Friday, January 13, 2006

RetireLaughing Newsletter Jan 06

Hi this is Bernard Kelly from

Welcome again to my blog.

Recently I received this email:

Bernard, have done some more fact finding. Are you working for your clients or are you working for your developers to help them clear stock and push their brands. Are their house prices competitive and are they negotiable, or do we have to buy at their set prices as they have built x amount and they have no buyers?

Cheers Peter

You may be interested in my response:

Hi Peter

good questions - and may they keep coming. However you probably don't realise that these are questions about real estate - none of them address your fundamental issue i.e. "how can I solve my problem?" What you have to act on - and quickly - is a strategy that (a) will eliminate your mortgage of $370,000 and (b) will put substantial assets in place for your retirement.

Perhaps you need to tell me - because you have obviously done so much research - what exactly has prevented you from moving ahead to date? Then I may be able to assist you to the best of my ability.

My product brand "" is just focused on solutions. If you have developed a different strategy to achieve your goal of a retirement income having today's purchasing power of $50,000 - well, I may not be able to assist.

However if you have developed a better strategy, I would love to be part of it. Perhaps you can fill me in when we next meet.

Now more specifically to your questions:

1. As l am licensed under the real estate legislation, it is the vendor who pays my commission. At law then, the vendor is my client. However, as I operate only in the property investment arena, and the solution that I offer is to create a substantial retirement income for you and Kath, I will be here to assist you over then next 15 years or so. And you won't continue to deal with me if I don't look after you, will you? So effectively, I am working for you while a succession of vendors is contributing to my financial well-being. My income comes from the developers - but only if I can resolve the issues that have prevented you from the progressive realisation of your goals.

My approach is totally different to how a real estate agent in general practice operates. In general real estate, the typical agent only ever meets the buyer for one specific transaction. And of course that typical real estate agent in general practice knows nothing about using various legislation or various professionals to further a strategy to achieve your retirement goals. Which is why they generally won't accept deposit bonds and cannot refer you to a quantity surveyor. I'm quite happy to assist you in this vein if this is your interest.

2. The investments that I share with my clients are always price competitive. Not gilt and gold, mind you, but neither a residence simply at lock up stage with a certificate of occupancy - which is often the "competitively priced" product that you see advertised on TV. I only offer a turnkey product in a growth suburb - with not a penny further for you and Kath to spend - completely packaged up as an investment (tenants in common, two enduring powers of attorney etc) presented with the maximum WOW factor to provide competition between tenants to enable you to chose. Which would you prefer - a half-completed dwelling without a tenant or an investment with a tenant?

3A Of course you can negotiate with a developer, but to achieve maximum investor advantages (i.e. least in, most out) you need to focus on a brand new - to maximise the depreciation - off-the-plan residence - to maximise the stamp duty savings. But to achieve the best quality build in your "display home" investment, you never want to try to negotiate down with a builder. Why? Because he won't shave his profit margin. Instead he will use inferior product or cut corners in other ways ( e.g. eliminate air conditioning or portion of the driveway) and ultimately deliver to you a product that will not be so attractive to a tenant. But you have the choice between becoming a landlord or an investor - all I can do is give you the code to $1,000,000 in net assets which - at 5% - will provide you with an inflation protected $50,000 annual income for the 15-20-25 years of your retirement . The question is: Do you want to receive the code?

3B. As to "no buyers" - if a developer agrees to my terms and conditions, and will develop a product that I will certify to my investment clients, then of course there are buyers i.e. my investment clients such as you and Kath.

Peter - I do appreciate that you are at a cornerstone. Like the diggers who in the 1850s were at the top of Queen Street in Melbourne - they could take the road to Bendigo or to Ballarat: either way the die was cast.

As with bungy jumping, you will have to 'feel the fear, but do it anyway". But I'll be with you at every step of the way.

In the meanwhile, would you prepare a list of the research projects that you have completed over the past six months or so, with a comment against each why your path was blocked. That will provide us with some focus.


Bernard Kelly 0414 778 518