Welcome to the end of the 09/10 Financial Year.

Paying tax is something we all need to do but none of us like to do.

Next tax time you could be adopting legitimate tax minimisation strategies reducing your tax burden whilst building a strong investment property portfolio.

Find out how…

Before reading this article you should always seek proper, independent financial advice before making any investment decision. See the Disclaimer section at the end of our legal page.

With tax time looming we will all be doing our tax returns and probably realising one thing – we are paying too much tax.

Tax is not a bad thing – someone has to pay for our roads, schools and other infrastructure, but there are legitimate ways to reduce your tax by using the money for something more worthwhile like building an investment property portfolio.

We get questions all the time – how can you own a property for under $30 per week? Why so little?

Well one strategy is Negative Gearing.

What Is Negative Gearing?

Negative gearing strategy in Australia is motivated by our tax regime, which allows deduction of ongoing losses against taxed income. This is further offset by taxing capital gains at a lower rate.

This might sound complicated but in reality it isnt.

How It Works!

You purchase a property and incur costs on that property – these costs include third party expenses, loan interest and set up costs.

If the costs on the property are greater than the (rental) income generated you will technically be incurring a loss on that investment.

But the story continues…

You Earn An Income? This Is How It works

In Australia the losses made on property are able to be weighted against your taxable income.

You will need to have a clear picture of your costs versus income to know your losses – costs include depreciation, setup costs, mortgage costs and interest, ongoing maintenance and property costs such as rates. Just like your personal income – you can claim anything that contributes to the generation of income in your property.

All Portfolios properties come to you with a clear understanding of the costs involved so you make an educated decision on the potential for negative gearing of the property before purchasing.

Your capacity to cover the loss is an important factor in determining the right deal.

So If It Is  A Loss Why Do It?

There are a number of reasons why people consider negative gearing as an option for their property investment strategy from straight tax minimisaton through to the great investment returns to be made on the property.

Many of the Portfolios properties are expected to return in excess of 250% return on investment giving you great returns in any market.

Property is a great investment, but like any investment there is risk and you should seek proper independent financial advice.

Talk to Portfolios and see how we can help you make those steps to a future in property investment.

You’ve watched the lifestyle shows, dreamed of buying the do-upable dump and making a good return out of it.

All over the world people take on projects to renovate and make money from property. It is contagious, both challenging and rewarding.

But what happened to making the dream a reality?

Portfolios is proud to be associated with Cherie Barber and Stephen Tolle and the Renovating For Profit team. It is a unique community of people that buy houses, do them up, and sell them – for a living. The amazing thing about this community is it is made up of ordinary Australians like you and me. There are some who wouldn’t dare put a lick of paint on a wall or pretend to be the carpet layer, tiler, sparky and plumber all in one.

In fact most of these people are simply great project managers, I will come back to that later.

Renovating property is a rewarding experience that, given the right tools, structure, strategy and financial platform, will give you a very fulfilling career or some extra income.

I personally complete 2 -3 projects per year, look after the Portfolios group businesses and along with meeting our wonderful clients that is my plan. Business will give you a lifestyle, your deals will give you your financial wealth.

So how can I help?

When looking into renovation project there are plenty of aspects to consider.

The main 3 are: Structure, Strategy and Finance, other fine print considerations for you could be:

1. What is your exit strategy?

Are you going to renovate and hold or renovate and sell?

Always be prepared when you have to hang onto the property that you have the capacity to hold via income or equity.

2. What is your costs and profit margin?

Understand the kind of gains you can make and manage your improvements accordingly. Knowing your numbers for buy, renovation and end sales price are critical to success.

3. What improvements/ works do you need to make?

Are you just making cosmetic changes or major structrual or even extending the property?

Firstly make sure you can make the changes you want to – check with council and look at similar properties.

Your due diligence is your chosen area will make sure you know what is desired and the end sale price for delivering that to the market.

As you make more an more deals this job will get easier because you will be able to estimate better yourself. But in the mean time surround yourself with professionals. Dont be afraid you will be helping their businesses too.

4. What is your contingency?

I see too many developers, renovators and property investors that come in with a conservative estimate on improvement works and do not consider an contingencies.

Lets face it there are many and varied factors to property projects, allow in your plan to cater for these.

5. Become A Project Manager

Project management 101 – manage your project closely – watch your progress, scope and budgets.

