Retirement Strategies 1 July 2010

An investment property in south west Brisbane awaiting landscaping (right)




I’ll PAY YOU $5,000 …

… for each successful referral that you generate.

For some time now I have been paying my private clients $1,000 for successful referrals, and $5,000 to professional referrals – such as accountants, solicitors etc.

My practice helps late career couples plan for 20-25 years of comfortable retirement, by addressing the elements of personal health, financial security, family & friends and a zest for living.

However my main income comes from sharing with private clients certified residential investment properties. The point of difference with my practice is that I focus on retirement outcomes and start by asking: who is the ideal tenant? secondly: what style of accommodation do these ideal tenants want? thirdly I constantly research – of the 35+ regional property markets across Australia - the best location (having regard to lowest land taxes, higher rents, forecast 10 year growth, and nearby diversified economic zones i.e. where there are stable jobs.)

Recently I was asking myself “How can I pour some petrol onto my lead generation?” and then – in a moment of unusual brilliance – I lit the match: “I’ll pay $5,000 to everyone”.

Now if I pay you $5,000 and keep the rest of my professional fees (paid by the property developer) inside my practice, my reasoning is that I’ll still be ahead as this is incremental to my established sources e.g. Google Adwords.

So feel free to find out more about joining me as a Referral Agent. (We could have a lot of fun together. And you could make a lot of money - this year, next year, every year.) Your role is simply to generate leads – I’ll do the rest.

Let me know if you want to know more – for example, when will you get paid? where is the deepest pool of prospects? and the address of the Facebook page where we’ll share our success.

Phone me – Bernard Kelly – anytime. My mobile is 0414 778 518 email admin@retirelaughing.com
Australia’s Retirement Strategiest®


WHAT IS THE RETURN ON PROPERTY?

Now I’m not a Financial Advisor, but I am entitled to give you my personal views on how property investing works.

So let’s say you’re earning $80K pa and you purchase an investment property with a price tag of $400K.

However, as the tenant starts by paying you initially $320 per week and the taxman gives you back almost $10K every year, with rental increases in around seven years your will investment should be positively geared.

Which means your total out-of-pocket contributions i.e. the funds you personally invest, will be around $35K.

Now on the basis that “property doubles every ten years”, your gain in ten years time can be expected to be around $400K – so looking back you will realise that you have been making a gain of $40K each year.

So to my mind, the percentage return is 40/35 X 100 pa

Which is one of the reasons I like property.


SHARES OR PROPERTY?

I have cordial relations with a financial advisor, and when I was in his office the other day I noticed a new wall graph issued by BT, advocating – naturally – shares over property.

The story is that had you used $31,000 in 1993 to acquire an investment property with value $200,000 or buy a share portfolio, by late 2009 the property would have appreciated to $570,000 while the share portfolio would have moved up to $654,000.

Says the graph.

However in the real world, over a period of 16 years you could have at least ten investment properties – or perhaps you could be close to 707 houses just like those two school teachers did recently in the UK over 15 years. They ended up £240m ahead.

So I’ll be sticking to the real world – where with my very successful investment strategy, property outshines equities every time.

Let me know if you want me to send you the newspaper clippings of how those schoolteachers did it. Just hit the reply button for this email.


ARE HOUSES IN AUSTRALIA TOO EXPENSIVE?

The popular press continues to run articles suggesting that house prices are moving out of the reach of first home buyers.

They probably are right, but is that really a problem?

To my mind we are probably transiting from the lifestyle of our parents to the lifestyles of our grandchildren.

Already one third of all housing in Australia is owned by investors, and that trend looks like it will continue.

After all, only 40% of households in Western Europe own their own homes, with 60% owned by investors. They think that’s normal – and I suspect we too will get to the same thinking, eventually.

So while houses in Australia may be becoming unaffordable for first home buyers, the demand will still be there from investors, so prices will continue to rise.


WHY YOU SHOULD PLAN

Once you have made your plan and developed goals something wonderful can happen – if you allow it to.

I’m referring to future visualisation!

I am a firm believer in the motivational books that say if you are aware of your goals and review them regularly the brain has a way of ensuring that they are achieved. (The reason why I am firm believer is that it happened to me!)

The reason is that the brain cannot distinguish between real and imagined.

So if you imagine sitting on the proverbial beach, with pleasant company, a glass of something cool beside you and a portfolio of investment properties, the brain will start to want it to happen because otherwise it will be in conflict with itself.

