k or something silly and got like a poor persons tax relief.
But summing up, yes its a tight ship @ present and gets scary at times.
Nathan your story is an inspiration to me and i have a similar goal
Can i ask what sort of income bracket you are on to sustain this property business you have built?
Can i ask what sort of income bracket you are on to sustain this property business you have built?
Hey Everyone,
Would like to say thanks to all for the kind words, even more motivating.
Also reply to Bayview,
Yes close with your numbers...
I get $14k of my wage as car allowance, so i claim all my car expenses against this, making that 14k pretty much tax deductable... the remainder of it, is taxed at normal rate. I generally get my whole tax cheque back, last year i got taxed on $22k or something silly and got like a poor persons tax relief.
But summing up, yes its a tight ship @ present and gets scary at times.
Good work.
Might I suggest that you pay out the current car loan with the next tax return, then, assuming it is then debt free - hold onto one car for a longer period now, and pour the future tax returns back into the investment loan to reduce debt, reduce LVR and create more cashflow and equity, and a safer financial position.
Even as a deduction, a car with a loan attached to it is still a loss, and it is a depreciating "asset".
There's just not as big a loss with the tax deduction factored in.
Hey Everyone,
Would like to say thanks to all for the kind words, even more motivating.
Also reply to Bayview,
Yes close with your numbers...
I get $14k of my wage as car allowance, so i claim all my car expenses against this, making that 14k pretty much tax deductable... the remainder of it, is taxed at normal rate. I generally get my whole tax cheque back, last year i got taxed on $22k or something silly and got like a poor persons tax relief.
But summing up, yes its a tight ship @ present and gets scary at times.
Just wondering for our own situation, Is there FBT applicable for the employer with this vehicle scenario?
Hey Bay,
the car is cash... as stated before... never ever had a car loan or personal loan....
Got it; so what happens each year with the car; do you trade it in and add the tax return to make up the difference, or sell it privately and do the same with the tax return?
I still reckon the tax return would be better utilised on your debt reduction and on equity building - especially in light of your neg cashflow currently, and the fact that you own your car outright.
But I'm probably more risk averse than you and like having a nice equity buffer and lower LVR.
What's your current LVR out of interest?
I know you have said that you buy 20% under the market but the locations you are buying...properties can take months to sell if at all and at severe discounts so your profit could be rapdily eroded. In 1995, you could buy houses in Mt Druitt for 65k....now they are about 220k.....who knows where they might be in another 2 years. The moral of the story never be forced to sell....as losses only occur when you have to sell at all costs!
I don't think you need to be unduly concerned for Nathan. I know the area he invests in very well, as it is also my stomping ground. Some of the houses may be listed and selling at 220k, but he is not buying those ones. While not knowing the intimates of his financial position, I would say that at the prices he is paying, I think he is in great shape, even if the worst came to the worst & he had to liquidate a few.
Skater,
Diversification also applies to RE. The reason I raise this is because the Mt Druitt area will wear the economic stress the longest. It happened in the last recession. Even if you bought at 150-170k....I know a few who have bought in Mt Druitt areas for these prices and they have pulled back...and these people are are not fools. They are quite smart....as a matter of fact these guys have sold their houses to reduce their debt! Liquidation maybe hard in a very depressed market.....in the 1990 recession....it was impossible to sell in Mt Druitt....no one was buying.
Skater...whilst I have understand that you have a vested interest, it is also important to keep an open mind. I previously said that Australia would come out of this crisis without too much impact...but I am now thinking differntly and am bearish on property at the moment. Evand, Sunfish, Alex and some others have actually pointed out some interesting facts.
Anyway....everyone has a different perspective...time will tell.....
Cheers
Sash
Diversification also applies to RE. The reason I raise this is because the Mt Druitt area will wear the economic stress the longest. It happened in the last recession. Even if you bought at 150-170k....I know a few who have bought in Mt Druitt areas for these prices and they have pulled back...and these people are are not fools. They are quite smart....as a matter of fact these guys have sold their houses to reduce their debt! Liquidation maybe hard in a very depressed market.....in the 1990 recession....it was impossible to sell in Mt Druitt....no one was buying.
