# Diving in the deep end...



## easylikesunday (20 June 2010)

Hello all.

Im 25 and have just brought my first property. I was lucky enough to get it well below market value, and as it sits now, Im about 30-35k up. Going off recent sales in the area, and several real estate sharks.. I mean agents!

Being in the trade I plan to renovate the house and IF possible, sub-divide the block and build 2-3 units down the track. As I have only just settled on the house my first question is how long do I need to wait before I can re-finance? 

Secondly, I have around $27,500 cash to invest. I plan to put $7,500 straight into the house to make it more "liveable" so that leaves me with around $20,000 to gamble with.

I have brought and sold a few shares just to say I have done so, but Im a complete amateur when it comes to investing. All I know is 6.00% from ING isn't going to fill my pockets any time soon.

Im not after stock tips or secrets, just some advice in what direction to head?

Gold?
Shares?
A racehorse??

Cheers!


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## drsmith (20 June 2010)

Did you borrow to purchase the property ?

If so, a home loan offset account will effectively give you a rate of return on your cash which is the same as the home loan interest rate, tax free.

As for racehorses, definately not the following.

https://www.aussiestockforums.com/forums/showthread.php?t=19063


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## nunthewiser (20 June 2010)

easylikesunday said:


> Im not after stock tips or secrets, just some advice in what direction to head?
> 
> Gold?
> Shares?
> ...




WOW! Looks like its your lucky day.......I have the deal of a lifetime!

 Just so happens i have ONE position left in my investment club.

Please send cheque/money order for $19,999.00 to . 

Deal of a lifetime
P.O box 1234
Nigeria


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## drsmith (20 June 2010)

He won't have that much left after he sees my investment offer on the first page of the above linked thread.

You might have to offer a 40% early bird discount.


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## easylikesunday (20 June 2010)

Yes I borrowed. After initial deposit and FHOG I owe about $155,000 on the house and its been valued at $180,000 - $210,000 as it sits now.

I plan on renting the house out in the future which should nearly cover my repayments.


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## easylikesunday (20 June 2010)

nunthewiser said:


> WOW! Looks like its your lucky day.......I have the deal of a lifetime!
> 
> Just so happens i have ONE position left in my investment club.
> 
> ...






Im still waiting for my 10% share of 20 million from Benin..


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## jbocker (21 June 2010)

easylikesunday said:


> Hello all.
> 
> Im 25 and have just brought my first property. I was lucky enough to get it well below market value, and as it sits now, Im about 30-35k up. Going off recent sales in the area, and several real estate sharks.. I mean agents!
> 
> ...




Well done Easylikesunday on buying at a discount. $20 000 to 'gamble' with.. I take it that is a poor choice of word, ie dont gamble, that sort of money dont come easy! 
Renovating the property, and subdividing, I assume you can subdivide and keep the original residence - otherwise why renovate if you eventually knock over the house. (I appreciate $7500 is not much when it comes to renovating). Here again watch the timing of your renovation wrt to renting - may need to consider the best timing for tax, depreciation, capital gain, adding to the cost base of property. Talk to your accountant.



easylikesunday said:


> Yes I borrowed. After initial deposit and FHOG I owe about $155,000 on the house and its been valued at $180,000 - $210,000 as it sits now.
> 
> I plan on renting the house out in the future which should nearly cover my repayments.




If you eventually rent out the property, be careful with what you do with your $20 000, and you pay it off the loan, you _may _be better to park it in an offset account instead.  In a nutshell talk through your plans with your accountant before you commit to any course of action. You can lose some significant 'benefits' just by doing something simple like parking the money in your loan and redrawing it.


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## son of baglimit (21 June 2010)

easylikesunday said:


> Yes I borrowed. After initial deposit and FHOG I owe about $155,000 on the house and its been valued at $180,000 - $210,000 as it sits now.
> 
> I plan on renting the house out in the future which should nearly cover my repayments.




i assume you have considered the POTENTIAL capital gains issues of renting.
i say POTENTIAL as they can be avoided.
are you prepared to 'rough it' and live there immediately while renovating, thereby establishing it as your main residence and having the CGT exemption apply ? 
once established with the exemption then you are free to rent for 6 years.
http://www.ato.gov.au/individuals/content.asp?doc=/content/36887.htm


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## Sir Osisofliver (21 June 2010)

easylikesunday said:


> Hello all.
> 
> Im 25 and have just brought my first property. I was lucky enough to get it well below market value, and as it sits now, Im about 30-35k up. Going off recent sales in the area, and several real estate sharks.. I mean agents!




