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When Property Investing Goes Wrong

Property investment is a huge decision and can be exceptionally rewarding. You will have ups and downs and face challenges from finding the right property to screening possible tenants. Planning and research are crucial if you want to make it big in the property game.

When property investing goes wrong

Good research helps to prevent bad investment decisions. Some investors however have failed to protect themselves and have paid the price. Read the following stories and ensure you can avoid such misfortune:

Nightmare Tenant

http://www.yourinvestmentpropertymag.com.au/property-management/how-a-nightmare-tenant-left-me-broke-142148.aspx

Tonya McGinley, a Brisbane single mum learned the hard way not to let emotions cloud her business decisions. She let one family, who was recommend by one of her existing tenants, to move in without paying bond. The family had just arrived from New Zealand and needed somewhere to live. Tonya sympathised with them and agreed to let them rent the home.

She didn’t experience issues with them at first. Problems with payment soon began to emerge after the first six months when the father lost his job. Eventually, the family was so far behind the payment and confessed that they couldn’t afford to stay in the house anymore. The father promised to pay the rest, but “pulled a midnight run”, leaving the property in a bad state and the landlady up to her neck in debt.

Lost Opportunity

http://www.apimagazine.com.au/blog/2014/07/my-185000-mistake/

There’s buyer’s remorse, then there’s remorse from not buying. Lauren Day from Sydney passed up an apartment on Sydney’s lower North Shore because of fears it could cost her too much money to hold. While she considered buying the property briefly, she didn’t pushed through with it. The property was sold for $745,000. One year later, she found out that an apartment in the same building with almost the same style was sold for $930,000. In just a little over 12 months, the apartment fetched gains worth $185,000.

Drug House

http://www.stuff.co.nz/life-style/home-property/71262774/bad-tenants-turn-australian-investment-property-into-drug-house

It’s the stuff of nightmares for many investors. Imagine coming to inspect your property only to find out that it has been turned into a drug den. Trent Lister and his mom experienced exactly that. When they walked into their Geelong property, they found the home trashed from the outside. When they called in the police, they confirmed their worst fears — the home was completely destroyed and converted into a grow house.

Trent said there wasn’t anything suspicious about the tenants when they came to him two years ago. It turned out that on checking, their bank statements, licenses, Medicare cards, were forged. Unfortunately, the incident happened before he had updated his insurance policy, so he had to dig deep to pay for the damages.

Solid research goes a long way

These stories are not meant to scare you off, but to help you understand the importance of solid research when it comes to property investing. Sometimes things can simply go wrong but with research to back you up, and the right advice you’ll stand every chance of building a significant portfolio and avoid bad investment decisions.

Our comprehensive 44-point checklist weeds out lacklustre property options. With a solid research team working with you, you can identify the best properties for your portfolio. Ring us now to know more on how we can help pick the right property.

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How to be Financially Fit When You’re Not Fit to Work

We don’t think twice about getting insurance for our car or house. But when it comes to protecting ourselves and our income, some of us need to be convinced. The simple reality is we need to be ready when life throws us a curveball, and we cannot ever forget to safeguard our most important asset — ourselves.

Insurance Policies

What would you do if you suddenly find yourself unable to work? Statistics from Safe Work Australia show that the chances of being waylaid because of injury or illness are high. What’s even more worrying is that many injured Australian workers receive no financial assistance.

Getting good insurance policies is imperative if you want to secure your and your family’s finances. If something bad happens to you, you will know that you have financial support to fall back on.

There are several other types of insurance apart from life insurance that can help you in case you’re unable to work due to injury or illness. One is permanent disability insurance. When you’re permanently incapacitated to work, it will provide financial help for your medical expenses, debts, and other expenses that may come depending on your level of cover.

Another policy worth considering is income protection insurance. When you’re rendered unable to work because of injury or illness, the insurance can pay up to 75% of your current income.

Cost of coverage of each insurance types depends on various factors like your health, occupation, and age. This is why you need to make sure the insurance policy you’re getting fits your needs.

Ensuring Your Family’s Future

Ultimately, you need to get insurance if you want to secure your family’s financial future. When you have life insurance, permanent disability insurance, or income protection insurance, you have one less thing to worry about. You can focus more on creating long-term wealth and be financially fit in case you’re not fit to work anymore.