Let me know if I can help you explore your options. Email me – Bernard Kelly – anytime to admin@retirelaughing.com


20.4% OF AMERICANS WORK BEYOND AGE 65

The Employee Benefit Research Institute has just released its report how Americans funded their retirement, based on their 2008 census.

It has some relevance to us here in Australia, because US government welfare is the largest source of income for those aged 65 and over.

While income in later years can be correlated closely with a prior career – the lowest retirement income is earned by blue collar workers, the highest by self employed professionals (who typically continue to work) – there is wide variation around such averages.

But while the report makes for interesting reading, what is quite startling is that 25.6% of total income for the cohort over 65 in the United States comes from earned income, and that 20.4% of persons over 65 are still working.

This indeed is worth serious reflection - if one quarter of total income for the cohort over 65 in the United States comes from earned income, and that 20.4% are still working, what is the significance of this for you personally, here in Australia?

WHY SHOULD YOU USE ME?

For one reason, this is my practice. Unlike a salesman, I can’t just up and leave you and find another job.

And the continuing viability of my consultancy relies on your continuing goodwill, which only exists when everything that I promise comes to pass.

And as I’m only 66, I should be with you and your family for at least the next 14 years.

And then I share the financial risk with you. My warranty (“I’ll pay you the rent if you can’t find a tenant for more than four weeks during the first three years”) remains in place. But as this has only happened once during the past eight years, neither you nor I are at any real risk.

Feel free to contact me – Bernard Kelly – at any time. My mobile is 0414 778 518.

WOMEN ARE MORE CONCERNED

A recent study by Kiplinger Financial in the US (published 30 May 2010) reports that women are more concerned about their long term financial security than men are.

When asked “do you now expect to retire later than you did a year ago?” 62% of women said “yes”. For men it was 50%.

Responses to the question “Will you need to work in retirement to make ends meet?” 41% of women said yes, and 32% of men responded in the affirmative.

To the question “Will you have enough?” only 30% of women said “yes”, but it was 47% for men.

And finally “Will you need to cut back on your lifestyle?” 60% of women agreed, but only 52% of men.

This broadly agrees with what I have found here in Australia over the years. Women appear to think more deeply about how they will be able to spend their retirement.

I’m Bernard Kelly – Australia’s Retirement Strategiest


TELL EVERYBODY “I DON’T HAVE ENOUGH”

Once you’re into your 50s, reality starts to set in and you begin to realise that you don’t have enough for 20-25 years of comfortable retirement, and that the government pension may be woefully inadequate to maintain your lifestyle.

Of course, you can wait for the financial markets to breathe life back into your superannuation, but deep down, you know that there’s not enough in there for an heroic comeback.

And you can talk about saving more, but the problem is that it’s virtually impossible to save enough in the time you have left.

Now it occurs to me that virtually everybody is in the same boat, but it’s simply a topic that is never raised in conversation.

But think about it. The logical conclusion is that someone out there has a partial solution, but you don’t know who they are. And if you did know them, and they told you, their approach may only be a partial solution.

But it you made it a common topic of conversation, would that help?

The answer is probably “yes” because there would be more brain power turned on to the topic, and by being able to articulate the problem, your sub-conscious will be in there 24 X 7, seeking a solution.

Men’s health in our later years is now out from under the shadows.

Why not do the same with planning for our retirement?


COMMON MISTAKES BY PROPERTY INVESTORS

If you and I swapped jobs, we would both make fundamental errors – simply because neither of us had any experience of what we are supposed to be doing in the new job.

Which is why many mistakes are made when someone decides to “invest in property”.

If a couple is doing it themselves, one of most common mistakes is to buy in their own suburb. These investors think that the ideal tenant is someone “just like us”, and secondly they don’t understand the loss depreciation write-offs (which translates into the loss of real dollars) when they buy an existing property.

And if a potential investor does go to a seminar, those people don’t have a knowledge framework to measure the presentation against. For example, they don’t know their loss every time a tenant leaves, they generally don’t learn about the body corporate fees and sinking fund levies, and they definitely know nothing about an exit strategy. So they become convinced that an inner city apartment is the best investment (when actually it's almost the worst).

The list goes on.

However, by these fortnightly updates from retirelaughing.com you will over time acquire an education in property investment, that you can use for yourself, or share with family, peers and workmates.

And in the process, you will be building your wealth in property, through a sound educational knowledge base.


LET'S MEET -MELBOURNE OR PERTH

I’ll be at the Melbourne Retirement & Lifestyle Expo at the Caulfield Racecourse 10-12 September.

