THINK MONEY WEALTHY & WISE
It’s all about
CREATING WEALTH REDUCING DEBT AND
ee me n s d n in a e ca Come y team . W ts e and m ou the secr ebt, y d teach cing your our u y of red t affecting u witho e! l lifesty
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Are you on track to achieve your financial goals? How is your retirement looking for you?
Will possible changes to negative gearing affect you?
thinkmoney.com.au
THINK MONEY WEALTHY & WISE
The Advisor Magazine Friday, 22 January 2016
Bernard Salt slams negative property outlook O
ne of the nation’s leading demographers has slammed negative media reports about the Australian property market. KPMG partner Bernard Salt said he is an optimist when it comes to Australia. Negative views of the property market are rife, he said, but have little truth behind them. “When do you ever pick up the paper and read a positive view of the Australian economy or property market? There is never a positive view,” he said. “In fact, if you acted on the advice, you would never buy property, you would never invest in property.
And yet, in fact, you would have missed the greatest boom for the last 25 years and the peak of that boom from 2008 through to 2013 or so.” Mr Salt said Australians need to take a “bigger-picture view”, and argues that we are a young, vibrant country with strong levels of population growth, very aspirational, and we’re rich in terms of income per capita. “We are as rich as the Americans, some say even more so depending on how you measure it. We are more egalitarian. Our cities are more attractive places to live. We are an overnight flight away from China,” he said. “There is no reason why we wouldn’t be prosperous people in 10 or 15 years’ time. There is no reason why people wouldn’t be spending more on property in the future.”
Mr Salt said Australians need to take a “bigger-picture view”, and argues that we are a young, vibrant country with strong levels of population growth, very aspirational, and we’re rich in terms of income per capita.
Except from The Advisor Magazine
How many properties are in your plan? Let’s make it a reality.
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THINK MONEY
When you consider that 1.7 million Australians own investment property however less than 2% own 5 or more, it doesn’t take a rocket scientist to work out that it really is all about having the right strategy to grow your portfolio and not affect your lifestyle along the way. Experience counts. Having invested in property myself now for 15 years, and having taught hundreds of clients to invest in property during the last 9 years, I have seen success comes down to implementing the ‘four rules of wealth through property’. I cover these rules at my seminars and client meetings, now I will share them with you.
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The 4 Rules
of creating wealth through property
Rule #1 SEPARATE YOUR LIFE FROM YOUR INVESTMENTS The most important part of successfully investing in property is the organisation of your money. By getting control of your income and personal mortgage, getting debt reduction and money control happening, you can confidently launch into property investment. We teach our clients to separate their personal side from the investment side and build a property investment portfolio. Many investors fail from the financial pressure when the rental property expenses and income flow in and out of their personal accounts. By managing their investments and not having the holding costs affect their personal income, our clients increase their wealth, without decreasing their lifestyle.
Rule #2
BUY NEW NOT OLD There is quite a difference to wealth creation by buying new properties instead of old. Over the years, the drain on cash flow from constant maintenance and repairs of old properties can really hold back your ability to buy more investment properties. However by buying new property, the benefits are not only increased cash flow but also being able to attract better tenants. And importantly, the bonus of receiving tax deductions from depreciation. With all of these financial benefits, you are able to go from negatively geared to positively geared much faster, thus enabling you the freedom to grow more quickly.
Rule #3
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It’s easier to manage the investment holding costs if you minimize the cost of payments during the ‘negatively geared’ period. As the property goes up in value, so does the rental income. The property should go from negatively geared to positively geared and then the extra rent reduces the investment debt. So it is all about the timing, and maximising the tax.
Rule #4
NEVER SELL
Over the past 100 years, Australian property has grown in value on average 10% pa. It’s not 10% every year, it works in cycles, usually 2 or 3 years of really good growth, 5 or 6 of flat and a couple of years of negative growth or retraction; meaning that a property can have flat or even negative growth over an 8 year period. The property growth cycle is often debated, but history shows this as fact. Though no one has a crystal ball for the future. There are many benefits of keeping property - you incur buying costs only once, and pay no commissions on selling or capital gains tax. But by selling, taking profit and buying again you maximise the costs and minimise the profits. These costs can equate to $50 or $60,000 even before capital gains tax. By not selling, this money can be utilized as equity to purchase more property, and your existing property continues to grow as well as the new one.
