Investment House's In-House News, January 2006

How to make an extra $50,000 this year without working any harder...
An open letter from Managing Director, Colin Ferguson.

Have you ever wondered if there really is a way that you can make some extra money?

We’ve all seen the various adverts promising riches from trading currencies and options (… just 15 minutes each day and you can make as much as $$$). And there are the other adverts promoting computer share trading packages that will let you “…sack your Boss and recapture your life for yourself”. Many of them appear to be founded on a platform of smoke and mirrors. So is there anything out there that doesn’t rely on “techno-magic”? Something you could look into and then say “Yep, I can see how that would work!”

It’s certainly a noble pursuit. Think about what an extra $50,000 would mean to you? Let’s say you found a way to make an extra $50,000 this year.., and we fast forward to Christmas Day 2006.., and you’ve got the cheque for $50,000… How would it make things better for you? Would you do the “responsible thing” and pay it off your home loan? Or would you pay some off the home loan and then treat yourself to something nice – maybe a holiday, car, boat? Or perhaps it would mean better schools for your kids.., or sponsoring a cause you’re passionate about. Imagine how it would feel to be able to do something like that. And then imagine how your life would change if you did it again next year, and then the following year...

You know, the reality is this: it’s very likely you could make an extra $50,000 this year. That’s the reality: many hard working Australians really are able to use simple property development strategies that would massively enhance their financial future.

So, why don’t they? I mean, if it’s really true – why don’t more people do something to make their lot in life better? An extra $50,000 would have to be something of a plus, wouldn’t it?

Well, as best I can figure, it seems to come down to “knowledge” and “attitude”.

Of course there are a good number of people who just don’t have a sufficiently strong financial base to entertain these strategies (yet), but there are literally thousands who could be taking advantage and aren’t.

The “knowledge” hurdle is easy. Some people just don’t know that these strategies exist (after all, they don’t teach this stuff at school or university). That’s where the Investment House team comes into the picture – to help educate people with “how it can be done”. That’s why the series of educational reports was put together on the website.

And it’s not very complicated. Most people quickly grasp that you can buy something for $100, then spend another $100 making it better, and then sell it for $300 to make a $100 profit. Sure property development requires bigger numbers – but it’s the same concept. And with property, the banks will lend you most of the money to do it. Isn’t that a good arrangement!

The “attitude” hurdle is the tricky one. This is the one that holds most people back. It’s that niggling concern that it might not work for you. And so it should hold you back – the risk of failing and maybe even losing part of what you’ve worked hard to get isn’t something that should be ignored. It’s actually healthy.

Yet the odd thing is “most of our fears in life are larger in our minds than they are in reality”. And most of that stems from “the fear of the unknown”. So the way to minimise that fear is to move “unknown’s” into the “known’s” area – which brings us back to “knowledge”. The more you learn about the way things work, the less “unknowns” there are to worry you, and the more confident you become with likely outcomes. Do you remember what it was like when you were learning to drive a car? At first it seemed impossible – you had to have the engine rev’s just right as you let the clutch out slowly, and at the same time you had to start thinking about the next gear change – all the time worrying about not running into things and looking out for other traffic? Now you don’t even think twice when you get into a car. That’s what happens when you move the “unkown” to the “known”.

One fundamental that probably kept you going when you were struggling with “kangaroo petrol” in your car was the fact lots of other “people just like you” had somehow overcome the learning curve – so the odds were you could too. It’s the same with property development. Lot’s of other “ordinary people just like you” have been able to make these ideas and strategies work – so the odds are you can too.

And when it comes to property development, the Investment House team can help make your learning process easy. It’s like having your driving instructor with you until you become competent and confident yourself. And with hundreds of these projects under our belt, it’s very rare that something catches us by surprise. That means you get the benefit of our experience which minimises your risk while you gain confidence.

Okay, back to making an extra $50,000 this year.., what sort of financial platform do you need to have?

If your situation is similar or stronger than that outlined above – then you could probably become an armchair developer. And the nice thing about the position is the hours are flexible and the pay is pretty good.., $50,000 in the first year for next to no effort (and who knows from there?).

That’s the really easy bit. You can email me direct at colin@investmenthouse.com.au or you can ring on 07-3369-0111 and speak to myself or Marco Mendes (our Research Manager), and between us we’ll work out if these strategies can work for you. You never know, this might be a $50,000 phone call!

P.S. Here’s an excerpt from our Case Study this month (see "Andrew and Kylie Carr - A Case Study" below) It’s a story about a couple who learned about these strategies and said “Yep, I can see how that would work!”..,

House and Land Development yields the Carr's "an easy $65,000 in equity"!