And also at the Leisure & Lifestyle Expo in Perth (Claremont Showgrounds) 29-31 October.

I look forward to meeting you if you can make either event.


PAY FOR A CONSULTATION

Some kind people want to pay me for this service.

Feel free to go to my membership site www.retirementstrategies.net.au and pay $110 for a full membership


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

LIFESTYLE NEWSLETTER 15 March 2009

TRY YOUR RETIREMENT INCOME NOW

If you are saying that you will be able to live with less money in your retirement, try to live off that amount for one month.

If you don’t succeed, chat with me – Bernard Kelly mobile 0414 778 518 – and I’ll help you explore your options.

LESS THAN 30% PLAN TO RETIRE BEFORE 70

A survey by the Australian Bureau of Statistics taken in mid-2008, released late February, reports than less than 30 per cent of middle-aged and older Australians now intend to retire before they turn 70.

The survey was taken in mid 2008, and released in late February.

The causes appear to be threefold.

There is a growing awareness that many of us will remain very active well past age 70, that boredom is all too common for many early retirees, and of course most of us don’t have enough funds for 20-25 years of a dignified retirement.

So we’ll be happy to keep working.

AVOID ANY RELIANCE ON GOVERNMENT WELFARE

The consultation paper on retirement incomes – as part of the Henry review into the tax system – notes that there are now five people of working age for each person over 65.

However by 2047, this ratio will fall to only 2.4 persons.

The consequence of having relatively more of us retired and less of us in the workforce will mean that the cost of the age pension will increase from 2.5% of the gross domestic product to 4.4%.

In addition there will be larger demands by the health sector to pay for the ever increasing cost of caring for an increasingly older population and ever increasingly costly medical equipment and drugs.

The economy will simply not be able to sustain the pension as we currently know it.

A likely scenario is that we will only have access to the pension, and the Pharmaceutical Benefits scheme etc., once we have exhausted our super.

So plan now to avoid any reliance on government welfare, as it may not be there when you’ll need it.

If you would like me to help you explore your options for 20-25 years of dignified retirement, contact me – Bernard Kelly – any time on admin@retirelaughing.com

HOW MUCH INCOME WILL YOU REALLY NEED?

Most of us underestimate lifestyle costs, medical expenses and inflation.

What is enough? What is not enough?

If you’ve given even the slightest thought to retirement, you’ve probably heard or read that you need about 70% of your final salary to live comfortably in retirement.

This estimate is frequently repeated … but that doesn’t mean it is true, but at least it’s a reference point.

You won’t learn how much retirement income you’ll need by reading this article.

For that you’ll need to meet with someone who can talk common sense about your lifestyle needs and short-term and long-term expenses.

And I don’t mean a financial planner. I mean someone who doesn’t have a vested interest in selling you financial products.

I mean someone who can talk common sense.

That said, there are some factors which affect retirement income needs – and too often, they go unconsidered.

HEALTH

Most of us will face a major health problem at some point in our retirement – perhaps even multiple or chronic health problems.

We don’t want to think about it, but it’s a reality.

And if you don’t have enough money for day-to-day living, you’ll probably end up with a mental health problem.

My solution is to find some form of modest employment – even perhaps a “profitable hobby”.

HERIDITY

If you come from a family where people frequently live into their 80s and 90s, you may well live longer. Imagine retiring at 65 and living to 95.

You would need 30 years of inflation-protected retirement income.Investments.

These must be diversified, and inflation protected.

You’ll need to find a path between carrying too much risk, and being conservative.

SPENDING HABITS

If you’re like most of us, you probably spend 90% or 95% of your income. Will your spending habits change drastically once you retire? Probably not.

GOVERNMENT WELFARE (or lack thereof).

Over the years, the government has progressively restricted access to welfare. This can only be expected to continue.

So will you have enough?

Let me know if you’d like me to help you explore your options. Contact me – Bernard Kelly – anytime via admin@retirelaughing.com

With acknowledgments to Bill Losey of Retirement Intelligence

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!


96% OF AMERICANS …

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.

Source: MyRetirementSuccess.com

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

My mobile is 0414 778 518


REVIVAL FOR INNER CITY IPSWICH

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: admin@retirelaughing.com


ANOTHER REASON TO DISLIKE APARTMENTS

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 admin@retirelaughing.com




WHY I DON’T LIKE CASH-FLOW-POSITIVE INVESTMENTS

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 admin@retirelaughing.com.

