Goodbye Renting Read online

  GOODBYE

  RENTING

  For the battlers who never thought it was

  possible to get a place of their own

  it’s time to get back

  to BASICS and start

  living in your own home!

  TRACY LEE HARVEY

  1

  I dedicate this book to my son Luke

  for the remarkable, unique young man he is and for the

  adversity, challenges and survival skills he has had to

  endure and overcome in his short life.

  2

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  GOODBYE

  RENTING

  Tracy Lee Harvey

  Author of Goodbye Welfare

  4

  First published in Australia in 2008 by Tracy Harvey

  Copyright © Tracy Lee Harvey 2008

  www.goodbyewelfare.com

  www.goodbyerenting.com.au

  Project management: Best Legenz www.bestlegenz.com.au

  All rights reserved. No part of this publication may be reproduced,

  stored in a retrieval system or transmitted, in any form or by any

  means, without the prior written permission of the publisher, nor be

  otherwise circulated in any form of binding or cover other than that

  in which it was published and without a similar condition being

  imposed on the subsequent purchaser.

  National Library of Australia Cataloguing-in-Publication entry

  Author: Harvey, Tracy.

  Title: Goodbye renting / Tracy Harvey.

  ISBN: 9780646494739 (pbk.)

  Subjects: House buying — Australia.

  House buying — Handbook, manuals, etc.

  Dewey Number: 643.120994

  Cover design: Martin Harvey

  Internal design: Best Legenz

  Cartoon designs by Mathew Carey-Gorey

  Photos by Iris Imaging, Springwood, Queensland

  Printed in Australia by Ligare

  5

  The prospect of home ownership appears to be diminishing

  For many people and is currently being described as:

  Completely out of reach

  Unaffordable

  Impossible to achieve

  and

  A thing of the past

  But…

  Where there is HOPE

  There is a HOME!

  6

  Disclaimer

  This book is intended to provide education and general information

  on the subject matter covered. However, different states and countries

  have particular laws and practices that relate to specific locations and are

  subject to change. With this in mind each situation is different and the

  reader is advised to consult with their own adviser regarding their own

  individual circumstances.

  The author has taken reasonable precautions in the publication of this

  book and believes the information presented is accurate as of the date the

  book was written. However, the author, publisher and distributor, Dennis

  Jones & Associates Pty Ltd, do not assume any responsibility for any

  errors or omissions.

  The author, publisher and distributor explicitly disclaim any liability

  resulting from the application or usage of the information contained in

  this publication, and the information is not intended under any

  circumstances to serve as legal advice relating to individual situations.

  Distributed by Dennis Jones & Associates Pty Ltd / 03 - 9762 9100

  7

  Table of Contents

  Preface. ...........................................................................................................11

  Introduction. ...................................................................................................13

  Who is Tracy Harvey?. ..................................................................................21

  Starting at the end. .........................................................................................26

  What's So Bad About Renting?. ..................................................................28

  Homelessness. .............................................................................................31

  Some common statements made by people who didn't own their own home

  ....................................................................................................................34

  What a home Can do for you. .......................................................................35

  So why does it seem so hard to get into a home right now?. .......................35

  Overcoming the doom and gloom associated with home ownership. .........37

  The dreaded interest rate rise. ......................................................................41

  Picking the right property. ...........................................................................43

  Price. ...........................................................................................................43

  The dream home. ........................................................................................44

  Let’s get excited, baby!. ..............................................................................46

  Missing the boat. .........................................................................................47

  What do I need to do?. ................................................................................48

  Investment property requirements. ..............................................................52

  What is mortgage insurance?. .....................................................................52

  If I did use this strategy… What sort of investment property would I buy? 53

  Where do I invest?. .....................................................................................58

  What else do I absolutely need to know about home occupier versus

  investment property?. ..................................................................................60

  Saving. .............................................................................................................64

  How to Save, Save, Save!. ..........................................................................64

  Fly buys. .....................................................................................................67

  The baby bonus. ..........................................................................................68

  Free water. ..................................................................................................70

  Facing Your Demons. .....................................................................................73

  Excerpt. .......................................................................................................73

  Confront your debts…. ................................................................................74

  Don’t hide from your creditors. ...................................................................76

  Paying for all of your tomorrows. .................................................................78

  What is an income stream?. ...........................................................................80

  Time to save, save, save!. ...............................................................................81

  Start to stash the cash. .......................................................................
..........81

  Why it is so important to get into your own home then build from your

  investment. ......................................................................................................85

  Why is now such a critical time?. ................................................................86

  Story Time. .....................................................................................................89

  One-legged Warren. ....................................................................................89

  8

  The action list for getting a loan. ...................................................................93

  Find out how much you can borrow and what type of loan fits you!. ..........93

  The home loan maze. ..................................................................................94

