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WHITSUNDAYS

230 Shute Harbour Road, Cannonvale Email: sales@prdwhitsunday.com.au www.prdwhitsunday.com.au

NEWSLETTER

Back to basics

As I grow older I am consistently reminded about the simplicity of life and how important it is to get back to basics, basics are fundamental to making the wheel go round, smoothly. One of the most important wealth creation strategies is investment on a long term basis in median-priced residential real estate. When I first started in property in 1987 I was lucky enough to read Jan Somers’ Building Wealth Through Investment Property (www. somersoft.com.au). I practised what I learned and purchased my first residential investment property. When it increased in value, I used the equity to invest in more property and before I knew it I had 10 properties accumulating in value, paid for primarily by the tenants and the tax man. This wealth creation has allowed my family and I to enjoy a wonderful Whitsunday lifestyle and enabled us to leverage into businesses such as PRDnationwide Whitsunday. As the market moves past the bottom of the cycle I thought it important to talk about the wealth creation opportunities that exist and why and how you can take advantage of them. To me, it’s all about the “why”. Today, most people retiring will retire on a pension of less than $20,000 a year. In fact, 87% of us will be reliant on the government pension in some way. Less than 5% will retire with an annual passive income of $50,000 or more. Consequently, the “why” for you should be strong – you don’t want to struggle to exist on less than $20,000 a year. Retirement is about enjoying life as you have worked hard and, for many, it is about contributing to family or causes – this cannot be done on less than $20,000 a year. The second component to the “why” is minimising the tax we pay – the average Australian will pay approx $400,000 in tax during their 30-year working life. In our opinion, you must explore the alternative. The “how” starts with a goal or outcome – the average household income currently is about $70,000. In retirement, people generally can live on 75 per cent of their previous income (or $50,000) – generally pre-tax in your retirement phase this equates to $62,000. So, we need $62,000. To generate this we need (based on a consertative 5 per cent gross yield) $1,023,000 of net investments (multiply income by 16.5) plus owning the house we live in outright. This level of capital will provide the income stream desired without having the need to dip into and reduce capital, which lowers your potential income earning ability. If, like me at the time, you are starting from zero, this means you need to create in today’s value approx $1,500,000 in net equity (the above $ 1,023,000 in investments plus pay off your house of, say, $450,000. If inflation continues at, say, 3 per cent and

you have 25 years until retirement time, this figure will increase to over $3million at that retirement time. That’s a lot of money so its best to get started. Step 1, in our view, is to invest in your principal place of residence, a tax-free investment that you can call home. With property prices at such a low level and interest rates at an affordable 5 per cent, this is much more in reach than many people think. The biggest mistake I see people making is saying that they want a better property (eg bigger, views, acreage etc) first – they wait to save more and the increase in prices and interest rates beats them and they never enter the market. Once you have your first property, create equity (what you own of it) as quickly as possible by paying down the debt quickly (advice can be given on how to do this) and increase value by smart but not overcapitalising improvements. When you have sufficient equity, invest in your second property - your investment property. This will be substantially easier because you won’t have to pay a deposit (your bank will take into account the equity you have in your first home) and you have two extra people helping with the mortgage, your tenant and the tax man. You are now on your way, and in all likelihood you will be ready for your second investment property within a couple of years. Lets recap and see how the above simple strategy will serve you. We wish to retire owning our own home with (in today’s terms) $50,000 a year after tax. To do this, as we are starting from $0 and have 25 years, we need to accumulate $3million in assets. We have purchased this year a house for $450,000 that we live in, next year our first investment property for $475,000 and two years later our second investment property for $500,000. Assuming it takes us the full 25 years (and it won’t, there are much easier and quicker ways) to pay off our home loan and the values appreciate by a consertative 5 per cent we will have a total property portfolio worth approx $4,300,000. Even if we have interest-only loans, the entire time for our two investment properties and still owe the original $975,000 we will have net $3,300,000 or more than we need to achieve our $50,000 a year after tax. What’s more, you won’t be left at the mercy of a $20,000 a year government pension. So if it’s that easy why don’t more people achieve their financial goals? Most simply aren’t aware and fail to plan. By following the simply process above you will be well on your way. Having experienced the investment process daily, as licencee, and being certified to provide personalised investment advice, I can assist you with your plan. Christie Leet, Principal

OCTOBER 2013

Can you retire & live on less than $20,000 a year? For every 100 people born in Australia, only 1% is wealthy by age 65 while 87% are dependent on the government. Take the first step to join the 1% now by attending our program:  Personalised plan  Investment analysis program  Investment advice  Priority investment offers  Finance discounts

6pm Monday October 14

at PRDnationwide Whitsunday 230 Shute Harbour Road

In every program that we run there is a wide and varied group of attendees. It does not matter what your financial position is today, in fact many people start with a negative net worth. It is of far greater consequence that you are committed to change.

Secure your future RSVP - Michelle, Ph 49462000


230 Shute Harbour Road, Cannonvale Email: sales@prdwhitsunday.com.au www.prdwhitsunday.com.au

RESEARCH: Wealth being created HOUSES

For 2013 in the Whitsundays, there have been 93 settled house sales or $42.7million (more in addition to this will be under contract awaiting the settlement process) the highest sale price was $1,500,000. The median price has moved from just above $420,000 to approx $460,000 providing property owners with $40,000 in increased equity in under one year, which is a fantastic form of wealth creation. January was the highest settlement month with 19 sales recorded.

