WHY I DISLIKE DEFENCE FORCE HOUSING

What attracts many investors to Defence Force Housing is the 10 year rental “guarantee”.

Of course, when you understand the fine print, what this “guarantee” really means is that DFA will only keep paying you the rent while they need your investment property to house defence force personnel.

Investors still recall when the RAAF base in Bairnsdale, Victoria, was closed, all those local DFA homes were then no longer required. With a glut of houses for sale, investors couldn’t exit, and of course there weren’t tenants to occupy all of those ex-DFA houses.

Now the Rudd government has commissioned an audit by the Boston Consulting Group to slash $2 billion from the Defence Department’s budget.

Late in the Howard years, there were proposals to close the Woodside Army Barracks in South Australia and the Richmond RAAF Base in New South Wales. These proposals could be readily reactivated.

A far better investment strategy is to avoid such obvious risks and only acquire investments properties in a growth corridor adjacent to a major, diversified economic zone.

If you would like me to help you explore your options, contact me – Bernard Kelly – anytime at

admin@retirelaughing.com

IPSWICH NEEDS 116,000 NEW HOMES BY 2031

The number of new homes in the Ipswich local government area will treble over the next 20 years if the Queensland Government's forecasts are right.

Its draft regional plan for southeast Queensland, released on 7 December, predicts that the Ipswich region will need 116,000 new dwellings by 2031.

Ipswich Mayor Paul Pisasale's reaction was to declare: "Bring it on."Ipswich wasn't ready 10 years ago, but we are now."

The new regional plan, which will be open to public comment until April next year, proposes that Brisbane's western corridor be the area's next major population growth.

The state's new draft regional plan for southeast Queensland forecasts that 735,500 dwellings need to be built in the region by 2031, a 65 per cent jump on the current number of 1.1 million.

I'm Bernard Kelly http://www.retirelaughing.com/

Source: The Courier Mail 8 December 2008

an investment property about to welcome its first tenants

OLD v. NEW – the $100,000 DIFFERENCE


A private client recently asked “with home prices falling, shouldn’t I take advantage of lower prices?”

My response was along the lines “certainly – if you can find a suitable investment $100,000 below the price for new”

Let’s say that to attract a suitable tenant into an established house, you’ll need an investment that’s not too old, say ten years old.

It works this way – if you purchase existing housing stock, you’ll pay full stamp duty – that’s $10,000 extra.

Then the difference on the depreciation on a house ten years old compared to one off-the-plan today is probably $40,000.

Then repairs and maintenance during the next ten years could well be $50,000 for an investment already now ten years old, compared to virtually zero for an off-the-plan investment during its first ten years.

That’s the $100,000 difference.

So if I offer you an investment today for say $380,000, to be better off you’ll need to find something that will attract a suitable tenant for less than $280,000. That’s quite an ask.

And you’ll also miss out on the research and packaging – which regional market will be best over the next five years, and my introductions to an investment- aware funding strategist, to an investment-aware property solicitor, to an investment-aware property accountant, to an investment-aware insurance broker and to an investment-aware asset manager.

And now with lower interest rates, an investor on $70,000 will only need to outlay $28,800 over the next six years to be in full control of this $380,000 investment.

If you would like me to explain in more detail, contact me – Bernard Kelly – anytime on admin@retirelaughing.com

PRESERVE YOUR NEST EGG

How long will your savings last?

By Robert Brokamp of The Motley Fool

There you sit with a finite pile of savings from which you will need to take all or most of the money to support your retirement spending.

The accumulation phase of life is nearing an end.

How much of that stash can you safely take each year to ensure it lasts your lifetime? Will you take the same amount annually? Or will you just buy all the cool toys and vacations you've always really wanted, and let your slightly older self deal with the fallout a few years later?

All of these questions boil down to one over-arching theme that we've thoughtfully put into this question: How long will your money last?

The "70% to 80%" rule of thumb is based on the assumption that many of your current expenses will go away in the golden years.

