Is Credit Card Debt Destroying Your Home Owner Dreams

The data that is evolving regarding credit cards is that people are applying for them at a younger and younger age.

One of the greatest flaws in this reporting is comparing the Generation Y’s with older folk of 65 years of age. It has been reported that the average 65 year old applied for their first credit card when they were 34.

This is a direct contrast with the gen Y’s who are usually applying at the age of 20!

This should not be surprising data. In this day and age you can apply for a credit card online. In the “old days” you had to jump through many hoops and wait weeks to get a credit card. Twenty five years ago, the United Kingdom would not even give you a key card until you had banked with your banking institution for six months, let alone a credit card.

Thirty years ago a credit card was considered a luxury. In the now, a credit card, whilst not essentially a necessity is definitely marketed as a way to get what we want immediately, instead of the scrimping and saving of our grandparent’s era.

The alarming data though is the fact that most twenty-somethings have credit card debt of between $10,000 and $30,000! THAT could have been a mortgage for our 65-somethings!

What most twenty-somethings don’t realise is – their credit card debt may exempt them from getting a mortgage and actually creating their own little piece of paradise. The place they can call home and escape the hustle and bustle of today’s modern living.

Fountain Property Group are interested in helping people achieve their housing and investment dreams. We offer some tips to those who really want to own their own home.

Stop Spending!

The first tip is clearly obvious and that is to stop spending or more importantly stop frivolous spending. It is so easy to rack up a hefty debt and have little to show for it. Try cooking and entertaining at home instead of eating out and paying the outrageous drinks prices you do at clubs, pubs, and restaurants.

Ask Whether You Really Need This

Often you can convince yourself that you need the latest mod con. Whatever item it is you are considering going into debt over ask whether you really need it? Could the old one work just as well even though it does not have the latest bells and whistles?

Buy Quality

If you must spend your hard earned cash (sorry run up your credit card debt) do it by buying quality items. Buying cheap usually gives you what you bought – something that will break down faster!

CASE STUDY 2– DON’T DELAY, ORDER NOW

high rise apartmentDelaying your decision to obtain a depreciation report can cost you tens of thousands of dollars worth of depreciation entitlements. We have set out below a case study of depreciation entitlements claimable by a first time investor examining what a delay of 4 years could do to an investor’s cash flow. In December 2016, Paul and Samantha are told of the cost benefits of engaging Deppro to produce a depreciation report. As is evident from the table below, Paul and Samantha’s delay means they missed out on almost $60,000 worth of depreciation deductions from previous financial years.

 

Financial YearDepreciation on PlantCapital AllowancesYearly Total
  Low Value Pooling  
23/3/2012 – 20122,6748012,4465,921
2012 – 20134,10113028,95214,355
2013 – 20143,4548148,95213,220
2014 – 20152,9235088,95212,384
2015 – 20162,4878478,95212,286
2016 – 20172,12708,95211,079
2017 – 20181,82808,95210,780
2018 – 20191,58108,95210,533
2019 – 20201,37408,95210,326
2020 – 20211,20108,95210,153

Obtaining a depreciation report at or around the time of settlement of a property can put thousands of dollars back into an investors pocket. This money can be used to either pay down existing debts on investments or drive the investor to re-invest and grow their portfolio.

CASE STUDY 1– 1950’s POST WAR COTTAGE

The common investor purchasing a 1950’s post-war cottage would assume that there is little value in obtaining a depreciation report for that property. As described below, this leads to investors missing millions of legitimate tax deductions each year.

     

Lin and Andrew purchase a post war 1950s home in 2011 for $460,000. Although it does not qualify for deductions for the construction cost of the building (being a pre-1985 house), they can claim the depreciation for the plant and equipment included in the purchase such as the blinds, carpets and stovetops. While Lin and Andrew might think that the plant and equipment in the property should be replaced as a write off, they are missing out on over $10,000 worth of deductions in the first 4 years.