Timing is also critical so use a program to manage day to day activities who is where when – what needs to be completed to allow other works to take place on site. And like your contingency build buffers into your program – rain delays, holidays, slack contractors.

6.  With each deal it gets easier

When I started out – like all of us – I made mistakes but in each case I have learnt far more from them,now I have the privilege of helping people avoid the mistakes I made, saving them valuable time and money.

There are aspects of this business that you will always rely on others to solve for you but increasingly you will be able to take on aspects of the deal yourself based on your growing knowledge – you will become more astute and will see potential everywhere.

Financing The Deal

So the deal looks good and you have done your due diligence, what now.

Make the time to work with the Portfolios Team on your plan, whats possible, the project, structure, strategy and then we can work on finance options.

We can even show you strategies how to finance the deal using other people’s money and time.

First things first complete our Portfolio Review and we will work with you through the steps to becoming that Professional Property person.

Make It Happen – you’ll love it.

Paul Pritchett

A Never to be repeated bargain! Contract has crashed, and YOU are the winner!!

One Only House/Land package in town of Chinchilla for just $375K with Ducted Aircon.

Call Keiran at Portfolios Property for details on 0447 255550

$1000 *refundable EOI, will secure this for you TODAY! This wont last!!

Find out more about this deal…

At Portfolios we have profiled Chinchilla a number of times previously in this broadcast and have profiled it on our property website.

We believe that Chinchilla is a fantastic investment property opportunity and having only a one property left at this fantastic price it will be a shame to miss out.

Chinchilla is located in the Darling Downs 250 Km NW of Brisbane. It is a popular tree change destination. With an historical capital growth of 14% and rental yield 6.6% with vacancy under 1.0 the stats really hold up for this property. If you earn in the 40% tax bracket – this property could be yours from just $43 per week.

Strong population growth continues throughout the region alongside ever increasing job opportunities and tightening rental availability has driven up rents sharply.

The town has a great community spirit and has hospitals, schools and many ammenities of normally much larger towns.

Over $10 Billion dollars is currently being spent on Coal mines, Gas pipe line, Rail line linking rural Qld, gas exploration & waste water purification.

You can find out more about Chinchilla here but we suggest you dont delay to get this great price.

With the average loan for an investment property being refinanced every three years it is little wonder the banks have introduced fees to make you think twice about moving away from them.

Loan exit fees have become common place in the mortgage market. Today very few banks provide loans without them. But it hasn’t always been the case.

Lenders exit fees serve to discourage people from refinancing to other banks – or even with the same bank. They are designed to keep customers as long as the bank can.

The challenge for banks is that most home loans do not make as much profitability in the first few years as they do in the ensuing years. Banks need to recoup profit if the customer chooses to exit early.

Fees can range from $400, an average of major lenders around the $750-$1000 mark with non-bank lenders charging a percentage to exit of around up to 2.5%.

Whilst we dont necessarily agree with these exit fees it is something we have work with developing your strategy.

What you need to understand is your strategy affects the loan options and it is far more than just the interest rate.

At Portfolios we understand all consideration of your deal and the associated loan/s which is why we aim to offer up to three loan options into your strategy each with its own profile and considerations. Make sure you take the time to review and discuss.

For example if you are purchasing to renovate and sell  quickly  then we will offer up to 3 loans that typically would have  lower exit fees for great profitability in your deal.

However if your strategy is to buy and hold the property then the early exit fees are not so much of a consideration.

Portfolios will work with you to develop the right strategy that includes Structure, Strategy, the Property and Finance.

If you wish to look at your options and get started complete our FREE Portfolio Review and we will be in contact with you shortly.

Portfolios looks forward to working with you to …Make it Happen.

Here’s a question for you?

Do you know who will look after your assets if the unthinkable happens to you?

A large percentage of property investors are under insured personally meaning that if they were unable to continue servicing the loans due to death or disablement  they would leave a considerable debt – sometimes un-servicable for their family to pick up.

Peter Bentley, trusted advisor with Portfolios says;

“Protecting yourself and your family is a vital part of a successful property investment strategy. If you were to suffer in an accident or be unable to repay your investment loans through disability or death would your family be able to support your portfolio?”

So what kind of legacy will you leave?

Protecting yourself is one of the greatest gifts you can give to your loved ones if you should be unable to support them.

