Mick and I would be keen to have you offer us advice on how to better structure our loans etc

“Hi John,

Jackie here......Mick and I would be keen to have you offer us advice on how to better structure our loans etc.

Firstly, we want to make sure our loans etc are working to the best of the ability, and secondly, we are not happy with our BOQ service. Our latest home loan is with CBA and we also have a mortgage with Macquarie.

It is difficult for us to get down seeing you for the hours / days we work. I thought it might be possible to get the ball rolling over email - if you could let me know if this is OK, and what you would need to look at (Mortgage statements, rates etc).

I could either email or mail a package of everything you need for you to review and then hopefully we can get down to see you personally to wrap up.

How does that sound?

Thanks in advance for your assistance,

Jackie”



Why is this so?
In our discussions they commented that they ‘understood property’ & they ‘liked renovating them’ and ‘buying low’ meant that they should make capital gains. These are very good reasons but they haven’t done back of the envelope cash flows which is why to use Michael’s phrase ‘they are robbing Peter to pay Peter.’

[Julia could use the same phrase with the MRRT and SPRT]

Let’s look at a rental property scenario with a house value say 400K
Debt on it of say 75% i.e. 300K @ 7.4% interest only means -22,000
Costs as rates + insurance + RE fees + 1%-2% maintainence at least = - 8,000
Rent which always should be higher say 350pw +17,500

I.e. a gross negative cashflow of 12,500
How much is this over 5 years = $62,500 which must be made up.

Good luck as the real estate agent is ~3% = 12K+ & the government wants its share 50% of the nominal gain. Michael & Jackie & all others are hoping for a sizable gain to have a residual capital gain left for them. It isn’t worth the risk or the reduced lifestyle now.
What if the rental was empty for a long period? How much does that cost & where does the cashflow come from? What if 2 properties were not rented for a period?

Mick & Jackie need to restructure their debts using our active wealth strategy.



We had other discussions this week.

Noel wanted some 800,000 life insurance & so we ran off the top 18 company rates for his age of 48. In our discussions he asked ‘did we have a strategy so that he could retire his current income’. That’s a challenge when he has 2 children & still a debt of 180K. This is a very common problem out there. He at least knows his position & doesn’t like the outlook. Our active wealth strategy may help if he has a positive risk profile & doesn’t want to be ‘the frog in the jug’.

Of course the regulators in their wisdom want him to rely on them. Does he?


We had Will call us after being referred by another happy client. Will has a 245K mortgage & was also aged 48. However he had 16K on credit cards & very concerned that he would be in the same financial position & debt when he retired. A different solution is required & we need to maximise the second income with some discipline.


We had Tony comment after 6 weeks in Turkey enjoying hot air ballooning & holidaying. He admitted that 3 years ago he came to the conclusion that would never own another house in his lifetime. He couldn’t afford to buy the $1m+ house which his lifestyle wanted. However he could afford to rent it. Any landlord is going to be better than a bank as a landlord. What Tony is doing is saving all those extra costs of house ownership such as rates & maintainence & using our active wealth strategy.
I.e. let’s revisit if we need a house.


We had from Lianne today after emailing her monthly HW.
‘Back from our walkabout – it was fantastic’ and ‘we did 3 week trip including Lake Eyre and Uluru and other sites along the way – tenting it!
Come back to make sure we can go again for longer and’ Also did a crossing of the Simpson Desert west to east’.
Lianne can do this as they have reduced their large mortgage over time to a nominal 34k bad debt today. They are so happy with us they wanted off the satin drugs they were on for our active health prevention strategy which also everyone needs.


As these are not uncommon scenarios then we invite you to call on 07 3848 1088 or email us or visit our websites. Our active wealth strategy may be worth lunching over.


John McAuliffe