Forum Replies Created
Hi Strawberry,
I thinkl you should strongly consider selling the Richmond property. Whatever cashflow you get from it will pale into insignificance against the “after tax saving” you will make by having a lower loan amount on your new PPOR. Do the maths on a spreadsheet.
If you would like to have an IP borrow against the large amount of equity you would then have in your PPOR, but don’t have any cash in it and make sure the loan is interest only.
Regards
Alistair PerryHi Zyleth,
If you end up purchasing a PPOR and plan to make it an investment property in the future make sure you take out an interest only loan with a 100% offset account. If you don’t do this it will cost you significantly in trerms of taxation benefits when you come to purchase another PPOR.
With regard to your lending capacity, i suggest you get a second opinion. There is a marked difference between what different lenders are prepared to lend and if the broker you met with is not particularly good then you may find you can in fact lend a lot more than you think.
Regards
Alistair PerryHi KB1975,
The strategy you are considering is sound, though a little higher risk than buying an existing house. As long as you reralise this and do your homework you will do fine.
If you would like any questions answered re planning regulations please post them on this thread and i will answer them for you. I would also be more than happy to recommend other prefessionals, such as architects, builders etc.
Regards
Alistair Perry
http://www.town-planning.com.auBill,
Is the draftsman processing your application for you, or are you doing it yourself? Either way, that is incredibly cheap and if the plans go through OK, I’d love to have the guys contact details. We give out a lot of work to draftsen and architects and usually the good ones are quite expensive.
Regards
Alistair PerryNathan,
I beleive it is illegal to provide finance to someone who is an undischarged bankrupt. I hope you have sought legal advice on this as wrapping is a form of finance.
Regards
AlistairHi Sbrody,
In terms of your loan, when you apply for a loan if you declare the property to be an IP then you can use some of the rent for servicability, but if you can not claim the First Home Owners Grant (assuming you are eligible for it).
There are also tax implications. If you rent out a room you can claim some of the Interest on your loan on tax and probably some depreciation. However, if you do this you lose some of your Capital Gains Tax exemption.
This is a very simplistic explanation. You should get yourself a good accountant and discuss the various tax implications with them, but I hope this is of some assistance.
Regards
Alistair PerryHi Snowflake,
As far as an accountant goes, I highly recommend Morry Kalkopf from Guests Accounting in Caufield 03 9509 7033. Guests work for some of the largest property investors in Melbourne and have provided me and my business with terrific service. I have also referred a number of other forum members to Morry and all of them have also been very happy.
Hi Susan,
The problem with these kinds of properties is that it is difficult to get a decent LVR from a lender, and those that will give you a decent LVR will charge a higher interest rate, killing the yield. You are also unlikely to get much capital growth.
Basically, if you have heaps of equity and need cashflow it may be a reasonable investment for you, but for most people it would be an anchor around their neck.
Regards
AlistairHi MGR,
I work as a consultant to developers, through my town planning practice and have seen a lot come and go. The reality of the development industry is that, if you don’t know what you are doing there is a very real chance that you will lose money. I would therefore strongly recommend that, for your first couple of projects at least, you stick to one at a time.
The developing game can be very rewarding, so good luck. You seem to off to a bit of a flying start.
Regards
Alistair PerryHi Billy,
Your first move should be to speak with an architect or draftsperson who has experience in designing dual occupancies. You will need a town planning permit, so it is important that the designer understands the planning system.
Whether you will receive a permit or not, and the quality of the end product, will be heavily influenced by the design you come up with.
You should have a look at the info on Michael’s site, as its pretty comprehensive. It would also be a good idea to have a chat with him, as he is very experienced in all facets of development.
If you have any queries re the town planning process, please post them and I would be more than happy to answer.
Regards
Alistair Perry
http://www.town-planning.com.auHi DAB,
If you are using your PPOR as security you should be able to borrow 100% of the investment property. Even if you have no other property you can go interest only on a 100% loan.
This might not be that important for this purchase, but if you want to continue to move ahead, in terms of acquiring IP’s, I suggest you find another lender.
Regards
AlistairHi Wazl,
Some banks will lend against the end value if you have a fixed price building contract. Check with your lender, or else get a broker to organise a lender that will do this.
Regards
AlistairWizard are great for loans, just like McDonalds are great for food. It just depends on what you are after.
I was speaking with my accountant last week and he mentione that his family own a nuumber of apartment comlexes in Prague (spelling?). Apparently the cashflows are very high.
Regards
AlistairHi Craig,
If you want figures go the information victoria web site or shop in the city. They publish a book with median prices for the last 10 years, split up into houses, units/apartments, and vacant land. You will see that performances between different suburbs vary quite widely.
Regards
AlistairHi Craig,
I would class quality suburbs as those that people aspire to live in. Just ask yourself a quick question, are there people outside the suburb that would like to live there? What is the reason? If the only answer you can come up with is “Because its cheap” I would class it as a low quality suburb.
In a buyers market there is little reason for people to look at these areas because there a affordable properties in areas they would rather live.
The more reasons there are for people to want to live in an area and/or the more compelling the reason(s) the higher the quality.
My parents got caught by this in a new estate in Werribee in the early 90’s, they developed a dual occ and sold one immediately at a nice profit. However, before they could sell the second property prices crashed and they had to hold it for about 5 years before they were in a position to get there money back. In this time, if they had held a second property in Hampton, where they live, they would have made a very large profit.
Just my thoughts.
Regards
AlistairHi Amerc79,
If you are keen on positive cashflow you will find it difficult to purchase off the shelf unless you look at commercial properties. If you are willing to do soomething a little creative such as vendor finance, development etc you can make positive cashflow.
Regards
AlistairHi Hernus,
Two who could try are Roy Halabi from GPS Nework http://www.gpsnetwork.com.au and Nigel Kibel http://www.propertyknowhow.com.au
Both post on these boards. Roy is more into new property and Nigel established.
Regards
AlistairBRC,
That is not correct. To put multiple dwellings on the property a planning permit is required. You wouldn’t realign the boundaries without first confirming that you can use the extra land.
Regards
AlistairHi Bec,
If all the owner has done is submit an application to council, they have not really added any value. It may be a very good development opportunity, but don’t pay any premium unless he has an approval. Nothing is certain when it comes to the town planning process.
With regard to your question about utility connections. If the property is sold with permits, then that is all you get. You can use or ignore the permit, it does not require anything of either the current owner or the buyer.
Regards
Alistair Perry
