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  • My First Visit to Fort Myers

    I recently finally went over to the US. It was hard to explain to everyone that we owned a house there, and yet neither of us had actually even visited the area. At least one of us had been to the country before! But I myself had never been to the great USA, and what an experience it was. It really was amazing to actually see it first hand, the town of Fort Myers was nothing like I really expected it to be, even though I had been reading about it, looking at photos and everything over the past couple of years, it still looked completely different to what I had imagined.

    Overall it was a great trip, at first I thought it was a great success, I was able to set up a bank account for my LLC, meet with a mortgage broker who was very positive about getting finance for our next property, and of course got to actually see our property for the first time in Huntdale! Oh and I also had an offer that was accepted on a property I saw while I was over there, so all in all it seemed like a great trip.

    Unfortunately soon after I landed I found out the bank had made a mistake setting up my bank account and it had to be closed. I will not go into too many details and will cover it in another article. But it is one of the most frustrating experiences I have had trying to set up a bank account in the US.

    Anyway, back to the first visit in Fort Myers. What were my first impressions of the city. Well, everything was big, except houses. Roads were all big, seemed to have 4 lane highways everywhere, everyone seemed to drive big trucks, big blocks of land, large shopping centres, everything was big! But then the houses were not as big as what I had expected. During the housing boom in Sydney everyone seemed to build mansions, and I figured something similar happened in the US during the boom, but all the houses were similar. They all seemed to have an open plan living, dining and kitchen area with a small hallway that lead to 2 or 3 bedrooms.

    The big eye opener was just the state some people leave their houses in when they leave, I had heard stories about people trashing their houses when they are forced to leave, but it was not so much that, it was just lots of small things, like people taking shower curtains, door knobs, toilet seats, and just general dirtiness throughout the house. Also the workmanship of a lot of the construction left a lot to be desired, saw a lot of poorly laid carpet, mix matching tiles and just generally poor construction.

    It was also a big eye opener to see first hand the differences between the good areas and bad areas. I remember looking for our first house we must have queried our property manager about 100 properties at least, and she would have rejected about 90 of them! Claiming they were in poor areas, and yet they did not look too far away, but now I can see for myself that you can go from good area to bad area when you go from one street to the next. But if you are in the know and you can find the good areas, you can definitely find good properties are good value. I can see how a lot of people have been fooled into paying too much for a property. I rember one property which looked amazing, it was very well looked after and seemed very nice, but it was at the Northern end in Cape Coral, a long way from Fort Myers, so it was selling for $150,000, but there were similar quality prices in North Fort Myers (much closer to the city) for only $80,000. For some reason Cape Coral has high prices, simply because it is in Cape Coral, Lehigh Acres is a lot cheaper and is a similar distance away from the city.

    I will write a few more articles on my adventures in USA and will also divulge more about the property I did end up purchasing while I was over there. And also more about how frustrating the US Banking system is!

  • Tips and Tricks For Doing Your Own Tax Returns

    With the 30th June date well behind us it is time to consider that dreaded task…doing your tax return. In this post I’d like to focus on income tax benefits for real estate investors. For Australians, doing your own tax return is now simplar than ever with the governments e-tax online system. Doing your own tax is not difficult but it is time cosuming. However, the benefits that you will get out of doing your own tax return far outway any time constraints that you may have. Not only will you get a much better understanding of the tax system but you will also get a better understanding of your own financial situation. You may even find that with all of this new knowledge that you find ways to make your money work harder for you from a tax perspective. You may see ways to improve your financial position that you had not seen before. By preparing your own taxes you will develop a better tracking system of your income and expenses. Below are some tips for someone who is thinking of preparing their tax return by themselves for the first time:

    • Make sure you read through as much information as you can. There are thousands of great articles on the internet that are free to read (just like this one!). I find articles to be much more helpful as they’re easier to read, usually focus on one or two points at a time and are generally more up to date than books. It is not uncommon for tax rules to change from year to year so make sure that you’re reading the most applicable information to your situation.

    • Be honest whne preparing your tax return as making too many wild assumptions will make it impossible for you to keep track of why you claimed one item over another. It could also get you in trouble with the tax departmentand.

    • Doing your own tax is not for everyone. It is always a good idea to be on top of your taxes but if you have quite a few properties and your tax returns are quite lengthy then it will make more sense to hire a chartered accountant. As they get more complex, you may actually cost yourself money by doing them yourself. However, think of how much ahead of the game you will be with your accounting systems and knowledge.

