With all the noise from the media, one could easily be tempted to believe prices are about to collapse.
Truth is, the old paradigm of investing is no longer working.
New taxes on overseas buyers, bank lending restrictions, capital gains and stamp duty taxes have all changed things foreever.
And it's critical to understand that you need a NEW way to invest.
Both avoiding investing and investing can be risky. Warren Buffett said it best, when he stated:
“Risk comes from not knowing what you’re doing”
What's important is getting all the data you need to minimise your risk and maximise your upside as an investor in 2019 and beyond.
There are plenty of changes on the horizon, including the potential threat of labour putting a stop to negative gearing, interest rate rises, mortgage affordability, tougher lending criteria, the abolishment of ‘interest only’ loans and much more.
Truth is, even though many people are in a state of worry about the property market right now there’s never been a better opportunity to get even better returns than you could have managed in the past.
Make the decision to investigate the difference between the old paradigm (negative gearing) and the new paradigm of investing (where you can get 15% returns instead of 3-5% returns) without paying Capital Gains Tax!
Without paying Council Rates or Body Corporate fee. Without paying Stamp Duty, or Foreign Investor Taxes.
The truth is, despite all the confusion in the marketplace right now… it’s actually a blessing in disguise once you know WHERE and HOW to invest.
Consider this...
If you purchase a residential property NOW you need in round figures:
-DEPOSIT 30% -TAXES AND DUTIES 12% -BANK FEE/LEGAL FEES 4%
Don't forget these costs are calculated on the purchase price, NOT you cash outlay!
So for a typical 2 bedroom apartment you need around AUD$276,000 cash on a $600,000K property. Or a whopping 46% of the price!
If the property gets:
In Sydney you get around 3.5% rent. Melbourne 4 to 4.5% and Brisbane 5%.
Lets use the best case scenario Brisbane at 5%.
Out of this rent you have to pay
-Body Corporate 0.9%
-Rates and Taxes 0.3%
-Agent rental management fees 7.7%
-Repairs, maintenance and vacancy say 1%
So, the NETT rent is AROUND 4%.
Tax on rental if no negative gearing is 30%.
Net return say 2.8%.
If capital growth averages 5%, which it has historically done, your ROUGH figures are this:
$600K X 5% X 3 years = $94,500
Plus rental at 2.8% x 3 years =$50,400
Total profit of $144,900
LESS interest on loan of say 6% x $420,000 loan x 3 years $75,600.
Return of $69,300 on outlay of $276,000 cash is 25% over three years, OR 7.72% compound per annum.
Not bad at all. .
BUT we haven't yet paid Capital Gains Tax, (30%) selling costs, agents fees and so on.
And it is a LOT of work to do all that!
There MUST be a BETTER way!
And there is!
There are opportunities to...
- Generate 15% IRR returns instead of 3-5% returns.
- Pay just 15% withholding tax instead of 30% capital gains tax.
- Avoid all the purchase costs of Stamp Duty, Foreign Taxes etc when investing
- And much more!
- AND
- Protect yourself against the consequences negative gearing being wiped out after the next election.