Andrew and Kylie Carr purchased a block of land in March / April 2005 in Camp Hill (just 6km from the Brisbane GPO). It was a 423m2 block and with the proposed home being 5 bedrooms over two stories they would get city views from the back deck assuring great capital gains into the future.

All up the Carr's spent $595,900 on the house and land. The site was purchased for $288,450 and the house cost was $307,450 including ducted air conditioning, electric gates, security system, vacuum aid, spa bath and landscaping. The house was completed in early January and tenanted 3 days later.

The house next door which is similar although a bit smaller with a plunge pool and one less bedroom just sold for $680,000. After all has been said and done the Carr's reckon they've "picked up an easy $65,000 in equity", not too bad considering they carried on their lives as normal both working full time and looking after 2 young children!

Don’t let the size of the figures phase you. It took well under $200,000 in equity to do this project, and they didn’t have to pay one cent out of their pocket during the project because the holding costs were capitalised. This “armchair developer” strategy is fairly new to many investors and often they think that it’s only suitable for property “high rollers”. The fact is this strategy is well within reach of the ordinary investor.

If you have a family income of around $90,000+, and you have at least $150,000 equity (or say $100,000 cash for deposits) then it’s very likely you could engage this strategy and massively enhance your financial future.

So make it a great year - contact us on (07) 3369 0111 for a complimentary assessment of your financial capacity. It will take about 20 minutes and will either “put you out of your misery” or open an amazing window of opportunity.

And hopefully you’ll be able to start planning ways to spend your new found pennies!


