My motivation for expanding into finance in early 2010 mirrored why I started my property business in mid 2002; the need to ‘raise the bar’ and create a five-star business model was glaringly obvious! Unfortunately, as can be the case with a new venture, mrd finance had some ‘false starts’ but today Heather, our finance specialist driving this business, is competently and effectively delivering the level of service that I expect… but people rarely experience.

Pigs Don’t Know That Pigs Stink

You don’t know what you don’t know… until tough times test relationships, finances and beliefs etc.

If the average person doesn’t know the difference between a good and a bad haircut or when a new lounge suite clashes with the room it’s in… what hope do they have sorting their finances or devising a plan to build wealth alone?

Three Kinds Of Knowledge

1. Stuff You Know
2. Stuff You Know You Don’t Know
3. Stuff You Don’t Know You Don’t Know

Traditional education tells us to increase the knowledge of ‘stuff you know‘.

Proper education is to increase the knowledge of ‘stuff you know you don’t know’! For Example

• I know each bank has its own lending criteria and loan calculator. This is stuff I know.
• I don’t know what the lending rules are for each bank. This is stuff I know I don’t know.
• I didn’t know one of my lenders would convert my low document loan to a full documentation loan without reapplying or supplying supportive paperwork. Neither did I know that another of my lenders had replaced two older loan products with newer more competitive ones- that I could swap over to. These were things that I didn’t know I didn’t know and as a result cost me $6,500 a year in avoidable bank interest.

You Have No Clue!

The reality is that neither you nor I have a clue! We don’t how much stuff there is that we don’t know that we don’t know and therein is the reason for most of the mistakes we make in life.

Successful people have other (specialist) people around them on their journey. A player has a coach, a singer has a singing teacher and a business owner has a business consultant/mentor. Coming to the realisation that someone else knows more (and can help you) is the first step in really learning. But why would you have a coach and then go and do your own thing anyway? That would be like having a dog and doing all the barking yourself!

Going the distance and succeeding in becoming a property multi-millionaire requires acting on the suggestions of those who know better. As with any worthwhile endeavour in life there will be tough times to overcome… so don’t go it alone!

Don’t go it alone. You need a team of four that you speak with regularly… and act on their ‘advice’:

1. The right finance specialist
2. The right property mentor
3. The right property
4. The right (pro property) accountant

I have come to understand in business and life that I win more often when surrounded by specialists than I do trying to become an expert in all areas. Merely increasing what I know is good but taking counsel from specialists is best! As is often said about someone… ‘He knows just enough to be dangerous’.

I rely on the expertise and advice of my accountant, Darren. He really knows his stuff and compensates for the accounting stuff that I don’t know that I don’t know. Likewise, when it comes to lending and finances I rely on Heather – as evidenced in her saving us $6,400+ a year in interest! My mistake was in not having her review my situation sooner.

Even though I have lived and breathed this stuff for the past 14 years and have Heather working from my office five days a week I was still giving $125 a week too much to two banks; OUCH! What is it that you don’t know that you don’t know right now that’s costing you?

• Opportunity cost by misreading markets and market cycles
• Paying more interest than is necessary
• Not knowing how to buy property in your superannuation fund

I can help you safely and responsibly make money in real estate and Heather can sort out your finances better than others… but if you need a haircut see a hairdresser. In all instances I recommend you don’t go it alone.

Tell me exactly what it is that you want us to help you with >>>here

Happy Investing,

Nick Lockhart
Our Customer Care Program works for you… because investing is personal!

How’s it working out for you so far?

Does 38%+ per annum returns, no capital gains tax and with GREATLY REDUCED RISK grab your interest… even a little? If so, reading this to the end is a MUST!

Back then I was working for Westpac. I was a financial planner and a serious ‘super sceptic’… for reasons that now vindicate me. That said, I see much benefit in super today… not because I have changed but because the legislation has.

Let me deal with something up front before I lose those who think I am just a property person taking a pot shot at another asset class! Just about all Australians are locked into superannuation, so the argument isn’t whether to participate or not… but rather how to manage your super to increase the likelihood of getting the result you want. And for the record, as a Westpac employee I convinced many people to not make extra contributions into super when they had personal debt big enough to choke a horse! Yes, suggesting they pay down non deductible debt (like their home loan) and leverage into investment property did nothing for my income… but that was never the point. It was the right advice to give these people… period! Needless to say I moved out of that industry (my choice) gravitating to where I am now.

Today, I don’t promote property because I’m in the property industry. NO; Today I’m in the property industry because I believe property is our best vehicle for building wealth!

