BIG PROFITS

IN REAL ESTATE
STEPHEN McCARTHY
HOW TO BUILD YOUR
PROPERTY INVESTMENT PORTFOLIO
FOR AS LITTLE AS $15 A DAY
CEO, McCARTHY GROUP
THE SECRET IS UNDER YOUR FEET
With our growing population,
afordable land supply choked of,
and the rising cost of construction
materials, it could well double again in
the next ten years. Tis ever-increasing
value is your equity, and we call it your
sleeping money.
It sits right under your feet, and if
harnessed correctly, it has the potential
to set you on the path to fnancial
freedom. Te secret to making real
money in property investment begins
by knowing how to use the equity that
exists in your own home.
TIMES HAVE CHANGED
Of course hindsight is a wonderful
thing, but imagine how much equity
youd have today if you had bought two
properties when you started out? At
the time, the bank or building society
probably wouldnt have lent you the
money that you needed.
Tankfully, this has now changed. In
fact, banks are now eager to help you
own a second home because:
the rental income from residential
properties can service its mortgage;
over the medium to long term,
Welcome to the Big Profts in Real
Estate guide. I am delighted that
youve taken this important frst step,
and have begun to seek information
on how to build your property
investment portfolio.
Creating and growing your own
portfolio is a major step towards
fnancial independence. Although
you might think that building your
portfolio with as little as $15 a day is
not possible, let me assure you that it
iswhen you know how.
Tis booklet describes how the
equity in your home can be leveraged
to provide you with an asset to assist
you in becoming fnancially inde-
pendent, and maintain your standard
of living well into retirement.
WHAT EXACTLY IS EQUITY?
For most Australians their wealth
is tied up in the value of their own
home due to growing property
prices. Look at your own home
and youll know this is not a recent
phenomenon. Chances are that if you
have had it for ten years or so, it has
approximately doubled in value.
2
THE SECRET IS UNDER YOUR FEET
property values continue to rise;
and
few things are as safe and secure as
residential bricks and mortar.
INVESTMENT PROPERTY
WITHOUT A CASH DEPOSIT
As a homeowner or mortgage holder,
you have already done the hard work
through saving for your deposit and
building the equity in your home. Tis
is why purchasing a second property
is far easier than you might think. And
owning two or more could fnancially
set you up for life.
Flushing the equity in your own
home helps you to kick-start your
property investment portfolio. It
allows you to invest in property
without the need to come up with a
cash deposit.
Tere are however many other
opportunities available to you through
this equity. An investment portfolio
can, in the short term, reduce your tax
bill and move you towards becoming
mortgage free. In the long term, it
can provide you with the security of
fnancial freedom.
For over a decade the McCarthy
Group team have been dedicated to
helping our clients achieve big profts
in real estate. Tis opportunity is now
available to you.
Michael
Johnson
Head of
McCarthy
Group
Financial
Wayne
Wanders
General
Manager
Stephen
McCarthy
CEO
COND PROPERTY
N YOU THINK
OWNING YOUR SE
IS EASIER THA
Many people are amazed to learn that
it is far easier to own a second property
than it is to own the frst. Tey believe
that its hard enough meeting the
existing mortgage payments on their
current home, let alone thinking about
how they could aford a second one.
Te truth is you wont be paying
of the second mortgage by yourself.
Unlike your own property, where you
have to make one hundred percent
of the payments, your tenant will
contribute approximately half of the
cost of the mortgage repayments.
Te tax ofce will then cover about
a quarter of the costs in tax rebates.
Which means that you only have to
fund the diference. Refer to Diagram
I, on opposite page.
WHY DOES THE TAX OFFICE GIVE
YOU TAX BREAKS?
Te government makes these generous
concessions available because it has
decided that private investors are the
preferred suppliers of rental property.
Tis also takes the pressure of the
government to provide housing.
Consequently, many years ago the tax
HOW DO THE NUMBERS WORK?
Purchase price including costs $430,000
Outgoing
Mortgage payments $25,500
Running costs 8,000
Total $33,500
Incoming
Rental $19,000
Tax breaks $9,500
Total $28,500
Shortfall $5,000
Weekly $96
Daily $14
Assumptions
Interest rate 5.92%
Interest only
Running costs include rates, property
management, insurance, maintenance, etc.
