Investment property information resources
"I personally found the ""For Dummies"" books, on property investment, very helpful and a great primer. I found them unbiased and very informative, laying out the basic principles. Depending on your knowledge it can provide you with enough of a foundation to have an informed conversation with banks/real estates etc.  Watch the markets for a while (at least 6 months) to know what prices vendors will be expecting and rents tenants will be expecting, most property magazines will also contain a suburb summary in the back.  When you get closer to purchase make sure to ask your bank for the RP Data reports on the properties you are looking at, the banks will typically provide these for free. I also set out some points for myself which I made clear for myself at the beginning: This might provide a good starting point and really narrow down your research options as generic research on property investment can be overwhelming. I ended up with a 3 Bedder in western Sydney that has so far happily paid for itself. Building a good relationship with real estate agents and attending lots of open homes/auctions and talking to other investors can only help.  I was once told if you attend free property investment seminars you will always learn at least one new thing (be it statistics, methodologies, finance options etc ), with that in mind always keep a level head, leave your wallet at home and don't sign up to anything.  At the end of the day keep a cool head, don't stop reading and rush nothing." As user14469 mentions you would have to decide what type of properties you would like to invest in. Are you after negatively geared properties that may have higher long term growth potential (usually within 15 to 20km from major cities), or after positive cash-flow properties which may have a lower long term growth potential (usually located more than 20km from major cities).  With negative geared properties your rent from the property will not cover the mortgage and other costs, so you will have to supplement it through your income. The theory is that you can claim a tax deduction on your employment income from the negative gearing (benefits mainly those on higher tax brackets), and the potential long term growth of the property will make up for the negative gearing over the long term.  If you are after these type of properties Michael Yardney has some books on the subject. On the other hand, positive cash-flow properties provide enough rental income to cover the mortgage and other costs. They put cash into your pockets each week. They don't have as much growth potential as more inner city properties, but if you stick to the outer regions of major cities, instead of rural towns, you will still achieve decent long term growth. If you are after these type of properties Margaret Lomas has some books on the subject. My preference is for cash-flow positive properties, and some of the areas user14469 has mentioned. I am personally invested in the Penrith and surrounding areas.  With negatively geared properties you generally have to supplement the property with your own income and generally have to wait for the property price to increase so you build up equity in the property. This then allows you to refinance the additional equity so you can use it as deposits to buy other properties or to supplement your income. The problem is if you go through a period of low, stagnate or negative growth, you may have to wait quite a few years for your equity to increase substantially. With positively geared properties, you are getting a net income from the property every week so using none of your other income to supplement the property. You can thus afford to buy more properties sooner. And even if the properties go through a period of low, stagnate or negative growth you are still getting extra income each week. Over the long term these properties will also go up and you will have the benefit of both passive income and capital gains. I also agree with user14469 regarding doing at least 6 months of research in the area/s you are looking to buy. Visit open homes, attend auctions, talk to real estate agents and get to know the area. This kind of research will beat any information you get from websites, books and magazines. You will find that when a property comes onto the market you will know what it is worth and how much you can offer below asking price. Another thing to consider is when to buy. Most people are buying now in Australia because of the record low interest rates (below 5%). This is causing higher demand in the property markets and prices to rise steadily. Many people who buy during this period will be able to afford the property when interest rates are at 5%, but as the housing market and the economy heat up and interest rates start rising, they find it hard to afford the property when interest rate rise to 7%, 8% or higher. I personally prefer to buy when interest rates are on the rise and when they are near their highs. During this time no one wants to touch property with a six foot pole, but all the owners who bought when interest rates where much lower are finding it hard to keep making repayments so they put their properties on the market. There ends up being low demand and increased supply, causing prices to fall. It is very easy to find bargains and negotiate lower prices during this period. Because interest rates will be near or at their highs, the economy will be starting to slow down, so it will not be long before interest rates start dropping again. If you can afford to buy a property at 8% you will definitely be able to afford it at 6% or lower. Plus you would have bought at or near the lows of the price cycle, just before prices once again start increasing as interest rates drop. Read and learn as much as possible from others, but in the end make up your own mind on the type of properties and areas you prefer.