Skater...whilst I have understand that you have a vested interest, it is also important to keep an open mind. I previously said that Australia would come out of this crisis without too much impact...but I am now thinking differntly and am bearish on property at the moment. Evand, Sunfish, Alex and some others have actually pointed out some interesting facts.
Anyway....everyone has a different perspective...time will tell.....
Cheers
Sash
I agree, however if you read Nathan's posts you will find that he doesn't have all his property in the one area.
How have I got a vested interest? I'm not a real estate agent. I'm not trying to sell down my own portfolio in the area. Sure I do have properties in the area, but I have over half of my properties in other areas. In fact I have more properties in a regional town than I do in Western Sydney AND I have a few other Sydney ones as well as interstate.
I previously said that Australia would come out of this crisis without too much impact...but I am now thinking differntly and am bearish on property at the moment. Evand, Sunfish, Alex and some others have actually pointed out some interesting facts.
Anyway....everyone has a different perspective...time will tell.....
Sheesh! Anyone would think I was running around shouting to all who would hear me "Buy in Western Sydney. You can do no wrong. Don't even bother looking elsewhere."
All I am saying is that Nathan seems to be doing quite well & he appears to have quite a bit of equity under him. He appears to be an intelligent young man and I wish him well. Sure, he has a large chunk of neg cashflow, but if his income is secure (and only he would know this), and he can keep his expenses low (coupled with the raising of rents, which IS happening in Western Sydney) he won't have any problems.
Touchy are we?
With all seriousness....I think NO ONE's income is secure at the moment. I have relos in all parts of the world...UK, Canada, India, USA...guess what they are saying? The job losses there have been very high in a matter of 2 months.
We are trailing slightly...but we will be affected because India and China now show signs of weakness. This was the last cog that kept Australia going. I was very positive till about 6 weeks ago...now I am not so sure!
To put things in perspective I am not bagging Western Sydney....as a matter of fact Western Sydney can't drop another 40% as opposed the Eastern and Northern Sydney where the high end real estate. But it is important to ensure that we take a balanced view....which is the broader economy and the credit crisis is going to have huge bearing on real estate.
I guess...those economics courses at university are of some use after all?
Cheers
Sash
With all seriousness....I think NO ONE's income is secure at the moment. I have relos in all parts of the world...UK, Canada, India, USA...guess what they are saying? The job losses there have been very high in a matter of 2 months.
We are trailing slightly...but we will be affected because India and China now show signs of weakness. This was the last cog that kept Australia going. I was very positive till about 6 weeks ago...now I am not so sure!
To put things in perspective I am not bagging Western Sydney....as a matter of fact Western Sydney can't drop another 40% as opposed the Eastern and Northern Sydney where the high end real estate. But it is important to ensure that we take a balanced view....which is the broader economy and the credit crisis is going to have huge bearing on real estate.
I guess...those economics courses at university are of some use after all?
Cheers
Sash
Touchy are we?
Mate, looks like you're the touchy one. You are, after all, the one declaring that I have a vested interest in either Nathan's situation (I have no idea how you got that notion), or Western Sydney as a whole. Personally I really don't care one way or another what your views are, I'm just going to keep on doing what I do.
I believe that we should all tread carefully, especially at this time in the market, but I don't believe for an instant that Australia is doomed just because the other parts of the world are in crisis. Just before you shoot me down, I'll just add that I'm not saying that we won't have a crisis either. I don't have a crystal ball, so I'm not going to jump up & down to predict which way we are headed, only time will tell.
Agree,
Skater has no interest in my affairs, only she knows my main area i invest in quiet well.
Western sydney is bread and butter, and represents good value with strong demand. I know agents in the area on a friend basis, and i know that they are struggling getting listings at present.