Mortgage Rescue

[Glenda N]

On Sunday November 25 I attended this seminar run by Dymphna Boholt. It was a "taster" seminar to encourage you to purchase her education program, so was a general overview of her knowledge. So here it is for your reading enjoyment!

Her website is www.realestatesuccess.com.au

Her 2 main areas of knowledge are Asset Protection and Positive Cash Flow Property Deals.

Most of her education is aimed at ordinary people who are fairly new to the world of property investment.

To sum up her philosophies:
1. Protect Your Assets
2. Be Tax smart and Tax efficient
3. Always be market ready
4. Focus on sound investment strategies
i) cash flow properties
ii) growth properties


ASSET PROTECTION

Dymphna told enough horror stories to convince me to really tighten up my loose ends in this area - including protecting assets currently held in personal names. For example, a guy playing golf had his golf ball hit someone on the head (this is in Australia) who suffered concussion. The short story is he was successfully sued for 3.8 million dollars and lost his properties and business and became bankrupt. This could happen to anyone.

The 3 most litigious areas in Australia are:

Property Ownership
Business Ownership
Personal action involving a motor vehicle.

She gave a lot of information on structures - covering it all very fast, and I have now ordered her book called "Protect Your Ass - and your assets", since she obviously knows the area backwards. In summary:

Partnerships are bad
Partnerships of trusts are OK
Hybrid trusts are generally overkill
Discretionary Family, or Unit Trusts are good. Trading or Business trusts should be separate to Property Holding trusts. Don't have too much in any one trust. Have the same number or preferably value of properties in each trust. This is mainly because if that trust is sued - only the assets of that trust are exposed.

Protect your home with an internal registered mortgage.

She gave some good info on how to handle excess income from your trading trust by moving it around to other trusts, including one she calls in concept a "piggy bank trust" and a "bucket company". I only got the general gist of this and this is why I have ordered her book.



SUCCESSION PLANNING

Some things to do:

Get your will up to date
Ensure you have set up an enduring power of attorney for the person who will need to administer all your affairs if you become unable to do so.
Notify anyone (such as parents) that instead of you personallybeing a beneficiary - it should be your trust(s). So they will need to modify their will.


POSITIVE CASHFLOW PROPERTY (Cashcows)

To determine whether a property is a cashcow - apply the RULE OF 2

2 X Purchase Price/1000 <= Rent per week.

Purchase them direct, or CREATE them via CHUNK DEALS

Her definition of a chunk deal is something that involves a purchase price, and an additional chunk of money to add value somehow.

Some ways to create:
renovate
split (subdivide) and sell a portion
find unit blocks that are UNDER market rental
strata title unit blocks
Improve somehow for higher yield - renovate, or turn into multi housing
Build new or just get DA/BA to build new
Create more income streams (eg pinball machines in the common laundry!)


To compare one deal with another - and work out the

OPPORTUNITY COST ROI

Passive Income/capital tied up *100

Works best in REGIONAL areas. Need to do lots of due diligence to determine the DEMAND for the property. And this works best if you can find an area of transitional growth. Jump on top of the pebble in the pond effect.

Her home study course plus a seminar and 12 months of teleseminars cost $3000 on the day.

[Jason M]

Hi Glenda,

Thank you for sharing the key points of Dymphna's recent seminar with us. After reading what you have written, I started thinking about "leverage"...

We should all know that leverage is an important aspect of successful investing, although for many of us I'd assume that we may limit ourselves by only leveraging financially (e.g. by using other people's money). Now that you have made available this written summary of a whole day's course that's able to be read in just a few minutes, you have actually allowed us to leverage our time!

Imagine if 10 people each attended just one seminar per year. If they decided to openly share what they learnt with each other, suddenly it'd be like each person attended 10 different seminars during that same year! This means potentially 10 times the knowledge is available for each person, as compared to what they would have gained on their own.

So once again I'd like to thank you for taking the time to share this with us. For me personally, it has stimulated my thinking to explore a couple of topics in more detail. I view this as a wonderful outcome and I'm sure it'll be appreciated by a lot of other people, too.


Jason.

[Glenda N]

Thanks Jason - and I agree, that if others are happy to summarize on things they learn, or even an area that they are interested in - and/or have specialised knowledge that would be terrific.

One advantage of summarising learnings is that you distil it down to the important take-aways for action in your own brain, so there is personal advantage in doing this too.

[darylrae]

Hi Glenda,

I havent heard of - Protect your home with an internal registered mortgage. but would like to know more though.

I agree though we all need to protect ourselves from being sued its funny we dont think it much until we have already put things in our own name (im guilty of it) im certainly changing the way i do things now.

suggestion - look at setting up a $2 company as trustee of a new trust and yourself as the director only.
- i would only have 1 buy and hold property per discretionary trust
- if your doing a subdivision it would vary if your selling both blocks or all blocks i would only bother with 1 trust.
- if your keeping 1 as a buy an hold out of a subdivision im not to sure on which way to go with that.
- if you have a house in your own name another way (if you dont want to sell it) is to keep the mortgage pretty high on them then its not worth suing you or at least the asset base would be less to pay out
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Kind Regards Daryl

[piyush123]

Hello,

Well, I think it is a good idea that you don't take too much note of the strategies she was selling even 9 mths ago....because today's market is very different.

Rams debacle, rates rising, sub prime, cpi, foreign credit crunch, rent pressure, growth stagnant in an increasing number of outlying suburbs, change of govt......


Try and read up on some of the forecasts from the major Aussie banks in relation to what is going on with supply of credit. The value of property is ultimately determined by the cost of credit.
ANZOutlook (http://www.anz.com.au/business/info_centre/economic_commentary/MC_anzeco_outlook.asp)
NAB Outlook (http://www.national.com.au/Business_Solutions/0,,148,00.html)
D&BExpectation (http://www.dnb.com.au/general/media.asp)
AIG (http://www.aigroup.asn.au/)
RBA Stats (http://www.rba.gov.au/Statistics/)
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[nancygale12]

Howdy


Hmm........great information,it's informative as well as useful,I appreciate with that.


Thanks


Regards
Nancy

Southern Md Homes