Renegade Economists show 303
As broadcast on 3CR on Wednesday 21.08.13.
Karl Fitzgerald: Property spruikers, spruikers, spruikers. Today we go into the heart of the battle zone, into one of the biggest property spruiking seminars in Australia. One of 15 tour stops for Dymphna Boholt.
Dymphna Boholt: Hey guys, my name’s Dymphna Boholt, and I’m here to invite you to a full one day of training that I’ve got coming up very close to you. Why is this going to be important to you? Well let me tell you what I’m going to cover and why I’d love you to be there. I’d love to meet you and love you to be part of the journey with me. Here’s what we do. First of all, I’m going to talk about how the ownership of property has become so important, and how you need to own your properties, not just for now but for tax reasons, so when something goes against you, someone’s not going to take it away from you. It’s a big problem in this country and it’s getting bigger, and I really want to stress that. And I really want to teach everybody how they can start to grow a significant portfolio safely and keep it. Keep it as a legacy. Keep it as a portfolio that will live on long after you’re dead and gone. So the kids have got it, the grandkids have got it. Something really creating that long family trust fund. But how do you do that? That’s a long way out in the future. So what I’m going to do in this one-day event is I’m going to cover some economic stuff. I’m going to tell you about hot spots around Australia. I’m going to tell you about where our economy is at right now, and what we need to be doing right here right now to change your life.
KF: Alright, this is Renegade Economist Karl Fitzgerald signing in from a property spruikers event: I love real estate, being conducted by Dymphna Boholt who is one of Australia’s leading property proponents. She’s traveling Australia at the moment doing a national tour. There’s some 400 people at this seminar today. It’s fast paced, it’s full of facts and it’s all about pushing real estate higher and higher as the ponzi game rolls on.
Spend $5,000 on her investment material, and she’ll guarantee you’ll earn 10 times that within the next 12 months or your money back. Amazing! Discretionary trusts are the vehicle to protect your assets – that is the key. What are some of the other things? You’ve got to have a bucket company set up. You’ve got to have each property you own set up with its own trust and its own company structure above that and then a bucket company, which is the parent holding account. There’s piggy bank trusts involved. She has buzzwords for everything. But the big one this morning was all about superannuation. “It’s our last remaining tax haven”. She said, “with self managed super funds, now you can borrow via your super entity”. You only pay 15 cents in the dollar on income earned there in your pre-retirement phase period. And your capital gains tax at 10%, but when you’re in that pension phase, no income tax, no capital gains tax. You only need 20% deposit to buy the house, “so dip into you super and do it” was the sort of vibe coming through. It’s all about passive income. “What changed my life was passive income”, she said. It’s all about risk analysis, reverse feasibilities, fear of success. Can you do it?
Some of the other buzzwords coming through were ‘chunk deals’. It’s all about buying big blocks of land, subdividing and cleaning up. Some people she’s quoting are making $100,000 in just 3 or 4 months. There’s something else she calls a grid variance analysis, which is one of her big plays, looking at location, location I dare say. Are you a serious investor or are you a BBQ investor? You’ve got to be in the know.
Phenomenal, sitting in the room with 400 people hearing about all of these examples of how people are buying real estate at prices that match the rental incomes. This is the trick she’s saying. Don’t negative gear by spending more than what the property can actually deliver to you in income. That is sensible. That will help keep a lid on this bubble. But what she’s really saying is buy regional. Buy regionally! That’s where you get these large blocks of land. You can have these chunk deals and earn some quick cash. Alright, let’s go back to the seminar now. We’ve got another 2 or 3 hours. We’re going to be hearing about some of the theories Phil Anderson and Fred Harrison talk about, W. D. Gann. Essentially pulling some of the Georgist knowledgebase I talk about, of the business cycles; real estate cycles and using that to make easy money. So everyone is in it to win it. It’s all about passive income and setting that up in 18 months. So I will report back after this session.
DB: Imagine whatever you earn now, whether it’s $40,000 a year,
$60,000 a year, $100,000, $200,000, whatever! Whatever you earn now, imagine earning that same amount of money, but passively. What’s passive income? Passive income is about having that money coming into you regardless of whether you get out of bed or not. Regardless of whether you go to work, regardless of whether you pick up a pencil, regardless of whether you do anything. It’s passive. It comes in from income. Now I’m about real estate, I’m not about shares; I’m not going to talk about anything else. It’s about real estate. So real estate income that comes into you over and above all of the expenses related to that property. And you’ve still got some left over. So you’ve got rent coming in, you pay the interest on your mortgage, you pay your rates, you pay your insurance, you pay someone to manage it, you pay some repairs and maintenance, and you’ve still got some left over. And that some left over, imagine if that’s 100 dollars a week. That’s $5,000 a year. That’s $5,000 a year you never have to get out of bed for again forever. You never have to earn that money again, and you know what?
The funny thing about passive income in real estate is that it actually increases in value. So if it’s $5,000 this year, chances are it will be $5,400 next year. Might be $6,000 the next year, might be $7,000. You turn around in 5 years time or 10 years time, and its $20,000, $30,000. Passive! That’s after paying all of the expenses. Now that money comes in regardless of what else you do.
But that’s just one property. Imagine if you’ve got two of them, or 3 of them, or 4 of them. Imagine if it’s not just $5,000 income by $25,000 in passive income. For some of you, you’re getting uncomfortable. For some of you you’re not really getting this, you’re going, “Ahh that’s not possible, they don’t exist. Not in Australia… We’re one of the most expensive countries in the world because that’s what the media tells us”.
Well listen to this media, there’s plenty of good property around. There’s plenty of passive income, around but you need to be educated. You need to be looking at certain types of property, certain styles of investing. And you need to be doing this in a calculated, logistic fashion. To a business plan that works for you. And remember that your business plan is going to be different from the guy sitting next to you, because he’s got a different personality. He’s got a different amount of money starting with, he’s a different person, he’s got different dreams, goals, and aspirations to you. So I’ll teach you how to do that business plan for yourself. I’ll teach you how to go on a journey to make that happen for you.