A new government, a new day?! 1



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Our new Government will need to source money to pay for their election win and for the desperate promises made to pacify minority view voters and secure their vote solidifying their own career futures and retirement outlook.

With every monetary avenue stretched to a maximum, where is this pot of gold going to come from? An untouched stash of money just waiting to be seconded for the good of the country?

First, let us digress a little and approach this subject another way. Remember negative gearing? It has been in the news lately. Australians where pushed and gently coerced with the support of the Government into buying that ‘must have’ investment property for their future and why stop at one? Go hell for leather!

One investment property will soon become two, three, four and more, and before you know it we will all be millionaires retired and living a life of luxury. Wow sounded great, sounded unbelievable and of course it was.

Why am I not a millionaire property tycoon? Why are other attendees at numerous seminars who were promised the world and all the security not living a life of luxury? Why are the seminar organisers not millionaires?

All that preaching of a new, you beaut, guaranteed system that will not fail. Just buy the book, pay your money and reap the benefits; we will help you; no worries; every step of the way; the Aussie sprit will prevail. Did it? Did it hell.

Today property agents and real estate agents are still telling us it best is to buy now at a one-off reduced price, just for you. That’s if foreign nationals have not stepped in and been given preference. An amazing investment; value for money; guaranteed tenants and guaranteed income. Perfect for negative gearing.

Wait a minute did I hear that word ‘guarantee’? Did I hear ‘negative gearing’? Wow, will I save money and make money at the same time? That’s amazing, where do I sign? What are they guaranteeing? Why, if the offer is so good, have they not bought it themselves and become millionaires? 

Please explain this thing called negative gearing. Is that when I can offset all my expenses against my income, which if my expenses are more than my income I can offset it against my tax situation, getting a reduction? Yep, that’s what negative gearing is: using a minimum amount of your own money, all the rent money and a maximum amount of government money to make you a millionaire.

Look at this round cake with 10 per cent of your money, the rent and those marvellous tax savings borrowings are more than covered. It’s a win-win situation that cannot fail and the rent was guaranteed for a whole year and all expenses can be claimed. All this means it hardly costs you a cent. Must be great because the politicians do it all of the time, sometimes they even declare their interest, when challenged. 

It all sounds so good but why was this all allowed to go on uninhibited? Banks freely gave money, often to those who could not afford it. You did not even have to see the property as there was an artist impression for you. In fact in many cases the property hadn’t been built yet, but it was best you got in quickly before other idiots, sorry people, took advantage of the best deal in town.

Many of the properties sold in this way were single units in a block of units, a duplex (two properties joined on a block), a flat or an apartment in either small or large complex. Thousands were sold to unsuspecting buyers in the belief that they would become millionaires and would be able to retire to a great life.

These properties must have a Body Corporate Agreement signed by all owners setting out the rules for the properties and the responsibility of common areas within the development or complex. Owners of these properties make a monthly payment into a ‘sinking fund’ under the control of the managing real estate agent. The money that goes into the ‘sinking fund’ is in simple terms intended to pay for any repairs required to the building. The Managing Agent is required to have regular meetings with the owners and an annual general meeting to discuss needs and requirements and accounts. There is no requirement to have the accounts audited unless under instructions of the owners. Experience dictates that only a very small percentage of owners attend such meeting not believing in their importance.

The amount of money currently in bank accounts placed there by real estate agents each month amounts to billions of dollars unaccounted for in bulk form. No interest is paid on these accounts and rarely is the money used for repairs hence the many complaints by tenants.

This incredible amount of money is unregulated therefore no one body is aware of how much in total there is. This money is looked after normally by the rental department of the real estate agency who normally is or was the same agent who sold you the property.

We all know we can depend on real estate agents for their honesty and due diligence and they work extremely hard for their fee but I ask: is this the best method of control?

Could it be that if the Government was awake to the fact this money is there and unregulated that a highly paid civil servant sitting in his ivory tower under pressure to raise money will or may get the idea of using the money for the benefit of the Government? Whilst paying interest for doing so and making funds available for building works and repairs as and when required?

This sounds dreadful but governments have been known to do worse things have they not? In whose hands would you rather the money be: the governments or a real estate agent? Not much of a choice, I would suggest.

Do you have such investment properties? Do you really know how much money has been put away for a rainy day? Do you think the Government could find a way to use the ‘Stash of Cash’?

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Paul Goldfinch

Married with two children retired to the Valley Of Peace, Kongwak, Victoria. Formerly a Detective Sergeant, The Flying Squad, New Scotland Yard, before coming to Australia almost 40 years ago carving a career in small business and within the Corporate arena as a senior manager, including the establishment of WorkCare Victoria. Retired as Licenced owner/operator of an independent Real Estate Agency and Business Brokers in Queensland. Now dividing time between family and travelling Australia by caravan with a passion for the plight and lack of support for aged pensioners.

  1. Must have been good in the Flying Squad. He flew all the way out here for a better life.

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