Wednesday, December 23, 2009

Product Newsletter 1 January 2010

An investment property (right) to appeal to the ideal tenant
and give maximum returns to the investor, under construction for a private client in the south-west suburbs of Brisbane - where growth is fastest, rents are higher, and land tax is lowest. And located adjacent to clusters of economic zones (where the jobs are).


With the slow release of land around capital cities, coupled with increasing population and young couples setting up home, ANZ Bank is predicating that Australia will be 200,000 dwellings short in 2010!

This shortage will rise to 280,000 in 2011, and is forecast to progressively increase to 580,000 in 2015!

So both values and rents will continue to rise – even with the Rudd government’s push into “socially affordable” housing.

And of Australia’s 35+ regional housing markets, when you run the numbers based on the product which the ideal tenant wants and which will give maximum financial returns to the investor, by a process of elimination we always end up with a moderately-priced new family home off-the-plan adjacent to major economic zones in the fastest growth corridor where rents are higher and land tax is lowest – i.e. the south west suburbs of Brisbane.

And for a typical investor, even assuming another interest rate hike, your out-of-pocket contributions may only be around $20,000 over 6-7 years with the benefit anticipated to be around $400,000 in 7-10 years time.

Can you afford not to explore this further?

Let me help you with the maths – contact me (Bernard Kelly) anytime. My email is

Source: ANZ Bank’s “Australian Property Outlook” December 2009


Property investment remains one of the most popular ways to create wealth for the ordinary person, but for uneducated investors it can be easy to make mistakes at tax time.

The Australian Taxation Office says it has identified a number of common mistakes in the tax returns of rental property owners, and its list includes:

Construction costs are a big issue, as depreciation of capital works deduction at the rate of 2.5 per cent a year is permitted. So the structure is completely written off over 40 years.

However, the land on which a rental property is constructed cannot be claimed as a depreciating asset for tax purposes.

Deductions can also be claimed for the decline in value of some types of depreciating assets in residential rental properties, for example curtains, blinds, dishwashers, refrigerators, stoves, air conditioning units, television sets and hot water systems. You may be able to write off most of these over five years.

However other areas where a tax deduction cannot be claimed include:

• conveyancing costs, which form part of the cost base.

• travel expenses where the main purpose of the trip is a holiday and the property inspection is incidental to that.

• expenses relating to private use of the property.

• interest on any private portion of a loan that is used for both investing and private purposes.

To ensure that you maximise your deductions, you need a Quantity Surveyor’s Report at the time of acquisition, and a specialist property accountant every year. Then you can get your tax back every payday!

If you need assistance, feel free to contact me – Bernard Kelly - anytime at


Banks are in the business of lending money. They are not in the business of helping you put something extra aside for your retirement.

So they try to tempt you with “the lowest interest rate”. Unfortunately, as an investor, you will find that generally such loan products won’t let you make extra repayments nor will you have an offset account.

The same goes for “honeymoon rate” loans. The banks don’t give money away, so after the initial honeymoon period you’ll be paying a high variable rate, and there will be solid penalty exit fees if you try to go to another lender. They will make the same off your loan – over time – as off every other client’s facility.

The only way to obtain the best package is to talk with a funding strategist (who will have more expertise than a regular mortgage broker ). I can introduce you to a funding strategist at the peak of their profession.

You’ll need someone who knows which bank currently has an appetite for additional investment loans, and which banks are presently offering generous “bank valuations”. And which banks property investors should best avoid (I’m thinking here of niche banks – such as banks which target farmers or trade union members).

Each of the major banks has perhaps 85 mortgage products for investors, but bank employees aren’t always able to identify what is best for you. So even if you stay with your regular bank, you’ll still need an (external) funding strategist to identify the most appropriate funding product for your particular circumstances.


Writing in “The Washington Post” on 10 November, two academic researchers looked at a typical young couple aged 22 today, and used recent US savings rates and investment returns to see what this two income household would have tucked aside when they came to retire at age 65 in 2051.

The results weren’t good.

The problems, in short, are that Americans don't save enough and don't invest very well.

Which probably applies equally well in Australia.

However it’s not too late to do something worthwhile. Even if you’re in your 50s, and you know you won’t have enough, feel free to ask me – Bernard Kelly - to help you explore your options. As my private clients can testify, over the years I’ve developed considerable expertise in this field. My email is


Even though you may be well into your 50s and have no nest egg to speak of, you can still avoid having to spend retirement on government welfare.

I'd say the main issue isn't the number of options available, but rather your willingness to embrace them.

A good start would be to contact me – Bernard Kelly – right now. Just hit the reply button on this email, or phone me 0414 778 518


The school system doesn’t teach financial education, and in my mind the number one reason you will see lottery winners, professional athletes, movies stars, musicians, and other entertainers broke after earning millions is because they – like the rest of us - lack the basic skills to manage our own money.

So I don’t offer my private clients anything too sophisticated – I’m a believer in the KISS principal (keep it simple, stupid). And real estate – done well – outshines everything else for its simplicity.

If you won’t have enough for retirement, I can help you explore your options – but let me tell you that if you in your 50s, there’s no other way to catch up than via the very successful strategy that I offer.

Contact me – Bernard Kelly – anytime on 0414 778 518. My email is


I have put my seminars on-line.

There are ten clips, each of three minutes. Together they cover the full content of my live seminars that I deliver around the country.

You can see them on you-tube. Just go to and type in “Bernard Kelly”

About Bernard Kelly:

Bernard Kelly BEcon MBA CRPC Australia’s Retirement Strategist, is a highly sought-after advisor, retirement authority, thought-leader, author and radio commentator because he makes the complicated and mundane topics of investing and retirement fun! Bernard has over 20 years experience providing families with financial advice. He is the author of Live Your Dreams in Retirement, Property Investing for Couples, Goolwa by Breakfast and Raising Decent Kids into Substantial Wealth and publishes a fortnightly newsletter that reaches thousands of subscribers worldwide.