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Hi Beth,
Maybe I'm thinking against the grain too, but I think it sounds like the right time to buy now too.
My thoughts are:
- Increase to the first home owners grant should make it easier for people to buy and hence help drift house prices up
- There are a lot of people out there with money in shares that are now feeling very insecure about they're investments. I think they will start looking for the safe investment choice into bricks and mortar putting further upward preasure on house prices
- Interest rates are dropping very quickly at the moment putting upward preasure on housing prices
- Sydney population is increasing putting upward preasure on house prices
- Yes, I realise that unemployment is increasing. But we are looking at a forcast change of an exceptionally good unemployment rate of around 4% to somewhere meadiocre in world standards of around 5-6%.
- Inflation is expected to decline which will put downward preassure on houses
So four forces pushing up against two forces pushing down indicates to me that house prices are on the rise, and with so many people in a state of panic, you might get some bargains now too. I do realise however that I am not an economist and don't actually know the weighted impact of each of the forces so do not profess to know prices will rise as a certainty.
Im about to put my money where my mouth is though, and am currently looking to purchase in Sydney. My stratagy will be to purchase quality property as close to CBD as possible or near the beach. I want to purchase property that has rarity as I feel it will be more secure than those in the outer suburbs belt that could be more volatile (because there would be a higher proportion of first home buyers and greater proportion of reposetions).
Good luck with everything, I'm sure you will do great!!!
I would suggest that you only go for a company/trust arrangement if you are going for a buy and hold stratagy. If it is for property that you are purchasing as shorter term reno's you may find that the extra tax complications and set up costs outway the benifits.
I haven't had any problems with lenders giving me loans for trusts, just don't expect the loans managers to immediately know what to do though as often you need to initially explain to them how they work.
GR does this mean you pay the seller a fee for the option to purchase the property at a particular price?
If this is the case wouldn’t there still be a bit of haggling over the price in the option where another buyer could offer a higher price?
Sorry, I did not read all of your questions.
As far as establishing a market value for the furniture, I took photos of them and paid a nominal fee for a second hand furniture dealer to give me an estimate for the value for replacement and depreciation purposes.
And to establish a value to add to the unfurnished expected rental return; I thought 25% was a reasonable return on the value of the furniture.
I also created my own condition report for the furniture and have the property manager check it before and after each occupancy in addition to the standard condition report they use.
I would suggest you request 6-8 weeks rent as a bond as further insurance against any damage to your furniture.
I have a fully furnished 2 bed unit that is renting for $220 per week (but without the linen and cutlery) The other units in the block are rented out for around $170 per week unfurnished. This is also targeted to long term tennants.
Hope this helps
At these early stages of investment I would look first into the right structure to start your portfolio as this is very hard to change later down the track. Find some books on companies and trust funds. I would suggest you do this before you purchase your next IP.
I would rent it out as you can always use the equity from the property to persue other investment opertunities later down the track. Plus, with your investment so close to home it will make it easier for you to manage it.
All our properties have been purchased post July 2000. Yes, she is my defacto spouse and we are currently renting. It would work out better if she purchased our PPoR in her name due to the way we have set up the company and trust fund.
FHOG = First Home Owners Grant
I have already used the first home owners grant but my partner has not. However, she has bought an interstate investment property with me. Does that mean that if she purchased a house to live in under her name that she would still be eligable for the first home owners grant? For the past 2 years I have been informed that she would not get it.
I have just had a colorbond roof put on a reno I am working on. It turned out to be slightly cheaper than tiles.
I asked the builder how this was possible as I know someone else who did a renivation a couple of years back and found that tiles were cheaper.
He said that it depends on the shape of the roof. If you have a skillion (not sure of spelling) roof then colorbond will be usually be cheaper as there will be less cuts that need to be made. However for roofs with lots of trusses then a tiled roof will usually be cheaper as to install colorbond would require a lot more cutting of sheets.
I think Don and Liz have offered sound advise. Try and set achievable goals for your level of expirience.
I still have not found any positive cash flow properties (although I have tried very hard), so have mostly purchased properties that are nearly nutraly geared. I have found that by letting inflation take its course, in just a few short years, these properties become positively geared. Although this is not ideal, I am still able to use this method to build a positively geared portfolio whilst my skills are developing.
happy house hunting
SebYeah, it does seem to work well on TV, thats what made me think about it. Thanks for your encouragement. I think I’ll see if Freedom or Domayne might lease out old floor stock for a short period.
Thanks for your replies
I will look further into trusts – I didn’t think they provided the same security in limited liability, but I will investigate further.
I disagree with Michaels break down of option Vs subject to.
With an option you do not have to state any conditions. The 1-2% is your fee for having the right to buy that property in 6 months. This alows you to keep your intentions for the property disclosed from the agent and the owner.
This would be handy if you think you have realised potential in a property that if made more public would attract unwanted compitition.
For the Capital Gains enthusiasts, you could put an option a a property that you thought was about to suddenly increase in value. Just like options in the Stock Market
Don’t wory Depreciator – you answered my question.
With the prime cost method, if you have a few solid items of furniture in a rental property, it could be forseeable that you could end up depreciating these items beyond their original purchase price. If this occurs and the items are still in use, do you need to exclude them from future calculations?
I would steer clear of auctions. They usually cost more, are mostly advertising for the agents. And, if nobody bids to a price you are happy with you still have to pay for the auction.
In my oppinion it is best to ask a price well above what you expect and then gradually step the asking price down. Most people looking for a house will mostly look at places in the price bracket they can afford.
Thanks for your reply MortgageHunter, I will speak to more brokers.
Will brokers consider myself as director and the company as two seperate entities in regards to giving discounts on interest rates for borrowing over 500 000 dollars? ie. Do they consider me as two customers or as one?