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	In this issue: ¯How to make an extra $50,000 this year without working any harder... ¯Investing in Property – Safe as Houses! ¯Inflation likely to keep rates on hold (“The Age”, January 25, 2006) ¯Site of the month ~ a beauty in Greenslopes ¯Andrew and Kylie Carr ~ A Case Study ¯Thought for the Month... Famous missed opportunity quotes How to make an extra $50,000 this year without working any harder... An open letter from Managing Director, Colin Ferguson. Have you ever wondered if there really is a way that you can make some extra money? We’ve all seen the various adverts promising riches from trading currencies and options (… just 15 minutes each day and you can make as much as $$$). And there are the other adverts promoting computer share trading packages that will let you “…sack your Boss and recapture your life for yourself”. Many of them appear to be founded on a platform of smoke and mirrors. So is there anything out there that doesn’t rely on “techno-magic”? Something you could look into and then say “Yep, I can see how that would work!” It’s certainly a noble pursuit. Think about what an extra $50,000 would mean to you? Let’s say you found a way to make an extra $50,000 this year.., and we fast forward to Christmas Day 2006.., and you’ve got the cheque for $50,000… How would it make things better for you? Would you do the “responsible thing” and pay it off your home loan? Or would you pay some off the home loan and then treat yourself to something nice – maybe a holiday, car, boat? Or perhaps it would mean better schools for your kids.., or sponsoring a cause you’re passionate about. Imagine how it would feel to be able to do something like that. And then imagine how your life would change if you did it again next year, and then the following year... You know, the reality is this: it’s very likely you could make an extra $50,000 this year. That’s the reality: many hard working Australians really are able to use simple property development strategies that would massively enhance their financial future. And yet most don’t. So, why don’t they? I mean, if it’s really true – why don’t more people do something to make their lot in life better? An extra $50,000 would have to be something of a plus, wouldn’t it? Well, as best I can figure, it seems to come down to “knowledge” and “attitude”. Of course there are a good number of people who just don’t have a sufficiently strong financial base to entertain these strategies (yet), but there are literally thousands who could be taking advantage and aren’t. The “knowledge” hurdle is easy. Some people just don’t know that these strategies exist (after all, they don’t teach this stuff at school or university). That’s where the Investment House team comes into the picture – to help educate people with “how it can be done”. That’s why the series of educational reports was put together on the website. And it’s not very complicated. Most people quickly grasp that you can buy something for $100, then spend another $100 making it better, and then sell it for $300 to make a $100 profit. Sure property development requires bigger numbers – but it’s the same concept. And with property, the banks will lend you most of the money to do it. Isn’t that a good arrangement! The “attitude” hurdle is the tricky one. This is the one that holds most people back. It’s that niggling concern that it might not work for you. And so it should hold you back – the risk of failing and maybe even losing part of what you’ve worked hard to get isn’t something that should be ignored. It’s actually healthy. Yet the odd thing is “most of our fears in life are larger in our minds than they are in reality”. And most of that stems from “the fear of the unknown”. So the way to minimise that fear is to move “unknown’s” into the “known’s” area – which brings us back to “knowledge”. The more you learn about the way things work, the less “unknowns” there are to worry you, and the more confident you become with likely outcomes. Do you remember what it was like when you were learning to drive a car? At first it seemed impossible – you had to have the engine rev’s just right as you let the clutch out slowly, and at the same time you had to start thinking about the next gear change – all the time worrying about not running into things and looking out for other traffic? Now you don’t even think twice when you get into a car. That’s what happens when you move the “unkown” to the “known”. One fundamental that probably kept you going when you were struggling with “kangaroo petrol” in your car was the fact lots of other “people just like you” had somehow overcome the learning curve – so the odds were you could too. It’s the same with property development. Lot’s of other “ordinary people just like you” have been able to make these ideas and strategies work – so the odds are you can too. And when it comes to property development, the Investment House team can help make your learning process easy. It’s like having your driving instructor with you until you become competent and confident yourself. And with hundreds of these projects under our belt, it’s very rare that something catches us by surprise. That means you get the benefit of our experience which minimises your risk while you gain confidence. Okay, back to making an extra $50,000 this year.., what sort of financial platform do you need to have? For this strategy to work… You don’t need huge amounts of equity – if you have $150,000+ in equity or $100,000 cash then you probably qualify. You don’t need to have a massive income – a family income of $90,000+ per year is usually sufficient. And you don’t need to be “hands on” – you can even have a very demanding full time job, or live in another city, state or even country! If your situation is similar or stronger than that outlined above – then you could probably become an armchair developer. And the nice thing about the position is the hours are flexible and the pay is pretty good.., $50,000 in the first year for next to no effort (and who knows from there?). So how do you get the ball rolling and find out more? That’s the really easy bit. You can email me direct at colin@investmenthouse.com.au or you can ring on 07-3369-0111 and speak to myself or Marco Mendes (our Research Manager), and between us we’ll work out if these strategies can work for you. You never know, this might be a $50,000 phone call! I genuinely hope you call. Kind regards, Colin Ferguson P.S. Here’s an excerpt from our Case Study this month (see "Andrew and Kylie Carr - A Case Study" below) It’s a story about a couple who learned about these strategies and said “Yep, I can see how that would work!”