15 minute read
All about Money Symposium
which will give you education about creating wealth from a holistic point of view. From a Financial Planner, an Accountant, a Mortgage Broker, a Solicitor and a Builder. In this our first issue we will be introducing you to our contributors and letting you know what to look for yourself when using someone from their industry.
Building for investment versus residence – what’s the difference?
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There are a number of considerations to take into account when building a home for investment purposes. When living in your own home, you will care for it more so than a tenant would. Therefore when selecting the finishes for your investment, you should take a long term view on how each element of the home may suffer from wear and tear. For example, tiles in the living areas may be a better alternative to carpets as they won’t wear or become stained.
A common mistake is building an investment property that strictly suits ‘your’ purposes. The ‘would I live in it?’ approach is not always the best rule of thumb. There are a number of different tenant types that many people don’t consider when constructing an investment home.
The location of the investment property may also factor when determining the number of bedrooms, bathrooms, living areas and car spaces. For instance, when located near a university, plenty of bedrooms, bathrooms and off street car spaces are a good idea, catering for student share accommodation. Another example is an investment property in a family orientated location benefiting from a second living area, in lieu of a third bathroom.
To achieve long term flexibility, designing a home that ticks boxes for both investors and owner occupiers is usually the best bet. When the time comes to sell and capitalise on your investment, not only will other investors be looking at the property, owner occupiers will also be in the mix. Increasing the number of buyers vying for your property is beneficial.
A unit versus a house? Properties without a body corporate or common facilities, and incurring fees, can typically be more valuable on the market and having 100 per cent ownership of the land is very desirable in the long run.
P. 1300 90 40 40 W. www.thompsonsustainablehomes.com.au Brad Thompson
Why build an investment property? (versus buying new)
Being able to select the house design and the fittings and fixtures is a critical part of investing in property. Being able to make minor tweaks to the house design can make a big difference in how desirable your house is to prospective tenants. If you purchase a property that is suited for the owner to live in, you may be ending up with an investment that costs a small fortune in frequent repairs. It is best to start from scratch to make sure that you are getting exactly what you need in an investment.
How do I maximise my return on investment? A good way of maximising your return on investment with a new investment home is by designing and selecting the fixtures and finishes in conjunction with your builder. This will ensure that you are delivered a low maintenance investment that will require less maintenance costs in the long run – which will maximise your cashflow and enhance sale price of your asset.
Which builder should I use? Not only should you choose a reputable builder that can deliver, you should also select a builder that is experienced in building investment homes. Selecting a builder that has a specialty in not only building investment homes, but is also adept at selecting the appropriate fixtures and fittings that will ensure the longevity of your investment is paramount to the overall success of your investment.
ABOUT THE AUTHOR
Brad Thompson is the Director of Thompson Sustainable Homes, which is a licensed builder based on the Sunshine Coast. Thompson Sustainable Homes delivers energy efficient homes that suit owner occupiers and investors alike.
Book your ticket here http://goo.gl/CNAUyL
Tickets are just $20 with all money being donated to a local charity For more information contact 07 5444 4456 or admin@bmmag.com.au
$All About Money
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Wealth Creation - What’s involved?
Should I, • Buy shares or an investment property? • Borrow or pay off debt? • Add funds to Super or set up a managed investment? • Do I need a budget, when should I start? At Infocus, we have learnt that the place to start is with what’s important to you! Everyone’s situation is filled with different circumstances and has different life changing events. It comes down to the lifestyle that you want for yourself and your family. The above are all methods for creating wealth. The time for action is now! So whether you’re 21 and just got your first job, or 61 and just finished your last job, time in the market, not timing of the market is what’s important. Small steps can create large results over time. Look at the trillion dollar value of Super funds that didn’t exist 50 years ago. Borrowing funds to invest gives you more exposure to an investment compared to using your own cash.
Borrowing is not the only way to create wealth. You create the means to wealth by earning an income, either by a salary or from your business. Your ability to earn is the most important aspect for building wealth so make sure it’s protected.
More on that next time.
The Wealth Creation Mortgage
The Client ... John, 42, Supervisor earns around $85,000 per annum, his wife Jenny earns $21,000 per annum, both children have left home, and they have net assets (excluding superannuation) of $185,500.
The Problem ... The Js had no set plans about how to pay their house off or retirement and personal finances were not building. This concerned John and Jenny.
P. 07 5443 4311 W. www.infocus.com.au/sunshine-coast Infocus Sunshine Coast Team
The Process ... During interview, we uncovered that the things that concerned them were: • Paying off the mortgage • Surplus cash flow was not being saved • Be sure retirement was secure and • Freedom to enjoy their lifestyle, play golf and visit family in the meantime. Sound familiar?
