Saturday, July 15, 2006

Newsletter July 2006


We had a very pleasant experience this past month – we were able to share with a private client a new residential property investment that didn’t impact on their lifestyle at all.

It happened like this - they had an earlier investment property on an old fashioned financial structure, so we were able to refinance that.

Then they had credit cards drawn to $25,000 on those old high rates – 15% and above. So we paid them out and put that debt into the new loan.

The net effect was to reduce their payments by $600 per month – which was their out-of-pocket contribution for the new investment property.

So the new investment didn’t impact on their lifestyle at all, not by one penny!


Of course, even if those clients did have to make a contribution out of their own pocket, they would still have been far, far better off.

In this country, we can’t save. In fact, the statistics are that for every $1,000 that we earn, we save just $1 (yes that’s right – one dollar).

We are affluent consumers – I used to think that it was those little items (motorway fees, mobile phones, the internet, cable TV, etc) that were robbing us of our future.

But now my daughter and her fiancée are going skiing at Christmas to Japan! (But they have earned the right - he started his portfolio a few years ago, and recently they did an investment property together).

But fortunately we are good at paying our bills. So when you take on a mortgage for an investment property, it is a form of forced savings and we will always make the payment.


You probably know someone who takes a lottery ticket each week, but has never won the big one – or even second division.

But when you put an investment property in place, it’s like taking a certified win in the lottery.

How’s this, you say?

Well, let’s look at it this way. When you put an investment in place today – for say $300,000 – the statistical record suggests that it will double in ten years. So statistics suggest that you’d expect to have an extra $300,000 in ten years that you wouldn’t have unless you acted. (note – this is just common sense, and I’m most definitely not giving you financial advice.)

So there’s your “lottery win” – you may have to wait ten years for payday, but it will be there waiting for you.

Whoever acquires and holds that property will be the winner – it may as well be you.

Anyone who can control their weekly out-of-pocket expenses can collect big time.

But don’t let your emotions override the logic of property investment – such as asking yourself “what if it doesn’t increase in value?”

Now that’s the same logic that says children will never grow to teenagers, and teenagers will never progress to adulthood.

So don’t let your emotions override the logic of property investment


You would have seen the press headlines for the statistics released by the Reserve Bank of Australia a few days ago - on 11 July.

Basically, they said that the banking community had lent a record $20 billion for housing in May, up a staggering 18% over May 2005.

This $20 billion was $2 billion a month more than the record lending levels at the peak of the 2003 boom!

Now you know what they say – there are three types of people: those who make things happen, those who watch things happen, and those who wondered what happened.

We can help if you want to move into the “those that make things happen” category.

It’s no more difficult than stepping onto the escalator at the shopping centre. And once you are aboard, it takes you effortlessly up to the next level.

FREE SERVICE offers a free investment analysis service.

We can advise you online what your weekly contribution will be to have your names on the title of an investment property. (In normal circumstances, for an average income level, I wouldn’t want it to be more than that amount which would impact adversely on your lifestyle.)

Just email us with your income levels, the State where the investment will be located, its value, your current mortgage, the expected rent, and if you intend to use a cash deposit – the amount.

And remember to give your phone number so that we can chat about the results, and play with the “what ifs” in real time.


Bernard Kelly 0414 778 518