20 years on from Keating’s reforms questions still hang over superannuation and the critical need to fund our ageing population. The stock market may have performed reasonably but ‘failure’ best describes the ability of fund managers when measuring personal superannuation returns.

But it doesn’t have to stay this bad!

Contact mrd >>>here

Most people:

• Have their retirement funds tied to the (extremely volatile) stock market
• Have no real say in their fund’s investment strategy
• Have no ability to leverage their super balance

The current Gillard government wants to introduce legislation to increase the employer contribution from 9% to 12% and then to 15%. This is tied to the mining tax and a whole lot of political ’cause and effect’ that I won’t touch on today. Suffice to say I assume you want the best returns, with the least possible risk, on whatever goes into your super.

FACT: Industry and retail super funds have averaged over the past decade an annual return exactly equal to the annual average inflation rate for the same 10 year period… 3.2%! So your money has effectively done nothing!

STOP for a moment and think about your superannuation. Given you have to participate in the system, are there better options from underperforming funds in volatile markets?

As an example only…

• Roll your super balance(s) into a Self Managed Superannuation Fund (SMSF)
• Use $100,000 of the balance for a deposit ($80,000) and 5% purchase costs (stamp duty and legal fees)
• Purchase a $400,000 property inside your SMSF (borrowing remaining $320,000)
• Property value doubles at some future time
• $400,000 asset becomes an $800,000 asset
• $100,000 initial balance turned into $480,000 (i.e. $800,000 less the original $320,000 debt)
• An ordinary property that averaged a 10 year doubling cycle represents a 7.2% average annual return
• A better researched property that followed history and doubled in seven years would represent better than a 10% per annum average return
• Your 4:1 borrowing ratio would mean in real terms that your actual total return was 380% (i.e. $100,000 became $480,000)
• WARNING: There are many considerations that need to be addressed with your financial advisor. E.G. the continuity of any life insurance attached to your current super fund. It’s never ‘one size fits all, but horses for courses’.

That said, property offers a real choice for people looking to put an end to an underperforming superannuation experience!

• We are moving to a season of falling interest rates
• Some property markets have bottomed and offer great buying opportunities
• Both the Federal and Queensland governments are (for a limited time) offering grants totalling $110,000 on qualifying properties to qualifying purchasers
• Changes to legislation allow for super funds to borrow

Super now ticks all the boxes! Add to that government grants and a buyers market in select capital cities and you have a compelling alternative to the lousy returns from volatile markets.

To discuss these or any other ideas concerning property, financing or refinancing with me and the team @ mrd just let me know >>>here

DISCLAIMER: Do not interpret anything I say as financial advice. For information or advice you request that goes beyond our scope we will refer you to an independent advisor.

Happy Investing,

Nick Lockhart
Our Customer Care Program works for you… because investing is personal!

A property investor is a business owner; but who:

• Doesn’t know he’s in business
• Doesn’t look after his investment like he would a business
• Incorrectly assumes that by merely having the property he will create wealth

STOP! I am not having a ‘cheap shot’ at you personally… but let the statistics speak for themselves.

• One in four investment property owners sell their investment property within the first 12 months
• Four out of five STOP buying after just one investment property

That leaves me dumbfounded asking one question… What tha?

Seriously, I’m passionate about the wealth creating opportunities property offers you and me… so these numbers are of great concern. They’re also very surprising and bear no resemblance to the experience of my clients over a decade. What these numbers do tell me is that most people ‘out there’:

• Get it wrong initially
• Lack ongoing support
• Have little understanding of property cycles

Referencing back to mrd‘s three safety check points:

1. Do you have the borrowing capacity up front
2. Do you have the capacity to hold onto your property post settlement
3. Do you have the knowledge, support and understanding to ensure you sleep well at night… not stressing over a decision that you should have been celebrating

Get The Right Support

Don’t wind up in regret… just another sad statistic! Opportunity abounds, especially right now, if done right.

Reliable and competent support in finance, finance structure and property (as in any business) are fundamentals. This is a ‘no brainer’.

My very real points of difference in business are in the education and support we freely offer. My team and I are totally committed to assisting you long before any purchase decision. And when the time is right, we’ll do our best to make your financing and purchasing experiences as uncomplicated and enjoyable as we can. It doesn’t end there, nor should it! For almost 10 years we have continued to support anyone who asks… long after settlement.

One in four property investors selling in the first 12 months and four in five never buying more than one should not be reality! I know for a fact that very often it is in the financing arrangements that most often things are messed up… but that doesn’t have to be YOUR experience.

In a nutshell, I promise that if we can help you at any stage of the process – we will!