If you feel you are under insured and want some advice go to the website and through our insurance providers check out one or all of the following insurance products:

• Life Insurance
• Accident Insurance
• Income Protection Insurance
• Temporary Or Permanent Disability

Dont leave a nightmare for your family – manage the risk for them and for yourself.

Keeping it streamlined and delivering on your property investment deals is key. We thought it beneficial to share ways that you can ensure streamlined approvals and delivery:

1. Be Clear, concise and consistent with information and documentation.

At Portfolios we ask you to complete a Client Portfolio Review with all required information, especially Assets and Liabilities on the second page.

Make sure the quality of the copies are good, noting faxes and ID documentation rarely mix well.

Tell us you whole story, good , bad and not so good,  we need to know.

If you do not know tell us, as we like to ensure you understand and continue your property investment education.

2. Have a your story straight.

Take the time upfront to allow Portfolios to work through and document your property investment strategy and the finer details. This is important to get the process right and the strategy to deliver your plans.

Knowing the fundamentals of your deal after thorough due diligence and then not changing it unless forced to.

If you have a change of plans notify us  as soon as you can as usually we can accomodate your new direction.

3. Send the full set of documentation all at one time.

Just like planning to know your strategy – taking the time to get all the documentation together for then initial submission.

Lenders will not even review a loan that is not 100% complete with documentation. Hence it  will mean less grief when the lenders and stop them putting your deal in the deferred pile.

For over 50% of loans at present the lender is requesting additional documentation after submission, allow for this.

4. Be patient after loan submission.

The current lending climate is full of red tape and delays. Approval delays have improved on this time last year.

You need to understand and appreciate that we chase service levels with lenders and sometimes stick to the ones that deliver consistently in lieu of another.

The team understands your passion and interest in the ‘knowing of loan approval’, its ours as well.

5. You will hear about any update.

Know that as soon as we hear an update we will inform you.

Its exciting when approval comes through – at Portfolios sometimes we get more excited than our clients.

Check your email each day, as any update from a lender would be to us via email which we review and forward to you.

6.Conditional Approval – Formal Approval

Note that currently Conditional Approval is forecast as 3-5 days and Formal Approval is forecast as 10- 14 days.

To settle a refinance (you have cleared funds in your account) and for purchases it takes 5- 6 weeks at present.

This is from loan submission to the lender, 100% complete, ready to purchase your property/ies.

Contacting us with expectations over and above the timeframes may cause you frustration, we ask you to note point 5.

Portfolios works to a program outlined above, we put client service at the top of our priority – we deal with the banks for you and keep you informed.

For example, each and every day, for each loan submitted, Portfolios checks the lender’s website as well as email and phone follow up in some way. The team are well drilled in keeping your loan progressing and pushing your loan through…its in all stakeholders interest.

Its an interesting lending market out there at present. You might need a hand to deliver your plans, Portfolios wants to help Make it Happen.

Maybe something good has come out of the GFC, it appears people are thinking twice about refinancing their home to put on that extension or remodel the kitchen.

Instead statistics are showing that mortgages have swung in favour of people wanting to purchase investment property.

With the winding back of the First Home Owners Grant Scheme and three successive interest rate rises, AFG, Australia’s largest mortgage broker has seen a drop in the number of people financing to either buy their own home or refinancing to improve it.

Whilst the property market on the face of it is continuing to climb and sales are increasing brokers are acutely aware that the market is still a little hesitant following the GFC that dominated the 2009 agenda.

The January figures show that property investors as a proportion of mortgages written continue to hold steady making up 33.7% of all mortgages written the January period.

At Portfolios we believe that it makes economic sense to build your investment in property before being excessive with your own needs. This economic activity has encouraged Portfolios diversification into property sourcing for our clients as the property investment market not only remains strong but continues to grow.

Focussing on investment property finance and sourcing, we have seen a steady increase in activity in property investment both in our business and across the market further backing up these statistics. With Portfolios, our focus is financing for investing in property so you can be sure that leading into 2010 you are will be well placed in the market with us.

At Portfolios we encourage you to review your situation and find out how easy it is to start building your investment property portfolio with us. It is obligation free and could set you on the path to financial freedom.

Simply fill out our Client Portfolio Review and we will call to arrange an appointment over the phone.