mrd

Do you love surprises? I don’t as a rule because they often come packaged up as problems!

The best thing we can do with a problem is rename it! It’s not a problem, it’s a “challenge”… and with every challenge comes an opportunity to grow!

“Those who remain flexible rarely get bent out of shape”!

When Katrina and I settled our last property purchase we were without a tenant for almost 4 weeks! Given the housing shortage, we were very surprised.

So why did it take that long for us to secure a tenant?

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Last week the Reserve Bank of Australia (RBA) made the decision at it’s monthly board meeting to leave the official cash rate on hold. That means no adjustment to interest rates this month.

But Did The RBA Get It Wrong?

It will be interesting to watch what they do with interest rates in the months ahead. Their actions will be an indication of whether this months decision to leave rates on hold was the right one or not.

At the beginning of 2008 the RBA put interest rates up twice. At the time the opposition argued that the decision to do so was wrong and a reaction to Kevin Rudd & Wayne Swan talking up inflation; citing it as the # 1 enemy to go after. What they failed to recognise was that the negative economic impact coming out of the USA had already begun to work its way through the system and here in Australia the economic slowdown was just about to bite.

The numerous interest rate cuts later in the year is clear evidence that monetary policy in the early part of 2008 was wrong.

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The following graph shows the history of interest rate movements in Australia from March 2001 to March 2009. The official cash rate currently stands at 3.25 per cent, which is a 45 year low.

Some people are simply confused right now. They have heard so many mixed messages in the past 18 months that they are unsure if now is a good time to step out and invest… or hold back and minimise their commitments.

If that’s you, don’t stay confused. It’s only when we have the right information that we can make fully informed decisions.

• Keep asking questions
• “Lash out” and have us prepare a Finance Structure & Cash Flow Health Check (there’s no cost anyway)
• Explore your retirement possibilities; not based on what you have done to date but what is possible in the next 7 to 10 years

To have us assist you, click here

Happy Investing,

Nick Lockhart
mrd Customer Care Program… because investing is personal

Prevention is better than cure. A complimentary, no obligation Finance Structure & Cash Flow Health Check may:

• Save you (literally) tens of thousands of dollars
• See the mortgage on your home cleared quicker
• Open up opportunities that would otherwise have passed you by

Yes please!

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Buy in the correct ownership split. Many married couples automatically buy in a 50/50 split. This is fine if your taxable incomes are similar but if they are not you could be losing a lot of money to the tax office.

Marion and I started buying in a 90/10 split because my income was $42k and hers was $18k. Later we ran our own business and income split so property purchases then were made at 50/50. It is important and can save you thousands of dollars a year.

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The Lone Ranger and Tonto went camping in the desert. After they got their tent all set up, both men fell sound asleep.

Some hours later, Tonto woke the Lone Ranger and said, “Kemo Sabe, look at sky. What you see?”

The Lone Ranger replied, “I see millions of stars.”

“What that tell you?” asked Tonto.

The Lone Ranger pondered for a minute and then said, “Astronomically speaking, it tells me there are millions of galaxies and potentially billions of planets. Astrologically, it tells me that Saturn is in Leo. Time wise, it appears to be approximately a quarter past three in the morning. Theologically, the Lord is all-powerful and we are small and insignificant. Meteorologically, it seems we will have a beautiful day tomorrow. What’s it tell you, Tonto?”

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Over the past 8 years or so speaking with all types of people on the subject of investing in property, many, generally new to investing, ask me the “what if” questions. My broad base of experience has meant my answers have generally put their minds at ease. Two questions, however, that I lacked a good solid answer for were:

1. How good will your portfolio be if we have another world war?
2. How good will your portfolio be if we have a worldwide recession or depression?

Well, with regards to Q 1, I still have no concrete answer for, and hopefully never will. With respect to Q 2, however, I can now (i.e. only now) say from experience… “It’s all ok”!

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Priced at $335,000
@ $330 p/wk = 5% Rental Return
Contact us on (07) 5580 8888 or simply reply to
this email for more information

The Development:

These Northern Brisbane Townhomes are ideally positioned less than 800 metres to the water. The development is a staged development and will consist of 55 units including and an onsite mangers unit.

Each unit is equipped with oven, cooktop, rangehood, dishwasher, air-conditioning, double lock up garage and landscaping.

Deception Bay:

The town of Deception Bay lies within the Caboolture District and forms part of the Moreton Bay Regional Council (incorporating Caboolture, Pine Rivers & Redcliife). The Sunshine Coast is 60km to the north, the attractions of Brisbane 30km to the South and domestic and international airports less than 30 minutes drive away.

Just 45 minutes north of Brisbane’s CBD, Caboolture offers visitors a world of choice – from water sports and rainforest walks to mountain top dining and charming country towns and villages. There’s even the opportunity to explore one of Australia’s most environmentally valuable marine parks.

Brand New Three Bedroom Townhome Property Report > More Info

In this example we have used Endeavor Gardens at Deception Bay  showing how you can lower your holding costs, by capitalising your expenses.

Non Capitalised Example:

Weekly holding cost is $32.

Link to full non-capitalised report: Click Here PDF (24kb)

No weekly cost – positive cashflow, $75 per week.

Link to full capitalised report: Click Here PDF (24kb)

At the peak of the interest rate cycle the standard variable of the big 4 banks was 9.57%. Assuming you took up the offer of a professional package with the banks and qualified for the full 0.7% discount your interest rate would have been 8.87%. For a peak rate, that isn’t too bad considering long term history. I recall buying my first home in 1994 when the rates had come down to a low 10.5%. They then dropped to 9.5% and I was dancing with joy at how much money I was saving and how cheap interest rates were.

How times have changed.

To demonstrate how the changes in interest rates affect your holding costs I will use the properties at Endeavour Gardens as an example…

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