For the most part, this is true. Once you kiss the boss goodbye, you'll no longer endure the following:
Work-related expenses,
Social Security taxes
Contributions to retirement plans
Mortgage payments, (if your house will be paid off)

There are two other ways your expenses might decline.

First, retirees tend to downsize – but the savings might not be there.

With no need to keep the four-bedroom house now that the kids are grown, for example, some pensioners flee the big house for the something smaller. However the cost to move into – and maintain – a new home or retirement village can still be quite expensive.

However, some require the same level of income in retirement they enjoyed while working.

How? It comes down to this: If you're not making money, you're spending money, particularly in the early retirement years.

Another big expense is health care.

A survey in the Journal of Gerontology found that 61% of couples age 70 and older and 54% of single adults spent at least 10% of their retirement savings on health care. A startling 45% of couples spent more than half of their savings to medical bills.

Medical insurance is not free (there are on-going premiums), and it doesn't cover everything (e.g., most long-term care).

The real price of leisure

So what will retirement cost you?

The best research we've come across concludes the following:

A "safe" withdrawal rate ranges between 4% to 6% of a retiree's starting portfolio.

The accuracy of that approximation depends on your age. If you're 65, then that estimate is quite accurate; if you're 25, thankfully you have many decades to improve your lot.

CONCLUSION

But the simple answer to all of this is – if you want an income of $50,000, this equates to 5% of $1,000,000. And only a portfolio of residential real estate is inflation protected.

Let us help you calculate what you can expect (and what you'll need!) when you retire.

Contact me – Bernard Kelly - anytime at admin@retirelaughing.com

SUCCESSFUL PROPERTY INVESTING

Lance Winslow writes:

Despite what you might think success is never an accident.

Oh sure, you might have some luck along the way that puts you in a nice situation for a while, but it's not long term.

Success is achieved by those who capitalize on their luck and reduce their risks or turn-around their failures and challenges.

If you look at some of the most successful folks in the world, you will realize that they often came from nothing.

Many were orphans and didn't even have a pot to use for their bathroom needs. But how can this be, how is it that someone can have such bad luck and turn all that around and become successful?

Simple, because success is never an accident, many of these people because they worked hard, they had no choice, it became a habit and they just never stopped once they achieved a comfortable lifestyle.

Working hard, working smart, making lots of friends and never giving up were just part of who they are.

These same elements of success are available to everyone, even if so many people choose not to accept these principles.

After all, we have free choice, free will and we live in a free society.

You are allowed to succeed beyond your wildest dreams or fail, but it is your choice.

Success is no accident, no one I know is successful over the long-haul without working to attain it.

No one should feel guilty for being successful, just like no one should make excuses for choosing not to be successful.

The fact is that it is up to you, so please consider this.

If you have innovative thoughts and unique perspectives, come think with Lance; http://www.WorldThinkTank.net/.

Bernard Kelly http://www.retirelaughing.com/

WHAT IF THE ECONOMY CRASHES?


I was recently asked “What if the economy crashes?”

My reply was along the following lines:

“Thanks for voicing your reservations – if you didn’t have some concerns then I’d be reaching out to take your pulse to see that you’re still with us.

“You must remember that property investments are for the long term – you told me that you have only $100,000 in super. So you should consider putting one in place now, so that in five years - when you come to retire – you will have at least one running for you. Then if you live off your super for two years, then an investment – one that a family would pay say $400,000 today to live in – should be well in excess of that value.

“Since records began, property has increased three times in every 21 years. Which is why the commentators say ‘property doubles every seven to ten years’.

“And if you have ever thought ‘how will young couples ever be able to afford a family home?’ then you too know that property values increase over time.


“Over this past 150 years, there have been depressions and recessions, world wars, 22% interest rates, change of governments, financial meltdowns, stock market crashes, you name it. Even the impact of the ‘recession that we had to have’ in 1991 only lasted four years before property values exceeded what they were in 1990.

