Friday, December 24, 2010

Property Strategies 1 January 2011

“expect to reap an extra $449,999* when you’ll really be needing it”.


"This is as true in everyday life as it is in battle: we are given one life and the decision is ours whether to wait for circumstances to make up our mind, or whether to act, and in acting, to live."

-- Omar Bradley (General, US Army, WW11)


"Thank you very much Bernard. We do appreciate what you have done for us." Ray Smuts, Western Australia April 2008


For a successful investment, my approach is “least in, most out” and when you look at the recipe it is

40% of success is location

30% of success is the product (i.e. the accommodation)

20% of success is the packaging (the professional support that you need).

Location is easy to determine – if you know what to look for. It boils down to a) fastest expected growth b) higher rents c) lowest land tax. The answer is the south-west suburbs of Brisbane.

The product you need must be capable of attracting a succession of long stay, quality tenants i.e. young couples with children in primary school. And what they want is a four bedroom family home with air con and double garage in a family suburb. This product also provides maximum financial benefits to the investor.
The third ingredient – the packaging – relates to the funding strategist, the quantity surveyor, the legal ownership structure, a specialist property accountant, the insurance broker, the solicitor and an estate planning specialist, and the asset manager.

I put my private in touch with all these experts, and my practice is based on long term relationships, repeat business and personal referrals (and so I can’t afford to let the very first investment that I share with you go sour).

Feel free to contact me – Bernard Kelly - anytime. My mobile is 0414 778 518

Or you can see all this live at


During 2010, nursing homes in Australia opened 5,643 new beds.

Actually 8,140 beds were needed, but the government wouldn’t subsidise that many.

Now with the surge of people currently moving into later life, there will be a substantially increased demand for beds – and if you can’t afford it, they won’t let you in.

Just one investment property could make all the difference to you. Let me help you explore your options. Contact me – Bernard Kelly – anytime. My email is


If you have around $250,000 in super, and are still working, you can now use that to invest in property.

If you are in late career, you may not be able to accumulate more than $350,000 in super before you retire, and we all know that will be totally inadequate for 20-25 years of comfortable retirement.

Using your super is really no different to using the equity in your own family home to boost your retirement funds via property – money in super is also untapped wealth that you have already accumulated.

Now you no longer have to fear penury in your retirement.

The reason why you need around $250,000 in your super is that if the “bank valuation” comes in at 90% and then if they only lend 60% of that for your investment property (because it’s a non-recourse commercial loan) you’ll need virtually all of that to make up the difference.

If you would like to learn more about using your super for property investment, contact me anytime. My email is


Avoid this tragedy.
A recent survey by Industry Super Network (published 18 November 2010) found that large number of retirees across all levels of retirement savings use a significant part of their payout for immediate consumption, mainly to pay down debt.

26% of respondents indicated that their debts were greater than one quarter of their retirement savings.

The research “Retirement Savings and Longevity” by Dr Sacha Vidler also found that more than one third of retirees said that they would struggle to make ends meet if they had nothing other than their super.

Consequently around half of those who are already drawing on their super continue to work.

ISN represents five major industry funds - AustralianSuper, Cbus, HESTA, HOSTPLUS and MTAA Super – so these results are significant.

• The solution is to develop a portfolio of property investments – using the conservative and traditional strategy that I share with my private clients. If you would like me to help you explore your options, contact me anytime on


From “The Australian Financial Review” 14 February 2008

One survey of 1000 respondents - by the Senior Australian Equity Release Association of Lenders - found that one third of baby boomers expect their money to run out between 5 and 10 years into retirement.

One third (perhaps the same one third) thought it most likely that they will need to sell their family home, and downsize, for the purpose of funding daily living expenses.

Another survey by Retail Finance Intelligence found that one in five current retirees (that’s 20%!) are still repaying their mortgages, and of those approaching retirement, one third expect to still have a mortgage when they do retire.

Comment: A logical outcome of those retirees with mortgages is that they will need to tap into their superannuation to repay your mortgage, or sell. Because you can’t repay a mortgage when you don’t have a decent income.

If you feel that you won’t have enough for 20-25 years of a dignified retirement, phone me immediately 0414 778 518


My private clients are just like you – ordinary people looking for a simple and secure way to invest in property.

I offer research, experience, logic, and efficiency, and take the hassle out of the process for you.

My mission is dead simple: to give you all the free education you need in one newsletter so you can begin the process of building your property investment portfolio -- whether or not you purchase property through us.

I am constantly chatting with interesting people, and every so often someone says “that sounds very logical, so just send me the paperwork”.

Life is good to me, and on the basis that we only take action for one of two reasons (to increase pleasure or reduce pain) I can probably make yours better too.

If you go to the bookshop at the airport, you’ll see that there are perhaps 18 books there on investment property, each offering a different strategy. As a generalisation, I’d say they’re all OK, but that the strategy that I share with you is far better. Those authors are writing to make money – and that is a very different goal to giving you the best advice.

If you want to chat with me anytime, feel free to phone 0414 778 518.


First time investors often get confused that a “bank valuation” has some close affinity to market value.

There is some correlation, of course, however a “valuation for the purposes of lending” is more often a banker’s tool to limit their exposure to a certain class of assets.

It’s all in the definition – much like when a dam is said to be “full” which doesn’t mean that a dam cannot hold more water, rather it means that there is adequate storage for 1,000 days of normal usage.

In the wake of the Global Financial Crisis, banks now have tighter capital requirements under the Base III regulations. Which means they don’t have as much money to lend as previously.

Which goes somewhat to explain why banks have different valuation and lending criteria for assets such as commercial property, properties being bought by first home buyers, investment property being bought by individuals, investment properties inside SMSFs etc etc.


From time to time, people ask me about buying property in the US.

Now I am no expert in that field, but it appears you need a Limited Liability Company to be your purchase vehicle, which will obviously require ongoing annual accountancy and filing fees.

Then the tax consequences appear to be so adverse for an Australian resident - either an individual or SMSF (which are invisible to US authorities) - that any US property purchase is likely to be - from day one - a really poor investment. But to clarify this, you'd best ask an international tax expert from a major accountancy firm for a professional opinion on this point.

And then, as non-residents investors can only effectively buy for cash, you can't use any increased equity to expand your portfolio. There is no way use leverage to grow your portfolio using a mortgage if you can't access the equity. So you’ll need the full purchase price in cash each time. Remember, we want capital gains, not income today.

Furthermore, when the time comes to exit, who will buy? Bargain-priced homes are only available in depressed areas, and that location will always be a depressed area. If the locals aren't buying today, why do you think there will be affluent buyers for that location in the future?

Finally, consider what the exchange rate will need to be when you exit. You may be buying at parity today, but to extract a worthwhile capital gain, you would be hoping it will be around 80 cents. But if the Americans have to keep devaluing their currency to compete against low cost imports to boost their economy, you may be whistling into the wind waiting to see 80 cents again.

The very successful investment strategy that I share with my private clients is clean and simple, in comparison.


You can now buy my manual “37 case studies of Profitable Hobbies for immediate application” at

At $19.75, it’s excellent value if you think you’ll be needing an additional source of income at some stage.


My new blog is at

I intend to use it for current news – as part of my social network tools

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 thought. 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.
19 Prospect Street, Box Hill 3128 Australia. Tel 61-3-9899 8577 mobile 0414 778 518

“expect to reap an extra $449,999* when you’ll really be needing it”.

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