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
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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.
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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
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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!
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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
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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
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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
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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
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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