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Welcome to NPIS The Ultimate Guide To Property Investment “Work Smarter, Not Harder, To Build Wealth For Your Family Using Our Insider Secrets“ Brought to you by National Property Investment Specialists www.npis.com.au www.npis.com.au Disclaimer The primary author of this report, Dino Livanidis, is not a financial planner, adviser, registered accountant or financial professional. The information presented in this report is based on his personal experiences as an entrepreneur, consultant, coach, investor, and others he has modeled in detail. You may have to modify them, do further research on them or adapt them to suit your personal financial situation. Any information presented is given purely as an illustration and should not be construed as a specific investment recommendation. The laws relating to investment, taxation, benefits, and the handling of money are constantly changing and are often subject to changes in government policy. Whilst every care has been taken to ensure the accuracy of the material contained herein at the time of publication and presentation, the author, presenter, promoters will not bear any responsibility or liability for any action taken by any person, persons or organizations on the purported basis of information contained in this report. Without limiting the generality of the foregoing, no person, persons or organizations should invest monies or take other action on reliance on the material contained in this report or any support material, but instead should satisfy themselves independently (whether by expert advice or otherwise), of the appropriateness of any such action. W A R N I N G: Don't Speak To Anyone Until You Have Read This Report “Start To Finish” This report is about to reveal to you some of the insider secrets to successful property investment, but first let’s answer a few questions that You have been dying to Ask • • • • • • Why You should invest in Property? 10 simple and easy steps for You to start investing in property What’s the "The Millionaire Mentality“ You keep hearing about? How much money can You really make Investing in Property? What’s ‘Leverage’ and why is this the key to successful property investment? What happens if something happens and You need to come up with money urgently, how can You afford that? How do You get started in Property Investment, how much do You need? What type of property should YOU Invest In? How do YOU pay the home loan off quicker using the LOC? Have You consolidated your debts? You are about to see a proven way to save thousands of dollars that may pay off Your home quicker When is the right time to Invest in Property? You bought the property but can’t get a tenant for it – what do You do? What is the difference between buying ‘Off the Plan’ and an Existing property? You made a great profit on a property - How do You calculate and minimise Capital Gains Tax (CGT) If You cannot accept another debt against Your home, learn how to use other methods If You have plenty of cash or Won A Lottery You need to know how to really get that money working for You What make NPIS different from other companies? • • • • • • • • • • • www.npis.com.au www.npis.com.au Our pension system is falling apart - The shocking facts of paying for your retirement – will You even be able to afford to retire? If YOU think this doesn’t apply to You then think on! You may be well below retirement age now but that’s what the millions now caught in the pension trap thought. Tomorrow is another day and I’ll do something about it then. Well for them time has run out – don’t let the same thing happen to YOU! The latest shocking statistics sponsored by AMP from the University of Canberra, show that the average person (aged between 50 to 69) who is still in the workforce, has savings through superannuation of just $170,000. It also states that for anyone to retire on an income of $38,000 per annum, YOU would need approx $800,000 in Investments, and that DOES NOT include Your home! Most people are struggling just to have the home paid off by retirement – there is no way they will have any other savings or investments by then. So, what does this tell us about the way we have been using our money or educating people about providing for life and retirement? One thing is for sure, we were taught how to get jobs and pay our taxes, but no-one ever taught us how to prepare ourselves for financial independence. There seems to be a large hole in the system and its telling me that the average person in Australia is not preparing properly or acknowledging what they need to do for retirement. They just hope everything will all be ok when they get to retirement! Financial security in retirement is not something you think about today and then ‘Presto!’, it’s all prepared and done. This is a long term, ‘Step-By-Step’ process that you achieve slowly over the years. The most important part is when you start, and that should be NOW. I will demonstrate how easy it can be by just Investing in the right Property especially when it meets all the necessary criteria. You know that property goes up in value over time, we all do. It is inevitable: you can’t stop it but you can accept it and use it to create your own independent financial future. If you look at property prices 5, 10 or even 20 years ago, how many people do you know (including yourself), who now wish they had purchased a number of properties through their lifetime? How wealthy would you all be today? www.npis.com.au So let’s consider this: What Stopped You Then, And What Is Stopping You Now? This is one of the most important question’s you will ever ask yourself Once you have realized what is holding you back, then, and only then, can You educate yourself to overcome this fear. When one of my consultants or myself sit with one of our clients for the first time, we discuss this issue in depth and try to help them understand what it is that they want and how it is possible to achieve it through property investment. We also help clients discover their inner fears about property investment and help them to understand that once you have the answers to all Your concerns, the next step is much easier to take. Once you fully understand the Investing concept, you then start to realize how much money you have actually lost from holding back all these years. Let’s Look At The Advantages Of Investing In Property 1- Firstly, your existing money (or equity in your home) can be put to work for you using the power of leverage, to achieve astounding results. So, how does leverage work? LEVERAGE Where else can you hold an Investment amount of $350,000 for less than $130 per week and has shown through history to increase in value over time? If the same property had a capital growth that year alone of only 10%, your equity would increase by $35,000 which is approx $700/week. That’s like having another wage every week, isn't it, but the difference is that all this wage is going straight into your savings account. Later we’ll learn more about how leverage actually works. 2- You have total control over the investment, you can sell it whenever you want; you can even live there if you wish. You also can pass it onto your children, charity or family members and introduce them to a better and brighter future. 