Do You Want $7,000

It’s now one month into the new financial year and time to lodge your tax return. Did you know that an ordinary couple earning just $55,000 and $30,000 respectively who purchased a typical $350,000 investment property would be entitled to a $7,000 tax refund? NB: This is an example in which I’m assuming a new property and a depreciation schedule prepared by a registered quantity surveyor (QS)… not just an accountant (who is not licensed to claim as much as the QS).

In my experience most investors:

• Buy with emotion or on yesterday’s demographics
• Don’t understand nor implement advanced financing strategies
• Fail to claim all the ATO legitimately allows them to
• Do not prepare budgets or accurate cash flows
• Spend little time in understanding the market and market cycles impacting their ‘business’
• Fail to seek professional assistance, opting instead to make decisions that reflect their feelings at any given time
• Basically.. “perish for lack of understanding”

I guess it’s no wonder why only one in four investors last only 12 months and four out of five investors never go beyond a single investment purchase! Weird, in my opinion, given the certain financial fate we all face and the predictable assurances that investing in property (done the right way) will deliver over the medium to long-term.

Win/Win

Let’s face it… we win when you win!

If you’re even considering how (a) right finance structure and (b) investment property might fit into your future… do yourself a huge favour by speaking with mrd first.

If not more thoroughly and more professionally… I guarantee we’ll support you at least as well as anyone else – AND without the ‘BS’!

You have MUCH to gain and absolutely nothing to lose by contacting me with your question(s) now >>>here

Happy Investing,

Nick Lockhart
Our Customer Care Program works for you… because investing is personal!

Do you remember when the GST was introduced into Australia? It was July 2000. Since then, most working singles and couples could have managed to secure (at least) half a dozen well researched residential investment properties. If you did this; congratulations! No doubt, with falling interest rates and a seriously growing housing shortage… the global slowdown would be delivering you more benefits than challenges right now!

Reaction is all too common! Why wait for drastic times to push us to those “drastic measures” that the politicians keep spruiking?

Doesn’t it make more sense to conduct our financial affairs during the good times in preparation for those drastic times… that always find us sooner or later?

Now while we can’t change the past, it is unwise… perhaps irresponsible… not to learn from it!

• Wealth gives financial options… to work or not; full time or part time
• Wealth allows a family to capitalise their expenses through the leaner times, should that be necessary
• Wealth allows you the luxury to assist an aged parent or take your children travelling and broaden their horizons in life
• Put simply, wealth will allow the construction of a “force field” around your family so that when (not if) financial pressures come your way, they are found to be impotent and ineffective… as far as you and your family are concerned anyway
• Wealth allows you to take advantage of opportunities when they present

No!!! It is not drastic times that call for drastic measures; but life itself!

Sooner or later, LIFE calls for drastic measures. Therefore, until you have created your security and made provision to “pay for the rest of what your life will cost”… you should (1) have a workable plan and (2) be working that plan. So let me ask… are you?

You Have A Duty Of Care!

We get up each day and go through our routine, join the “rat race” and head to work! Why? To earn a living! Let’s not deceive ourselves… earning a living will never on its own deliver us lifestyle.

Unless you are doing something on the side; i.e. separate to your job… like kicking off your part time business, writing the songs that will form your first CD, working on securing a patent for your invention before taking it to market… or perhaps leveraging off what you already have to increase your asset base… you are derelict in your financial “duty of care”… and it is certain that lifestyle with cashflow (as opposed to debt) will never be your experience.

Yes!!! We first need to earn a living, but if that is all we are doing… if we are not simultaneously creating tomorrow’s lifestyle… we (absolutely) will be disappointed! It’s not a matter of if, rather when! Some people’s neglect catches up with them sooner, while others later. Either way, sooner or later our neglect will catch up with us. Hopefully when it does, there will still be time to do something about it.

While we have no choice but to endure pain at some time, we do have a say in which pain we will endure. Which have you decided upon?

1. The pain of discipline now, for a season
2. The pain of regret later, for the remainder of your life

Each and every day; in both the good times and bad… we should be doing something to take us a step closer to the realisation of our dreams and goals.

Don’t wait for ‘your ship to come in’. You began constructing it long ago already, piece by piece… and right beneath your feet. Truly talented musicians and sportspeople endured the pain of discipline for years and years before there ever was a hint that success was heading their way. Day in and day out, little by little… they did “something” to take them closer to their goal. Remember that it takes years to create an “overnight success”.

In an interview, one Australian Olympic swimmer said he never missed a training session. This was so that when he stepped up on the starting block he would know that he had done everything absolutely possible to be the best athlete that he could be. Whether tired or full of energy, whether the water was cold or warm or whether or not he felt like it… he did something towards his goals every day.