“Don’t let the current crop of bad news distract you from taking action to ensure some form of dignified retirement.

“I know it’s a watershed moment for you – but whether you invest, or if you don’t, there is definitely a foreseeable outcome either way. Destiny is a matter of choice, not chance.

“Which outcome would you prefer?”

Phone me Bernard Kelly anytime on 0414 778 518 cell 61- 414-778 518

or visit the website http://www.retirelaughing.com/

WHY YOU NEED A FUNDING STRATEGIST


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.

I can introduce you to a funding strategist at the peak of their profession.

Phone me Bernard Kelly anytime on 0414 778 518 cell 61- 414-778 518

or visit the website www.retirelaughing.com

I ENJOY CHATTING WITH SOULMATES WHO SHARE MY HOBBY


So let me say at the outset (in the tone of an unemotional consultant) most of us fail with our efforts at property investing because you don’t have a goal, and without a goal you can’t possibly have a long-term strategy. At best what you would have is a haphazard strategy.


My long term strategy used to be that when my estate event occurred, the kids would say “the old man did pretty well, didn’t he?” Now that I’m 63 and the kids are mid 20s – early 30s, my goal is now to teach them Wisdom. So that when I die I hope that they’ll say instead “Mum and Dad, as a partnership, did pretty well, didn’t they?”


So what is your long term goal? A mate of mine wants to be able to pay the taxman $100,000 each year in his retirement. Because if he achieves this, he knows that he’ll be earning $400,000 pa.


My strategy is better than yours because I have a goal (which is to own a substanial investment portfolio before I’m 78) and have worked out a simple strategy how to get there.


But even your haphazard strategy is better than the 95% of the population – who have none. My typical clients come to me in cruise mode – but they have suddenly realised that in their mid-50s they just don’t have anything like what they’ll need for 20-25 years of dignified retirement. They are now trying desperately to avoid the cliff.


So I give them a goal – which is to own three investment properties before they retire.


But if your younger, I would suggest that your goal could well be to have an income in retirement of say $100,000. Which means having wholly owned assets (in today’s money) sufficient to give you a 5% return. So the goal that I offer to you is wholly owned investment assets worth (in today’s money) $2,000,000.


The only reason why my strategy is better than yours is because I have been chatting to soulmates who share my hobby for 20 years longer than you have. So I have learned from them. My hobby – and yours – is really no different than any other hobby. When you’re keenly interested in something, you find soulmates in the most unlikely places, or you see something on TV or in the press and you run it around in your mind until you work out how they did it.


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 mine is far better. Those authors are writing to make money – and that is a very different goal to giving you the best advice.


All those 18 strategies are OK, because property is forgiving, and even if you make a mistake, over time any investment will rise in value. Capital city properties have risen three times in value during each 21 year cycle over the past 150 years. Which is why they say “property doubles in value each 7-10 years”. This is true even in Perth, although the Perth market goes through long droughts – ten years or more – before it has explosive growth for a few years to catch up the moving statistical trend line.


My focus is on “least in, most out”. So I have determined the demographic of the ideal tenant, how to attract that ideal tenant, where would this ideal tenant be willing to pay an above normal rent, and how much can the average investor afford each week. These elements determine what the accommodation is, so then I look for the ideal location – a family suburb near to a solid cluster of basic non-boom jobs, in a growth corridor, where land taxes are lowest. And the exit strategy determines that the price should be up near, but under, the median so that you can exit into the broadest market (families).


Congratulations! You are ahead of the field, and you’ll keep increasing your lead. Over time you’ll gradually develop a goal and then a strategy, and don’t worry about the past. Just keep chatting to soulmates and you’ll find your way.


Regards


Bernard Kelly www.retirelaughing.com mobile 0414 778 518 cell phone 61 414 778 518


PS As I don’t spend my advertising budget on traditional media, I’m able to pay you $1000 for successful referrals

I would be delighted to be your personal financial coach over the next five years and share a strategy that will dramatically reduce your learning curve.