3- Once you have accumulated enough equity in your investment you can borrow against the Investment to achieve the lifestyle you dream of. This might be for your dream car, the longer holidays you have always dreamt about, or paying off you’re home debt. And it doesn’t stop there. You will also have an ongoing income making it possible to work by choice and not by necessity. 4- You can claim your tax back along with your wages, instead of waiting till the end of the tax year. It will then be resting in your home loan saving you interest. www.npis.com.au Property Investment.. Is It For You? Before you start looking at Property Investment, you must ask yourself – “What do I want to achieve from investing in property and what result would I like to achieve from it?” For everyone there is a different answer as we all have different hobbies, lifestyle and needs. We have sat down with hundreds of clients and never yet heard the same combination of needs and wants! For some people they would love to just pay the home loan off, other’s dream about going on a cruise, travelling from one island to another, and for some it is just to go fishing on a river every weekend with the family. Many have also said that they would like to have their tax re-directed to building them wealth instead of going to the Government. Would you agree with me if I said that the greatest GOAL for anyone to have is to be “Financially Secure” at a chosen age or at retirement? I would say almost 100% of all clients we have met, want to be financially secure in retirement and have the choice to do what they want, when they want. By replacing your wage income with rental from your property investments this could give you the choice to work only because you want to, not because you have to. To be financially secure in retirement is such a wonderful feeling, nothing quite beats it. It’s so powerful that I cannot explain the happiness and mental freedom a person has when they are in a position to have the freedom to do what they want, when they want. After all, you have worked long enough to deserve it haven't you? Imagine going on a holiday without the thought of how many days you have left before you have to go back to work? Or worrying that you have to go back to work to earn some money, because your account is regularly being topped up by the rental income from tenants in your properties. Ok…. This what I would like you to do…..It’s your turn to do some homework which will reveal to you where you now stand financially and where yo would like to be at retirement. On the next page fill in as much as you can and see how you stand. Remember this is for your eyes only, it’s not a financial plan but it gives you an idea of where your are at, so give it a try, you may be amazed with the result. www.npis.com.au Firstly write down what your ideal lifestyle will be when you are financially independent, or at retirement. Lifestyle eg- Travel, Eat Out. 1. 2. 3. 4. 5. 6. 7. 8. 9. ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ ________________________ Cost Per Annum $________________________ $________________________ $________________________ $________________________ $________________________ $________________________ $________________________ $________________________ $________________________ Total annual income needed- (Y) $________________________ Total amount needed in Investments (Eg we will work on a 4% return) Y x 25=(A) $___________________ Your Current Financial Position Assets: 1. Home Debt (B) Total Value (C) Owing $_________________ Note- We don’t add the home value as we won’t get an income from the home but we must pay for the amount left owing on the loan. 2. 3. 4. 5. 6. Property Investment $__________________ $_________________ Other Investments $__________________ $_________________ Shares/Super Other Debts Cash Savings $__________________ (B) $________________ (C) $_______________ $__________________ $_________________ $_________________ Total your columns Deduct (C) from (B) = (D) $_________________ www.npis.com.au Total amount needed in Investments (A) $_____________________ (Total C minus Total B) (D) $____________________ Now deduct (A) from (D) How many years do you expect to work for (E) $_____________________ (F) _________Years Now Divide (F) into (E) = $____________ This is how much you need to save every year to accomplish your goal. If it seems unachievable, then you MUST start to learn how to LEVERAGE yourself, otherwise financial security will not be yours when you need it. Please remember this is just an example, it is not a financial plan. We also suggest talking to your financial planner to diversify into other areas like share and superannuation. If you are like most people in Australia, you were taught (like my parents), to pay for everything in cash and were told never to get in debt. My father passed away after 4 years in retirement. He did have a beautiful home, paid off, but what he couldn’t handle, was trying to live on a pension. After having a great lifestyle, then having to live on a fortnightly pension took his self esteem away; it killed him as a man. If you want to take away a person’s confidence, personality, self esteem and reason for living, then take that person who has been independent and earned an income all their life and put them on a pension - it seems to just take the heart out of them. Why You Should Invest In Property This one rule alone can change the way you think and help you make a fortune when used correctly: LEVERAGE "The Millionaire Mentality" Too many people underestimate the POWER OF LEVERAGE and how to use it to their advantage. www.npis.com.au LEVERAGE Let me give you an example to illustrate what Leverage means. A Football player plays Football. The leverage comes when he is watched by tens of thousands of fans at the stadium and viewed nationally on television. The large salary a Football player gets comes from his skill and popularity. These are his leverage. With Property the leverage is created by using a small amount to borrow a larger amount. You might use the equity in your existing home or use a cash deposit, to persuade a bank to lend you all the money to buy another property. When the new property goes up in value, you have created a profit and return for yourself using someone else's money. So Leverage is simply using whatever money, asset or skill you have to borrow a larger amount, or get a better salary or return. Now this is working smart isn't it? Now with Your HOME, the house you actually live in, You are fully responsible for paying the monthly payments. With an investment property in most cases you have the tenant paying approx 63% of the mortgage and expenses, you also have the taxman paying for approx 25% and you contribute what’s left over. Depending on your taxable income, if the property is new and the type of property you have invested in. Who’s really paying for your Investment? And YET…. YOU OWN THE INVESTMENT!!! If your Investment of $300,000 increases in value by just 10%, that's $30,000 profit in equity And if it needs a $80/week contribution or $4,160 per year. That gives YOU a 721% RETURN Can you now see how YOU can start Leveraging and "Working Smart"? This one lesson alone, if you fully understand it, can change your whole life by turning you into a very smart investor. And the future rewards will be immense if you