The table below shows example values of plant and equipment in a 1950’s post war home including the mistaken value often attributed to the item by the investor and the real valuation undertaken by Deppro:

ItemMistaken valueValue for depreciation purposes
CarpetWrite off$2,439
Hot Water System$50$1,440
Heaters$100$847
Window blinds$300$3,727
Outdoor furniture$50$581
Smoke Detectors$20$186
Rangehood$50.00$254
Cooktop$80.00$423
Oven$100.00$508
Total$10,405

Do Changes to the Aussie Dollar Actually Mean Anything to the Property Market?

There is always speculation about whether fluctuations in the Australian Dollar are going to affect the property market. This is how many newspapers and forums get your attention. The headlines alone, whether the Aussie dollar is going up or down, are enough to create further speculation.

So what does it mean to the average home buyer looking to own property? The truth is, very little. There are always going to be surges and drops in the market and they are not all as a direct result or even have anything to do with the value of the dollar in ANY country.

There are so many variables that may affect the housing or industrial property markets that you cannot lay blame on what the currency value is alone.

So what other market variables should be considered?

Unemployment
High unemployment will definitely affect the market. This is due to an increase in foreclosures.

Oil and Commodities
An increase or decrease in the cost of these essential products can affect how much money people are spending at any one time and how much spare cash they have.

Tourism
When the Australian dollar is low, coming to this great country is way more attractive and certainly more affordable. The influx of overseas tourists, yes due to the low dollar, can change and affect property values should these tourists also be interested in buying property.

The Reserve Bank
The Reserve Bank controls the cost of lending money. We all wait with baited breath every time the Reserve Bank is going to release its findings.

Lower interest costs mean that consumers spend more. Higher interest costs would seem to mean less spending but not in all sections of the market.

What Does it All Mean?
If you have all of these factors in alignment, the moon is full and your tongue is hanging the right way, you may be able to predict and pinpoint the exact time to get in and out of the property market.

Time and time again, the economists have had it wrong and we have all survived.

What we say at Fountain Property Group is – go back to basics.

Do a budget to ascertain if you can afford to enter the property market.
Ensure you have enough capital (deposit) to invest in the deal.
Do your due diligence! – Research, research, research
If you do these three things, it does not matter what state the dollar is in when you enter the property market, you will be on a winning course.

Low Interest Rates Continue – Let’s Party

Here in Australia we are so lucky to continue to experience low interest rates. Long gone are the days of escalating rates that took people’s homes and livelihoods away from them.

Through careful observation the Reserve Bank of Australia continues to monitor and control the rates we pay on our mortgages and keeps them as low as possible.

We are not suggesting for one minute that it is a good idea to go out and blow any spare cash you have. This is not what we recommend when we say – Let’s Party!

Rather, we are thinking more along the lines of:
1. Let’s get into the market and take full advantage of this great situation
2. Pay down your current mortgage as quickly as possible and then do the first point.

Now this is something to celebrate!
Imagine if you can, being able to pay down your mortgage in under five years. If this is your plan you could not hope for a better environment to do it in than when rates are low.

Once you have your money under control (and not the other way down) you free up your cash to do something worthwhile. Think of holidays, restaurants and theme parks with the children. Perhaps do a course and learn something new or even get into an investment property.

Property Investment – The Greatest Nest Egg
If you are dreaming of building a nest egg for you and your family then now is the best time to dive in.

The persistently low interest rates make it easy for you to move into the investment scene and build an empire to sustain you and your crew.

Fountain Property Group specialise in sourcing exactly what you need and can afford. We are not bound by territories and boundaries and are able to search for that unique and perfect investment wherever the market may take us.

Whether you are dipping your toe into this amazing, fortune building environment for the first time or you are a seasoned professional, we are able to source and provide the right property at the right price.

Whilst the days of escalating interest rates are long gone, they are not forgotten and they still provide the angst to deter and even stop an investor in his or her tracks.

It is essential that due diligence is conducted for each and every property that is considered. We do all the hard work for you and take the stress out of the decision making phase.

What Are Clearance Rates In Real Estate Talk?

When you hear or think clearance rates you might be forgiven for thinking that there is a big sale going down somewhere and you better get in quick. Well, probably the only word in the last sentence that relates to real estate clearance rates is the word ‘sale’.

More importantly, clearance rates in this industry relate only to properties that are sold (or not) via the auction process.