NSW LAND TAX WILL RISE

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 admin@retirelaughing.com


WHAT CAUSED THE SUB-PRIME CRISIS

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 admin@retirelaughing.com

LIFESTYLE NEWSLETTER 15 October 2008

25% EXPECT TO RETIRE AFTER 70

The recent study released by Mercer Wealth Management Consultants reports that nearly one in four people aged over 50 surveyed expect to retire after age 70.

However most expect to scale back their hours.

The survey is done annually, and has seen a leap in recognition that superannuation will not be adequate. Only 17% recognised this in 2005; now it’s 31%.

And almost three quarters in the 2008 survey agreed that they have not adequately prepared for retirement.

Don’t let that happen to you!

While you’re still working, you still have time to develop sustainable income for your retirement.

Ask me how! (Just hit the return button on this email)


PENSION ENTITLEMENT AGE WILL RISE

With politicians openly acknowledging that they could not afford to live on the single pension, the debate about all pensions is now on the table.

At the heart of the matter is that the government can no longer to afford to pay us all the pension, as to do so would cripple the Budget.

The original pension age of 65 was linked to life expectancy, which was eleven years a century ago for a male. Now it’s closer to eighteen years and of course women live a few years longer than men.

And there is a demographic bulge underway as baby boomers increase the proportion of the population aged over 65.

To alleviate the drain on their Treasuries, countries including the United States, the UK and Germany have already moved to increase the pension entitlement age. And others, including Greece, Italy and South Korea are making noises about doing the same.

So don’t be at all surprised when they announce that the pension entitlement age in Australia is to be increased.

Which of course is another good reason to develop your own investment portfolio to avoid any reliance on government welfare.

Feel free to contact me – Bernard Kelly - anytime on admin@retirelaughing.com I’ll be able to help you explore your options.


38% RETIRE WITH MORTGAGE ABOVE $100,000

The recent Senate enquiry “A good house is hard to find: Housing affordability in Australia” found that 38% of households now retire with household mortgages in excess of $100,000.

Most find that they have to draw down on their super to eliminate this debt.

If you want to avoid this disaster, contact me – Bernard Kelly – anytime. Just hit the return button on this email.


PROFITABLE HOBBY – AERIAL PHOTOGRAPHY

Here’s a novel idea.

I read about a man whose hobby is Radio Controlled Aircraft.

Now in his fifties, he used his skills as an RC pilot to create a hobby business in aerial photography. He specialises in charity golf tournaments, taking photos and selling them to the golfers.

His equipment costs were in the $2500 range and in one year he was able to recover that cost and put some money towards more advanced equipment.

If you need a website for your hobby business, go to www.valuewebsites.info


PROFITABLE HOBBY – PLUM PUDDINGS

Plum puddings in a calico bag is a traditional Christmas gift, but now they can be given at any time of the year –either as corporate gifts or as wedding keepsakes.

The production is quite simple, and you can build up an inventory in advance, however the packaging may need some thought. But start with the basic traditional calico bags and work up from there.

Pricing might be tricky – but one thought is to sell at four times the cost of the ingredients. The rationale is one quarter for overheads, one quarter for waste, and one quarter for profit.

If customers baulk at your price, just say “unless I make a profit, I can’t provide the service”.

To find clients, take a stand at garden shows or bridal exhibitions.

If you need a website for your business, go to www.valuewebsites.info


MOST SUCCESSFUL HOBBY-BASED BUSINESSES

Mon Sep 1, 2008

LONDON (Reuters) - More than two million Britons who are in permanent employment are at the same time trying to turn their favourite hobby into a business, according to a new survey.

Commissioned by the insurance company Direct Line for Business, the poll also found that for 23 percent of Britons it would be a dream come true to start up their own business based on an outside interest.

The survey listed the most successful hobby-based businesses as fashion design, eBay selling, buy-to-let property development and web design.

Most of those surveyed indicated that a profitable hobby would be “fun” while a sizeable proportion suggested that such a part-time business would give them more long term security.

The online poll of 2,234 Britons was carried out between July 4 and 8.


Regards

Bernard Kelly www.retirelaughing.com admin@retirelaughing.com

Product Newsletter 1 July 2008

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




WHY SHOOT FOR 10 INVESTMENTS?

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 admin@retirelaughing.com

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



POSITIVE GEARING OR NEGATIVE GEARING?

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.

CAPTIAL GROWTH

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.

SUMMARY

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



BRISBANE WILL CONTINUE TO LEAD



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


HOUSING SHORTAGE TO PERSIST

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


TEN PROVEN GOLDEN RULES



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

TAX ISSUES FOR KIWI CLIENTS



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.