continue to use this vital rule. www.npis.com.au How Much Money Can YOU Really Make When Investing in Property? Let me start by explaining a formula that you can use and see how much money you can really make through investing in property the right way. The Rule Of 72 If you take anything that has a capital growth or rate of return, you can work out how long it would take for your investment to double in value. Lets say you have $40.000 in the bank and the bank is willing to give you 5% return (lets forget about bank fees, income tax etc for this example). So to work out how long the $40,000 will take to double in value you divide the 5 into 72 (Magic Formula). Which means your $40,000 will double in 14.4 years. Now you can use the same formula with property, but just remember that property never goes up in value in a straight line i.e. it doesn’t go up the same amount each year. But historical figures prove that over the long term a property will increase in value. Now of course there are some considerations, such as the area and the type of investment. If you buy a lousy property in a run down area then its unlikely to increase. For the example below I am showing property doubling every 10 years. So if we use the Rule Of 72 and divide the 10 years into 72, your average capital growth would be 7.2%. The example below shows a property being purchased every 2.5 years, the 1st one for $300,000 the 2nd investment purchased in 2.5 years for $375,000 and the 3rd investment purchased in 5 years time for $450,000. 1st Investment $300,000 2nd Investment $375,000 3rd Investment $450,000 0 years 2.5 years5 Years10 Years15 Years 20 Years 300,000 375,000 450,000 600,000 900,000 1.2 Million 1.2 Million 1.2 Million 1.2 Million Please note- The above example shows property increasing exact every 2.5 years which in real life as you know, it goes up and down like a wave, but if you took a line through it all you will see the increase. So in 20 years time if property increased by 7.2% we should have 3 investments with a total value of 3.6 Million dollars, and a debt owing to the bank of only 1.125 Million. (You can also do the calculations for 15 years if you wish, plus we have only worked on a property portfolio of 3, imagine if you invested in more). So what choices do you have now? www.npis.com.au What Options Do You Have With A $3.6 Million Property Portfolio? Huge, is the answer….. 1 - You can sell one of more of your properties you have purchased to pay off the debt on the other investments. Tip - Always sell the investment property that has the least amount of Capital Gain and sell in the year you have made the least amount of income to minimise your Capital Gains Tax. 2 - You can refinance against your investments to support your dream life style. 3 - You can just hold on to the investments and live off the rental incomes. 4 – You can borrow against the 1st Investment to support more investment properties. I often have people ask: ‘What happens if something unexpected happens and I need money urgently, what would I do then?’ That’s quite simple. We recommend to our clients that they borrow a little more to act as a safety net or contingency plan. We ask the financier to increase the loan amount needed for the Investment by an extra $10,000-$15,000. This is perfectly acceptable but please note, that you would need to have a property as security for this to be possible, it cannot be done when borrowing with a minimum cash deposit. By increasing the Investment loan amount by the $10,000-$15,000 you will feel safer knowing that you have the means to cope with the unexpected emergency should it arise. We call this sleep money; it just sits there in the Investment account until you need it for that emergency. It doesn’t cost any extra interest unless you use it. If you do use it for the Investment, then the interest paid is tax deductible because it was used for investment purposes. www.npis.com.au How Do YOU Get Started In Property Investment, And How Much Do YOU Need? First let me say that You don’t need to know anything to get started if you don’t want to. We are here to do it all for you – right from start to finish, step-by-step. You can review our services in detail by going to the end of this report to see our simple 10 step process to successful property investment. There are 2 ways you can get started; 1- You can use a cash deposit or 2- Use your home as security. Firstly: The bank will need a deposit, which is a minimum 5%-10%. However if you can raise a 20% deposit you will not need to pay Mortgage insurance. Since 20% is quite a lot, lets do an example with the minimum deposit, so you will need to pay mortgage insurance, as well as stamp duty and loan costs. Please NoteStamp duties vary from State to State. It also depends on the property you want to purchase, if it is ‘off plan’ or an existing property. An ‘off plan’ property will not have been built yet, so you are purchasing something you have only seen on a plan at this stage, hence the name ‘off plan’. The advantage of an off plan investment is that you only pay stamp duty on the land, which is minimal (rather than the whole cost of the new property). But you will need enough money to cover all these expenses for an existing property. EG- Melbourne Property- Fully renovated, existing Property Based on Approx Figures Purchase price $300,000 10% Deposit $ 30,000 Stamp Duty $ 15,660 Loan Cost $ 1,500 Conveyancer $ 1,500 Mortgage Insurance $ 2,500 Going by this example you will need $51,160 to get started (subtract approx $10,000 stamp duty for an Off the Plan Investment). Secondly: The easiest and simplest way to invest in property is to use equity from your own home, or use some one else’s home as security. If the new Investment Property is in a good capital growth area, you can wait a couple of years and then have the bank do a new valuation. If there is enough equity growth (profit) in the investment, you can ask the bank to release the security of the property held. Then the Investment Property can stand on its own. Using the home as security has its advantages as you don't have to pay for all the upfront expenses, there will be no mortgage insurance plus the loan would be 100% tax effective and easier to set up. There are many other alternatives but talk to our Consultants once they have sat down with you and considered your personal situation. www.npis.com.au What Type Of Property Should YOU Invest In? Your taxable income and your security will determine how much the Bank will allow you to borrow. Remember, the main purpose of getting into an Investment Property is to build wealth and not restrict your lifestyle. So the best way to calculate this, is to personally sit down and work out how much will you be able to contribute on a weekly basis, then you start to look at different properties that suit your personal cash-flow or contribution level. If you use my Cashflow Program: http://www.npis.com.au/investment-property-prog.html it will help you to determine which type of property will work on your taxable income. Many clients, when we meet for the first time, always have a favourite type of Investment, e.g. House only, Unit in CBD only, etc. In my opinion, all properties will go up in value over time, some quicker than others, so that’s why we only Invest in areas that have potential for