Rental assumes property rented for 48 weeks
Figures have been rounded
4
ofce worked out a plan to incentivise
private property investment, loosely
described as negative gearing.
WHY INVEST?
Whilst there are frequent media
reports calling for the government
to scrap these incentives, successive
governments have continued to reject
these calls as the principles for these
tax incentives remain strong.
Tere are many reasons why people
like yourself decide to buy a rental
investment property. Some want
to retire early. Some are motivated
for tax reasons. Others just want to
enjoy the feeling of creating wealth
for themselves over and above their
regular income.
However, most people only make
a move when they discover how little
money theyll receive through normal
channels when their working days are
eventually over.
COND PROPERTY
N YOU THINK
OWNING YOUR SE
IS EASIER THA
Other
Invest for
Retirement
Reducible
Taxable
Income
Obtain
Income
from
Rent
Secure Long-term
Investment
You
Taxman
Tenant
5
Diagram I:
Who pays the second mortgage?
Diagram II:
Why do people invest in property?
Y WORKING LONG
AVE STOPPED
KEEP YOUR MONE
AFTER YOU H
Did you know that the majority
of retirees in Australia are bitterly
disappointed with their level of
income?
Whether its from superannuation
or the pension, or a combination of
both, it provides for a meagre income.
Unfortunately many dont discover
this truth until its too late to do anything
about it. And it is widespread, afecting
both white and blue-collar employees.
If you were to fnd yourself in this
situation, you can say goodbye to having
private healthcare, or private motor
vehicle ownership, or helping out your
kids. Tere will be no more luxuries.
YOU HAVE A CHOICE
How much money will you need to live
comfortably once you stop working?
Lets work backwards. Assuming a
reasonable $40,000 a year before tax,
and a conservative return on your
investment of 5 percent, how much
capital would you need to generate
earnings of $40,000 per annum? Te
maths is simple: $800,000.
NEVER SAY NEVER
Youre probably thinking, We could
never save $800,000. But before you
dismiss the idea, just think about the
value of your own home. Chances are
Katrina & Dennis Ghetto
McCarthy Group Clients
Since 2005
6
Y WORKING LONG
AVE STOPPED
KEEP YOUR MONE
AFTER YOU H
that if you bought it ten years ago for
around $250,000, it could be worth
$500,000 today.
Te most recent available fgures
from the ABS show that in the last
ten years, the median house price of
the eight capital cities has grown at an
average rate of 8.9 percent per annum.
At that rate, it doesnt take long for a
property to double in value. If you kept
a property thats now worth $500,000
for ten years, it could then be well
worth $1 million.
So, why not do this with more than
one property? And thats the secret of
property millionaires. It is the simplest
and easiest way to proft through
property investment. Buy and hold.
LEVERAGE AND TIME ARE THE KEYS
Te secret to building wealth is using
the equity that you have already built
up in your property to assist you to
invest in an asset that appreciates in
value. Lending for property is the
favoured form of lending for banks
and building societies. Tis is why
they place billions of dollars in the
property market each year.
BANKS WILL HELP
Provided that you have a regular
income, have sufcient equity, and a
good credit history they will lend you
up to 100 percent or more of the value
of the selected property for a period of
25 to 30 years. Once that property has
increased in value, you may well be in
a position to repeat the process. But
most people only ever buy their frst
home and then stop.
At retirement, you may well be
surprised that your house is now
worth one million dollars. With
hindsight this could easily have been
turned into two properties worth two
million dollars.
Te sooner you act; the sooner you
can achieve gains. So, dont wait to buy
property, buy property and wait!
7
E LOAN WITH YOUR
OPERTY PROFIT
PAY OFF YOUR HOM
INVESTMENT PR
Many people still believe that they
should wait until their house is paid
of before buying another. Tats called
conventional wisdom.
But times change and so do
conventions. Today the bank will lend
you the money to buy an additional
property while you pay of the frst
one. Tis means that you can hold two
properties at the same time, and enjoy
the compounding value increase on
two properties rather than one.
Once their homes have doubled
in value, many couples then think
outside the square and sell the
investment property and pay of their
original home mortgage. We call this
approach back burning and it is
highly efective in creating a mortgage-
free result.