If you need help in getting your financial situation in order, talk to us today. We have been in the business of creating multi-millionaire Aussies for 20 years now, and we would be honoured to help you secure your financial future.

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Population Growth: How Does It Affect the Economy?

With capital cities dominating the list of most liveable cities in the world year after year, the list of reasons why people love living in Australia is ever-growing. In fact, for many years, Australia has been a popular destination for migrants.

According to the Australian Bureau of Statistics, the projected resident population of the country is around 23 million. With an annual change rate of 1.8%, this means there is an increase of about 400,000 new Australian residents every year, including migrants who move and find work in the country.

But how does population growth affect the economy exactly? Does having more Aussie residents improve the country?

Ageing Population

Australia has an ageing population, which simply means the median age of Australian residents get older each year. This has a large impact on the labour supply. As there are less Aussies able to work in the future, the labour force may soon struggle to support the economy.

This is where migrants can provide a much-needed boost to the labour force. They are often of the working age, which means they can keep the workforce growing. According to the Treasury, they can also raise the general skills level and productivity of the country, which in turn, spurs economic growth.

Job Opportunities

With a growing population, employment has to grow as well. Labour supply must keep up with the growing demand for job opportunities. Migrant workers fill numerous jobs, from doctors and lawyers to cleaners, improving the participation rate and raising the living standards of the country as a whole.

Policy Reforms

The government needs to answer serious questions as the population grows, especially regarding national budget and policy reforms. These may include talks about health care programs, infrastructure, and the Age Pension system, which is beginning to show cracks even now. For many reasons, you should not rely on pension alone. If you want to secure your financial future, you need to start taking action now and create sustainable long-term wealth.

Population growth is an important factor for driving the economy forward. Without it, the economy would simply stall. But there are issues and challenges that come with a growing population particularly in terms of your financial future. You need reliable investment vehicles to ensure good living conditions in your retirement.

Ring us if you want to know how to secure your retirement and ensure a better financial future.

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It’s Never Too Early to Start Tax Planning

It has been months since the start of the financial year, and tax-savvy investors know that every moment counts when it comes to taxes. While it’s too late to think about your tax for the previous year, you can start tax planning for the current financial year as early as now.

With help from the expert tax professionals at Zero Accountants, here are some tips to jumpstart your tax planning:

For individual tax payers

  • Spend on productive tax deductions

If you’re going to claim tax deductions, make sure that it can help you increase your future income. Self-education, additional courses, and seminars, for example, allow you to widen your skill set and to improve your professional qualifications.

  • Consider salary sacrificing to Super

Salary sacrificing is a strategy where you give up a part of your before-tax salary and put the money into your super fund. It’s popular among middle to high-income earners. While you have to pay 15% tax on your salary sacrificed super contributions, the rate is considerably less than the average marginal tax rate.

  • Start a business

Business entities are entitled to various tax deductions not available to individual pay-earners. If you want to take advantage of these deductions, consider starting a business.

  • Look at negative gearing

Negative gearing happens when the cost of maintaining a property is larger than the rental income it provides. Investors can get back these losses through tax refunds at the end of the financial year.

For business owners

Business owners have a lot to consider when tax planning. To get you started, consider the following:

  • Determine which accounting method — cash or accrual — to use
  • Determine directors fees & wages
  • Determine company dividends
  • Determine director loan accounts
  • Revaluing stock
  • Accounting for staff entitlements that haven’t yet been paid
  • Contributing personal assets to your business such as furniture, cars & equipment
  • Obtaining advice on overseas tax structures / investments
  • Claiming tax deductions by contributing to a charity
  • Claiming the $20,000 equipment purchase from the May budget
  • Reviewing your current business tax structure(s)
  • Setting them up on Xero bookkeeping for effective tax planning

Don’t wait for next year to start planning your taxes. For good measure, get expert professionals like Zero Accountants to help you understand your tax options. For other matters including minimising debts and maximising tax deductions, call us now. 1300 723 580

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5 Must-Do’s Before You File Your Tax Returns

October 31 is fast approaching. How is it going with your tax returns? If you haven’t started doing them yet, don’t worry — there might be still enough time to do them. But it helps if you know how to go about filing the return

Tax-savvy investors know that to drive their investment strategy forward, they need to be very particular with their tax returns. Here are some handy tips that can help you prepare when lodging your return:

 

Get your identification details right

Before you do anything, make sure your personal identification details are correct. These include your Medicare number, private health insurance statement, and the personal and income details of your spouse, among others. The last thing you want is to find wrong personal identification details just before you file your returns.