  The 100% lend for your home. ....................................................................95

  What other loans will help me?. ..................................................................96

  Loan sharks warning. ..................................................................................96

  Type of loans that can help you into your first home. .................................97

  Low and no deposit loans. ...........................................................................97

  No deposit loans. .........................................................................................98

  Equity releases loans or reverses mortgages. ..............................................98

  Credit impaired loans. .................................................................................99

  A shared equity loan. ................................................................................100

  Fixed rate loans. ........................................................................................100

  Loan amount warning. ..............................................................................101

  Pre-Approval. ............................................................................................101

  Story Time. ...................................................................................................103

  Impressing can mean Regressing. .............................................................103

  Getting into the real estate market with friends or relatives. ...................106

  Mum and Dad’s house. .............................................................................106

  Can I get my inheritance early, please!. ....................................................109

  Gift giving. ................................................................................................109

  Buying from your landlord. .......................................................................109

  Other parties. .............................................................................................109

  Another future positive. ............................................................................111

  From separation to divorce: building a positive financial future for you

  and your children. ........................................................................................112

  What are you going to do with your settlement money?. ..........................113

  The 10 stages of separation - after the crying. ...........................................115

  Child support. ............................................................................................116

  Wake-up call. ............................................................................................117

  Story Time. ...................................................................................................120

  Ode to Gay. ...............................................................................................120

  Why being a good tenant can help you into your own home. ....................124

  Good tenants. ............................................................................................124

  The dream tenant. ......................................................................................125

  Problematic tenant. ....................................................................................126

  Capital gains tax. ..........................................................................................128

  Why you need to know about it. ................................................................128

  What is capital gains tax. ..........................................................................129

  Story time. .....................................................................................................130

  The two trolley boys. ................................................................................130

  Body corporates. ...........................................................................................137

  What is a body corporate?. ........................................................................137

  A boundary timber fence. ..........................................................................138

  9

  The Australian first home owners grant. ...................................................140

  What is it?. ................................................................................................140

  So what is the eligibility criteria?. .............................................................140

  What's wrong with the first home owners grant?. .....................................141

  What governments can do to assist. ..........................................................142

  Getting back to basics. .................................................................................145

  Consumerism. ...........................................................................................145

  The me generation. .......................................................................................148

  Disadvantaged doesn't have to mean Dispiriting. ......................................152

  Why you need to know about inflation when it comes to getting a house. 155

  Mistakes you can make in real estate but learn from.... ............................157

  Wrong move. ............................................................................................157

  What not to do at the point of sale. ............................................................159

  First home must do's.... .............................................................................160

  Insurance. ..................................................................................................160

  Summing up. .................................................................................................162

  Before-tax dollars versus after-tax dollars. ................................................163

  Not getting legal advice. ...........................................................................163

  Providing a roof over your head. ...............................................................163

  Be realistic. ...............................................................................................164

  Make the start. ...........................................................................................164

  Conclusion. ...................................................................................................166

  Recommended reading. .............................................................................168

  Things to do. .............................................................................................169

  Questions I have bee
n asked. .......................................................................170

  10

  Preface

  June 2007

  A married couple conducted a ‘drive by’ past a property they had bought

  only six weeks earlier. It was a three-bedroom townhouse which they had

  purchased as an investment. They noticed a group of people standing

  outside the neighbouring property and realised that an auction was

  underway. Naturally, they were curious so they stopped and joined the

  group of spectators to find out what the townhouse (that was almost

  identical to theirs) would sell for, hoping it would, at the very least, fetch

  a price close to their purchase price. They listened intently as several

  bidders began to bid. After only a few minutes the price had surpassed

  the amount they had paid for their place and the bidding continued. The

  bidding was made at $5,000 increments and the main bidders were

  persistent in outbidding each other until the price was now in excess of

  $50,000 more than the couple had paid for theirs. After a few more

  minutes the bidding began to slow down with one party eventually

  pulling out. The couple watched in amazement as the auctioneering

  eventually halted with the announcement that the property had been

  passed in as it had not reached the reserve price. The property was

  eventually sold for $65,000 more than the couple had paid for theirs only

  six weeks before!

  Now, check the date, this was 2007, right? And hadn’t the property

  boom well and truly ended?

  In some places around the world the market has slowed to an absolute

  halt, even falling into the ‘bust’ category. So how did this couple

  manage to make as much as $65,000 in as little as six weeks? Because, if

  you really analyse this situation, that’s exactly what they did. And how

  long does it take to work and save that sort of income? If you were to

  allow for paying tax it is an awful long time!

  Further to the story

  When the couple purchased the particular property in

  question, they went out one Saturday morning to public

  viewings, or open inspections, just like so many other prospective

  buyers. They trundled along to one property after another with groups of

  other people doing the same thing, but they had also made an