, ne ney n o za Su nk M i Th ent Cli
INTEREST ONLY LOAN! Interest only loans always spark debate in both the home owner and property investment circles. We use interest only loans but pay extra, assisting in massive debt reduction against your home mortgage. Most clients reduce their debts in record amounts – more than $30-$40,000 in the first year. On the investment side there are big benefits. Interest is tax deductible, principal payments aren’t.
I have two investment
properties and aiming for five in five years.
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THINK MONEY WEALTHY & WISE
With
ilds Chris Ch
I often get asked questions about specific topics to do with property investment, so we have decided to include a Readers Q & A. I love hearing from people so if you have any questions you would like me to answer, please send an email to askchris@thinkmoney.com.au
This months question is very topical right now:
or returns. The key is to have your system have the ability to be flexible and changeable.
Q. SHOULD I BE WORRIED ABOUT POSSIBLE CHANGES TO NEGATIVE GEARING?
At Think Money we have set it up so the uncontrollables don’t matter. We aren’t reliant on the tax returns. They are a bonus (a great bonus) but not an essential.
A. IT DEPENDS!
Like any investment, with Property there are uncontrollables. These uncontrollables include things like interest rates, property cycles, supply and demand, tax benefits, even the weather.
For example, we have set up a pot (of money) to separate the investment side from the personal side and we have a buffer in that pot to cover the holding costs until the properties are positively geared themselves. The tax refunds (from negative gearing) currently go into this pot as a bonus, not a necessity. So if tax deductions were to change we just slightly adjust what is required in the pot and keep moving forward.
If you have a system set up that is dependent on one or all of these conditions having to be a certain way, then you are bound to run into problems with your strategy at some point, either now or in the future.
A property investor with no plan buys relying on uncontrollables, affordability from low interest rates and tax deductions. Then when things change they struggle and often fail.
Let me explain. It all depends on the system or strategies you use to manage your investment property portfolio.
If however your have an investment system set up so that the uncontrollables don’t matter then any change will not have any dramatic effect on your outcomes
Should any uncontrollable factor change - tax deductions for example, we tweak our strategy and change with it.
They often have to sell and quit with a bad taste in their mouth. It’s no wonder then that out of the 1.7 million people in Australia who invest in property less than 2% get to 5 properties. Most sell after a year or two because they don’t have a plan or system to roll with the flow of change. A smart property investor utilises these benefits while they are available, however has a strong plan of what strategy to change to when these uncontrollables change. That is what works best at Think Money. It doesn’t matter what happens - there is always a plan to get through it, a confident hand to hold along the way and someone with knowledge and skill to guide you through the changes. Anyone can create wealth through property on the sunny days! We teach people how to do it when the storms of change are on the horizon.
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Pay your home off in
5 to 7 years
The biggest fallacy our parents taught us is to believe a home loan is a “long term” debt. Most of us saw our parents work hard all of their lives to pay off their mortgage, and then struggle to retire comfortably. It is nurture not nature that keeps most of us imprisoned on the mouse wheel of debt.
Let's look at your current situation...
Our grandparents, god bless their little cotton socks, were taught by the banks how to do their banking, they passed this on to their children who passed it on to you. They had a lot to say about money...
Add up the amount you have paid into your loan to date:
• Money doesn’t grow on trees. • A penny saved is a penny earned. • I f you count your pennies, the dollars will take care of themselves. • If you can’t pay for it – don’t buy it. Most of us believe that we should work hard, save to buy our home, spend the rest of our lives working to pay it off and hopefully, save a bit to retire on. It just doesn’t have to be that hard. By treating your money right in the first place, learning the benefits of how loans work and setting up the correct finance platform for both fast debt reduction and smart wealth creation, most of us can pay off our homes in 5 to 7 years (instead of 25) and acquire 10 properties in 10 years without struggling with the holding costs. It’s just a matter of setting your loans up properly.
Have you been paying your home loan off for years and feel like you are getting nowhere?
Your monthly payment – say $2k x 12 months x 5 years = $120k. Most loans have only reduced by $5k or so in that time... Now we have an OMG moment! It’s time to do things a bit differently. Change the way you are doing your banking, follow the next 7 steps and you will be well on your way to getting out of debt fast.
#1 Get the right loan #2 Set up a Cash Management System
#3 Use a credit card #4 Bank your pay into your loan
#5 Stay organised #6 Start investing and getting ahead
#7 Separate your personal and investment banking
, d Anne David an ey Clients on Think M
12 7 86
Think Money Wealth Through Property specialises in helping people just like you to get out of the debt cycle, and start to accumulate wealth, without affecting your lifestyle. We teach you how to beat the banks at their own game, by using our Cash Management System and the right loan structure so that you can own your home sooner, get rid of your credit cards and consumer debt, and start living the life of your dreams.