Constant and Unrelenting Action

Any worthwhile endeavour will require constant and unrelenting action. Taking great financial care of your family is not all they need from you… but is very, very necessary all the same. Let’s face it… the alternative is not worth considering.

Subprime, Fannie Mae, Freddie Mac, Global Credit Crisis, Recession, unemployment and so on and on! These words are not valid excuses for taking time off. Like the swimmer… rain, hail or shine… he swam. Making forward progress is sometimes quite easy and other times it’s really, really hard… but it’s always necessary.

There are times when it is prudent to conserve your financial resources while you seek out new opportunities… there are times when it is most prudent to step out and take action. For some it is now a time to consolidate. For others it is a time to move forward. Whatever choices we make on a daily basis, they ought to be carefully and responsibly considered responses to both our goals and circumstances… not a reaction to fear, uncertainty and confusion.

The important thing is to constantly do something towards your goals.

• Clearly define your goals
• Be real! If you are not prepared to fight for a goal… it isn’t really one at all
• Know your income(s) and expenditure
• Know where your money is being spent
• Identify wasteful and unnecessary leakage
• Get a financial health check
• Fine tune your cash flow structure
• Have your finances assessed to see what resources you currently have
• Learn all you can about your chosen strategy [did you catch that one?]
• Look for ways to overcome your next hurdle
• Remain focused and don’t get distracted

Remember, the financial “ship” that will keep your family afloat is being built piece by piece beneath you… and by you!

Regardless of where you are on your journey; just getting started or well on your way… discipline yourself daily to make some forward progress.

Walking the Talk

Each of the 8 members of the mrd team are doing just this. Our youngest team member’s daily activity includes learning and saving for a first deposit. Now is not the best time for him to buy, but he is doing something! Every admin person, including our part time bookkeeper has either settled an investment property with mrd or is unconditionally contracted to do so. All are looking beyond their next purchase and planning more.

Then there is Martin’s example. Martin set a goal to become a property multi-millionaire when he was 50. On a daily basis he then steadily progressed towards that end and at 58 years of age he retired (sort of like an Olympic achievement… considering how little he had in his favour at the age of 50). Today Martin works as an mrd Property Mentor on a part time basis… and by choice. He does not need the income as much as the involvement in helping others do likewise. If you have not spoken with Martin and had him tell you of his journey, maybe you should. Doing so would constitute as “doing something“… and cost you nothing.

If small doable, daily actions become a part of your routine… what now appears as a hopeful horizon may soon become your experienced reality! That’s when you will start to hear over and over again… people telling you how “lucky” you are.

Our Customer Care Program will work for you… because investing is personal. Don’t be afraid to ask for our help… thinking it will somehow be taken as a license to sell you something. That is so far from the mrd DNA, it’s laughable. We will assist you on your journey from where you are to where you want to go. We will do so respectfully and responsibly and at all times empowering you to make your own fully informed decisions. Personally, I think you should have a chat with Martin and ask him to assist you with an mrd “Finance Structure and Cashflow Health Check”. This is Step 1; the diagnosis phase… from where changes can be made to possibly assist you to:

• Pay off your mortgage sooner
• Eliminate horrible debt faster
• Legitimately reduce the amount of tax you are paying
• Do away with unnecessary property record keeping
• Keep your accountant’s charges to a minimum
• Set real (and achievable) goals
• Define a track to run on… so you are not derailed along the way

To take advantage of this no obligation, complimentary offer from mrd you will need to complete a Borrowing Capacity Assessment form. NB: While you may not be looking to borrow money at this time, the information gathered on this form is nevertheless essential before we can conduct a “Finance Structure and Cashflow Health Check”.

• To complete the BCA form, please click here
• To send a message to Martin, along with your details to have him contact you, please click here

CONGRATULATIONS; you have now finished reading this article; what next piece of your “ship” are you now going away to construct?

Happy Investing,

Nick Lockhart

mrd customer care program… because investing is personal

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.

As it turns out, 2008 was not a year where inflation was our major concern. In fact, before the year was out the global slowdown put an end to inflation as global demand for goods and services fell away and prices began collapsing.

Nick’s Opinion

Personally I think:

• Our economy still lacks the overall business and consumer confidence needed to see things turn around
• Banks are still being very difficult to deal with when it comes to businesses wanting to borrow money etc
• That the next round of federal government handouts (the stimulus package) will not have as potent a short term impact as expected or needed
• Unemployment continues to be the worrying issue and unless small business gets some relief the negative employment trend will not be arrested

It’s just an opinion and I may be wrong, but for reasons including those above, I expect we will see further cuts to interest rates. I also see justification for the extent of further rate cuts to go further than most economists are currently predicting.