UNITS

For 2013 in the Whitsundays, there have been 95 settled unit sales or $33.7million (more in addition to this will be under contract awaiting the settlement process) the highest sale price was $2million. The unit market over this period has performed the strongest in terms of number of transactions and highest price levels. The median price has moved from just above $225,000 to approx $260,000, providing property owners with $35,000 in increased equity in under one year, which again is a fantastic form of wealth creation. May was the highest settlement month with 20 sales recorded.

LAND

For 2013 in the Whitsundays, there have been 66 settled land sales or $13.1million (more in addition to this will be under contract awaiting the settlement process). The median price has moved from just above $150,000 to approx $175,000.. May was the highest settlement month with 14 sales recorded. You will notice from the three graphs that settlements have slowed particularly in August. In our opinion this is a result of three factors: a) Some of the data will yet to be recorded for August and hence the month will improve b) Historically, the lead up to an election sees an easing in the real estate market c) The land market has eased and this is primarily due to sales occurring in estates that are yet to be completed (eg off-the-plan sales) and these will be recorded when the estate is complete and settled.


230 Shute Harbour Road, Cannonvale Email: sales@prdwhitsunday.com.au www.prdwhitsunday.com.au

SUCCESSFUL SALES 85 Pringle Rd, Cannonvale Sales Agent Rob Taylor

Brad Sobott

Christine Koolman

Sales agent

Connie Van Tulder

Sales agent

0437 257 371 Christine Koolman

19 Woodwark Cres, Cannonvale

Sales agent

0411 236 507 Simon Dymmott

Sales agent

0412 832 910 Brad Sobott

Sales agent

0428 466 124 Simon Dymmott

Lot 14 Mountain View Rd

Sales agent

0400 799 788 Connie Van Tulder

Sales agent

0419 025 744 Brad Sobott

0419 025 744

24 Whitehaven Cres, Cannonvale Sales agent

0411 236 507 Brad Sobott

0411 236 507

36a Stewart Dr, Cannonvale Sales agent

0400 799 788 Rob Taylor

0428 466 124

6/36 Waterson Way, Airlie Beach 3/20 Pandanus Dr, Cannonvale Sales agent

0437 257 371 Connie Van Tulder

1/40 Banksia Ct, Cannonvale

0448 601 694

74 Timberland Rd, Jubilee Pocket 21 Raintree Pl, Airlie Beach

Lot 3 Windemere Dr, Strathdickie 25 Laurina Dr, Strathdickie

Sales agent 0411 236 507 Rob Taylor

7b Wills Ct, Cannonvale Sales agent

Sales agent

30 Cumberland Ct, Airlie Beach

Sales agent 0428 466 124 Kelli Medford

30 Scarlet Gum Cres, Cannonvale 31 Eshelby Dr, Cannonvale

0428 466 124 John Harris

66 Jones Rd, Cannonvale Sales agent

Sales agent

Lot 2 Jessies Way, Cannonvale

Sales agent 0448 601 694 Rob Taylor

5/6 Island Dr, Cannonvale

0428 466 124 Brad Sobott

11 Orana St, Airlie Beach Sales agent Rob Taylor

Sales Agent

0428 466 124 Kelli Medford

20 Kara Cres, Airlie Beach Sales agent Rob Taylor

Unit 15 18-34 Raintree Pl

Sales agent

0419 025 744 Rob Taylor

44 Moonlight Dr, Jubilee Pocket Sales agent

0411 236 507 Christine Koolman

0428 466 124

14 Kingfisher Tce, Jubilee Pocket Sales agent

0437 257 371 John Harris

0412 832 910


230 Shute Harbour Road, Cannonvale Email: sales@prdwhitsunday.com.au www.prdwhitsunday.com.au

Friendly Auction System - 6pm Tuesday, October 15 -

13 Stewart Drive Cannonvale

4 bed, 2 bath, 2 car John Harris Sales Agent 0412 832 910 johnharris@prd.com.au

412 Peppers, 9a Hermitage Drive Airlie Beach

1 bed, 1 bath, 1 car Christine Koolman Sales Agent 0437 257 371 christinekoolman@prd.com.au

5 Scenic Ridge Drive Cannonvale

3 bed, 2 bath, 2 car Simon Dymmott Sales Agent 0400 799 788 simondymmott@prd.com.au

AUCTION October 15 6pm

523 Peppers, 9a Hermitage Drive

AUCTION October 15 6pm

51 Kingfisher Terrace

AUCTION October 15 6pm

Lot LRG 1 Cycad Close

Airlie Beach

3 bed, 3 bath, 2 car Christine Koolman Sales Agent 0437 257 371 christinekoolman@prd.com.au

Jubilee Pocket Land

Christine Koolman Sales Agent 0437 257 371 christinekoolman@prd.com.au

Hamilton Island Land

Christine Watson Sales agent Hamilton Island 0487 174 555 christinewatson@prd.com.au

AUCTION October 15 6pm

AUCTION October 15 6pm

AUCTION October 15 6pm

Expressions Of Interest

Lot 122 The Landing - Port of Airlie Airlie Beach Land

Gregg Taylor Christie Leet Sales agent Principal 0418751199 0407 775 488 christieleet@prd.com.au

EOI closes October 31 5pm

147 Shute Harbour Rd Cannonvale Land

Robert Taylor Senior Sales Agent 0428 466 124 roberttaylor@prd.com.au

EOI closes October 21 5pm


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