InvestKit

Remember, as an Investor’s Choice newsletter subscriber you also have access to the InvestKit containing easy to use spreadsheets for researching and locating the right property.

If you haven’t yet looked inside the InvestKit to see what’s on offer, don’t delay because you could be missing out on something that will make a difference to your investment strategy.


This link is not active for those who are not members of the newsletter.

Final Melbourne Property Investing and Renovation Course

Yes it is another special offer from Investors Choice just for our newsletter readers and their friends. Many of you have taken the opportunity to attend one of my property investment courses in Sydney, Brisbane or Melbourne that I have conducted over the last few years.

So it’s with some regret I am conducting my last one day course in Melbourne for the current cost of $150 plus gst. If you are interested in attending or passing these details onto your friends or family members download the details from the website.

I want to make sure that we continue to give great value and information so I am excited to announce that in 2010 I will be teaming up with another property investment expert to provide a two day Property Investment Weekend. These courses will be conducted in Melbourne, Brisbane and Sydney. These courses will cost $1500 (with discounts for our current clients).

I have limited the places to 20 for the final Melbourne Course (at the $150 price) to be held on the 12th December 2009 in the city 9-3pm, so if you are interested then act now.

I look forward to seeing you there.

For more details click here

Low risk investing Part 3

When considering risk minimisation for property investment I break down the investment into six bite-size pieces and make sure I have a strategy that covers each of those steps. Last time we looked at the first consideration for low risk investing; your ‘Investment Strategy’ and over the next few editions we’ll take a look at the others listed below:

1. Investment Strategy
2. Exit Strategy
3. Finding the Right Property
4. Property Ownership
5. Cashflow Management
6. Ongoing Portfolio Management

This month we look at numbers 4, 5 and 6 on the list. Visit the archived newsletters if you missed previous strategies


Step 4: Protect your investment

You have done all the hardwork and purchased a property – don’t rest on your laurels look after this nest egg and nurture it and in turn it will be there when you need it.

• Make sure you invest in landlord’s protection insurance; it will cover you for tenant damage and loss of rent as well as the obligatory building insurance.

• Negotiate long term, fixed tenancies (at least 12 months) to minimise vacancies and loss of rent.

• Manage your agent/s. Make sure they are conducting regular inspections, following up on repairs and maintenance requests, and monitoring and charging market rent levels.


Step 5: Manage your cash flow

Discuss with your mortgage broker the option of fixing some of your loan. This has an advantage as you know your outgoings ahead of time for the fixed portion. This makes future budgeting easier but can mean higher costs overall so it is not a step to be taken lightly.

• Maximise your tax deductions: have a depreciation schedule prepared and use tax variation schedules to improve your cashflow.

• Manage late rent payers quickly and have regular rental reviews to make sure you are at market rent

• Review your lending options annually with your mortgage broker to make sure that they are still right for your needs and circumstances.

• Take out income protection insurance, in case you lose your job or cannot work.


Step 6: Mange your portfolio effectively

• Review your long term goals and consider how each property in your portfolio is contributing to that goal. Get rid of those that don’t fit or are no longer working for you. This may be based on capital growth, underperformance or rental issues.

• Keep your properties as separate securities when borrowing against them. If they are supporting each other through cross collateralisation it may greatly reduce ongoing investment potential. It is not uncommon for first time investors to find out later that the bank has cross collaterised their properties. This can reduce borrowing flexibility in the future and it is important that this strategy is understood. For more detail go to the Invest Kit for an article that explains cross collaterisation in detail.

• Don't become dependent on one lender. Spread your debt and risk. You maybe surprised at the benefits and low cost in doing this.

In summary, risk management is about understanding the likelihood and consequences of a situation or event. If you understand the potential risks and you employ risk minimisation strategies then you should have no unexpected surprises and have a successful plan to achieve your goals.

Best of all, with sensible risk minimisation strategies your properties increase in value, your wealth increases and you get closer to achieving your long term goals…what could be better than that!

Newsletter Articles - Read Strategies 1, 2 and 3

Thinking of Buying an Investment Property via your Self Managed Super Fund?

Many people are considering buying an investment property through their Self Managed Super Fund (SMSF). This is a complex strategy so it is important that you know the facts and seek professional advice before you proceed. Jane Horn of Rivet Financial Solutions has compiled a few thoughts on this topic.

Investment Property via SMSF – Common Questions

As it is via your SMSF it is critical to get the process right first time round and not be caught in a compliance nightmare. The following points are based on current legislation and address 5 commonly asked questions. (Note: legislation may change in the future)

1. If you already own the residential investment property (or home) it cannot be put into the SMSF. This applies to properties owned by related parties as well - A related party is someone like a relative.
2. You cannot rent the property to a super fund member(s) or a related party
3. The loan must be repaid. You will find that most lenders require principal & interest payments and may initially allow only a short time frame for Interest Only repayments, if at all.

4. Refinancing is not currently permitted.

5. There are no additional loan top ups provided. It is a once only borrowing.

The following key points aim to help give you a guide as to what’s required and how this strategy might work:
1. Your SMSF trust deed must allow this type of investing and borrowing, so make sure your trust deed is up to date. Most current trust deeds have this build in. It should be double checked.
2. The investment in real property must be inline with the SMSF investment strategy.
3. Your Super Fund will need to provide the deposit plus other purchase & loan costs.
4. You will find that the maximum lending rate is approx. 70% of the value of the property (LVR) for residential investment properties. You cannot add other purchase costs to the loan.

5. The loan is typically serviced by a combination of rental income and employer contributions or you may have sufficient savings in your super to service the mortgage.

All the points raised only touch the surface regarding the complexity and considerations required for this strategy to be successful. It is really important to gain expert advice and guidance in this area. Please make sure you speak with your financial planner and/or accountant to make sure you are doing what is appropriate for you and within compliance requirements for your SMSF.

In the next newsletter Jane will share some live examples of types of investment properties eligible under SMSF’s and how they might be rented and used.

The above information is general information and should not be considered advice. If you would like further information and to obtain advice in this area Jane Horn of Rivet Financial Solutions Pty Ltd is a Financial Planner and Owner of Rivet Financial Solutions Pty Ltd. Jane can be contacted on 0400 202 716 or jane@rivetfs.com Jane is licensed through Patron Financial Advice (AFSL: 307379).

QBE BIS Shrapnel Property Market Predictions

This report looks into the future till 2012 and predicts what will be the drivers in the property market. A must read for any serious investor. If you have only a short time download the video instead.

Click here to access the Report