From: Mike .
Hi Everyone,
Big week after last week's yawn. 8 threads, 37 posts and one thread containing 9 posts - one short of equaling the record.
Topics Included: Renting Home, GST, Investors Club/Group, First IP, Books, Next IP.
Quotable Quotes:
From Leon: "Can I also ask what your relationship is to Somersoft are you employed by them (I notice that your name appeared most) or an interested investor? Nothing personal just trying to determine what level of assistance you can provide? Cheers & thankyou for your feedback."
Me: Another person who can't believe Les is just an ordinary bloke with a passion for numbers. I told you you had missed your calling as a Financial Advisor, Les.
From Les (in reply to Leon): "Right up front, let me say I am just an enthusiastic, new investor who has spent a fair chunk of time reading, doing seminars, etc. I am just another bloke who found this forum, and I appreciate others opinions, and I share mine too, but only where I think I can add something.
The figures I arrived at were generated on my own home-grown spreadsheets. I believe PIA could do a lot of this too, but I've tended to "stick with what I know" - since I wrote the spreadsheets myself, I find them easy to use."
From Bill: "Hello out there! WEE BIT LONELY!! I've placed a few messages to the forum (PI Helpers, New Townhouses etc, Investors Club/ Property Investors Group) and check excitedly to see if anyone has heard my voice in the wilderness.........hoping someone can help...... Looking forward to 'hearing' a friendly 'voice'!!"
Me: This is a classic example of employing "begging" language to get a reply. Works every time. Bill got 2 responses! Not an avalanche, but when you're in the wilderness ANY voice is a friendly voice.
From Les: "I can't help with your Melbourne question - too far South for me - I'm not into penguins and icebergs .... ;^)"
From Marc: "Our share portfolio has managed to contribute to our high stress levels and it is our opinion that we could do better with investment property."
From Trev: "G'day Les, I've been trying to restrain myself for the last five minutes after reading your article - but alas I can no more. We have not chatted yet, but I have been reading your entries with interest - impressed always by your learned and down to earth advice. So it was with great disappointment that I read your hostile rejection of VWs over ABBA !! I too like ABBA, but LUV VWs."
From Les: "G'day Trev, Actually the ones I HATE are the ones that look like VW's (1930 - 1975 or whenever!!) I never could quite relate to a car that travelled faster in 3rd gear than in 4th!!!! And whenever I closed the door, my eardrums burst ;^). I hope you and your Passat are still in love in 10 years time.
From Maryanne: "What a great opportunity to have this forum to discuss some stuff- it feels a bit weird spilling out your financial situation!!"
Research & URL's:
From Geoff: Leon have you tried the demo software for PIA? http://www.somersoft.com.au/DemoSoftware.htm
From Les: Do check out the "GST" section found on the Somersoft Home Page. It's a hell of a lot more useful, and easier to navigate than the ATO's site.
If you want to tackle the ATO's site (brave man) then go to http://www.ato.gov.au then "Search", enter "real estate" and it brings up an article called "property". In Part 4 of that article, it addresses Residential Property. Not very complete to my mind - I think Ian Somers has done a far better job right here.
From Janice: "I see a number of people out there have read Robert Kiyosaki's book 'Rich Dad,Poor Dad'. 'Cashflow Quadrant' is another of his books and it has really made me think of the possibilities that could happen. Also Anthony Robbins book "Awaken the Giant Within" I found fantastic. Reading it encouraged me to take the plunge from being an employee to being self employed (which I have wanted to do for a number of years)."
From Bill: "As for Anthony Robbins I think he is brilliant. Awaken the Giant Within is a book I think everyone should read. I'd also highly recommend you read his earlier book Unlimited Power. Covers some of the same stuff but is sufficiently different to compliment ATGW. A 'must read'."
From Gee Cee: "One of my first inspirational books was by Noel Whittaker "Making Money Made Simple" He listed in this book a number of other good self improvement & motivational reads. The Books that I found great are Success Through a Positive Mental Attitude Napoleon Hill & W Clement Stone. The Magic of Thinking Big David J. Schwartz. Any of the property books by Fred Johnston & Brendon Whitting. These are just a few but there are a lot of other good ones out there."
From Les: "Folks, I have read the biggest percentage of those - and all of them well worth the read. But two that gave me a "whack on the side of the head" and gave me a whole new perspective were "His Needs, Her Needs" and "Men are from Mars, Women are from Venus".
I just KNOW that last one is right up there with Abba and VW's (you either love them or hate them) - and Men are from Mars has received a lot of bad press in areas that I've been. But it provided me with a fantastic lot of "wake-up calls" with respect to my reactions to my wife (and other women too).