TIME IS RUNNING OUT
One of the key ingredients in the
recipe of successful investment is
time. You need time to let asset values
and rentals grow.
Te longer you leave the decision,
the less time you have to reap its
benefts. And if you are not careful,
you may reach the point of no return,
and face the kind of unsatisfactory
retirement being experienced by
many Australians today.
You need to make sure that when
your work stops, your income doesnt.
And the only way to do that is to
develop a sound investment plan, and
act upon it.
ITS COMMON SENSE
Youll kick yourself if you ever come
to realise that there was a solution.
A solution that enabled you to retire
in relative comfort, with fnancial
freedom and independence, and you
simply never discovered it.
Please keep an open mind, and
understand that Im not asking you to
do anything that doesnt come with a
good dose of common sense. If you
do nothing about the future, you will
most likely end up going broke.
8
E LOAN WITH YOUR
OPERTY PROFIT
PAY OFF YOUR HOM
INVESTMENT PR
9
Living on an income equivalent to
the dole means you are broke. And
if you want to avoid this situation,
then you might as well give yourself
a fghting chance and create a Plan B.
HOW DO I DO IT?
For many people the starting point
has been our Plan B Workbook. Its a
simple guide with fve key pillars. It
starts out by helping you to calculate
where you are right now in terms of
your current assets and income, and
where you are likely to end up using
your current projections.
You then work out how much
income youll need to retire in the
kind of lifestyle that youve enjoyed
while working, and that you plan
to continue to enjoy once youve
stopped.
Te workbook is essentially a
roadmap of the path to investment
success, leaving you with a clear
picture of what you need to do to take
control of your future.
Would you like to get a sneak
preview of how your fnancial world
will look in twenty years time? Im
sure you already know where you
want to go, but can you fgure out how
to get there with certainty?
Our associates can walk you through
your fnancial future, and map it out
for you so you can see clearly where
you are today, and how you can retire
without money worries.
Lynne & Ray Spicer
McCarthy Group
Clients Since 2010
L TOGETHER
PLAN B FOR RETIREMENT
PUTTING IT AL
THE PARTHENON YOUR
F I N A N C I A L
I N D E P E N D E N C E
T
A
X
S
U
P
E
R
M
O
R
T
G
A
G
E
A
S
S
E
T
S
I
N
C
O
M
E
P L A N B
10
Let us introduce you to the Parthenon -
your Plan B to fnancial security.
You need to have all fve pillars of
the Parthenon working in harmony to
put a roof of fnancial independence
over your head so you can begin
building your property portfolio.
PILLAR 1
:
INCOME TAX
About one third of your income
disappears in tax; the frst thing to do
is to stop giving so much money to the
tax ofce. With Plan B we will examine
the tax you will pay over your entire
working career and put that into
perspective for you. Ten
we look at how
to minimise your tax and put some of
that money back into your own pocket.
PILLAR 2
:
YOUR MORTGAGE
Another third of your income
disappears on the mortgage, and this
is from your NET income. Tats afer
you have paid tax. Over the full term
you will pay back nearly three times
as much as you borrowed.
In this section of your Plan B we
look at every possible way of reducing
your mortgage. Tese frst two pillars
of your Plan B are all about reducing
your most signifcant costs, so that
you can put the money to
work for you.
L TOGETHER
PLAN B FOR RETIREMENT
PUTTING IT AL
THE PARTHENON YOUR
PILLAR 3
:
SUPERANNUATION
Te question everyone asks is how
much will my superannuation be
worth on retirement, and will it
provide me with sufcient income?
Teoretically, your biannual state-
ments should answer these questions.
However, for most of us these
statements are indecipherable. Tere
is unnecessary complexity and general
uncertainty on what it will provide,
and upon working it out, many people
are underwhelmed.
Plan B will show you accurately
and in laymans terms what income
your superannuation will deliver to
you when you need that money.
PILLAR 4
:
ASSETS
For most people their biggest asset is
their own home followed by the value
of their superannuation fund. But will
they generate enough income for you
to stop work comfortably?
Te family home could be a source
of income but there are no guarantees.
You will always need somewhere to
live. What Plan B looks at is what
assets you currently have to give you
an income stream when you stop
work, and what other assets you can
put in place to help build your income
for the future.
