What are the costs involved in selling a properyy that should be factored into checking if an investment is worthwhile. I want to make a bit of an excel calculator that will allow me to do some quick comparisions but never having bought or sold any properties im not sure where to start.
Does anyone have an excel sheet they use to do quick checks to see if a property is a worthwhile venture?
Thanks,
Agents fees – around 2 to 3% plus GST
Legals – around $1,000
CGT
Loan exit fees
Mortgage discharge feesThese are the main ones.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
The costs that immediately spring to mind are:
– Your solicitor
– The selling (real estate) agent. They don't all charge the same commissions. Ring a few in your local area to ask what they
charge. 2% is a guesstimate.
– Capital Gains Tax. The "gain" you make is added to your taxable income, and may push you into a higher tax bracket. Note that you'll get 50% off the CGT bill if you've held the property for at least 12 months. The sale of your home (PPOR, or "Primary Place of Residence") is CGT-free.Do remember that when you sell a place, you will presumably need to buy another, and thus pay stamp duty. So for eg, let's say you buy a place for $100k, and stamp duty is $5k, and your solicitor costs $1k. If you sold for $106k you'd actually make a loss, because you'd have to pay 2% of $106k to the selling agent, and you'd have to fork out another $5k or so in stamp duties to get into the next property.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
thanks very much for this info.
Can anyone recommend a program or excel template that is setup to give quick feedback on whether an investment is worthwhile. Ive been umming and arring about buying a place in mt isa for my PPOR and later move but its all been done in theory in my head, I want to put in the numbers and Worst Case Scenarios down on paper and really work through it first….which I should have been doing months ago. I guess Ive been wrapped up in it being my PPOR and not focussing on it enough being an investment eventually.
Mate
I personally use and would recommend the PIA software…
http://www.somersoft.com.au/software.htm
There are a few on line calculators that other people may be able to provide the links for, but i personally cannot comment on any of these.
Matt
again thanks for that info.
My process was to basically;
– find a house i like (grew up here so know the areas well)
– check the figures in an investment analyser to show potential worst case scenario and best case scenario
– decide whether its going to be better suited for growth or rental investment
– purchase the property under market value
– add some quick reno's (does the PIA software have a function for this to estimate?)
– Save for next property outside of mt isa.Is this a common enough way to go about things to start?
With PIA you can enter both the Purchase price of a property and the Market price of the same property… these two figures will affect your ROI over time.
I am not aware of any functionality within PIA to calculate costs of reno's etc.
You can do things like change the loan from P&I to IO, interest rate, rental return, vacancy rates, forecast capital growth etc all by just changing the appropriate cells.
You can download a demo version of the program, but unfortunately a lot of the cells are locked so other than a overview of the program, the demo version is very limted.
Matt
I am using http://www.RealEstateAnalysisFREE.com – it's a free real estate investment software and can do most of the stuff what PIA does – plus it has a few more cool features.
There is also a resell analysis in the reports, and you can configure there quite a bit of things too. It's not the best software in the world, but definitely worth checking, since it's free.
I would personally recommend splitting this problem up into two seperate stages.
Firstly focus on collecting the actual costs and informaiton needed for your situation as outlined by the above posts. This is information you will need regardless of whether you use the back of a ciggie packet or purchase software. Get this down on paper first, you should feel a lot clearer about it now.
Secondly you may decide you need to plug this information into a software tool. I may be biased as I use excel a lot for my work but I would recommend creating your own spreadsheets based on the data you have collected and advice from other professionals such as your accountant. This will enable you to both customise to your personal situation and should make you much more confident in the numbers coming out.
I'm currently going through both my first house purchase and first subdivisdion and first build all at once and have found the above process the only way to make it really work.
Make excel your friend
thommo
Remember to always allocate some money to miscellaneous expenses as more often or not something unforeseen arises. It may be unexpected maintenance, tenants absconding and not paying rent, moving and cleaning expenses etc.
You should also include the extra (sometimes hidden) costs of buying a property – http://propertypanel.co.nz/blog/the-hidden-costs-of-buying-a-house/
Good luck!
You must be logged in to reply to this topic. If you don't have an account, you can register here.
