Accounting and Finance

Finance, Taxation, Insurance and Accounting related articles

Contributed By: Holmans Accounting on

One of the most hotly debated and often misunderstood concepts when determining the profitability of an accommodation business is the concept of ‘maintainable income’. The concept of ‘future maintainable earnings’ is a longstanding valuation principle, and possibly the most commonly used method of valuing an accommodation business is the capitalisation of the maintainable earnings of the business. In a management rights context, the capitalisation rate is referred to as the ‘multiple’, whereas in other accommodation businesses it is generally expressed as the return on investment percentage or ‘capitalisation rate’. Determining the multiple or capitalisation rate is very much the domain of the valuers and agentsRead More →

Contributed By: Mike Phipps Finance on

Thank god for the Australian press and in this case The Australian newspaper specifically. Here I am sitting at my desk after a nice Saturday morning bike ride with a chronic case of writer’s block. I have some vague idea that I want to talk about how badly the general public and even our industry professionals misunderstand banks, but I can’t seem to find the right introduction. And then, like a sign from heaven there it is…………a banking industry article with the following comment “Interest only loans also allow a borrower to access larger loans, which has helped drive property prices higher”. In what universeRead More →

TheOnsiteManager.com.au frequently gets introduced to many products, including landlord insurance, catering to the real estate industry. With our managers in mind, we assess the overall benefit of each product. Recently, Australian Landlord Insurance (ALI) presented an offer to us to take to our managers. We are pleased, on behalf of ALI, to offer to you landlord insurance for just $320. This represents a reduction, in most cases, over landlord’s current policies but also provides your clients with additional cover in many areas. Also note that the normal cost of a ALI landlord insurance policy in Queensland is $325. ALI’s product is extremely competitive in theRead More →

We used to think that getting to settlement was a normal process over about 90 days with maybe a bit of renegotiation on verification but due diligence and finance were fairly straight forward if we had qualified our buyer and committee approval was a given. What happened? Now we see more contracts fall over than ever before and extensions requested with almost every deal and finance can take 42 days or more. Buyers are providing more information than ever before and sometimes Sellers not enough. I think we all need to understand that the criteria has changed in the past couple of years. Sellers needRead More →

Contributed By: Mike Phipps Finance on

If you can just get your mind together Then come on across to me We’ll hold hands an’ then we’ll watch the sun rise from the bottom of the sea But first Are you experienced? Have you ever been experienced? Well, I have Jimi Hendrix May 1967 I’ve had this great old Jimi Hendrix song tumbling around in my head this week. A great riff and a great song from one of the legends but that’s not why it’s stuck on high rotation in my already overstressed mind. Here’s the thing. Not so long ago new entrants to the management rights, caravan park and motelRead More →

Courtesy of our friends at the Urban Dictionary I have unearthed what I believe to be the definitive description of this month’s bulletin title:  Crash and Burn : to come to grief or fail spectacularly. If you are an industry professional active in the management rights industry I suspect this description may resonate with you.  Our own observations and feedback from the coal face suggests that deals have never been harder to hold together with many “surprises” along the way. Why is it so? Let’s have a look at the key moving parts, the accepted best practice processes and see if we can identify someRead More →

Contributed By: Mike Phipps Finance on

After last month’s bulletin (some said rant but no offence) regarding bank lending and personal responsibility we received quite a lot of feedback.  Most was based around misconceptions of how lender security works with suggestions that we need to drill down and provide some detail.  Given that books have been written on this subject any brief summary will, of necessity, only skim the surface. I should also point out that I am going to talk about a variety of security arrangements in very general terms and borrowers should always seek independent advice to ensure they fully understand their obligations. So, without further ado, here goes!Read More →

Contributed By: Mike Phipps Finance on

If you saw the recent 60 minutes feature on the post GFC failure of the CEC Group in North Qld and the attack on the Commonwealth Bank I am sure you would have been somewhat taken back by the content.  I won’t get into the detail here but sufficient to say that the program and its reporter displayed a spectacular lack of understanding of even the most rudimentary elements of bank finance and credit contracts. The founder of CEC, to no great surprise, is playing the bank sent me broke card to some effect and places the outcome completely at the feet of the lender.Read More →

Contributed By: TheOnsiteManager.com.au on

Some strata communities – formerly known as Body Corporates – aren’t liable to pay tax. However, this is not applicable to all stratas, and wrongly assuming you are exempt from paying tax can lead to fines and even court proceedings. It’s important to get in the know about strata communities and tax liabilities so you can gauge whether or not you are liable. If you need more information or one-on-one advice about your own situation, it may be worth speaking to a strata specialist with corporate tax knowledge, such as the team at Abacus Strata. Here’s a quick overview of strata related Tax to helpRead More →

In August last year we published an article contemplating credit challenges ahead.  I point this out with no great delight because, for once, it seems we had it right.  Drop me a line if you want a copy of the original article, it’s on our web site. Anyway, one of the key points I raised a year ago was the expected pressure on lenders to reduce interest only lending. That prediction has most certainly come home to roost.  In the past few months we have seen a range of major and second tier lenders bring in restrictive lending standards for interest only property finance andRead More →