PILLAR 5
:
INCOME
Understanding what income you need
is critical, as is adjusting it for infation.
It is a sad fact that most fnancial
commentators overlook the corrosive
efect of infation on income.
CREATING YOUR PLAN B
Te beneft of having the Plan B is that
it puts all of that information together
so you can say, Tis is the area for
my mortgage, my tax, my assets, and
my superannuation, and see how
infation plays a role in all of that mix.
So, let us help you build your own
Parthenon by making sure all of your
fve pillars are working in harmony to
help you enjoy your standard of living
in retirement.
11
ERTY INVESTMENT
OR $15 A DAY
BUILD YOUR PROP
PORTFOLIO F
Media Hype
More Buyers
than Sellers
Shortage of
Tradespeople
Valuations
Rise
Prices
Rise
Stock Levels
Tightening
Rentals
Increase
No Confidence
More Sellers
than Buyers
Valuations
Fall
Abundance of
Tradespeople
Falling
Construction
Prices
Stock
Oversupply
Affordability
Crisis
Low Rental Yields
High Confidence
B
o
o
m
R
e
c
o
v
e
r
y
S
l
u
m
p
S
lo
w

D
o
w
n
Buyers Market
Sellers Market
PROPERTY INVESTMENT CYCLE
12
ERTY INVESTMENT
OR $15 A DAY
BUILD YOUR PROP
PORTFOLIO F
Ive found that most people dont
need to spend a fortune to create an
investment portfolio. Plan B can be
your guide - it is your back up plan for
your fnancial freedom.
To have a second property, on
average its an investment of $15 per
day with good rental returns and tax
benefts. Tats not much really when
you consider that a couple of cups of
cofee and a sandwich in a caf will
cost about $15.
$15 A DAY
CAN MAKE A BIG DIFFERENCE
Right now youre probably thinking
that $15 a day wont impact you or
your lifestyle choices in retirement.
However, it can make a signifcant
diference and allow you to retire
without any money worries.
Its all about choice. If youre
prepared to give up a couple of cups
of coffee a day, then you too can
set up your retirement that many
others only dream about.
SO WHY ACT NOW?
Most things in life, including
something as familiar as breathing,
follow simple cycles. Countless times
every day you breathe in, pause,
and exhale. Tese functions happen
automatically. A similar progression
is true for the property market.
Currently the property market is
generally considered to be in a pause
stage. Tis is normal. Its not negative,
or badit just is! Within the market
cycle, prices cannot consistently
rise without a pause, nor can they
fall indefnitely. In between these
two extremes, the market slows and
readjusts before rising once more.
Such patterns have been in place
since time immemorial. Plan B will
show you how you can increase your
assets by entering the market at the
right part of the cycle. Tere could
not be a more opportune time for
you to inquire further and enter the
market than right now.
13
E MARKET IS DOWN ACT NOW WHILE TH
I urge you not to put your decision
of any longer. Make the frst move
towards becoming one of the thousands
of investors whose lives have been
changed forever through
Another great investment property by
Investment Property Central, a division of McCarthy Group
discovering Big Profts in Real Estate.
For a free consultation with absolutely
no obligation, contact McCarthy Group
today on 1300 850 318, or email Julie at
julie@mccarthygroup.com.au. It could
E MARKET IS DOWN ACT NOW WHILE TH
STEPHEN McCARTHY CEO, McCARTHY GROUP
be the most valuable call youll ever
make. What do you have to lose?
Tank you for taking the time to
read Big Profts in Real Estate. Please let
McCarthy Group assist you in building
your property investment portfolio for
as little as $15 a day!
McCarthy Group Pty Limited ACN 086 284 826
T 02 9687 3601 / 1300 850 318 / F 02 9687 3610
Building 2, Suite 2.01, 35 Waterloo Rd Macquarie Park NSW 2113
PO Box 42 North Ryde BC NSW 1670
E julie@mccarthygroup.com.au / www.mccarthygroup.com.au
For additional copies of this consumers guide, or another in our series, please contact us at the address below.
PLEASE CALL 1300 850 318
VISIT OUR WEBSITE: MCCARTHYGROUP.COM.AU