The property buys understanding and advising the property proprietor of the date of the culmination of the development venture, flat, estate, house and office. We provide the best service of Real estate purchase and sale contracts. We typically prescribe that customers hold all property for the sake of a Panamanian partnership for resource security and pay to assess reasons. t ought to be noticed that Panamanian common law puts the weight of duty on the dealer to react to the purchaser for lawful and tranquil ownership. I used to own a few investment properties, so I'm pretty familiar with this.  As MrChrister mentions, lenders see investment mortgages as higher risk. People who fall into financial trouble are much more likely to let their investment properties go than their personal residence.  Consequently, the interest rates and downpayment requirements are generally higher. Typically a mortgage for an investment property will require 20% down, vs. as low as 3-5% down for a personal residence.  With excellent credit and some shopping around, you could probably do 10% down.  Interest rates are typically about a half-percent higher as well. You'll also find that the more investment properties you have, the harder it becomes to finance new ones.  Banks look at debt-to-income ratios to determine if you are over extended.  Typically banks like to see that your housing payments are less than 20% or so of your income.  However, with rental properties, housing payments generally account for far more than 20% of your rental income.  Other income you have can offset that, but after buying 2-3 houses or so, your DTI generally creeps into the range where lenders are uncomfortable lending to you anymore.  This is why you'll find that many rental properties are bought on land contracts with owner financing rather than with mortgages. Where we’re going, we don’t need profits Twitter Facebook LinkedIn Print this page 15 SEPTEMBER 19, 2017 By: Alexandra Scaggs Simply put, earnings no longer reliably reflect changes in corporate value and are thus an inadequate driver of investment analysis. – Profs Feng Gu and Baruch Lev, in a paper for the CFA Institute’s Financial Analysts Journal Well then!  This idea challenges the very heart of traditional equity-market investment analysis. The authors point out that legendary stock-picker Benjamin Graham spent hundreds of pages of his 1962 book on analysing and predicting earnings and other quarterly metrics. Earnings prediction is still central to most sell-side analysis as well.  But if profits, EBITDA or sales were truly central for corporate valuation, wouldn’t markets punish regular loss-makers like Tesla and Amazon more severely? And wouldn’t there be a stronger return to predicting profits?  The returns to such predictions have diminished over time, according to the authors of the paper, which might help explain the persistent underperformance by active fund managers. While the professors commit a minor chart crime below by starting the Y-axis at 1.5 per cent, it seems notable that potential gains were lower during the 2009 downturn than during the dot-com bust:  The 30-year pattern of the gains from the earnings growth investment strategy is depicted in Figure 2. Again, the deterioration of gains from perfect growth prediction is evident. Clearly, the problem lies with reported earnings, not in the way investors use them. Simply put, earnings no longer reliably reflect changes in corporate value and are thus an inadequate driver of investment analysis.  The decline in profits’ importance can be explained by a fundamental change in the way companies create value, they say.  There are lots of names for the change: The information revolution, the rise of the knowledge economy, and so on. No matter what you call it, the idea is that modern production relies less on physical capital and more on intellectual capital.  Accounting and financial analysis methods have failed to adapt to this change, they say. For example, companies are required to expense R&amp;D and sales expenses immediately, while they can amortise expenses from capital investment and acquisitions (including intangibles) over time. They argue those rules penalise the important methods of modern value creation, since R&amp;D costs create lasting returns from new products and SG&amp;A expenses create lasting returns from new customers.  Of course, one person’s “internally generated intangibles” can be another’s “overpaid salesforce”. But the difference in accounting treatment between those costs and acquired intangibles can make it difficult to compare within industries:  Thus, a company pursuing an innovation strategy based on acquisitions will appear more profitable and asset rich than a similar enterprise developing its innovations internally. Consequently, reported earnings, assets, and market multiples (P/E, book-to-market ratio) cannot be compared within industries, and earnings definitely do not reflect intrinsic value creation. And as far as we can tell, the professors aren’t lobbying to start amortising all sales costs and executive compensation. Instead, they say we should stop looking at the consequences of corporate value creation — the quarterly reports — and start looking at its causes.  They suggest financial analysis based on strategic assets, which are (1) rare, (2) difficult to imitate and (3) generate net benefits, like growth in a customer base or sales.  There would be four steps to this type of analysis. From the paper, with our emphasis:  1. Taking inventory of strategic assets: Compiling a list of the major strategic assets of the enterprise; distinguishing between operating and dormant assets (e.g., patents under development or licensed out versus abandoned patents), active brands (enabling the charging of a premium product price) and brands in name only, or producing oil and gas properties and those under exploration versus inactive properties. Such inventory taking establishes the foundation—active strategic assets—of the company’s competitive advantage. 