Forum Replies Created
Hi FIGJAM,
Here is an article we wrote last week on "The top property investing websites you can't overlook" for Smart Property Investor magazine. It is a guide to what interesting investment information you can find online.
Cheers,
Adrian
Hi xkfalcon,
A fixed price contract best is you need to borrow money for the reno off your bank. Both line of credit loans (which are available on some of the more flexible variable rate home loans) and construction loans often require a fixed rate contract in order to approve the funds to you. They then will pay the builder directly at each completion stage, which is assessed by their own valuer/inspector.
I hope this helps
@ Jamie,
Thanks for this. That was a typo. Meant to say "fixed price contract". I've corrected the original message
Hi Sunny,
My colleague recently showed me a one-bedder that sold in inner Sydney that was a prime candidate for positive cash flow. They are out there.
My suggestion would be to use a mortgage repayment calculator to help you crunch the costs. Can you reply with figures on both those options?
Cheers, Adrian
Hi Dsenior,
Here is a basic example of how a negatively geared property can turn into a positive cash flow property due to rental price growth. You can see that rental income starts to exceed mortgage repayments by the 6th year before costs. Obviously this projection will depend on how much rent grows in the area you purchase. You may want to crunch rental growth for each of your prospective properties.
Six years is quite a while to wait for positive gearing. I'm sure many of the investors here would shun it (if there aren't significant capital growth prospects). Make your own call.
$400.00 weekly rent
annual rental price growth (5%)
$400.00 – year 1
$420.00 – year 2
$441.00 – year 3
$463.05 – year 4
$486.20 – year 5
$510.51 – year 6
$536.04 – year 7
$562.84 – year 8
$590.98 – year 9
$620.53 – year 10
$651.56 – year 11
$684.14 – year 12
$400,000.00 – Mortgage total
interest only – repayment type
$2,000.00 – monthly repayments http://www.homeloanfinder.com.au/home-loan-calculators/mortgage-repayment-calculator
6% – interest rate
25 years – loan term
Hi Peter,
That is a fair concern.
I've written up as an example the costs of buying a property here. In the examples I've crunched, the buying costs are just under 6% (with Lenders Mortgage Insurance) , and the selling costs are just under 4%.
So, my examples have a total sunk cost of around $39,000 to buy and sell a $400,000 CGT exempt property in NSW.
It's up to your discretion, with the help of a trusted accountant, whether these costs outweigh potential benefits of structuring the way Noel Whittaker suggests.
When you do decide on a strategy, here is a quick guide on the type of home loan which is suitable to your strategy (scroll to the first table).
I hope this helps,
Cheers Adrian
I thought I'd quote from Noel Whittaker's Making Money Made Simple in order to answer your question:
"The best course is to sell the old house, use proceeds to help buy the new house and then borrow against it to buy the investment property. This enables the rents to be offset against the interest."
@Newcastle Knight
Here is a useful quick guide to SMSF property investing:
http://www.switzer.com.au/your-money/superannuation/the-rules-of-smsf-property-investing/
Did you read the Gittens article on productivity?
http://www.smh.com.au/business/productivity-rising-but-few-notice-20130310-2fu22.html
I second your thoughts. It seems many people are diving into mining towns with one single employer. What happens if the mind lays off staff, or worse, closes shop? You've got an expensive flop on your hands
These are some of the highest risk properties around. Know the employment conditions in the area…