The question: “Did the Reserve Bank get it wrong in March when they left interest rates on hold” draws a divided response; and only time will tell.

The RBA’s decision to leave interest rates on hold this month was either (1) A positive vote of confidence in the Australian economy, or (2) A mistake… that will be corrected in the months to come.

Outlook For Property Investors

Current conditions are actually ideal for investors… regardless of whether or not the RBA moves on rates further.

• Property can be purchased at fantastic prices; most, if not all, developers could be classed as “motivated vendors” right now
• Interest rates are the lowest they have been in our lifetime
• Australia is in the midst of a massive housing shortfall

For anyone with a job, the current climate should be as easy as it is likely to ever get… when it comes to creating wealth! Don’t let this open door close before you act!

Happy Investing,

Nick Lockhart
mrd Customer Care Program… because investing is personal

Finance Structure & Cash Flow Health Check

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 and open up opportunities that would otherwise have passed you by.

Yes please! Follow the link below to securely send us the information we need to complete this on your behalf:

https://www.investmentmentor.com.au/bca.php

Case studies of other mrd clients that have undertaken a financial health check:

http://investmentmentor.com.au/2009/02/20/property-investor-crash-victims/

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

• 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!

Follow the link below to securely send us the information required to prepare this for you.

https://www.investmentmentor.com.au/bca.php

To view case studies of other mrd clients that have undertaken a financial health check with us, see below.

http://investmentmentor.com.au/2009/02/20/property-investor-crash-victims/

Happy Investing,

Nick Lockhart
mrd Customer Care Program… because investing is personal

The Valuer!!!

The term “Valuer” is often misleading.  Many people assume, due to the label “Valuer” that this person is going to mathematically compute a recommended retail price for a property.  Nothing of the sort!  The term “Valuer”, when dealing with a financier, refers to someone who assesses the perceived risk involved in a particular transaction.  There are many factors involved that have nothing to do with the property itself.  The biggest single factor in any assessment is the opinion of that one person named “Valuer”.  It is not uncommon for opinions between valuers to differ by 10% or more on the same property.  The property is the same, they both have access to the same documentation and historical data but they come back with two vastly different numbers.  The only variable between them is their opinion.

Included in the valuation report along with an actual dollar value is a series of risk ratings for different criteria, mostly relating to the expected future market conditions.  Even if the valuation figure comes back within close proximity of the contract price, if the valuer’s opinion of any of these other risk criteria is high then the bank can also limit or decline any finance application.  In a bank valuation the “Valuer” isn’t just valuing that property, they are also predicting the likely economic future for the locality!

I recently had an mrd client comment on the low valuation he received on his own home and how it was actually below the council’s latest CIV (Capital Improved Value). The CIV is the total market value of the land plus buildings and other improvement and is calculated every two years using a process governed by the Valuation of Land Act and carried out under the guidance and audit control of the Valuer-General. The valuations are carried out by qualified professionals who hold recognised tertiary qualifications and who have the required practical experience.

I thought it may be useful for me to share what I sent to our client in regards to this matter. Names and other personal details have been changed for privacy considerations.

Hi X

I agree that valuations are an issue. You would have seen my own experiences related in recent articles. You would also be well aware of the issues last year where two identical townhouses standing side by side returned valuations $25k apart using the same bank and the same valuer- just different people working for that valuer. It’s a “professional’s” personal opinion , based on criteria set by the banks, and the bank will rarely vary from it because of the legal implications.

My issue with all this is in the terminology used. I don’t believe that the commonly accepted meaning of “valuation” is appropriate at present.

There are clearly two distinctly different documents here.  Both are misleadingly called “Valuations”:

• The bank “Valuation” for risk minimisation
• The Council “Valuation” for the setting of rates

I personally believe (and I could be wrong) that  the bank is setting a dollar value on their perceived risk, based on the property and on the borrower.

The council value is not really relevant as it’s the councils opinion of the current market value to set rates.  It is in no way related to the bank valuation which is a valuer’s opinion of the banks future risk potential in that particular transaction.

Realistically if the council’s valuation is too high, or values drop markedly what impact does it have on the council? They just collect more rates than they should I guess.

If the bank’s valuation is too high or values fall it has a dramatic effect on the banks security and risk level. Although we see no comparison between the Australian housing market and the US (covered in recent articles), what has happened in America must have some effect on our banks in that they will be more “nervous” about their security and will therefore be more conservative with their valuations.