Product Newsletter 1 June 2008

Example of potential for an investment property on this site in a renaissance suburb (right)



OUR GOAL - HELPING YOU FROM ZERO INVESTMENT PROPERTIES TO TEN


Here's a PROPERTY SPECIALIST ACCOUNTANT - BRISBANE



As you know, I try to introduce my private clients to the best network of support professionals that you need to maximise the benefits of your property investments.



For your information, I am now referring clients in Brisbane to Leona Bennett at Gordon Appleby & Co. in Red Hill 4059. Phone (07) 3876 6211



Leona and her husband own investment properties, so you can be sure that she keeps up with changes to the legislation.



Of course, if you want a referral to other specialist property accountants in other cities, phone me anytime: Bernard Kelly 0414 778 518



For international clients, my cell is 61-414 778 518 and of course my skype is: bernard.kelly1944

RUDD GOVERNMENT SUPPORTS PROPERTY

Recognising the importance of the property sector to the overall health of the economy, the first Budget delivered by Treasurer Wayne Swan has taken some bold initiatives to encourage both domestic and international investment in the sector.



Domestic investment is being prompted by



· the enhanced First Home Savers Accounts, costing $1.2 billion over four years
· the $623 million National Rental Affordability Scheme to encourage the construction of 50,000 new affordable rental properties by 2011-12. and
· the $500 million Housing Affordability Fund to address delays in planning processes and identify surplus Commonwealth land that could be used for housing.



In addition, the withholding tax imposed on dividends and capital paid to international investors from property trusts would be slashed from 30% to 7.5%, costing the government $620 million over four years.

This $2.9 billion package over four years will positively impact on clients’ residential property investments.

So while the real estate markets have paused for breath, now is the time to add something extra into your pension fund.


Remember that an investment valued at $400,000 today can be expected to put an additional $400,000 aside for you in 7-10 years. But it won’t unless you do the paperwork today!

If you want to explore your options for 20-25 years of a dignified retirement, phone me Bernard Kelly on mobile 0414 778 518 or cell 61-414 778 518



INVESTORS GET UPPER HAND OVER JOURNALISTS

It's a great time in property when our private clients can get the upper hand over journalists. There is so much press about how bad things apparently are at the moment but this is your opportunity.

Let's face it: at the urging of journalists, inexperienced and uneducated people want to stay out of the market. Experienced and educated investors are still participating.

Why? Because in ten years investors know they will be saying “we should have bought many more back in 2008”

Journalists were writing the same articles ten years ago. And – I daresay – they will be writing the same in 2018.

However the facts that will underpin an investment portfolio today are:

· The economy continues to be strong
· Net Migration – to offset the skills shortage - is strong
· Each year, we are building 30-40,000 fewer homes than we need
· The rental shortage will continue for years
· Construction costs of new homes continues to increase


If you want me to help you explore your options, phone me anytime. My mobile is 0414 778 518 and cell 61 – 414 778 518


BEWARE DEFENCE FORCE HOUSING


Some people ask me why I don’t like Defence Force Housing as an investment.

I do try to provide independent research for investors in residential property in Australia, and consequently I am able to share with you that the goal of DFA is not to assist you overcome the dollar shortfall that most of my clients have in their retirement plan.

No – the goal of DHA is to have you finance the accommodation that they are required to supply for defence force personnel.

Now I don’t deny that there are some definite attractions in their offer, however you should understand that their “10 year rental guarantee” only lasts as long as they need you.

For example, a few years ago when they downgraded the Bairnsdale air force base in Gippsland, they naturally had no further need for much of their rentals, and of course there was virtually no-one to replace them. And affected investors were not able to sell readily, as there was a glut of sellers.

Then last year the Department recommended the closure of the Woodside army barracks in the Adelaide Hills as well as the Richmond RAAF base, in Sydney’s outer north-west.

But as both were located in seats held by Liberals, the Howard cabinet vetoed the plan – it was an election year, after all.

But what is the likelihood of such closure plans being re-activated by the new government? Who knows?

But I wouldn’t want to be relying on DHA as a tenant in either location.


SUPER IS INADEQUATE

The peak superannuation body – the Association of Superannuation Funds of Australia – has releases figures that the average 2008 super balance is likely to be around $155,000 for men and $73,000 for women.

The questions to ask yourself are:

A) “in which year, in my retirement, will my super run out?”

B) “where can I find Bernard Kelly’s phone number to explore my options for an investment property?”


The answer to B) is mobile 0414 778 518 cell 61- 414 778 518 skype bernard.kelly1944