capital growth. The properties must meet all the criteria’s of an ideal investment e.g. Type of tenant, rental return, depreciation, infrastructure, vacancy rates, etc. Before we recommend an Investment Property to any of our clients, our property specialists spend many hours on the research, making sure all criteria are met. Remember: The only thing that goes up in value is the land, that's why we depreciate the internal fitting and fixtures and building. So every investment is different in every area, e.g. A one bedroom apartment in South Yarra Melbourne is perfect for the area, a larger 4 bed one would not be. All investments must meet the demand for rentals in the area. Finally, it must also meet your Cashflow so you will be able to afford the property at all times. This is why we at NPIS provide a personalised service. We select a Investment Property for each specific a client, placing extra importance on making sure the property will suit their personal cash flow situation. www.npis.com.au How Do YOU Pay Your Home Loan Off Quicker Using The LOC? So how does LOC (Line Of Credit) work? The best way to explain the LOC is to think of it as a great big credit card. This product is a smart way to pay off your home loan, a car, boat or holiday etc, and in record time. However, if you can't control your spending, then this is not for you. Your home mortgage interest is calculated daily. The interest is accumulated and compounded on the loan, so what actually happens is that you pay interest on interest. When using an LOC you have your wages paid directly into the LOC. This is off-set against the loan so straight away you have decreased the home loan amount (even if only for a short time until your wages are used up). Because the interest is calculated daily, every day that your loan appears reduced by your wages, actually saves you money on interest that can be used to pay off the principal sum. An effective part for the LOC is how often you are paid. If you’re paid weekly or fortnightly this would be perfect for you, however if you're paid monthly, the effect wouldn't be as noticeable. You use your Credit Card for purchases, bills and other household expenses whilst your cash is sitting in your home loan account saving you interest. You can include a debit card to take cash out if you want, a cheque book if necessary or you can organize a direct debit of (for example) $100 to go straight into a savings account. This will be for the little things you can't purchase with a credit card and also to have some cash in your pocket. At the end of the month when the Credit Card needs to be paid off, you can organize an automatic payment against your home loan or you can do it manually yourself. This is basically how a Line Of Credit works, and we have saved clients thousands of dollars using the LOC. When our clients purchase an investment property we have the finance company or bank do a LOC on their home loan (usually only a portion of it). We then arrange for our clients to claim their tax back weekly from the Investment Property, thereby all cash goes straight into their home loan like the rental income, tax back and their wages, saving them thousands of dollars. (Talk to your Bank or Finance Broker if you want to know more about LOC’s. If you need a Finance Broker we can recommend a couple of specialists in this field.) www.npis.com.au "Consolidation Of Debts" Here Is A Proven Way To Save Thousands Of Dollars That May Pay Off Your Home Loan Faster Plus this may put you in a position to afford another investment property….how good would that be? I was watching the ‘Money Show’ hosted by Georgie Parker and featuring Paul Clitheroe the other night. They were talking about people having all these credit cards debts, personal loan debts, car debts plus the home loan. Excuse my ignorance, but it has been so long since I have had such debts that I had forgotten that for some people this is the only thing they know. They live with debt all the time and don’t seem to know when to stop. I know many people are too shy or embarrassed to reveal their true financial situation, but whatever the reason, move that aside because its costing you a bundle of money. I am going to show you how to consolidate your debts and get out of the downward credit spiral you are in. I am in fact going to show you how to save a lot of money. What you do with that money is up to you. You can either use it to pay for a new lifestyle or spend it out again for another debt. Its Your Choice..... So I am going to pretend that you want to get the money back rather than it going to back to support the Bank’s profit margin! This is the golden rule that I have lived by You are better off having the debt, doesn't matter what it is, as long as it’s on the lowest interest rate available....period. Let me give you an example of how effective this is. Lets say I had a credit card of $10.000 at 18% - min payment - $500/mth and a Car Loan of $20.000 at 11% - min payment - $434.85/mth and a Personal Loan of $15,000 at 11% - min payment - $326.14/mth For this example, lets say you also had a home loan of only $150,000 at 7.25% with a min payment - $1023.26/mth This would mean your monthly outgoing just for these loans is= $2,284.25 So lets consolidate all these debts to the home loan which has the lowest interest rate 7.25%. www.npis.com.au Meaning $10,000 for the Credit Card plus $20,000 for the Car Loan, Plus $15,000 for the personal loan all added to the existing $150,000 home loan. This comes to a a total of $195,000 at 7.25% meaning your monthly payment is now only $1330.24/mth Saving you $954.01/mth, an extra $221/ week in your pocket. You could get your shopping for free every week, get yourself an investment property or make extra payments to your home loan. Now... this is back in your pocket and not some else's. Lets get really serious and get creative with these figures, lets see what happens if we set up the home loan so we can: 1- Make weekly payments. 2- Divert the $221/week saving back into your home loan as an extra payment. I have used the http://www.camdenvalleyfs.com.au, Camden Valley Financial Solutions Website. Study the picture below and see how many years and how much money we have saved. Using the method I have, you would pay off your home in 10 years instead of 30 years and the amount of interest saved would be a staggering $204,367.86 This is not a joke, what we have done is consolidated the debt and redirected the savings to the home loan. It is easy to do it when you know what to do, so don't wait any longer. If you are in a position where you are not using the lowest interest rate to your advantage then let us help you - we have specialists just working in this area of finance. YOU MAY ONLY BE A FEW WEEKS WAY FROM SAVING A BUNDLE OF MONEY AND CHANGING YOUR WHOLE LIFESTYLE. www.npis.com.au When Is The Right Time To Invest In Property? This is one of the MOST ASKED questions we get and you know what it comes down to? You only do it if you can comfortably afford it! You see, no one can really forecast the future, so don't worry about it! If you can afford now to invest in a property and your cash flow allows it, then do it. But if you cannot, then don’t! We at NPIS are here to guide and inform you, not to suggest that you invest when you really can’t afford to. I've heard many people say they are waiting for the right time, but when will that be? How many times have you sat around a table with friends and said, "You know, if I had purchased that property back then, I would have made a fortune today!