Tuesday, July 01, 2008

Product Newsletter 1 July 2008

An investment in Brisbane being built for a private client in Perth (right)


A private client recently asked me why I encourage everyone to go for ten investment properties.

The answer comes in two parts.

Firstly in my experience, if you want a little result, you can put a little plan in place.

However if you want a big result, you would put a big plan in place, and work at it consistently over time.

Then even if you don’t achieve the big result, the odds are that you will have exceeded the little result that would have emerged had you chosen that little plan.

The second part of my reply relieves on my experience that real estate investing can provide awesome results, and it is available to everyone.

It’s a simple two part answer, yet this strategy works.

If you want to explore your options, contact me – Bernard Kelly - any time on

Remember you have a choice – between a dignified retirement or living on welfare. What would you prefer?


You might read somewhere that “positively geared property puts money into your pocket. In contrast, a negatively geared property takes it out”.

Now this bald statement is true – however you have to see the whole picture.

In particular, to achieve positive gearing, you will need an older property so maintenance could be a major cash flow drain.

So after you pay for the repairs and upkeep, if you still have a profit, you will pay income tax.

And of course, an older property will usually not have the depreciation you need to shield you from this income tax.

So it may be that a positively geared property may not put money into your pocket after all.


The other side of the coin, of course, is capital growth.

How does a positive geared property compare with one which is negatively geared?

Just look at where most positively geared properties are located, and you will soon find that they are generally in regions where there are low rates of capital growth.

Let’s say that the capital growth rate away from capital cities is 3½%. At this rate, it will take 20 years for an investment to double in value.

In contrast, a negatively geared investment is typically in a growth corridor, where the capital growth could be say 9% pa. At this rate, it will only take seven years for an investment to double in value, and by then it should have become positive.


So a positive geared property is not likely to put money in your pocket, while a negatively geared property is likely to deliver substantial capital appreciation, and become positive within a few years.

Which would you prefer?

Would you prefer to retire with dignity or struggle to survive on the pension?

To explore your options, contact me – Bernard Kelly - anytime at admin@retirelaughing.com


Economic forecaster BIS Shrapnel expects house prices to continue advancing over the next three years, and faster than other capitals.

The BIS Shrapnel Residential Property Prospects, 2008 to 2011 report also says that banks may offer more attractive lending rates in 2009.

The report said residential property markets would experience marginal price increases in 2008/09 as the population was expected to grow by 1.5 per cent, its highest level since the late 1980s.

Median house prices in Brisbane were expected to grow 22 per cent in the three years to June 2011, outstripping other capitals.

Sydney values were expected to climb by 18 per cent during the next three years.

Melbourne and Adelaide median house prices were tipped to grow by 16 per cent to June 2011, followed by Canberra's 15 per cent.

Hobart house prices were tipped to rise by 14 per cent by June 2011.

Perth was predicted to be up 6 per cent in the three years to mid-2011.

If you feel that you would like to add to your investments to ensure that you will have something extra for 20-25 years of a dignified retirement, contact me anytime: Bernard Kelly admin@retirelaughing.com


Good news for investors in the Australian market – there will be a persistent demand as the housing shortfall is likely to last at least 10 years.

A report by Macromonitor “Australian Construction Outlook 2008 – Residential Building” predicts that any immediate increased construction activity will not be sufficient to overcome the current massive backlog, and looking further ahead, efforts to eliminate the backlog will be constrained by lack of land and a shortage of skilled labour.

Consequently demand will exceed supply, and values will continue rising. At the same time, rental returns can also be expected to keep rising.

If you want me to help you create or expand your portfolio, phone me anytime Bernard Kelly 0414 778 518
admin@retirelaughing.com skype: bernard.kelly1944


At a time when investing is growing more complex daily as we are bombarded with new products, new strategies and ever changing market conditions, the News Limited website recently published this list of 10 simple golden rules of investing:

1. Invest regularly
2. Stay the course
3. Diversify
4. Avoid get rich schemes
5. Regular reviews
6. Get the structure right
7. Borrow to invest
8. Look long term
9. Seek professional advice
10. Spend less than you earn


Just a note of interest to my New Zealand clients: there are tax issues when borrowing money offshore.

Non-resident withholding tax (NRWT) is payable to the New Zealand IRD at 10 per cent of the interest that's paid on the foreign debt.

However, if the investor chooses a bank in Australia that is a registered bank in New Zealand, for example Westpac, they are exempt from NRWT. If a bank isn't registered in New Zealand, NRWT exposure can reduce to 2 per cent of the foreign interest bill if the borrower applies for approved issuer levy status. This is a tax-deductible expense in New Zealand.

Kiwis investing overseas need to be aware that under accrual rules, they may need to pay tax on the fluctuating value in kiwi dollars of their foreign debt. Foreign currency movements can give the investor windfall tax losses, or assessable income, depending on which way the exchange rate moves.

Kiwis investing in Australian property must file tax returns in both countries. Owning the property in your personal name simplifies tax-filing obligations in Australia. Gains or losses on the Australian property can be included in the New Zealand tax return in the normal way.

Book Review: The Venus Approach to Real-Estate Investing by S. A. Philipp and Barbara Heil-Sonneck

There is a heap of inspiration and advice found in The Venus Approach to Real Estate Investing - America's Most Successful Women Real-Estate Investors Reveal It All: Trade Secrets, Stiletto Methods and Motherly Love by S. A. Philipp and Barbara Heil-Sonneck. Available from amazon.com

Written to encourage and empower women to become successful real-estate investors, this 220-page paperback sandwiches the first-person stories of nine such successful female investors between introductory chapters with provocative titles like "Where Low Testosterone Equals a Vastly Different Investment Approach" and concluding chapters that discuss what it takes to be successful in the field.

The book is a combination of inspiration, motivation, persuasion, advice, and how-to. In lively and always-understandable prose, the authors present real-estate investing as a viable and rewarding option for which women are ideally suited.

The first-person stories illustrate the variety in the real-estate investment business. However, these women have much in common too. All show themselves to be dedicated, hard-working and in love with what they do. Also, the main reasons they give for going into the business (to provide for their families, to gain financial independence, to experience the fulfillment of helping others, and to maintain flexibility of work hours and place) are repeated in story after story.

This book would make an excellent resource for any woman, old or young, with an interest in real-estate investing. It contains enough information about the business and the qualities needed to be successful to tell the reader whether or not this career is for her. Additionally, the book has a wealth of Web site information for those wanting to find out more about the book's contributors and their specialties, and begin educating themselves.

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