 

Review your prepaid expenses                                                                                

You can pay 12 months in advance for some tax-deductible expenses, which include premiums for insurance policies like income protection. Check if you did pay in advance for the 2014-2015 financial year and note them in your returns.

 

Find out the expenses you can claim

If you haven’t discussed this with your tax accountant yet, you can visit the website of the Australian Tax Office (ATO). They have a detailed guide on which expenses you can claim and which you can’t. Take note of other possible work-related costs as well for next year’s filing of returns.

Check your receipts

The Australian Tax Office (ATO) has said that it is auditing claims of rental property owners more closely. So, to claim work-related tax deductions, you should have the receipts to show for them. Check your receipts if they match your records. For good measure, label each one so you don’t miss possible deductions or worse, overstate claims, which can land you in hot water with the ATO.

 

Don’t forget your PAYG instalment notice

 

Lastly, if you have varied the rate of your PAYG withholding, the due date for the annual PAYG instalment notice is on October 21. Take time to fill out the form as you do your returns.

 

Of course, it’s always best to file your returns as soon as possible, so you don’t have to worry about incurring penalties. Review your returns thoroughly before you file them. Talk to us if you need help with your tax planning.

 

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Take Back Control of Your Life! — 5 Nifty Tips to Achieve a Work-Life Balance

Many of us struggle to achieve a healthy work-life balance. In fact, Australians rank high among those who work the longest hours in the modern world. As we all want be financially successful in life, we tend to take our work to heart.

However, by tying ourselves to our job, we forget to live and enjoy life. There are some who even have to work for a second or third job. It is not only us who suffer from working too hard. Our families are also affected when we fail to make time for them. If you’re not sure how to juggle your responsibilities at work and at home, pause for a moment and read these tips on finding that healthy balance:

Embrace imperfection

We are hardwired to succeed. But being successful does not mean you have to be perfect. Perfectionism can sometimes become detrimental, especially at work. If left unchecked, it can wreak havoc to your relationship with your co-workers, family members, and ultimately, yourself. Strive to achieve excellence and embrace imperfection.

Don’t bring your work to home

You need to set clear boundaries for the different aspects of your life. Do yourself and your family a favour by not bringing your tasks with you when go home. Work should be left at the office. If you’re a work-at-home professional, set a definite schedule for work and for family time.

Spend at least one whole day with your family

For many of us, family time tends to slide whenever an urgent work-related task comes up. But this can upset the healthy work-life balance you’re trying to achieve. So, keep track of what you do with your time, and make sure that you get to spend at least one whole day with your family.

Learn to say no

When your workload keeps on piling up, you need to speak up and talk with your superiors. Learn to say no when you’ve got too much on your plate already. Assess your priorities and do the tasks you need to accomplish first.

Consider investing

There’s nothing wrong with giving your best to your job. After all, it gives you a sense of purpose and wellbeing. But don’t forget to give yourself a break and make time with your family. Besides, there are other ways to achieve financial independence, other than working in a 9-to-5 job.

You don’t have to work all your life just to provide your family a good life and secure your future. By investing in property, you can create wealth and be financially independent. Give us a call today to learn how you can build your property portfolio with the money you’re earning now.

 

 

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How do you choose a property investment

What are the key ingredients you should be looking for in an investment property?

The short answer is simple. You should be looking for a well-built and designed property in a location where people want to live that will give you a good rental return and also has the potential for long-term growth.

Let’s have a look in more detail.

What makes a location desirable? It is an area where an increasing number of people want to live, both now and into the future. So be careful about boom areas that are based on one industry, such as mining. Prefer areas that experience strong and persistent population growth. A good example is South-east Queensland, where population projections are strong for Brisbane and its outlying suburbs, the Sunshine Coast and the Gold Coast.

Also check out the local infrastructure, including shopping centres, schools, universities, hospitals and public transport. And don’t forget that Australians like access to parks, golf courses and water (a beach, a river, or a lake).

Notice also that the desirability of many of the old industrial areas close to the centre of capital cities has changed leading to a new wave of inner-city dwellers. Industry is moving out and people are moving in.