Congratulations!!



> Being in the trade I plan to renovate the house and IF possible, sub-divide the block and build 2-3 units down the track. As I have only just settled on the house my first question is how long do I need to wait before I can re-finance?




Depends upon a couple of factors, residential property is usually able to borrow 85% as a maximum against the security value of the property. If we take your upper figure of 210,000, your maximum borrowing capacity would be $178,500 (since you borrowed $155,000 this would mean you could potentially borrow a further $23,500).  If we take your lower figure of $180,000 you are *maxed out already*.

Be aware however that the 85% figure is dependent upon other factors such as serviceability or your ability to repay the borrowed funds, tightness of credit within the bank amongst others.

So the valuation is what will determine whether you are able to borrow additional funds against the value of your investment. Be careful however about using the same comapny to value your house as you use for other investment purposes. If your house is revalued down because someone was generous in their valuation you could lose the lot. A La storm financial.



> Secondly, I have around $27,500 cash to invest. I plan to put $7,500 straight into the house to make it more "liveable" so that leaves me with around $20,000 to gamble with.




 Go to the casino if you want to gamble. 



> I have brought and sold a few shares just to say I have done so,  but Im a complete amateur when it comes to investing.




  Go buy lots of books and and keep reading until you realize how bad what you said just sounds, coz what I heard was "I'm not a Marine Biologist but I was hand feeding the white pointers while my mate was throwing chum in the water......."



> All I know is 6.00% from ING isn't going to fill my pockets any time soon.




So what you want to be rich now now now? Leave it there whilst you learn what you need to know



> Im not after stock tips or secrets, just some advice in what direction to head?
> 
> Gold?
> Shares?
> ...




Good Luck

Cheers


Sir O


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## easylikesunday (21 June 2010)

jbocker said:


> Well done Easylikesunday on buying at a discount. $20 000 to 'gamble' with.. I take it that is a poor choice of word, ie dont gamble, that sort of money dont come easy!
> Renovating the property, and subdividing, I assume you can subdivide and keep the original residence - otherwise why renovate if you eventually knock over the house. (I appreciate $7500 is not much when it comes to renovating). Here again watch the timing of your renovation wrt to renting - may need to consider the best timing for tax, depreciation, capital gain, adding to the cost base of property. Talk to your accountant.




Yes the future plan is to fully renovate existing house and subdivide the rear block. I dont intent on knocking the house down.
I know $7500 wont get me far but I could live in the house now as it stands so $7500 will go towards smaller things to make it a little more comfortable during reno's. 
My biggest problem is convincing the missus to move in.. I could sleep inside a whale carcass if I had too, her on the other hand...


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## easylikesunday (21 June 2010)

son of baglimit said:


> i assume you have considered the POTENTIAL capital gains issues of renting.
> i say POTENTIAL as they can be avoided.
> are you prepared to 'rough it' and live there immediately while renovating, thereby establishing it as your main residence and having the CGT exemption apply ?
> once established with the exemption then you are free to rent for 6 years.




I know its a must I have to live in the house for 6 months (of the first 12) which isnt a problem as I plan to be there for at least 12-18 months.

How long do I actually have to live in it before I can rent it out with the tax man biting me?

As far as renting out goes, if I happened to put a family member or friend in there as a private agreement where cash was used, who would know??


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## easylikesunday (21 June 2010)

Sir Osisofliver said:


> Go buy lots of books and and keep reading until you realize how bad what you said just sounds, coz what I heard was "I'm not a Marine Biologist but I was hand feeding the white pointers while my mate was throwing chum in the water......."




Haha. Yes well I only invested measly amounts at a time just to see what it was all about. I have since signed up for an eTrade account but at the moment its empty! I think all up I invested around $1400 and walked away with nearly that back.

Id like to get some books but again the only successful investor I know of is Warren Buffet. 

Whats a good book to start on for an amateur like myself?


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## drsmith (21 June 2010)

For $20k or any other amount, an effective return of ~7% tax free in a loan offset account is better than 6% before tax, regardless of how long it's there.


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## Carina86 (21 June 2010)

I would put $5K into some investment property courses. Look for a course that costs money (often a lot of money) as free courses are usually just there to sell you something.

I did one with Knowledgesource - Dympna Boholt however there are a lot of good ones out there. Before you commit to a course do your due dilligence. Try to find people who have done it before. Google the presenter and make sure that they are successful themselves and practice what they preach.

Find one that offers after care support and a forum where you can keep in touch with the presenter and the other course takers.

it might be a lot of money, but money spent on education pays, and can stop you from making horrible mistakes.