    Let us know some of your tips and tricks when doing your tax return by adding a comment below. Do you do your own taxes or hand them over to an accountant? Did you find doing them beneficial?

  • Importance of Cost Tracking

    A while ago I wrote a post about how my brother and I bought a house together. One of the first things I set up was a spreadsheet which tracked all the costs with the property, just so that we knew how much each of us had put into the property.

    It was in our benefit to put in as much money as we possibly could to pay down the mortgage as fast as possible, pay less money in interest, own the house sooner, etc etc etc. But obviously both of us earn different wages, both of us have different expenses, so the amounts we were going to put in were different.

    The spreadsheet was fairly straightforward, just the date and how much each person contributed to the loan. It should be noted that the values were weighted, because without going into too much detail, if you deposited $10,000 on to the loan at the start, it would have more of an impact on the overall loan cost and duration, than depositing $10,000 after five years. So the spreadsheet was fair and even and worked well for both of us.

    I am happy to say that because of the spreadsheet it made things a lot simpler when my brother decided he wanted to buy the house of me. When we first bought the property (3 years ago) our situations were very different, in that time, my brother had gotten married and was now living with his wife, and I was working in QLD so had no purpose to own a house in Sydney that I was not going to be living in. So it made sense to sell my half of the property to him, either that or collect some sort of rent and vacate my room (the wife did not want this situationa at all).

    So although it could have been a complicated process to see who had put forward the majority of the money, I was pleased the spreadsheet was able to give us the answer with ease. Both of us had valuations conducted on the property, and since they both yielded the same answer, we simply took the value minus the remaining principal, and saw who had paid more, and it was easy to see how much money I had coming to me once they bought me out.

    To put it in numbers, for example, the house was worth $400,000, the principal remaining was $200,000. I had contributed $10,000 more over the years than my brother. So my value would be $105,000 and his value would be $95,000. Fairly straight forward and it was able to remove any need for an argument.

    So now I have come into a fair pool of money and I am looking to start expanding my investing portfolio, I do not plan on purchasing a PPOR any time soon and hope to secure some good positively geared properties in regional NSW, or perhaps use finance to obtain some more properties in the USA.


    Disclaimer: By viewing this website, you acknowledge that it is for informational purposes only and does not imply any contractual agreement, promises of returns or legal expertise. All investors should consult with legal representation and appropriate accountants before making any investment and should ensure that individual due diligence is done. Any information provided here is for educational purposes only and should not be taken as financial advice.

  • Japanese Financial Institution for Aussie Property

    I was talking to a colleague at work the other day and he was telling me how he just acquired a property using a Japanese bank. My initial question to him was to ask why? He then went on to explain how he was able to get an interest rate from the Japanese bank, fixed at 3.5% for the next 10 years. I found this to be really amazing, and my next thought was to see why more people are not doing this, or have not done this before. After a bit of a discussion he was saying he believes it only became legal over the past 12 months or so, so it is generally a very new niche business for the finance institutions over there. And also currently the Japanese banks are only looking into providing mortgages for people who are in the resources sector, such as mining, oil and gas, etc. Not sure why exactly this is the case, but I guess they see it is as a more secure loan. This works out well for me seeing as I am in the Gas industry so I am definitely looking further into this.

    So I guess the question is why are the Japanese banks able to provide interest rates so low? Well you only have to look at the Japanese culture and current economy. It is in their personal culture to save, so each person individually is relatively wealthy and not under significant debt like they are in Australia. So already the banks have access to a large amount of money to be able to loan out to foreigners. Now looking at the interest rates in Japan, they lend money to mortgages over there at interest rates around 1.00% or so, possibly a bit higher. But looking at the comparison, even though the offered 3.50% is a lot lower than the traditional Australian interest rates, it is significantly higher than the Japanese interest rate, so it is definitely more profitable for them to start investing their money into mortgages in Australia.

    So my next step now is to look further into this to see the actual processes involved and what Japanese banks are able to provide these low cost mortgages. And also to look into other potential negatives. Hopefully after a bit of research I will have a greater understanding of how it works and can see if it is as profitable as it seems so far.

    Disclaimer: By viewing this website, you acknowledge that it is for informational purposes only and does not imply any contractual agreement, promises of returns or legal expertise. All investors should consult with legal representation and appropriate accountants before making any investment and should ensure that individual due diligence is done. Any information provided here is for educational purposes only and should not be taken as financial advice.