Thursday, October 30, 2008

Product Newsletter 1 November 2008

investment property in Rosewood about to welcome its first tenants (below)

If you retire with more, and more options, we’ll have succeeded! Remember - the clock has started to count down to your retirment.

In the words of Warren Buffett, investors should "be fearful when others are greedy and greedy when others are fearful".

So be greedy RIGHT NOW!


According to information on the U.S. Social Security Administration website, 96% of Americans will not be able to fund a retirement that will last their lifetime, irrespective of the level of earnings throughout their career.


If you feel that a similar statistic would apply in Australia, you need to give me a call.

My mobile is 0414 778 518


The good news for my private clients – and other residential real estate investors who target Ipswich – just keeps getting better.

Now the Ipswich City Council has purchased the major – but outdated – Ipswich City Square Shopping Centre and will guide its redevelopment.

Built over 30 years ago, the Centre has been neglected by its owners, and has suffered badly with competition from the new RiverLink shopping centre, just across the Bremer River.

The Council will plan the redevelopment, and will call for tenders to complete the works. It will not become the developer itself.

When completed in four years, the site will be able to accommodate 10,000 workers in high rise buildings, as well as both retail and commercial space.

Ipswich has 43% of all industrial land in south east Queensland, and experts predict that the surging support sector will ensure that this development will be a success.

If you want me to help you explore options to expand your investment portfolio, contact me – Bernard Kelly - anytime via email:


Over the past 10 years, house prices have increased 150% but home units and apartments have only increased 120%, says Australian Property Monitors.

Regular readers of this newsletter know that I dislike apartments as an investment – you’ll remember that I go on about the unnecessary expense of on-going management fees but of course the real killer when you run the numbers is your exit strategy.

And now we have this confirmation that their capital growth is slower compared to family homes.

My private clients are delighted with the results they have achieved following my strategy, and notwithstanding all the doom and gloom in the newspapers at the moment, I truly can’t see why history won’t repeat itself, and housing values will continue to increase over the long haul.

If you don’t have enough for 20-25 years of dignified retirement, I can give you some options.

Contact me – Bernard Kelly – anytime at


In times of economic uncertainty, speculators convert their holdings to gold or put their cash in the bank.
One of my private clients phoned last week to ask “isn’t a cash flow positive portfolio the best strategy for the moment?”
The answer is NO.
The principal attraction of positive cash flow properties is that they are supposed to provide you with an income, after all expenses.
Ignoring the issues of paying full stamp duty on the purchase and virtually zero depreciation, in reality you can only find such investments in regional Australia, where there is very little capital growth.
Now the banks know the risks of those areas – such as reliance on one industry for employment.
So they compensate by lending a lower percentage of the investment – not the 95% that you can reasonable expect in the capital cities. They may only lend you 75% of their valuation.
The real risk is that if the local economy goes into a slow decline, or a rapid nosedive, you will not be able to find a tenant, and secondly you probably won’t be able to sell.
A negatively geared investment – a family home in a growth corridor, adjacent to a major economic zone, where rents are above the average, and where land taxes are low – is always your best option.
If you would like me to assist you explore your options, contact me – Bernard Kelly - anytime via


As the economic difficulties faced by the government of New South Wales increase, it is casting about for more revenue streams.

Now the Independent Pricing and Regulatory Tribunal has thrown the government a lifeline.

The Tribunal’s view is that stamp duty is one of NSW’s “most inefficient taxes” and the state should consider boosting revenue from a more efficient tax - land tax.

Now you can see what is about to happen. Yep.

You don’t have to be very bright to realise that land tax in NSW will soon increase.

Which underscores the value of the investment strategy that I share with my private clients.

If you don’t have enough for 20-25 years of a dignified retirement, I can help you explore your options.

Contact me – Bernard Kelly – anytime via my email


As usual, there is very little analysis of what caused the sub-prime crisis in the United States, however I can’t see anything like it happening here (although having said that, we will all be feeling the after shocks for some time, but mankind will survive).

The background was that in 2002, President Bush designed a policy to increase home ownership for the poor. At the time only 8% owned their own homes, but the Bush initiative was so successful that this statistic became 22% by March 2007.

The new policy allowed the Federal Housing Authority (FHA) to expand its mortgage insurance cover for low income households. To qualify for home ownership, a household only needed a 3% deposit.

Now the building industry quickly realised that a whole new market had opened up to them, as they would be able to sell more homes as “government guaranteed” mortgages had become available.

So the developers went on a massive building spree with new homes, and they “left behind” – as part of the purchase transaction - the 3% deposit money. House sales soared.

And of course as the volume of mortgages increased, they were bundled into parcels and sold off to investors on the basis of this “government guarantee”.

It was apparent by 2005 what was occurring, however it was not until April 2008 that the FHA ceased offering mortgage insurance for these loans.

Suddenly the “government guaranteed” mortgages were no more, so sales collapsed, and with the massive overhang of new homes, values plummeted.

Until next time

I’m Bernard Kelly

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