.., House and Land Development yields the Carr's "an easy $65,000 in equity"! Andrew and Kylie Carr purchased a block of land in March / April 2005 in Camp Hill (just 6km from the Brisbane GPO). It was a 423m2 block and with the proposed home being 5 bedrooms over two stories they would get city views from the back deck assuring great capital gains into the future. All up the Carr's spent $595,900 on the house and land. The site was purchased for $288,450 and the house cost was $307,450 including ducted air conditioning, electric gates, security system, vacuum aid, spa bath and landscaping. The house was completed in early January and tenanted 3 days later. The house next door which is similar although a bit smaller with a plunge pool and one less bedroom just sold for $680,000. After all has been said and done the Carr's reckon they've "picked up an easy $65,000 in equity", not too bad considering they carried on their lives as normal both working full time and looking after 2 young children! Don’t let the size of the figures phase you. It took well under $200,000 in equity to do this project, and they didn’t have to pay one cent out of their pocket during the project because the holding costs were capitalised. This “armchair developer” strategy is fairly new to many investors and often they think that it’s only suitable for property “high rollers”. The fact is this strategy is well within reach of the ordinary investor. If you have a family income of around $90,000+, and you have at least $150,000 equity (or say $100,000 cash for deposits) then it’s very likely you could engage this strategy and massively enhance your financial future. So make it a great year - contact us on (07) 3369 0111 for a complimentary assessment of your financial capacity. It will take about 20 minutes and will either “put you out of your misery” or open an amazing window of opportunity. And hopefully you’ll be able to start planning ways to spend your new found pennies! Back to the Top
	Investment House Each issue we aim to focus on a topical issue. Clearly there are many different areas within the property industry and keeping on top of things can be taxing. Investment House provides a “one stop shop” service to investors, so it comprises a number of specialist divisions (research, finance, construction, property management, retail sales etc). Given this diversity, the company is well placed to keep you abreast of happenings. If you’re interested in a specific element of the market, pick up the phone and talk to one of our researchers - it might save you some time and money and will likely be of interest to other readers. This issue we’ll talk about some investment fundamentals and take a peek at what some of the experts say about the outlook for interest rates.
	Investing in Property – Safe as Houses! Falling commodity prices and rising incomes have helped to create an environment where just about anyone can buy a home entertainment system, television, or a variety of other high-tech consumables. Despite an ever growing demand for these items we see them becoming cheaper and cheaper. One reason for this is we can create as many of these products as we desire – so there is little or no constraint on supply. On the other hand, one thing that has very real constraints on supply is land. That is why investing in property has long been seen as a safe investment alternative. Despite the “safe as houses” sentiment, there are many misconceptions about investing in property. But, probably the most damaging is the misconception that you have to be wealthy to do it. Like many misconceptions, this simply isn’t true. In fact, statistics show that most Australian property investors are ordinary wage earners, generally with families, preparing for their retirement. A typical couple might start on the path to property wealth when they buy their own home or apartment for say $300,000. It is likely they have saved around $25,000 to cover a 5% deposit, stamp duty, legal fees and other expenses. Their combined income may be around $75,000 with the main breadwinner working full time for around $50,000 and the spouse working part time for say $25,000. Depending on income and their commitment, it may take this couple somewhere between 10 to 25 years to pay off their home. Often people think they have to pay their own home loan off before they can consider investing in another property. This is another fallacy. In reality most people should be in a comfortable position to start considering investing in property after about 3 to 5 years of property ownership – depending upon the stage of the property cycle. Often their home has increased substantially in value, thereby increasing their equity and making the remainder of the home loan a proportionately smaller amount of the total value of their house. They are then in a position to put that new found equity to work by borrowing against it for investment. After their initial property investment (and depending on income levels and expenses) they could continue to build their portfolio, without feeling too much pain in the budget, by adding another investment every 2 to 4 years. If you’ve enjoyed some good capital growth in your own property over the last few years and would like to find out if you are in a position to be looking at investment, call the Investment House team on (07) 3369 0111. Back to the Top
	Inflation likely to keep rates on hold (“The Age”, January 25, 2006) Mortgage holders are likely to be spared an interest rate rise for the months ahead after better than expected inflation figures showed prices were under control. The annual inflation rate fell to 2.8 per cent from three per cent, with prices climbing just 0.5 per cent during the December quarter. At 2.8 per cent, inflation is now inside the Reserve Bank's target range of two per cent to three per cent. Treasurer Peter Costello said the figures were a good sign for the general economy. "These are welcome figures," he told reporters. "They indicate that inflation is moderate in the Australian economy, notwithstanding intense pressure which is coming from the oil price and petrol prices." Opposition treasury spokesman Wayne Swan said although the overall inflation figure was welcome, costs were rising in a series of areas. Despite easing during the quarter, petrol prices over the past 12 months were up 15.2 per cent. And prices during January have shot back up. Other areas experiencing higher costs were vegetables (up 15.6 per cent during the past year), childcare (up 10.2 per cent) and pets and pet food (up 10 per cent). Offsetting these increases over the year were falls in audio, visual and computing equipment (down 12.2 per cent), poultry (down 5.8 per cent), small electric household appliances (4.4 per cent) and motor vehicles (3.7 per cent). CommSec chief equities economist Craig James said the Reserve Bank had nothing to fear on the inflation front. "The Reserve Bank has no justification to either increase or cut interest rates at present. Overall, the economy is in good shape and has no need of a kick-start by way of a rate cut," he said. But Westpac senior economist Anthony Thompson warned if petrol prices stay at their current level, inflation will be back over the three per cent mark within three months. "We still think the Reserve Bank will maintain their tightening bias in their upcoming February monetary policy statement, especially so given the first quarter outlook for CPI where we think there will be a bounce back up again," he said. Editorial Note: It’s important to remember these comments refer to the short term outlook which is atypical of Bank and Fund Management Economists. Six months is a long time in their world. The longer term economists like BIS Shrapnel are still forecasting a rising interest rate in line with increasing inflationary pressure over the next few years. Back to the Top