“ I know you are agreeing with me and laughing! I also hear this from most of our clients in their six monthly reviews. They say "Why didn't we invest in 2 or 3 properties instead of just one back then? We would have made a fortune today!" Do you know what holds people back from Investing into Property? It's not the money, it’s the mindset of debt. You see, we can all put aside a fixed amount per week for our future and in 2-3 months you wouldn't even notice it missing. But what people have a hard time getting over is the psychological aspect of debt; seeing all debt as a bad thing, rather than a well planned debt as a good debt which will provide for you in the future, which is exactly what a property debt does. This is one of the aspects that we spend time on with our clients. We will be there for you every step of the way when you invest with us, including when you might feel the need for reassurance about your investment. People just think of the debt itself rather than the opportunity it creates. This type of debt is sensible and well planned and in most cases you pay very little of it – the tenant and the tax man pay most of it, whilst you hold the profit from it. They are, in effect, making you wealthy in return for you well placed investment. Now that’s what I like. How do you think people purchase so many properties? If you go to the bank and ask for a loan to purchase a home to live in, they will only give you a certain amount of money to borrow. But if you ask for an Investment Loan, they will give you much more money. Why? Because they know you are getting rental income and a tax income for the investment, and that you wont be making most of the monthly payment yourself. Property Investment is good debt. Buying a car, boat, motor bike etc. does not do anything to increase your wealth so it’s called BAD DEBT. So when is it the right time to invest?.... Each and every single day is the best time to invest as long as your cash flow and the investment meets the criteria. www.npis.com.au What Do YOU Do When YOU Cannot Get A Tenant? Most people who invest in property get emotionally attached to it, instead of treating it like a business. If you had a fruit shop and your oranges were not selling at $2 a kilo, you would want to know why they were not selling, RIGHT? Wouldn’t you find out which shop was selling heaps of oranges and what price they were selling for? If the price was much lower than yours, wouldn't it be business sense to reduce your prices? Well…..that's exactly how renting a property is. I know for a fact that you can rent out any property at the right price. I personally have never had any of my Investment Properties without a tenant for more than 2 weeks. Let me tell you a true story that happened to me 5 years ago. I purchased a refurbished 2 bedroom unit in Altona Melbourne, over the phone. Yes! I purchased it over the phone! BUT, I knew all about this investment and it met all my criteria of a good Investment. The Investment plus costs (with all loan costs, stamp duty etc) was $205,000. Interest Rates were 6.75%, so the monthly repayments on the ‘Interest Only’ loan was $1,153/mth. So if I did not have a tenant, my cash flow for the month would be minus $1,153. Yes, I can claim it all on tax but my cash flow is affected, so this is what I did to make sure the tenant was found straight away. There were 12 units in the block, they were all to be let at the same time, with the recommended rental of $175 per week. I told my property manager to rent mine out at $10 cheaper than any other 2 bedroom in the block. Mine was the 1st one rented out that weekend. So now I can claim $10 less on the rental in the next financial year against my taxable income, but most importantly, I can handle a $10 less a week (or $40 a month) better than having to come up with the whole $1,153 per month. Makes sense, doesn’t it! Too many Investors get emotionally attached to their investments: don't let this happen to you. You must check out what other Properties like yours are renting out for in the area: sometimes you might be out just $5-$10, so yes, do some home work. You know the great thing about this homework is that you can do it within 2 hours. Just get on the phone and use the internet, that’s it. Your Property Manager can also give you some very helpful feedback on prices in the locality, to ensure yours is rented out quickly. www.npis.com.au What Is The Difference Between Buying “Off The Plan” And An Existing Property? An existing property is one that is already fully completed. Buying an existing investment property allows you to start claiming your tax deductions straight away. But you will be paying full stamp duty, which is possibly an extra $10,000 than with “Off the plan” (which hasn’t even been started yet). When it’s brand new you get 100% of the depreciations on the internal and building costs to give you maximum tax advantage. I personally have purchased existing property which has just been completely renovated, but only because of the area: it was located in South Yarra and Toorak (Melbourne). I was after the land value, not the unit itself. I could possibly build the same unit for $70,000 elsewhere but the land value was what I was after and that is what goes up in value, not the building. When buying “Off The Plan”, there are several considerations: 1. 2. 3. 4. 5. You buy in today's market and you benefit from any price rise due to materials or labour increase during the building period. You only pay stamp duty on the land, not the purchase price of the unit. If the developer takes longer than they should, it works out to your advantage, re Point 1. You buy brand new, less maintenance for a few years. Some clients have purchased 2 and at the end, if the prices have increased, they sold one and put the profit into the other Investment lowering the loan amount (Capital Gains Tax will need to be paid). You can make changes to the floor plan and add additions to your investment, sometimes at an extra cost, but if you plan to live in one this could be very appealing. Also Note- Yes you save on Stamp Duty but you still do make interest payments on the land once you have settled and also progressive construction payments while being built which means you may need a few extra thousands dollars to complete. 6. 