Me: Hi, Les. Can we call you a SNAG, now?
From Ian (NSW): "Les, I was wondering if you had read any material by Stephen Biddulph, particularly "Manhood"? It offers a valuable insight into men looking at what makes them tick. I found some of the material somewhat too "warm and fuzzy", however, I found the bulk of the material to have significant relevance and influence on my focus towards my life, wife and two young boys. I have also found a far more relaxed and comfortable approach to property."
Classic Post: Okay, enough of that warm and fuzzy stuff, already! Les' "home-grown spreadsheet" comes to the rescue again, and provides this week's Classic Post. The fortunate recipient this time is Leon.
Leon's question:
I have been reading with interest the previous articles and comments relating to the issues of renting out your own property. The most recent comments indicate that it is possible & that the interest on the loan & other associated expenses incurred are a tax deduction ( as confirmed by ATO booklet, will get copy ASAP ).
I am trying to determine the best course of action based on our current scenario. Own property valued at $400K (Inner West Syd) Mortgage $152K 25yrs at 6.55% P&I Estimated rental return $410/week Combined incomes $95,000 We have 2 children & require a larger house. This would mean purchasing for at least $550K ie sell with net profit$215K and new loan $335K. However I don't want to sell our current property & want an alternative to committing to $2,500 mortgage repayment each month.
1.Is it best to rent out current property and find larger property & rent it for ourselves( even at $350-$400/wk) and use current equity of $248,000 to purchase 1 or more investment properties?
My calculations (rough estimates) show that renting new house would be equivalent to interest charged on $335k loan! Is this still an advantage?
2.Our cashflow appears to better ie $1400-1600 rent v's $2500 mortgage = $1100-$900 better off. Does this appear to be correct & does this put us in a better situation?
3.I have taken on board comments re Temporary absence up to 6 years. Does this mean you can relocate to a suburb 5Km's away?
4.Will the PIA software help me calculate all of this? I have already booked an appointment to see an accountant & want the facts before I go because it sounds like not all accountants understand the principles we are discussing-would that be a correct assumption?
My gut feeling is that by keeping our current home & renting it out & renting out new house to live in & investing in more property is the best possible avenue for wealth creation, but I need to convince my wife who still has her mind set on 'owning our own home' and wants to see the figures & is concerned about the legality of it all. Comments appreciated.
Hi Everyone,
Big week after last week's yawn. 8 threads, 37 posts and one thread containing 9 posts - one short of equaling the record.
Topics Included: Renting Home, GST, Investors Club/Group, First IP, Books, Next IP.
Quotable Quotes:
From Leon: "Can I also ask what your relationship is to Somersoft are you employed by them (I notice that your name appeared most) or an interested investor? Nothing personal just trying to determine what level of assistance you can provide? Cheers & thankyou for your feedback."
Me: Another person who can't believe Les is just an ordinary bloke with a passion for numbers. I told you you had missed your calling as a Financial Advisor, Les.
From Les (in reply to Leon): "Right up front, let me say I am just an enthusiastic, new investor who has spent a fair chunk of time reading, doing seminars, etc. I am just another bloke who found this forum, and I appreciate others opinions, and I share mine too, but only where I think I can add something.
The figures I arrived at were generated on my own home-grown spreadsheets. I believe PIA could do a lot of this too, but I've tended to "stick with what I know" - since I wrote the spreadsheets myself, I find them easy to use."
From Bill: "Hello out there! WEE BIT LONELY!! I've placed a few messages to the forum (PI Helpers, New Townhouses etc, Investors Club/ Property Investors Group) and check excitedly to see if anyone has heard my voice in the wilderness.........hoping someone can help...... Looking forward to 'hearing' a friendly 'voice'!!"
Me: This is a classic example of employing "begging" language to get a reply. Works every time. Bill got 2 responses! Not an avalanche, but when you're in the wilderness ANY voice is a friendly voice.
From Les: "I can't help with your Melbourne question - too far South for me - I'm not into penguins and icebergs .... ;^)"
From Marc: "Our share portfolio has managed to contribute to our high stress levels and it is our opinion that we could do better with investment property."
From Trev: "G'day Les, I've been trying to restrain myself for the last five minutes after reading your article - but alas I can no more. We have not chatted yet, but I have been reading your entries with interest - impressed always by your learned and down to earth advice. So it was with great disappointment that I read your hostile rejection of VWs over ABBA !! I too like ABBA, but LUV VWs."
From Les: "G'day Trev, Actually the ones I HATE are the ones that look like VW's (1930 - 1975 or whenever!!) I never could quite relate to a car that travelled faster in 3rd gear than in 4th!!!! And whenever I closed the door, my eardrums burst ;^). I hope you and your Passat are still in love in 10 years time.
