Accidental Investor feeling overwhelmed

Hi
I didn't intentionally set out to be a property investor but circumstances happened and now i have 3 properties and my partner has 1. I earn less than $30k a year and he earns $130k. His property is a new purchase and for the first year will be a owner occupied then go to an IP for tax purposes. I live in one of mine. By the end of the year we will live together in one of them. I guess my first question is where should i start educating myself on what I've gotten myself into....other than this forum? Any books you highly recommend? Seminars? Another question is, is there such a thing as free financial advice? I worry that any financial advisor is going to try and sell me something when all i want is to sort out my current situation to my best advantage. I also need a tax agent on the Gold Coast so any recommendations there would be appreciated.
Thanks in advance.

 

Hello Haggis!
Very nice! Two main scenarios... are you going to stay split finances or joint?

If you want to keep separate portfolios/separate finances I hope your 3 properties are positively geared... If they have heaps of equity and are very positive cashflow you could pull equity out and buy another but you'd need to run it by a mortgage broker. If anything is negative cashflow but still has growth potential you could look to transfer that to the partner or a trust that you both control could be the go. You shouldn't negative gearing on your salary whatever you do.

Your personal income is low so whatever you do, you'd want your yield to be very positive. Your partner (if you stay with separate portfolios) could absolutely afford to buy more IPs and his doesn't have to focus so much on yield eg. Neutral is ok - he can focus on Capital growth properties and even stuff like subdividable blocks/blocks for development...

But... I think you'd want to go joint finances eventually as your incomes are so disparate (unless you have capacity to earn near 100k per year too which you havent indicated).... and you might have kids sometime down the track. I'd imagine you would be living off his salary more or less. I think setting up a trust structure for your investments could work well so you as a couple get the maximum tax benefits of a joint portfolio while you arent working/are on a low income. (Must talk to a good accountant!)

I've got a meetup scheduled for 25th Jan at the Bent Elbow Stones Corner near Brisbane if you can make it along that night? Would be good if you can make it!

Please note. I'm not a Mortgage Broker or Accountant so my advice might not be fully relied upon...

 

Welcome @Haggis Investments

Read the forum and ask plenty of questions. None are here to sell you anything and you will be able to formulate your own financial decisions. There are some very informative brains to pick.

With your combined income and 4 properties you're in a very good position already.

 

Thank you Gockie. I will clarify a few points:
We are both in our mid forties so the children card is not on the table.
The plan is to go joint finances and we already consider everything to be "ours" but we didn't know how to go about making it official without paying more stamp duty to add his name to my properties. Would a trust be the answer here? We also intend to marry so how will that change things?
My 2 properties earn enough to pay all 3 mortgages so i don't contribute to the loan at all. I haven't done my tax return for 14/15 yet but I'm guessing it's positively geared. I've avoided doing the return because i haven't got an accountant and as you pointed out, my low income means i can claim more tax than than i actually pay!
Our next step is to buy our forever house in about 18 months - 2 years.
It probably feels for complicated than it is hence my need to learn more.

 

Ahh... well Shahin actually said in another thread that keeping the properties in separate names is the go... your properties are positive cashflow, perhaps they should stay in your name only. In my view, they are better if you get the income rather than your partner since his marginal tax rate would be much higher than yours. Otherwise use a trust structure which will give you flexibility on distributing the profits and income but I believe you'll incur fees to set it up. You definitely should talk to a good accountant.... one who works a lot with property investors..

Can you make it to the meetup I mentioned? You'll find it in the meetups section. The Gold Coast isn't so far from Brisbane and Tuesday is a public holiday... I'd suggest you bring your partner too.

And ps. Good on you for asking the question. You don't want to stuff things up!

 

Gday Mr Investments, welcome aboard.
Try to read as many books as you can find, Margaret Lomas and Steve McKnight are a couple of the good Australian authors.
Go along to seminars if you want, but make sure to keep your credit card in your pocket!

There's a saying about that, something like free advice is the most expensive advice.

 

Gockie gave some good advice above. If they are making you more money than they are costing you, it might be better to keep them in your name.

Sounds like you are unsure if this is the case. I'd start by writing down all the costs and income from each property.

Costs: bank interest, insurance, council rates, water rates, property manager fees, body corporate fees (if any), depreciation (if any).

Then compare to the income you receive for that property.

Once you know what each property costs/ earns, you will be in a better position to know what structure is better.

 

Ok if you don't want to answer, but wondering if you inherited them?

If that's the case, I'd look into the rules around capital gains tax. I could be wrong but think there is a benefit in selling within 2 years if you were thinking of selling one down the track (perhaps to fund a house to live in).

 

Good point by Nemo!

 

In my opinion, most people can educate themselves to the point of not needing to speak with a financial advisor–if they're willing. It is a rare case that I hear a glowing experience from someone who has seen an advisor (though it does happen–the same could be said about a lot of professionals).

I would start by reading more from active and experienced investors (you are in the right place), check out some books (Jan Somers - More Wealth is a classic, and Pete Wargent has some great recent books).

Consider seeking out the best accountant you can, rather than the one closest to you. The majority of my investor friends have not met their accountant in person and many use someone interstate.

 

It is the free advice that costs the most. Advice would only be free if the advisor would be making money elsewhere - selling insurance, a property, loans etc.

You need to educate yourself enough to work out if you need advice and and if you do the education will help you assess whether the advice makes sense and is worth following or not.

I would suggest you start by just reading this forum. Don't bother with books.

 

Haggis, do you have any friends who own investment properties? If so, organise a coffee or lunch and discuss property. I don't know where your properties are, but familiarise yourself with ppty values in those areas where you own your properties. Keep abreast of what's going on in those areas property-wise. You can do that by keeping an eye on allhomes/realestate/domain.com. Don't be hasty. Keep them in your name. Find a decent accountant whose first priority is you. (Sorry I don't know any where you are).

 

Hi, welcome aboard!
I think there are a few bits of advice I would follow:
- start by reading the forum there is so much knowledge here, real life stuff
- you can then go read Somersoft forum (previous version of property Chat)
- don't bother with books for now
- don't over complicate things by setting up trusts and whatnot. They are expensive to setup and run, and unlikely to offer you any real benefit in your situation. You would also need to pay stamp duty.

You're in a great position, just relax and take the time to learn from the forum.
Living together or getting married does not make a difference (in general - I am no expert) when it comes to the assets being considered relationship pooled.

 

welcome @Haggis Investments
You will learn a lot here. I would use a proper accountant rather than tax agent and have them sit down with you and explain your situation and possibly the best way going forwards.
If the IPs are from a divorce settlement or inheritance and you are new to this, don't sweep it under the rug, but become proactive as you have started now and continue on.
A good accountant doesn't necessarily need to be in your state. You can develop a good relationship with one over email or webchats. @Paul@PFI is a member here and a very good accountant who looks after a number of members locally to Sydney and remotely,