7. When investing, you must look for areas that have potential for capital growth and areas that meet all the criteria of an ideal investment. If you would like to talk to our Property Specialists, please email us at property@npis.com.au with your contact details and we will have one of our Property Specialists call you. Once we have sat down with you and fully explained the advantages and disadvantages of purchasing an investment property, whether existing or offplan, you will then understand and know which way would best suit your personal situation. www.npis.com.au Capital Gains Tax (CGT)- How To Calculate It. The Govt introduced CGT in September 1985, and the new law states that if you purchased an investment property after this date and sell it, you must pay CGT. The calculation is only for investment property and not your place of residence: If you purchase and sell an investment property in the same year, then the whole Capital Gain is added to your taxable income and you would pay the tax rate on that income. If you sold after 12 months you would only pay half of the Capital Gain. E.g. 1 (I will not include any other deductions) You purchased a property Jan 5th 2004 for $300,000 which is sold and settled Dec 20th 2004 in the same year for $400,000. So the $100,000 profit will go onto your taxable income To your taxable income of $50,000, is added the $100,000 profit. So your new taxable income that year will be $150,000 and you would pay the income tax accordingly. If the property was in 2 names then each person would take half of the capital gain unless the ownership on contract was different. (Eg- 99% ownership to the higher taxable income person and 1% to the lower or non income person). Note: profit is taxable after all acquisitions and selling costs are deducted E.g. 2 You purchased a property Jan 5th 2004 for $300,000 which was sold and settled June 20th 2005 the next year for $400,000. Because you sold over e year later the tax is reduced. So the $100,000 profit would be halved and $50,000 profit will go onto your taxable income. To your normal taxable income of $50,000 is added the $50,000 profit so your new taxable income that year will be $100,000 and you would pay the tax accordingly. Again if the property was in 2 names then each person would take half of the capital gain. Rule of thumb: If you hold a investment property for more than 12 months then sell, 75% of the net profit after expenses goes to you & 25% goes to the government. Remember this rule: Only sell if you have to, and the best time to sell any property is in the year you earned the lowest income or at retirement. If you are to sell any of your properties, sell the one that has the least Capital Gain to lessen your capital gains tax. Capital Gains Tax - How To Get Away From Paying It If you purchase your first home and live in it for a few weeks, then go and rent or live with your family, you will be able to claim all the tax benefits and receive all the rental income from the investment property. You will be able to sell it without paying any CGT for the first 6 years. www.npis.com.au Many Home Owners Cannot Bear The Idea Of Another Debt Against Their Home. As I have said at the start of this report, you need to work smarter and leverage yourself. And one of the smartest ways is to use the equity in your home. Just remember you only need to use the home as security at the start to purchase an investment property, then allow the investment to grow in capital growth. You can then refinance and have your home released by the bank. Or you can take a loan against your home and only take out the money needed for the 20% deposit and all associated costs of purchasing the investment. But you can build your portfolio quicker when you use your home as security, and as described in one of the earlier pages, by using the LOC, you can get the whole system working to your benefit. Another point to remember: I know many people have worked really hard to pay off their home and do not want to see another loan or any debt on their house again. But if they had an emergency, or wanted to start up a new business and had to come up with $50k -$100k, where would they get that cash from? Also, what kind of retirement are they looking forward to? If they wont have enough to retire on comfortably then perhaps its time to re-think the idea of no more loans on their house? The only way some people can raise a loan is against their home. So perhaps the way to protect yourself in future is to buy investment property now! If you needed urgent money you can either remortgage the investment properties or sell a couple. But, what have we done? We have protected Your home. When you only have a home to rely on, you are laying yourself wide open to everything and it's the only thing you can fall back on. With a number, or even just one or 2 investment properties, you can spread your risk and afford to have choices, and at the same time protect your home. Just think how long you have to retirement. Can you make enough money by then to provide a safe and comfortable future for you and your family? You did some calculations on the first few pages, if you haven't already done so, do yourself a favour and do it now. Time passes too quickly in life, so we need to take every opportunity to move ahead. In 2-5 years time, prices and inflation will increase and you will be saying what everyone today is saying: that they should’ve purchased back then! Don’t be in the same boat. Wouldn’t you prefer to say I’m so glad I did something back then! Wouldn’t you and your whole family be proud of you. We can show how to take advantage of your home and get yourself started Investing in Property that could really secure your future. www.npis.com.au If You Have Plenty Of Cash In An Account Or Have Won A Lottery Would You Know How To Invest It To Maximise It and Keep It Working For You? If you look at all the people who won million’s of dollars through Tattslotto and other lotteries, the majority, within 5 years of winning, are back to where they started and sometimes worse off. Where do you think they went wrong? The first thing they do, is upgrade the family home, then get a new expensive car, more expensive clothes and thus their total lifestyle increases. The biggest mistake people do is not put something away towards generating an income to support this lifestyle. 3-4 years down the track, all of a sudden they realize, “Oh boy, how do I continue to support this new lifestyle? How do I fund the expenses of this big house, the car etc?" So I know you want all the goodies but doesn’t it make sense to do so in some moderation so that you can still then invest some money into something that goes up in value and gives you a cash return monthly, and most importantly, ongoing for the rest of your life? There are so many ways you can maximise your money with property. You could actually work out what sort of an income you want and then work out how many properties are needed to give you this income. A couple of years ago I had a good friend and he had $200,000 in the bank and approx $1.5 million of investments. So I said to him “$200,000 in the bank, what return is your bank is giving you?” At the time it was 4.5%. Ok, so 4.5% and because he was on a very high income 50% of the return would be taxed, which would now leave him 2.25% return. Now lets not forget that Bank fees etc which would drop his return even further. And then what is the Australian average inflation rate? If its approx 3-3.5%, this means my friend was losing approx 1% of his money per year, so it was going back wards and not forwards. So we sat down and worked out, going by his taxable income, that he could divide the money into 3, and put 3 deposits on investment properties to the value of $300,000 each. He would increase his Investments from 1.5 mill to 2.4 mill and now, even if he gets 5% growth, his equity would increase by $120,000 in that year alone, much better than minus 1% on his $200,000 per year. www.npis.com.au And There Are Other Options To Consider You could put enough cash into the Investment Property (thats in a high capital growth area) and have