From Maryanne: "What a great opportunity to have this forum to discuss some stuff- it feels a bit weird spilling out your financial situation!!"
Research & URL's:
From Geoff: Leon have you tried the demo software for PIA? http://www.somersoft.com.au/DemoSoftware.htm
From Les: Do check out the "GST" section found on the Somersoft Home Page. It's a hell of a lot more useful, and easier to navigate than the ATO's site.
If you want to tackle the ATO's site (brave man) then go to http://www.ato.gov.au then "Search", enter "real estate" and it brings up an article called "property". In Part 4 of that article, it addresses Residential Property. Not very complete to my mind - I think Ian Somers has done a far better job right here.
From Janice: "I see a number of people out there have read Robert Kiyosaki's book 'Rich Dad,Poor Dad'. 'Cashflow Quadrant' is another of his books and it has really made me think of the possibilities that could happen. Also Anthony Robbins book "Awaken the Giant Within" I found fantastic. Reading it encouraged me to take the plunge from being an employee to being self employed (which I have wanted to do for a number of years)."
From Bill: "As for Anthony Robbins I think he is brilliant. Awaken the Giant Within is a book I think everyone should read. I'd also highly recommend you read his earlier book Unlimited Power. Covers some of the same stuff but is sufficiently different to compliment ATGW. A 'must read'."
From Gee Cee: "One of my first inspirational books was by Noel Whittaker "Making Money Made Simple" He listed in this book a number of other good self improvement & motivational reads. The Books that I found great are Success Through a Positive Mental Attitude Napoleon Hill & W Clement Stone. The Magic of Thinking Big David J. Schwartz. Any of the property books by Fred Johnston & Brendon Whitting. These are just a few but there are a lot of other good ones out there."
From Les: "Folks, I have read the biggest percentage of those - and all of them well worth the read. But two that gave me a "whack on the side of the head" and gave me a whole new perspective were "His Needs, Her Needs" and "Men are from Mars, Women are from Venus".
I just KNOW that last one is right up there with Abba and VW's (you either love them or hate them) - and Men are from Mars has received a lot of bad press in areas that I've been. But it provided me with a fantastic lot of "wake-up calls" with respect to my reactions to my wife (and other women too).
Me: Hi, Les. Can we call you a SNAG, now?
From Ian (NSW): "Les, I was wondering if you had read any material by Stephen Biddulph, particularly "Manhood"? It offers a valuable insight into men looking at what makes them tick. I found some of the material somewhat too "warm and fuzzy", however, I found the bulk of the material to have significant relevance and influence on my focus towards my life, wife and two young boys. I have also found a far more relaxed and comfortable approach to property."
Classic Post: Okay, enough of that warm and fuzzy stuff, already! Les' "home-grown spreadsheet" comes to the rescue again, and provides this week's Classic Post. The fortunate recipient this time is Leon.
Leon's question:
I have been reading with interest the previous articles and comments relating to the issues of renting out your own property. The most recent comments indicate that it is possible & that the interest on the loan & other associated expenses incurred are a tax deduction ( as confirmed by ATO booklet, will get copy ASAP ).
I am trying to determine the best course of action based on our current scenario. Own property valued at $400K (Inner West Syd) Mortgage $152K 25yrs at 6.55% P&I Estimated rental return $410/week Combined incomes $95,000 We have 2 children & require a larger house. This would mean purchasing for at least $550K ie sell with net profit$215K and new loan $335K. However I don't want to sell our current property & want an alternative to committing to $2,500 mortgage repayment each month.
1.Is it best to rent out current property and find larger property & rent it for ourselves( even at $350-$400/wk) and use current equity of $248,000 to purchase 1 or more investment properties?
My calculations (rough estimates) show that renting new house would be equivalent to interest charged on $335k loan! Is this still an advantage?
2.Our cashflow appears to better ie $1400-1600 rent v's $2500 mortgage = $1100-$900 better off. Does this appear to be correct & does this put us in a better situation?
3.I have taken on board comments re Temporary absence up to 6 years. Does this mean you can relocate to a suburb 5Km's away?
4.Will the PIA software help me calculate all of this? I have already booked an appointment to see an accountant & want the facts before I go because it sounds like not all accountants understand the principles we are discussing-would that be a correct assumption?
My gut feeling is that by keeping our current home & renting it out & renting out new house to live in & investing in more property is the best possible avenue for wealth creation, but I need to convince my wife who still has her mind set on 'owning our own home' and wants to see the figures & is concerned about the legality of it all. Comments appreciated.
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