	Site of the month ~ a beauty in Greenslopes January’s property of the month is a ‘splitter’ situated in Greenslopes, 6km south of Brisbanes CBD. The area itself is a thriving inner-city suburb due to its proximity to everything. Location is the most important part of any real-estate purchase, and this site is elevated and peaceful yet is surrounded by important infrastructure and services like the rejuvenated Greenslopes hospital or the new $200 million busway terminal. (The photo doesn’t do it justice – it’s a great site). The 2 x 405m² lots are being marketed individually but discussions with the vendor’s agent reveal a considerable discount could be achieved if both are purchased together. The beauty of this site is that all the hard work has been done: the 2 allotments are registered and cleared, the services are connected, and the DA’s are already out of council! With an estimated purchase price of $450,000, and conservative resales of $640,000 which is on par with numerous local sales, our feasibilities indicate profitability of over $100,000 for the project. Little risk, great reward! All whilst you sit back and leave the stress of the project management to us… To take advantage of this opportunity, please call Marco on (+61 7) 3369 0111 or email him at marco@investmenthouse.com.au Back to the Top
	Andrew and Kylie Carr ~ A Case Study “It was Brian, from Wealth Coach Australia, that introduced us to Investment House” says Kylie Carr from Brisbane. “We joined Wealth Coach to get on top of our personal finances. We were like most people – earning a good income but not really seeming to get ahead. And it wasn’t as if we were living lavishly either. Anyway, part of the strategy we worked out included a property investment and Brian suggested we talk to the team at Investment House”. Andrew and Kylie weren’t seasoned property investors, so being able to work with Investment House meant they had an experienced hand to help guide them through the process. “We hadn't done anything like this before so it was a bit daunting. We met up with Colin and he explained how different options could work for us. And then he went through the entire process in simple and logical steps – it all made good sense” explained Kylie. “Once we saw how it all worked we both felt pretty confident about going ahead. The ‘One-Stop-Shop’ service that Investment House offers was attractive too because everything was handled in the one office. We figured that meant there was less chance of things slipping though the gaps. Anyway, we looked at several options and decided to go with a house and land project in Camp Hill. It was a 423m² block and promised city views from the back deck if we built a two story home.” “It was in March 2005 that we kicked it off” says Andrew. “We settled on the land at the end of April – and according to the feasibility model Investment House had given us – we should have the whole thing done and dusted just before Christmas.” As it turned out, we reached practical completion just before Christmas but the final touch ups weren’t done until January. The house was handed over on Friday 13^th – nothing unlucky about that as the tenants moved in three days later on Monday the 16^th. “Once we made our decision to go ahead, it was dead easy” chimes in Kylie. “Choosing colours was a dream. We'd heard of people having domestics over colours, but being able to choose from a hand full of professionally prepared themes made it quick and easy – and no domestics!” Once the construction was underway Andrew and Kylie visited the site a couple of times. “We were just being nosey - we really didn't have to because Sarah did a wonderful job in keeping us up to date with regular photos of what was happening, and also emails with what was scheduled next. A friend of ours is project managing a small townhouse development and she's frazzled 24/7 - I can't help teasing her with how easy our house has been”, said Kylie. As the construction phase neared completion, Andrew and Kylie became a little apprehensive about how quickly the house would be rented. During the construction, the loan payments had been capitalised so the payments weren’t affecting their week to week cash flow. But once the normal repayments started it would hurt if there wasn’t any rent coming in to help. “We needn't have worried. Wanda had tenants lined up a couple of weeks before the house was finished” said Andrew. “And she managed to get a higher rent than was forecast in the initial feasibility analysis so we were really chuffed.” A similar house was built on the block next door and has just sold for $680,000. “It has a plunge pool but one less bedroom (and it’s a bit smaller), so we figured they are pretty similar, if we assume our house would sell for the same amount then we’ve picked up an easy $65,000 in equity” says Andrew, with a smile resembling a Cheshire cat. “This arm-chair developer thing doesn’t pay too badly, especially if you work it back to an hourly rate!” he quips. Where to from here? Andrew and Kylie plan to let the dust settle on this one, and then look at getting more houses in their portfolio before the next phase of capital growth in Brisbane. Back to the Top
	Thought for the Month... Famous missed opportunity quotes "This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us." Western Union internal memo, 1876 "The wireless music box has no imaginable commercial value. Who would pay for a message sent to nobody in particular?" David Sarnoff's associates in response to his urgings for investment in the radio in the 1920s "We don't like their sound, and guitar music is on the way out." Decca Recording Co. rejecting the Beatles, 1962. "Take a chance! All life is a chance. The man who goes the furthest is generally the one who is willing to do and dare." Dale Carnegie Back to the Top

	Disclaimer
	All information in this report is general information only. Nothing in this report is meant to be specific investment advice, nor should you treat it as such. Everyone's individual circumstances will vary widely and you must seek advice from your own independent licensed investment adviser before investing into any form of investment. Investment House, its employees and representatives take no responsibility for the result of any actions taken by the readers of this report. Investment House and its related businesses makes no representation and gives no warranty as to the accuracy of the information in this document and accepts no liability for any errors, misprints or omission herein (whether negligent or otherwise).
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