Who Gathers the Data
Apart from each individual Australian state Real Estate Institute gathering some form of this data, there are two major companies that formally gather this form of information Australia wide. They are RP Data, and Australian Property Monitors (APM).

Interestingly, these two major companies go about the gathering of this data in very different ways. It is not as simple as saying 10 properties went to auction this week and 8 of them were sold under the hammer for an average of “x” dollars.

They each have their own criteria that they use to garner the information required. The criteria that can be used by both are how many properties:

  • Were advertised for auction,
  • Were sold at auction,
  • Were withdrawn,
  • Sold before auction,
  • Sold after auction,
  • Were passed in at auction.

Each of these can be diluted even further. For example: they may only include sales made within 24 hours of auction completion. For some, the negotiations may take a day or even week or longer.

One of the companies may not include withdrawn property data. You can see how this may change the relevance of any published results.

The one contributing factor to this house of cards is the reporting. It is up to the individual agency to report the results of any and all auctions. In a good market, they are more inclined to report their successes. But in a bad market…….. You fill in the blank.

The One True Guide Post
Deakin University conducted their own research into the anomalies of this subject.

They advised that at times the clearance rate was obtained from a very small segment of the market. They also pointed out that such things as the number of bidders present for an individual property as compared with competing auctions, as well as the number of bids received were not recorded. Nor does this form of reporting show how many, if any, properties exceeded the vendor’s reserve.

The other interesting fact they discovered over this 5-year study was that the data received actually showed a correlation between auction prices achieved and actual property prices as very similar.

What Fountain Property Group can confirm is that sale by private treaty is still by far the most common form of property transaction used in Australia and our choice of negotiation.

Self-Managed Super Fund (SMSF) – A Great Investment Strategy

Many Australians are becoming savvier about investment opportunities. With this in mind they are seeking ways to improve their retirement nest egg and reduce the flow of proceeds to the tax man—he who must be feared and revered.

The superannuation tide is turning and many of us are now choosing to take control of the greater flexibility a Self-Managed Super Fund (SMSF) can offer. Experienced investors and entrepreneurial mums and dads of the world are looking to secure their future by using this form of investment.

This is due to the generally higher payouts that can be gained and the amazing tax breaks offered. Another of the greatest advantages of this style of fund is the flexibility it offers.

Family members, (generally husband, and wife) have the ability to pool their resources, which allows them an inordinate advantage to invest in solid bricks and mortar as opposed to being at the mercy of what an employer funded superannuation may deem a reliable investment – this would usually entail a series of options with varying risks and rewards, typically in the share market.

Flexibility is not the only advantage, however. Other attractive benefits include vastly lower fees and the ability to create an estate plan that is designed to cater for the individual.

Whether you already own an SMSF or you are considering this form of investment in your future, Fountain Property Group  offer innovative and lucrative investment solutions that will slot straight into this form of strategic investment.

We do the Hard Yards

During our long association with the property market, we have come to understand and identify that just under half of all real estate transactions are made by people looking to create a wealthy nest egg for their retirement.

We were able to quickly identify that many investors be they old hands in the industry or newcomers, were time poor or had little knowledge or resources to correctly and decisively conduct their own due diligence.

Any number of our clients can make more money doing what they do and leaving this form of investigation to us. We take the stress, strain and, most importantly, the risk out of buying all forms of property.

Not only are we far better equipped to carry out these critical investigations using our vast network of contacts, we are also in the enviable position of being able to network with any number of reputable people in the accounting and mortgage sectors.

Take advantage of our vast experience, skill, and contacts. You will not be disappointed.

Building Your Retirement Nest Egg

Did you know that you cannot insure a share portfolio or term deposit?

Any risk or negative outcomes that may evolve from a drop in the market in these two investment options cannot be protected in any way. If you don’t know what you are doing, you could end up paying off shares that are worth nothing.

When you invest in property you can relax knowing that through fires, storms, busted pipes or any other number of accidents, you can insure your asset against damage and have it repaired without forking out more cash.

Tax Benefits and Incentives

Perhaps because housing is always in such demand the taxman smiles upon the investment of property like no other investment. All sorts of tax breaks and incentives are offered to assist with this form of investment.

Time Poor?