The Solution ... By restructuring their loans we were able to use some of the available equity in their property to commence an investment.
John increases his investment every month with a regular investment strategy. Tax savings were taken into consideration and the investment was placed in John’s name.
The Outcome ... In 11 months the Js increased their net assets by $35,474 to $220,974!
This was achieved through restructuring, investing and harnessing their cash flow and tax savings.
Fictitious names have been used in this true Case Study to protect the privacy of our clients.
Disclaimer: This information is general information only. You should consider the appropriateness of this information with regards to your objectives, financial situation and needs. Sunshine Coast Financial Planning Pty Ltd ABN 34 133 955 736 is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523 trading as Infocus Money Management.
ABOUT THE AUTHOR
Matthew Johnson, Senior Financial Advisor AR# 455767 Since entering the industry in 2001,Matthew has a passion for educating clients to reach their goals and objectives. This personal approach to financial advice has seen Matthew build strong,long term relationships with his clients based ontrust.
$ All About Money Symposium Thursday 22nd October at The Edge Mooloolaba 5.30pm to 7.30pm
$All About Money
4 1 3 5 6 7 8 9 0 2 4 5 6 Budgeting is the most basic and the most effective tool for managing your money. Yet, most people avoid doing it because it is additional work, much like cutting your lawn or fixing the roof. Budgeting also connotes that you have to give up and stop yourself from enjoying stuff. What budgeting actually does is clearly show you how you allocate your money and present you the choices on what stuff to enjoy – based on your financial limitations. It will save you the grief of overspending and being too much in debt. Budgeting does not stop you from enjoying stuff, it ensures that you enjoy stuff when you want it. Although budgeting is indeed more work, it pays off with many life-enhancing benefits: Melanie Jacobson and Renee Spears
Create your budget/ cash flow projections
sure you have the vehicle, you have the petrol, but if you don’t know the way, you are going to need guidance to get there, you need a map. Having someone assist you to work out your budget is the same thing for business. A couple of years ago we had a new client approach us. They had considerable Tax Office Debt and were unsure Benefits of Budgeting how they could turn it around and get on top of everything. 1. Gives you control over your money. We sat down and completed a business budget of 2. Keeps you focused on your money goals. what income targets the business would need to 3. Makes you aware what is going on with your money. achieve to produce the cash-flow the client needed 4. Helps you organize your spending and savings. to meet financial commitments. These targets gave 5. Makes you decide in advance how your money will work for you. 6. Enables you to save for expected and unexpected. the client a plan of exactly how much to put aside each week to pay the debt off within 12 months, a goal that previously seemed unsurmountable. 7. Enables you to communicate with your significant others about money. 8. Provides you with an early warning for potential problems. With the budget in place the client felt they were now in control of the business and also the decisions they made going forward. Having a budget and set targets in place also benefited the business, as now the owner was 9. Helps you determine if you can take debt and how much. focussed on the numbers, the business naturally improved. 10. Enables you to produce extra money. By taking control of the budget the client not only repaid
Case Study
the ATO debt in full, they have now also been able to set up investments outside of the business. They are now taking the same principles they learnt within the business to their Having a budget in place removes the stress. It’s like personal budget and when they are making decisions getting in the car to drive to Townsville without a map, about personal investments.. a
P. 07 5451 1118 W. www.mjjaccountants.com.au
ABOUT THE AUTHOR
With over 30 years combined industry experience Melanie and Renee at MJJ Accounting and business solutions are passionate about helping businesses be successful so that you can enjoy life and the things that matter most to you and your family. We understand that central to all business success is sound strategic and financial advice.