2. Enhancing strategic assets: Without continued investment and replenishment, even highly productive assets will wither on the vine (recall Dell). You should ask, Is the spending on R&amp;D, technology purchases, customer acquisition, brand support, and employee training sufficient to maintain and grow the business? Cutting R&amp;D or employee training to “make the numbers” clearly bodes ill for future growth. 3. Defending strategic assets: These assets are vulnerable to competition (from similar products), infringement, and technological disruption, raising the question of whether the company’s assets are adequately protected by continuous innovation, patent defensive walls, and litigation. A continuous loss of market share clearly indicates a failure to protect assets. 4. Asset deployment and value creation: Are the strategic assets, along with other company resources, optimally deployed to create value (e.g., retail outlets with increasing same-store sales)? And what is this value? Note that in our analysis, the measurement of the periodic value created is a byproduct rather than the focus of the analysis. We prefer to measure value created by cash flows to avoid the multiple managerial estimates embedded in earnings. In contrast to the cash flows generally used by analysts (EBITDA), however, we add to cash flows the company’s investments in value-creating strategic assets, such as R&amp;D, IT, and unusual brand creation expenditures, which are not really operating cash outflows. Now, if we are living in a period of secular stagnation, this could be seen as an attempt to lower the bar to make up for lackluster capital investment. (One academic literature review we found on the topic of strategic assets only cites papers from around the time of the dot-com bubble. Fancy that!)  What’s more, “defending strategic assets” can sound a lot like “maintaining monopoly power”, depending on the methods companies use in their defence. So an investment analysis focussed on strategic assets might also require more aggressive anti-trust regulation.  But if you accept the idea that widespread adoption of the internet brought a fundamental and irreversible change in the drivers of growth, there are worse approaches to financial analysis you can take.  There’s more detail and argument in the paper, which you can find here. "These kinds of questions can be rather tricky. I've struggled with this sort of thing in the past when I had income from a hobby, and I wanted to ensure that it was indeed ""hobby income"" and I didn't need to call it ""self-employment"". Here are a few resources from the IRS: There's a lot of overlap among these resources, of course. Here's the relevant portion of Publication 535, which I think is reasonable guidance on how the IRS looks at things: In determining whether you are carrying on an activity for profit, several factors are taken into account. No one factor alone is decisive. Among the factors to consider are whether: Most of the guidance looks to be centered around what one would need to do to convince the IRS that an activity actually is a business, because then one can deduct the ""business expenses"", even if that brings the total ""business income"" negative (and I'm guessing that's a fraud problem the IRS needs to deal with more often). There's not nearly as much about how to convince the IRS that an activity isn't a business and thus can be thrown into ""Other Income"" instead of needing to pay self-employment tax. Presumably the same principles should apply going either way, though. If after reading through the information they provide, you decide in good faith that your activity is really just ""Other income"" and not ""a business you're in on the side"", I would find it likely that the IRS would agree with you if they ever questioned you on it and you provided your reasoning, assuming your reasoning is reasonable. (Though it's always possible that reasonable people could end up disagreeing on some things even given the same set of facts.) Just keep good records about what you did and why, and don't get too panicked about it once you've done your due diligence. Just file based on all the information you know." I would like to specifically address your second question. There are a number of great resources available online, but I found that when I was first starting out the website Investopedia was a very helpful resource. There you will find a wide range of information regarding investing, investment vehicles, and glossaries of key terms with robust definitions to help you with the financial jargon. Reading the descriptions on Amazon.com it appears Investments is a graduate text and Elements of Investments is the undergraduate version of the text. Hmm well the methods used differ depending on the asset class. I've worked with a REIT and PE on a few different types of commercial projects. For a general overview though I would say look up courses at a local community college and purchase the text books on the syllabus. Some asset classes also have free industry updates which can give you an broad overview. Feel free to PM me if you want to talk specifics. Regarding transferring a residential investment property into your SMSF, no you cannot do it. You cannot transfer residential property into your SMSF from a related party. You can only transfer Business Real Property (that is commercial or industrial property) into a SMSF from a related party. You can buy new residential property inside your SMSF, and you can also borrow within the fund (using a non-recourse loan) to help you buy it, or you could buy it as tenants-in-common with your SMSF (that is you own say 50% in your own name and 50% under the SMSF). Regarding self-managing the investment properties held in your SMSF, yes you can, but you should make sure all your paperwork is in order (all your t's crossed and your i's dotted). You can even charge your SMSF for managing the properties, but this should be at market rates (not more).