A bank valuation of $410k when the CIV valuation is $434k is no more a variation than we often see between different valuers and lenders. In my recent apartment purchase at Robina we saw a $72k difference between a valuation done for St George and a valuation done for  Commonwealth Bank; mine was the one that came in $72k short!

In the current “financial crisis” with all the unknowns, banks failing around the world, often taking other banks down with them, I don’t see much chance of us changing their system.

I don’t disagree with your comments, I guess I don’t see anything we can effectively do apart from trying to understand how the system works and make sure we use it to our advantage (or minimise our disadvantage) wherever we can.

Happy Investing,

Martin Bell
mrd Customer Care Program… because investing is personal

Other Links to related “Valuation Articles”

• http://www.investmentmentor.com.au/valuations.htm
• http://investmentmentor.com.au/2008/11/28/valuations-will-somebody-please-explain/
• http://investmentmentor.com.au/2008/11/28/valuations-will-somebody-please-explain/

Finance Structure & Cash Flow Health Check

Our recent offer to complete a complimentary, no obligation Finance Structure & Cash Flow Health Check has been widely taken up. If you would like us to undertake this same service on your behalf please click the link below to send us your contact details.

More Info…

http://investmentmentor.com.au/2009/02/20/property-investor-crash-victims/

Yes please; I would appreciate a complimentary Financial Health Check

https://www.investmentmentor.com.au/bca.php

• Bad drivers don’t know they are bad drivers
• Pigs don’t know that pigs stink
• And you don’t know what you don’t know about finance structure

The following “Horror Finance Stories” took their victims by as much surprise as the person who had someone pull out in front of their car and cause an accident.

At least when you get behind the wheel of a car you are (mostly) in control. Sure there are other drivers on the road and then there’s things we rely upon – like brakes etc. When it comes to arranging and structuring your finances; you will become a passenger and your broker/banker a taxi driver.

Assuming your broker/banker properly understands the mrd Advanced Finance Strategies we promote, is akin to assuming a taxi driver will always take you to your destination by the shortest route… safely!

You would have probably noticed of late that we have been offering readers and clients alike a no obligation, complimentary “Finance Structure & Cash Flow Health Check”. Many have responded and taken up this Customer Care initiative and as such, we are exposing more and more “crash victims”.

Good people unwittingly letting unskilled drivers take control of their financial vehicle.

CASE 1 – BARRY:

Barry is nearing the settlement of an investment property sourced through mrd. He chose not to use an mrd preferred broker (one familiar with the mrd Advanced Finance Strategies), preferring to use his local credit union. This is completely understandable as he had a long term relationship with his credit union. Barry was comfortable with their service, found them to be friendly and conveniently located near his home.

While friendliness and customer care are essential, there’s so much more to correct finance structure than familiarity and a warm smile.

Barry took up our “financial health check” offer; which was fortunate for him as he was quickly headed for a wreck! His local credit union had initially not allowed any funds for settlement costs, such as stamp duty and legal fees. If we had not intervened he would have arrived at settlement about $12,000 short; that is with just enough funds to cover the property purchase only. This could have resulted in him being charged penalty interest while he madly rushed around trying to find the extra funds required.

It doesn’t end there; the credit union was also…

In the process of mixing private credit card debt with Barry’s home loan

Refinancing an existing loan back to themselves; i.e. replacing an existing loan with an identical loan. This added no benefit to the client but would have incurred another round of establishment fees etc… payable to the credit union

With Barry’s permission, we sent the credit union instructions (in “chapter and verse”) as to how to set the loans up… and they still got it wrong.

Someone from this office then had to educate the loans officer just to ensure Barry was given the correct finance structure!

It didn’t end there…

Round 2! The credit union then planned to mix investment debt and business debt in with his private home debt… and continued insisting on (unnecessarily) rewriting their home loan with an identical loan.

Throwing petrol onto the fire… they had cross collateralised their home and the investment property. With a pending settlement on his doorstep, Barry had no time to lose.

The instructions back to the credit union were simple:

Leave the existing loans as they were and create a single new loan to take to settlement that would have been sufficient to settle leaving about $4,000 in the buffer for their next year’s expenses.  Once the year is passed and the break fees reduced they will be looking to finance away from their local credit union; this time accepting our friendly suggestion that they use one of our preferred brokers.

This story had a happy ending, thanks to Doug… and a potential crash victim was saved!

CASE 2 – MARK:

Mark also chose to use a broker he was familiar with; someone who had an ongoing relationship with his place of employment and offered a bonus interest rate discount, due to this relationship. As it turned out, the discounted rates were similar to the big banks rates anyway.