Book your ticket here http://goo.gl/CNAUyL
Tickets are just $20 with all money being donated to a local charity For more information contact 07 5444 4456 or admin@bmmag.com.au
$All About Money
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Top Tips for Comparing Lenders
With interest rates at record lows, and Australia’s lenders offering innovative and sharply priced home loans, there are many good reasons to shop around and consider a range of loan and lender options. By choosing a home loan lender on banking history alone, you could be selling yourself short when it comes to finding the best home loan deal for you. There are many lenders out there offering mortgage products whose features may be ideally suited to your needs and if you don’t shop around, you may never know what is on the market. Here are my top tips for comparing lenders and their loan offers: 1. Compare lender interest rates: Understand what interest rates are being offered by Australia’s lenders. While interest rates aren’t everything, your The Mortgage Choice Buderim Team
A. 1 Ballinger Rd, Buderim | P. 07 5476 9333 E. Matt.ireland@mortgagechoice.com.au W. www.mortgagechoice.com.au/linda.ireland
Case Study
Client: Keola Westcott Goal: To be financially free by age 40 Strategy: - invest in appreciating assets - minimise bad debt - have fun along the way Properties: 3 Like many Aussies who’ve realised that their superannuation won’t be accessible any time soon, and the aged pension is hardly enough to make ends meet, Keola’s goal is perfect lender should be very competitive on rates. to be financially secure, earning a passive income that 2. Investigate the associated fees: Many lenders will will allow her to travel and enjoy her time off. charge various fees, so make sure the lender you are Well on her way to achieving her goal contemplating partnering with offers competitive fees Understanding the difference between good debt and bad and charges. Get your mortgage broker to compare debt is what sets Keola apart from the crowd. She knows that how the lender stacks-up in terms of the fees and she’ll have her dream home one day but for now she’s focused charges on the loan (loan features, transactions, late on keeping her bad debt (any debt that doesn’t bring in an penalties, early repayments, top ups et cetera.). income) low whilst she builds up her portfolio of properties. 3. Consider your features: Before you can find the perfect home loan, you need to She’s learnt some valuable lessons along the way and is happy to share these for any young investors starting out: understand what loan features you want to have Check your ego at the door both today and into the future (for example, • A few sacrifices now, while you’re building your property offset account, redraw facility and more). portfolio, will pay off in spades. Buy a car that’s reliable and 4. Consider lender support capabilities: If will get you from A to B, and buy clothes that are good quality weekend branch access and phone support • If you choose to buy a property to live in, it are high on your priority list, it is important to doesn’t have to be the Taj Mahal partner with a lender that offers such facilities. • Have fun along the way
ABOUT THE AUTHOR
Linda Ireland is the Owner/Manager of Mortgage Choice Buderim, Linda has been a top Mortgage Choice franchisee for the last 12 years, a credit to her customer focused team. Linda and her team are passionate property investors themselves, and have helped thousands of people reach their finance and property investment dreams.
$ All About Money Symposium Thursday 22nd October at The Edge Mooloolaba 5.30pm to 7.30pm
$All About Money
A B C D E F G H Glen Carpenter and Grant Cunning So you have found advisors to assist with your transaction. So what next? Just as you can’t build a good house without a solid footing, you need to make certain arrangements before you enter into your transaction. Whatever the transaction is that you are contemplating, it is vitally important that you get the foundations right, from the beginning. Generally, things can be changed or fixed at a later date however it will always come at a cost and probably a headache as well. Our role as solicitors is to assist people in
Developing a Plan Q & A
P. 07 3088 7511 E. admin@spirelaw.com.au W. www.spirelaw.com.au
Here are some questions we get asked frequently: reducing agreements to writing, setting up structures correctly and ensuring that your Do I need a family trust or a company, or both? particular circumstances are considered and the transaction is structured to suit your individual needs. There is no one size fits all approach. What structure you use to enter into the transaction will depend on your individual needs. Each structure has its pros and cons so you need to consider what you are trying to achieve and your own circumstances. Your solicitor will help with things such as setting up trusts and other structures, registering for various licences and other statutory requirements, and preparing contracts and other written agreements, depending on your transaction. One thing we stress to our clients no matter what they are doing or who I am buying a property. Should I speak to my solicitor first? Yes. Before you enter into the contract it is important that you have sought advice about the entity that will purchase the property, whether it’s through your Self Managed Super Fund (if you have one), what enquiries you can make before signing the contract and what the terms of the contract are. they are getting into business with: put it in writing. Once you sign the contract, you may lose your ability to change Your solicitor will assist you with planning things so it is best to get it correct from the beginning. for unforeseen events and ensuring that I am investing with a family member so I don’t need a you have agreements in place to protect contract, right? your interests. This is particularly important Wrong. Family members and friends have the same if you are investing with other people. legal rights as any other business partner. It is important If you fail to get it right from the beginning, there may be tax consequences or other costs, or if things go wrong you may not have any rights to recover your losses or protect your interest. The cost of getting that a shareholders agreement, partnership agreement or other agreement is prepared from the outset so if there is a dispute, the parties’ intention is clear. Too often we deal with issues where relationships in the family break down, this effects the business and there the foundations right will nearly always be less is no agreement in place to deal with the dispute. than the cost of having to fix it at a later date.
ABOUT THE AUTHOR
Glen Carpenter and Grant Cunning are directors at Spire Law, a Sunshine Coast law firm focusing on property, commercial, litigation and construction law. With over 50 years of combined legal experience, there’s not much the Spire Law team hasn’t done. The difference Spire Law offers is our ability to provide exceptional legal services consistently and efficiently on time, every time.
Book your ticket here http://goo.gl/CNAUyL
Tickets are just $20 with all money being donated to a local charity For more information contact 07 5444 4456 or admin@bmmag.com.au