it self financing – with all the outgoings covered. Or you could have a several investment properties fully paid off and others negative geared against the positive ones. All that means is that any monthly losses on the negative ones are offset against the gains on the positive ones just enough to reduce your tax liabilities. That’s a simple over view but we can discuss this in more detail if it applies to you. It all goes back to what you personally want now and what you want to achieve before your retirement. Particularly and most importantly what type of lifestyle you would like to have, now and in the future. You see, this way you can also leverage yourself to the maximum. So many people forget how to work smart by leveraging themselves. We leverage everyday, right now you are leveraging off me to gain knowledge and information; that is what I call working smarter! But what we want to do is leverage money to make us more money, that's why we borrow from the bank, we leverage from the bank. Everything we are saying here is to help you improve yourself financially and help you overcome any fears you may have that may restrict you from taking the next step. Yes, it does take action and guts to move ahead but if you keep doing what you have always done, then you can only expect the same result as you have always had. That will never move you any further forward. You need to start rethinking how you plan and use your finances – get out of your box and look around at some of the exciting options available to you. With NPIS you will never be on your own if you decide to invest in property. We will always be there to help you anytime you may have a question or concern. We WILL be there before you buy, when you buy and most importantly AFTER you buy, to keep helping and advising you into the future. We want to create a lasting and rewarding financial relationship with you that we can both be proud of. What Can We Do For You & How Do We Get Paid? Firstly, buying an Investment property is something you might do only a couple of times in your whole lifetime. So when the time comes to Invest, you may not be all familiar with the many processes involved. You may talk to your finance broker or bank manager, solicitor, accountant, asking for some advise, yet to find they are all confusing with conflicting advice. Then you will start searching the internet and calling many real estate agents, going to seminars and reading every book, magazine that has anything to do with property Investment. Many will tell you how good they are, who’ll probably be putting pressure on you to sign up with them straight away. Especially when viewing properties, the real estate agent will direct you to what they consider “Ideal investment properties”, without any criteria’s in place or reasons why it is an ideal investment for you. Then you may be put on the spot to sign up and lay a deposit down that same day, you will be placed under tremendous stress for no reason at all. At NPIS all of those problems are solved for you, we will sit down quietly with you and go through all of your options calmly and thoroughly. We’ll discuss with you, your goals and gather a snap shot of your financial situation to see if property is for you or not and then if it is, we will then explain in details all the steps involved to purchasing an investment property. We’ll give you recommendations based on your personal financial circumstances and advise on which companies we feel is likely to be right for you so that you can make a balanced and informed decision without any of the pressures. When purchasing an investment property you will have some people, friends and family all give you there thoughts about property investment and they will tell you that you should “Buy a unit with no maintenance”. Or “You should buy a house with land”. Or “Buy in Perth”. There will be so much conflicting recommendations to consider it will drive you insane. Our total independence means that you will be given recommendations based on well researched areas with the potential for capital growth and properties that do meet all the criteria’s of an ideal investment and most importantly to work inside your budget and personal cash flow. We’ll take all the pressure off you by guiding you step by step, this way we give you peace of mind! And the anxiety of investing into an investment property is dramatically reduced, if not eliminated. At any stage You won’t be pressured into anything, decisions will be made in an atmosphere of calm, with all facts laid out in front for you. This means you’re more likely to make the RIGHT decision on the way to investing. It also means everything’s done on your terms, once you are fully satisfied with the information put in front of you, the opportunity of making a informed decision will be to your advantage. Please note NPIS makes a commission on the sale of the property just like a Real Estate agent, which is paid by the seller. That is why our Goal is to help you build your wealth long term and create a better financial structure for you and your families future. The more we can help you through property the more you will refer us to your family and friends which is how this business has been built upon. What Makes NPIS Different From Other Property Investment Companies? For You Personally 1. 2. 3. 4. 5. 6. 7. 8. We help you step-by-step, from the very 1st step all the way until your tenant is placed. We supply you with a specially designed Investment Property Log Book and train you how to run an investment property making sure you maximize your tax advantages. We do not charge you a FEE at any stage for any services or appointments100 % Guaranteed no FEE, we are paid a real estate agent fee by the seller. We can refer you to a number of Accountants that specialize in Property Investment to make sure you get maximum cash back into your pocket. If your thinking of opening a Trust for your Investments we can refer you to a companies that specialize in this area. We can also refer you to a number of independent Financial Specialists that know how to set up your personal finance structure and Investment loans. We have a number of expert Conveyancers who will work hand in hand with you all the way, so you are not just another file in the process. We will review your personal situation every 6-12 months making sure your investment is going as planned and to see if there are any adjustments to be made along the way. For Your Property Investment Potential 1. 2. 3. 4. 5. Firstly we turn away 80% of the developments that come to us because they have not met our criteria. A pre-valuation is done before you are shown the investment property and we guarantee the valuation to be within 5% of the purchase price. We work in accordance with BIS Shrapnel and Australian Bureau Of Statistics for population movements and potential for capital growth areas. We only use established builders that have a proven history and supply good quality work and on time. We personally follow the construction every step of the way and up date your personal web-page every 3-4 weeks during construction with pictures. www.npis.com.au/investment-property/brown.html All new building’s have a building guarantee to give you peace and mind. We will demonstrate to you why the properties our property specialists have selected will suit you and your cash flow personally, and how they have the potential for capital growth. Areas we select have very low vacancy rates making sure there are plenty of tenants for your investment. 