THINK MONEY WEALTHY & WISE
Change e your lif
in 35 minutes!
IT'S ALL ABOUT THE NUMBERS Yes, I know it sounds impossible, but that is exactly what our clients tell us we can do. We look at things differently than you do and we can do that in one meeting. When you look at your finances you may get overwhelmed or fearful of what appears to be never ending debt and no way out of it. We, however, look for the opportunity to use your money differently and take away the financial pressure you feel and maintain, or even improve your lifestyle.
THE SECRET IS TO DO YOUR BANKING DIFFERENTLY Hi, I’m Chris! Think Money was born from my passion for helping clients create wealth through property. My passions are Property, People and Business. I have the privilege of changing people’s lives on a daily basis. The look of amazement on client’s faces when they realise they can do so much more than they ever thought they could is priceless.
We specialise in teaching people just like you to do your banking differently, managing your money to reduce debt not your lifestyle and help you take back control of your life. Have you been paying your mortgage off for years and seem to be getting nowhere fast? Once you have the knowledge of how to beat the banks at their own game you will be surprised to watch the years fall off your mortgage.
LEARN HOW YOU CAN REDUCE DEBT AND CREATE WEALTH THROUGH PROPERTY How would you feel if you were able to reduce your mortgage by $20,000 and purchase two investment properties within 6 months? Or have four investment properties in just 10 months? Well, we have clients who have done just that and are well on their way to creating the lifestyle they want in their retirement. Just by changing the way they look at their money.
Christine, Think Money Client
23 It doesn’t have to be hard – treat your money right in the first place, learn the benefits of how loans should work and set up the correct financial platform for both fast debt reduction and smart wealth creation. If you feel like you have lost control of your financial direction, are just treading water, or worse even, you are fearful of what your life looks like in retirement, then maybe it’s time to change what you’re doing. If you are serious about reducing debt, creating wealth and setting up your future for retirement, call us today. We guarantee it will change your life for the better.
Chris
12 7 86
FOR MORE INFORMATION AND ACCESS TO OUR EBOOKS BECOME A MEMBER OF OUR WEBSITE TODAY (IT’S FREE TO JOIN AND YOU CAN DOWNLOAD THE WHOLE SERIES). Have you seen our new look website? It’s full of great resources and there are a whole bunch of videos, budget tips and ebooks that you can access. Sign up to our newsletter for regular emails about upcoming events and stay motivated with tips from our resident goal mapping experts on how you too can reduce debt and create wealth through property.
We have helped hundreds of clients just like these so book your FREE Wealth Coaching session to find out how we can help you too!
CALL 5430 4777
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Check out the events calendar to see what,s coming up! Book into an Introduction to Think Money event (It’s FREE!!!) and learn proven wealth strategies whether you are an experienced property investor or just getting started. You can fill out a form online, or just give us a call and we can book you in. Too easy!!
THINK MONEY WEALTHY & WISE
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Real people share their
success stories
a aness V & Paul Money k Thin s t n Clie
12 Free
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Events not only how to get to retirement but how to DREAM for a retirement we never thought we could have.
We came to Think Money hoping to gain help and direction to plan our path into a comfortable retirement. Meeting Chris and the team, we have not only gained the knowledge and direction but so much more. Chris has been an inspiration, a mentor, a teacher and more importantly a friend. Along with all the team we have been shown
We now have a SMSF with one house and one in planning, and three investment properties in our personal portfolio. With all their patience, guidance, knowledge and most importantly encouragement, with the license to step outside the box of what we thought we could do and start a journey and dream big, we now have a SMSF with one house and one in planning, and three investment properties in our personal portfolio.
LEARN MORE, BOOK INTO A FREE WEALTH COACHING SESSION OR COME ALONG TO ONE OF OUR EDUCATION EVENTS. Each month we hold free events to help you learn more about Think Money and also to show you how you can build and then retire on a Property Portfolio. At our events you will learn: The secret to buying 10 properties in 10 years How to manage the holding costs The right financial platform for investors Proven strategies to property wealth How to reduce your debt, not your lifestyle Getting control of your money
Visit thinkmoney.com.au
CALL 5430 4777