You're in a great situation right now, you have the property already and can act on advice. You may know a lot about property already, I don't know what 'in the trade' means. But if you are a builder there is still a lot more to learn - tax, asset protection, positive cashflow vs negative cashflow.

I am in the same boat as you - I am 24 and will be buying in a year to renovate and then sell/rent out depending on finances. Best of luck with your adventure!


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## todster (21 June 2010)

When your pushin 50 like me i wonder if there will be anywhere left worth going too.
Don't forget to have some fun!


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## nomore4s (21 June 2010)

Carina86 said:


> I would put $5K into some investment property courses. Look for a course that costs money (often a lot of money) as free courses are usually just there to sell you something.




Save your money and research it all yourself on the net.


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## son of baglimit (21 June 2010)

easylikesunday said:


> I know its a must I have to live in the house for 6 months (of the first 12) which isnt a problem as I plan to be there for at least 12-18 months.
> 
> How long do I actually have to live in it before I can rent it out with the tax man biting me?
> 
> As far as renting out goes, if I happened to put a family member or friend in there as a private agreement where cash was used, who would know??




the tax man doesnt have any minimum time you HAVE to live in existing houses - simply establish residence (evidence of furniture/mail/living in the property). minimum 3 months for new houses.
the minimum you do quote i think is to do with the owners grant.
as far as a cash payment and a wink - yeah sure, youd be unlucky to get caught - but it does happen.


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## easylikesunday (22 June 2010)

son of baglimit said:


> the tax man doesnt have any minimum time you HAVE to live in existing houses - simply establish residence (evidence of furniture/mail/living in the property). minimum 3 months for new houses.
> the minimum you do quote i think is to do with the owners grant.
> as far as a cash payment and a wink - yeah sure, youd be unlucky to get caught - but it does happen.




Yeah being a FHO I think I need to live in the house for at least 6 months of the first 12.


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## easylikesunday (22 June 2010)

Also I would like to know if anyone here has invested, or is investing in old classic/vintage cars?

I was doing this as an 18-21yo and it paid for the copious amounts of piss I drank during that time. 

Im thinking of getting back into that kinda thing as some of the profits were huge when I think about it. Im a bit of a Holden nut and have been watching the oldies and their prices for years. I reckon there are a few bargains out there at the moment as the ass fell out of the classic market during the FC!

I wrote down a few of the buys and sells I could remember and profits averaged around 55% with some as high as 170%

Most of these were brought and sold within a couple of months, sometimes weeks. Most of the cars were old restorers so they were sold with no REG or RWC and always paid with CASH!

Just thought Id ask as the idea popped into my head!


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## drsmith (22 June 2010)

Carina86 said:


> I would put $5K into some investment property courses.



Crikey Moses!

Making Money Made Simple and More Money by Noel Whittaker have gone up a lot. I paid less than $50 for both books in the early 90's.


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## trainspotter (22 June 2010)

easylikesunday said:


> Also I would like to know if anyone here has invested, or is investing in old classic/vintage cars?
> 
> I was doing this as an 18-21yo and it paid for the copious amounts of piss I drank during that time.
> 
> ...




Take the 20k you have left over and go and buy yourself a HK Monaro in sh!tty condition. Drive it for a month or two unregistered and sell it on ebay for double your money ! Sheeeeeeesh ... I wish !


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## easylikesunday (22 June 2010)

trainspotter said:


> Take the 20k you have left over and go and buy yourself a HK Monaro in sh!tty condition. Drive it for a month or two unregistered and sell it on ebay for double your money ! Sheeeeeeesh ... I wish !




I already got one! Cant drive it though


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## easylikesunday (27 June 2010)

Another question..

Im watching a few "Penny stocks" as I have learnt they call them.

Anyway some of these stocks are worth less than a cent (.00X) so when they go up or down, even by .001 its around 10.00-14.20% 

Im watching one that has gone up and down about 20 times in the last couple of months (.007 - .013)

My question. 

Can I just set my 'BUY' at .007 and my 'SELL' at .008 and invest $5,000 which would give me 14.20% gain ($700) and just do this every day?


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## tech/a (27 June 2010)

easylikesunday said:


> Another question..
> 
> Im watching a few "Penny stocks" as I have learnt they call them.
> 
> ...




Yes.

You'll also lose $700 if it trades at .006.
You could lose the lot if its delisted.


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## prawn_86 (27 June 2010)

easylikesunday said:


> Can I just set my 'BUY' at .007 and my 'SELL' at .008 and invest $5,000 which would give me 14.20% gain ($700) and just do this every day?