6. 7. 8. NPIS 10 Simple and Easy Steps to Property Investment Your 1st step is to have a meeting with one of our professional consultants. We will review your situation to see if Property Investment is for you or not. All your questions and concerns will be answered and we will show you how you can save money on your home loan and pay it off even quicker than you are at the moment. Step 1 You will then be referred to a panel of Financial Specialists who will assess your current structure and analyse how they can either save you money or restructure your position to gain maximum benefits. They will show you how to pay off your home quickly by using an investment property. Plus they will guide you to understand how much you can borrow and from which lenders. They will do everything for you as far finance is concerned right from start to finish. Step 2 Step 3 If Property Investment is for you, we will set up a time to meet with our If Property Investment is for you, we will set up a time to meet with our property specialists and discuss the areas that have potential for capital property specialists and discuss the areas that have potential for capital growth plus properties that meet all the criteria of of an ideal Investment. growth plus properties that meet all the criteria’s an ideal Investment. Once you understand the criteria you will then bebe booked for Property Once you understand the criteria’s you will then booked for a a Property Inspection date if needed. Inspection date if needed. Please Note-If you need to fly to where the property investment is NPIS will cover flight costs once your finance in fully unconditional. On your Property Inspection, you will be met by one of our Property Experts, who will reveal to you all the reasons why the area was selected and why it has potential for capital growth. They will cover every single aspect of the location and the property relating to all the criteria as discussed. Step 4 Step 5 Once you fully understood and have decided to go ahead with a property that will work for you, we can then refer you to a few conveyancers to help you with the paper work. Step 6 The Financial Specialists will do everything for you, getting your finance approved, asking the banks to do the appropriate valuations on all properties and also making sure lenders selected will benefit you long term. Prior to settlement you will be referred to a Property Manager, who will explain what insurances are needed and how it will work for you. They will need your account number to transfer the rental income into your account. Step 7 Step 8 Once settlement is near or ready for settlement, our Property Specialist will then do a Final Inspection of your Investment, making sure he is personally happy with the finish. You will then be required to view your investment to allow settlement to proceed. After settlement one of our staff will supply you with our leather bound “Property Log Book” and give you a FREE 1 hour training session on how to run an Investment Property, so when tax time comes you just supply your accountant with the log book. An Accountant can also be referred to you if requested. Step 9 www.npis.com.au Dear Wealth Seeker ‘Our All-Round Property Investment Service Is Just Waiting For YOU’ I am sad to say that I have had first hand experience of what living on a small pension can do to a person, and it isn't a good sight. Seeing a person lose their self esteem and pride simply because they are no longer able to live an independent and free life, because their pension is so small it’s very distressing. You know people that are living on the pension, what sort of life are they living, if they had their life back again I bet they would have prepared differently. Please, please take the time to provide for your future now. Not tomorrow but NOW, while you have the time and energy to create a worthwhile future that you and your family can really enjoy. Don’t trust your twilight years to the mercy of the state. And it’s not just for your retirement either, we can help you start providing for your very near future, to enjoy a standard of life that you have only ever dreamed of. The feeling of being Financially Secure at any age is something that cannot be explained; the happiness and relief your mind has is the ultimate freedom. Being in a position to be able to just PACK UP & GO ON A HOLIDAY when ever you want is the ultimate sense of freedom. Can I ask you to do something that I feel is the only way for me to explain the feeling of being financially secure? Please get comfortable and relax. Close your eyes and picture how your life would be if you were financially free; what would you be wearing, what presents would you buy for your loved ones, where would you go on your holidays and for how long, what sort of car would you be driving and what other fantastic things you would have in your life. What about doing the things you love doing best and in style…… How would you feel knowing that your children won’t struggle later in years because you took the steps to make it right today? What if you showed them how to do it so they too can continue building Wealth for their children – how great would that feel? You have started a family line of wealth and security because you made that decision. Remember - The only thing we can’t do is turn back ”TIME” - once it’s gone, it’s gone for ever. Our services to you are ABSOLUTELY FREE and our knowledge in all areas is extensive; we help you in every step. Plus what have you got to lose, nothing… you will only gain by meeting with one of our specialists or booking with myself, now the choice is yours. I honestly do wish you all the best for your financial future. Mr. Dino F Livanidis www.npis.com.au Useful links for you to use. Here is the LINK to have direct access to our favourite Program that will allow to work out approx how much contribution you need to add to an Investment to see if it is Positively, Neutrally or Negative Geared. http://www.npis.com.au/investment-property-cashflow.html Here is another link to a program that will show you how to save thousands and years off your home loan when you change your re-payments from a monthly, fortnightly or to a weekly basis and even how $20 can work wonders for you. http://www.camdenvalleyfs.com.au– Click on “Extra Repayments” Your Feedback about the Report would be most appreciated. Please email to admin@npis.com.au _________________________________________________________________ No Obligation Appointment Request Form Yes, I acknowledge the appointment with one of your specialists or with Mr. Livanidis is absolutely free and yes I would like someone to view my situation as we would like see what options we may have for property investment. 1. 2. 3. 4. Email Sign Up for FREE Tips Phone Faxback admin@npis.com.au http://www.npis.com.au 1300 671005 02 4647-1462 Faxback form-(Fill in here and fax back to us 02 4647-1462 ) My name is: ___________________________________________ My Contact Number is:___________________________________ Best time to call me is:___________________________________ The State I live in is:_____________________________________