Much to Mark’s disadvantage the broker encouraged Mark to take out fixed rates; some as high as 8.78% for 3 years.  mrd, knowing the dangers of fixed rates discouraged Mark from using them… but we failed in our attempts to overcome his brokers persuasion. The odds are really against you winning with the use of fixed rates; 87% of the time according to statistics. The benefit of fixed rates for the broker of course is that they are locking in their commission for 3 years as it is too expensive for most clients to escape from.

The total cost of cutting this victim out of the wreckage (moving him from a fixed to a variable rate) is in excess of $50,000! This was a very expensive crash!

This broker advised Mark that he had the borrowing capacity for two investment properties. So, armed with that professional advice, Mark proceeded to unconditional status on two properties. Some months on, interest rates have dropped rapidly… yet Mark is left paying more than $20,000 a year interest above what he would be paying had he accepted our guidance up front. He can swap from his fixed loans to variable… but it will cost him in excess of $50,000 up front to do so.

The fight continues! We have no happy ending here just yet… Doug is busy trying to cut this victim free from a mangled wreck.

CASE 3 – LAURIE:

When Laurie approached mrd he was trying to refinance an existing (non mrd) investment purchase and was looking for additional funding to buy another through us.

When Laurie financed his 1st investment property, he fell victim to a type of loan referred to as a “cash flow mortgage”.  These loans capitalise part of the interest back into the loan, reducing the initial cashflow requirements. The loans rely on continued capital growth.  After a few years people with these types of loans have to start paying the full interest rate. The early years of capitalised interest means they are now paying full interest and off a higher base. Obviously, this can place a heavy burden on some. Capital growth is predictable long term but less predictable short term.

NB: The overall interest rate associated with these types of loans is higher than you can find elsewhere… so “buyer beware”!

To assist with cash flow, Laurie had converted his existing investment property to student accommodation… but this made it undesirable in the sight of lenders. Struggling to find a way forward and build wealth for his family and wanting to please his wife who had her heart set on finishing the renovations on their home… Laurie asked for an mrd Finance Structure & Cash Flow Health Check

Next step… Doug and the mrd preferred broker go to work…

The broker worked tirelessly to find a lender who would accept the (student accommodation) property; eventually succeeding to refinance this loan with a mainstream lender. Laurie’s new loan came with a greatly reduced interest rate and a provision of funds so that he and his wife can complete their home renovations.

• Their expenses are now much lower than before
• They can breathe easy
• His wife is happy that the renovations are again on the radar
• With the added value these renovations will add to their home, Laurie will soon qualify to consider his next investment property; should that remain his goal
• With the lesson learned from this experience, Laurie has now converted his property back to a “normal” residential house

Thanks Doug… another crash victim has been saved!

CASE 4 – CRAIG:

Craig had been a student of various investment strategies for some time. Having taken some steps of his own, he secured a few cheap, older properties. Initially coming to us curious as to what the mrd Advanced Finance Strategies may reveal, one of our preferred brokers worked with Craig and put forward a proposal to deliver the objectives Craig was looking for:- Remove the cash flow strain associated with supporting his property portfolio from his family, so as to allow him to continue to build wealth for his family… without having to live like a pauper.

In reviewing his situation, Doug identified huge opportunities that Craig was not taking advantage of.  We put together a proposal that allowed Craig:

• The ability to meet his initial objectives
• Add more than $1 million dollars worth of property to his portfolio

While Craig was yet another victim of a poor finance structure… the greater loss was an opportunity cost.  Assuming that the $1 million additional value to his property portfolio doubles over 7 years (historical average), their wealth will now increase by an average of more than $142,000 per year each year for the next 7 years*!

* NB: A property that doubles in value over seven years, will probably experience five years of little and no growth, followed by two years of phenomenal growth; that is growth is normally not linear.

Craig is already better off… but the real gains are still ahead of him. This all came about without costing Craig a single dollar:

• mrd undertook this as a part of our Customer Care Program
• The new properties will settle without the need of a cash injection
• The mrd Advanced Financing Strategies have positioned Craig such that he will soon hold an extra million dollars worth of property in his portfolio for less money than it cost him before the $1 million was added

This was a massive wealth creation opportunity that only came to Craig’s attention because he responded to our offer of a no obligation, complimentary Finance Structure and Cash Flow Health Check.

Well done Doug! Not only have we saved another crash victim, you topped up his fuel tank allowing his (property) vehicle to take him further!

CASE 5 – Peter:

Peter had never had any dealings with mrd. He was referred to us when he was wanting to sell a property.  This one was a sad case of injustice… Peter was not just a victim of poor finance structure… but of ruthless financiers and predatory marketers!