Fountain Property Group are not your average real estate agents where you can come and list your house and we market and sell it for you.

We are a company that sources properties for buyers and we are not restricted by any territories or boundaries like some of the major agencies are. As such, we have full flexibility to go wherever the market is hot or where we feel an area is poised for growth.

We source properties in strategic areas and only after completing our full due diligence on each and every one of them do we offer these to our clients. This is the most important step you can take in any property deal. It is essential that the properties we offer have met our strict criteria.

Our services go even further beyond this as we are able to design the correct structure required to purchase property, thus ensuring our clients also gain maximum tax advantages.

Let us guide you from beginner through to seasoned entrepreneur with our proven program.

Nearly 20 Years’ Experience

Knowing where to look and what to look for is not something easily gained. It can take years of being in and around the industry before you start to get a handle on its ebbs and flows. Are we the experts? Our short answer is yes, but we are not cocky about it. We continue to research and educate ourselves to ensure we stay on top of the trends.

Anyone Can Do It!

It does not matter whether you are a savvy developer, builder, banker, or a mum and dad investor.

With the money, the right advice, guidance and decisions, anyone can make a success of this form of investment.

Employer Funded Super – Helping It Work Harder

There is no doubt that investing in just about any kind of superfund is better than doing nothing. For some recently retiring baby boomers and the streams to follow them until 2028, there will be a vast number who will fall short of the dollar value required for them to retire comfortably with.

As this system was only introduced by the Keating Government in 1992, you can see how many of the early boomer births would not have created enough of a nest egg before they started retiring in 2011.
There is, however, absolutely no doubt though. If you get into your super early you are bound to make a huge dent in your retirement bill. How does setting the course to true freedom feel? Did you know that there are some real advantages in this system that not enough people are just not taking advantage of?

 

Tax Benefits

There are a few ways you can use your employer funded superannuation to your tax benefit.
You can make concessional payments into your spouse’s superannuation after tax is allocated. This may not seem attractive until you see note 2 below. You can salary sacrifice and pay up to $50,000 into your superannuation and only pay 15% tax. What a lovely nest egg. The Government will match your contributions dollar for dollar for any money paid into your account over and above the minimum your employer pays. This is also capped. That is to say, the amount you can contribute is capped. But wait for it, at $150,000! Whilst the Government only contributes a small amount you can see how the incentives stack up when you consider the whole lump sum compound interest that occurs when cash is invested long term.

Fountain Property Group are firm believers in ensuring your superannuation is progressing as well as if not better than CPI does. Visit it often to ensure its growth. It is important to keep that investment moving to gather as much investment momentum as possible. By adding to the fund yourself you add to the momentum to bring more energy to the investment.

Rome Wasn’t Built in a Day This form of investment is called delayed gratification. You sacrifice a little now for big returns at the end. This may seem a lot to some but just an extra $100 per month into your super and your money is doubled straight away!

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Time Management Tips To Improve Productivity

It is common for people to get lost with work in the office and lose track of important tasks that can help boost one’s productivity in the workplace. Here are several things you can try to improve your time management and get the important things done.

Analyse tasks. Make use of your time and effort for tasks that require immediate attention. If you have a task that you can do along with others in a single sitting, take note of these tasks and tackle them when the important ones have been accomplished.  Some tasks can take up much of your time but are not a priority, making you spend less time on those that need to be accomplished first.

Focus. There are several things you can do to re-focus.  If you need time to accomplish tasks and discourage interruptions, you might want to retreat to your office or cubicle. You wouldn’t want to do this for too long, take time to have breaks in between and mingle with your workmates for a quick chat.

Clear your clutter. A messy desk does not invite productivity because – like your clutter, your mind is all over the place all at once.  Clean up your desk and only have things that you are working on visible so that it captures your eyes and attention.

Take control of technology. Set certain times of the day to reply to email, and check it after lunch and before you leave the office, so that you can avoid losing the first couple of hours to technology.  Divert all your calls to voicemail, and set a time in the day to check it so that you can avoid distractions and get your tasks done.

Reminders. Make use of technology to organise tasks. Always take note of tasks that you plan to accomplish throughout the day – do not simply rely on remembering tasks without jotting it down.