The benefit to you of a desirable location? It is more likely to experience capital growth above the general trend and to appeal to both owner-occupiers and tenants.

Another important factor is the design of the house (or apartment) and quality of construction. Ideally you should look for newly built properties. This will mean that holding costs are minimised and rents are maximised in the early years of your investment. Pay attention to design features such as aspect, natural light, room sizes and storage.

A property that has been well designed and built will always outperform a lesser quality property in the same area. Your rent will be higher and your tenants will stay longer.

The return on your investment is a combination of capital growth and rental income. Notice that properties that give a high rental income generally have lower capital growth potential, and vice versa. So what is your need? High rental or strong capital growth, or a good balance of capital growth and rental income?

AT JDL Strategies we have a team that does all the hard work of choosing an investment property for you. We do the research, and can arrange all aspects of your investment, including property management. So feel free to talk to one of our client managers today if you would like more information.

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Negative Gearing: Why It Should Not Be Scrapped

Every experienced property investor knows how important negative gearing can be to their investment strategy. Negative gearing helps investors recoup possible losses from maintenance costs and rental income by claiming those losses against their other income. Quite understandably, it is a hot topic in the discussion of housing affordability in this country.

According to Luci Ellis, the RBA’s head of financial stability, the combined effects of negative gearing and concessional capital gain tax is threatening to tip the balance towards investors, or more specifically, those households in the top 40 per cent of incomes. In the Senate economics inquiry into home ownership, she said that negative gearing is worthy of a “holistic review”. She didn’t make any specific recommendations however on tax changes.

This leaves many Mum-and-Dad investors wondering: What would happen if the government abolished or scaled back negative gearing? Here are some possible scenarios if it were scrapped:

Rents would skyrocket

Negative gearing does not just benefit investors. It could be argued that the ones who benefit from it the most are the tenants. If there was no negative gearing there would be fewer homes for rent and more demand for those available for rent. Landlords may increase their rent to compensate for the lack of negative gearing and because of the supply and demand argument, rents could skyrocket. This leaves tenants scrambling to find an affordable living space and landlords facing possible lengthy rental vacancy periods.

Increased demand for public housing

If tenants can’t find a home that will not leave a hole in their pockets, their only option may be to apply for public housing. But with the waiting list as long as it is, increased demand for a suitable social dwelling might only make the system more inefficient and usher in a public housing crisis.

Properties for sale would oversaturate the market

Properties with negative cash flow would only hurt the bottom line of many investors. This is why many landlords might be tempted to sell them off if negative gearing was abolished or scaled back. When properties for sale oversaturate the market, prices may plummet and bring an unprecedented property market bust.

Inflation would increase                                            

Without negative gearing in place, inflation could be expected to increase along with the higher cost of holding properties. This is because housing costs are a component of the inflation figures.

Derailed retirement planning

Ultimately, if negative gearing is scrapped, it would hurt Mum-and-Dad investors who are simply trying to build wealth for their retirement. According to the Australian Taxation Office statistics, those who made a loss on rental properties had a taxable income of $80,000 or less — about 66.5 per cent of investors. It would be harder for them to secure their financial future and could derail their retirement planning.

Negative gearing is important for the market to be balanced. Removing it might send the property market in a tailspin.

Serious investors should have a good understanding of how government policies like negative gearing can affect their wealth creation strategy. Our team of property investment experts can help you get up to speed with everything you need to know. Ring us today to learn more about our financial education events.                                                      

 

 

 

 

 

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Sound Mind, Sound Finances: What Does It Take to Tune Out Distractions

Safeguarding retirement takes a lot of planning and effort. You need mental toughness to tune out distractions, especially as you’ll encounter all kinds of challenges along the way. Most people though don’t have the capacity to overcome them.

Not everyone is born with immense mental strength. But just as you develop your talents and skills over time, you too can hone your mental strength. If you can take control of your emotions and decision-making skills, you can better deal with almost every kind of situation.

Taking a cue from Amy Morin’s book titled “13 Things Mentally Strong People Don’t Do,” here are some of the traits you must avoid to secure your financial future:

  • Focusing on things you can’t control

When you’re in control of everything, you feel more secure and safe. This is impossible in reality though, as there are things that are beyond your control. Focusing too much on trying to control these external factors may only hamper your retirement planning. To secure your future, you need to know the difference between the things you can control from the things you cannot.