Peter and his wife live in country NSW (probably under water right now). To us they are typical of hard working, honest (‘as the day is long’) country people; the backbone of this wonderful country!

Peter had developed a skill-set over his working life… but that skill-set did not include knowledge about property investing or finance.

His goal was to build a retirement fund through property investment, to provide an income for his family that did not rely on government assistance. To achieve this, Peter needed the support of someone who would supply the knowledge and experience that he lacked.

Guess What?

Rather than finding support from someone who cared… Peter ran into some of the rogues that are prevalent in the real estate and finance industries. Would you believe me if I told you that Peter “fell for” a group whose guidance served their own interests; rather than Peter’s?

Of course you do… they’re everywhere unfortunately!

Peter settled on a property that was sold to him at an inflated price. I can say that because mrd was actually offered these very same properties when they were first released to the market by the developer. We turned them down; based on price only!

The property was fantastic and in a great location… just not good value! To have lost a bit to an overpriced property would not have been so bad. It would not have caused him to crash… rather slow him down a little (property is very forgiving if you just wait).

His real crash came from the finance arrangements.  The marketers and the finance company combined to get every cent they could out of Peter; whose existing loan was with the CBA.  It would have been very simple to finance the investment property also through CBA on a good interest rate… allowing Peter to achieve his goals. This is exactly what should have happened! That wasn’t good enough for these vultures (sorry, I have no idea how to be gracious in these unjustifiable situations!).

They refinanced his own home; which was of itself completely unnecessary… and tied the two properties together with high interest rates and heavy break fees.

Peter was a goner the moment he signed the paperwork!!!!

It was only a matter of time before Peter got into trouble with the loans.  Anyone with a conscience would have tried to help these “Aussie battlers”… but instead they all lined up to make sure they got their commissions and fees out of Peter.  The final straw was them taking over the property and evicting the tenant to ensure Peter could not recover. Not only was his investment property in danger but also his own home. The vultures were circling.

It was at this time that mrd became aware of his plight. Along with our experienced brokers and Peter’s solicitors, Doug and I worked tirelessly trying to rescue Peter’s investment property (i.e. help him to hang onto it)… but he was too far down the legal path for it to be saved. The best we could do is counter the remaining blows being thrown at Peter and ensure he salvaged whatever he could from the wreckage.

We were able to minimise his losses and ensure he kept his home; something he very nearly lost also! We were also able to assist Peter in lodging a formal complaint with the regulatory authority about the finance company involved.

In this case, Peter lost the investment property and was (temporarily) derailed from his financial goals… but his home was saved… and he is still alive to have another go at a later time. Had Peter come to us earlier and requested a complimentary Finance Structure and Cash Flow Health Check, we would have been able to identify the issues involved and intercept them before the crash. This was not to be!

Peter’s was a story with “as happy an ending as was possible”; in the 11th hour… thanks again Doug!

If you have not had personal dealings with mrd… you would be forgiven for thinking we are “just another mob out of Queensland flogging any old property to whatever sucker comes along”. I challenge you to test us. We know we’re different, but you never will know until you experience the mrd difference. I am so proud of the wonderful and dedicated team that I lead. If you suspect that mrd may be able to add some value to your wealth creation journey, then click here to request a no-obligation, complimentary “Finance Structure & Cash Flow Health Check” for yourself.

Happy Investing,

Nick Lockhart
mrd Customer Care Program… because investing is personal

SYDNEY (AFP) – Australia’s parliament narrowly passed a 42 billion dollar (28 billion US) stimulus package Friday in a bid to stave off recession in the face of the global economic crisis.

The parliamentary approval leaves the government free to immediately implement its spending plans, with Prime Minister Kevin Rudd stressing the need for swift action throughout protracted negotiations during the bill’s passage.

Rudd was jubilant after parliament backed the plan, saying the package was in the national interest and would help Australia’s centre-left Labor government fight the global economic recession.

“The most irresponsible thing to do today, with the worst global economic recession since the 1930s staring us in the face, would be to do nothing,” he told parliament.

The package includes spending of 28.8 billion Australian dollars on schools, housing and roads over four years, tax breaks for small businesses and cash handouts of 12.7 billion dollars to eligible workers, farmers and students.

Rudd said the Treasury estimated the plan would boost economic growth by 0.5 percentage points in 2008-09 and 0.75-1.0 points in 2009-10, supporting up to 90,000 jobs.

“Without parliament’s support for this plan, growth would be slower and unemployment would be higher,” he%2

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