Many beginners think this (I did too when i started).

If you place an order you will at the bottom to what's called the 'market depth' (search for it for other threads). This means everyone else that wants the same level and ordered before you will get filled first. Same goes for when you sell, and you can't have a buy and sll order in at the same time unless you already own some of the stock.

The other downside is for each move down you lose a high % with not much liklihood of recovery. Those stocks are worth that much for a reason. If you want to just gamble go to a casino fwiw.

Hope that makes sense.


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## yonnie (27 June 2010)

I trade like this full-time day in - day out. 
but you better listen to tech and prawn `cos I dont like too much competition


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## easylikesunday (27 June 2010)

So investing $5000 into AUZ everytime it drops to .001 and selling at .002, increasing my profits 100% wouldn't be a good idea? 

So basically a stock worth that much is about to go belly up?

AUZ are trading 10-20 million a day, surely these people are just doing that?


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## nunthewiser (27 June 2010)

yonnie said:


> I trade like this full-time day in - day out.
> but you better listen to tech and prawn `cos I dont like too much competition





I dont believe you.


I also often trade penny dreadfuls from .001 to 1 cent... sometimes it may take 3 months to get a fill and sometimes after that it still does not get there because of the size of the queue.......... Sometimes i can get lucky on the auction shuffle and jump the queue but then i have to join the queue at the next level to sell them , which is often another feat on its own .

I position trade these suckers and have done for years and can still often wait months and months to move in and out of the trade


But hey if you reckon you can jump the depth queuse on both sides to daytrade them on a daily basis ,more power to ya .


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## nunthewiser (27 June 2010)

easylikesunday said:


> So investing $5000 into AUZ everytime it drops to .001 and selling at .002, increasing my profits 100% wouldn't be a good idea?
> 
> So basically a stock worth that much is about to go belly up?
> 
> AUZ are trading 10-20 million a day, surely these people are just doing that?





Heres an idea............ try it.


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## yonnie (27 June 2010)

you better listen to tech, prawn AND nunthewiser.........


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## nunthewiser (27 June 2010)

yonnie said:


> you better listen to tech, prawn AND nunthewiser.........





Yep its easier to be an internet guru than actual reality dictates bud .

Good luck with your trading when you start.


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## Wysiwyg (27 June 2010)

nunthewiser said:


> Yep its easier to be an internet guru than actual reality dictates bud .
> 
> Good luck with your trading when you start.




ROLF. :


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## easylikesunday (27 June 2010)

That was the whole point of my question. I didnt have any intention on throwing $5,000 into shares, well not yet anyway 

I knew that if it was as simple as buy & sell then none of you guys would be sitting on a computer answering my questions... you would be swimming in a pool of coins like Scrooge McDuck.

I still don't understand the 'queue' bit. AUZ has 6.98 billion shares from what I gather. What do you have to queue for if only 20 million get traded?


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## nunthewiser (27 June 2010)

Queue.

Now if you join the queue on left you have to wait till those CURRENT 14 buyers have been sold into or dissapeared

then to  sell you have to join the end of those 470 sellers to be bought up or dissapeared on the right.

you may get your Buy within a few weeks/days/months .but who you going to sell them to at a profit without waiting till that queue on the rights all bought out?


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## nunthewiser (27 June 2010)

And then we have the "AUCTION SHUFFLE" 

blessit 

Now that one you will have to learn for yourself as its a cunning plan at times


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## easylikesunday (27 June 2010)

Thanks Nunthewiser, great picture and explanation.

To access that chart of buyers and sellers do you have to hold that stock or is it free to look up somewhere?


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## nunthewiser (27 June 2010)

easylikesunday said:


> Thanks Nunthewiser, great picture and explanation.
> 
> To access that chart of buyers and sellers do you have to hold that stock or is it free to look up somewhere?




various brokers different layouts. Some services are free(basic depths etc) , other services like iress etc cost money.

pretty sure ya might find basic depths on www.asx.com.au also.....(unsure if depths or just quotes)

No you dont have to hold a stock to look at it.


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## Wysiwyg (27 June 2010)

Can you honestly say it is a good trading career move? The double edge sword effect?


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## yonnie (29 June 2010)

nunthewiser said:


> But hey if you reckon you can jump the depth queuse on both sides to daytrade them on a daily basis ,more power to ya .




no, I dont DAYtrade those penny stocks; I keep track of 60 stocks and I`m just in the queue like everbody else. 

sometimes I get lucky like SWG last week where I bought 3 x 2 million shares on Tuesday I think and sold them the next day, both in the auction.


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