  • Letting negative thoughts hold you back

No one is spared from having negative thoughts. Even the best of us suffer from serious bouts of lack of self-confidence and anxiety every now and then. Successful people however don’t let these negative thoughts hold them back or stop them from achieving their goals.

For example, there are some people who are worried that they might not save enough for their retirement, which is perfectly understandable. Where they go wrong is that some resort to get-rich-quick schemes, which more often than not, put them in a worse situation. Remember that holding assets like properties for a long period of time can yield impressive gains, as past performances suggest.

  • Shying away from change

Change is the catalyst for growth. Often you have to deal with a lot of changes if you want to secure your retirement, especially if you want to venture into investing. You need to understand that investing can offer great returns but can also have its risks. The property market, for instance, is cyclical. Boom can be followed by bust. When you embrace and understand the cyclical changes in the market, you can make the most of your wealth creation plan.

  • Dwelling on the past

There’s nothing wrong with acknowledging the past. After all, you need to learn from your mistakes to avoid making them in the future. But dwelling too much on the past can be self-destructive, as it does not make you any more productive when planning for your retirement. Invest your energy instead on creating a better financial future.

  • Not creating time to be alone with your thoughts

Being alone with your thoughts is not unhealthy — far from it. In fact, you need to make time for yourself to reflect and to plan. Use your time to be productive and get your creative juices flowing.

  • Thinking the world owes you anything

We believe that everyone is hardwired to win. But you have to work for it. The world doesn’t owe you anything. If you want to have a comfortable retirement, you have to plan and work for it. You must actively find ways to secure your future, instead of leaving it to chance.

  • Expecting results to come quickly

“Good things come to those who wait”, as the old saying goes. You should always set realistic expectations, especially if you are planning for retirement. There will be failures along the way, so don’t expect success to happen immediately. Measure your progress instead in increments or milestones, and see how you can improve yourself further.

  • Not drawing the line

People who are in control of their actions know when to draw the line. They know their self-worth. They don’t let anyone make them feel inferior or affect them in a negative way. They understand how to respond in every situation.

Most Australians leave it to chance when it comes to securing their retirement. They don’t know that by not taking action now, they are risking their financial future. Securing your future starts with doing away with these negative traits that may only stop you from achieving financial freedom. Just ask the hundreds of everyday Australians who we’ve helped become millionaires themselves and developed mental strength to overcome distractions.

 

Contact our team of Client Managers now to learn more.

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Are Your Rental Homes Safe from Fire? 4 Ways to Protect Your Tenants and Your Business

Here’s a piece of news that should make you reassess your property management strategy: Just recently, a home in Brisbane was gutted by fire, sending thick smoke billowing into the air. Fortunately, no one was seriously hurt and the firefighters were able to contain the blaze before it spread to the neighbouring house.

A fire like that can happen anytime. Have you ever considered what would happen if a disaster like this strikes one of your investment properties? Are you sure that your tenants will be safe and your property or loss of rent will be covered by your insurance?

Managing a property has several responsibilities, which include making sure your tenants are living in a safe environment and that you are protected from financial setbacks. Don’t wait for a tragedy to happen before you take action. Here are some of the things you can do to prepare for such situations:

Get insurance

As a property owner getting insurance should be a priority. Repairs and temporary loss of rental because of a fire can seriously upset your investment strategy. You need to set up landlord and building insurance right away so you’re prepared for any situation.


Hire a property manager

We strongly recommend you employ the services of a property manager. Property managers are your best partners in maintaining your rental homes in tip-top condition and in situations like claiming insurance.

The team at Your Future Property Management (YFPM) for instance, has helped many investors sort out different responsibilities, from carrying out repairs to keeping in touch with their tenants. If anything happened to your property or your tenant, the property manager will be the first one to assist you to take care of everything.

Comply with local building codes

The best way to prepare for tragedies such as a house fire is prevention. Each state has their building codes and fire safety regulations. Check if your properties meet the requirements and get the necessary compliance certificates, for good measure.

Discuss evacuation plan with your tenants

Again, your property manager can do this for you. Tenants need to know what to do if a fire breaks out; they need to have a point of contact in case of emergency. This is also why it is beneficial to employ the services of a Property Manager

Be one step ahead of any tragedy. Ring JDL Strategies or YFPM for direction in satisfying your insurance and Property Management Needs.

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