Forum Replies Created
Corey are you able to please clarify how much of the kitchen you did yourself? Was $2.5k the cost of the cabinets etc and you installed it yourself or were there professional installation costs on top of this? I might be looking at doing a kitchen reno myself in the near future so curious to know approximate numbers
Hi there –
Personally I would not touch Werribee whatever your strategy is.
Re St Albans – what is the strategy? for development? not much going on there to be truthful – so you would want to assess is this for investment – PPOR? if investments, house or unit? The good thing about St Albans is the proximity to the city however, it ain’t the top of the list for young families.
Think about Braybrook?
Cheers IvanOut of curiosity, what makes you suggest Braybrook?
Makes sense. Thanks for explaining that guys!
Richard Taylor – do you deal in Melbourne too or only Queensland?
$90k in 3 years isn’t bad at all! If you don’t mind me asking, how is your current property performing in terms of growth?
That’s exactly what I’ve been finding recently too. Especially in Melbourne recently there has been very good capital growth but rents have not kept up and as a result yields have decreased.Going to one of Steve’s events tonight so will be interesting to hear what he has to say about the current market!
e.g. Look to buy in an area where the median rents are $450/week. Median price might be ~$380k (depends on the suburb of course, and the quality/age/location/whatever of the property). Look for a bargain in the $300k range and spend $15k on a selective reno. Anyway, right idea, but give it more ooomph and you will have it nailed !! ;)
BennyIs it possible to find properties which match this criteria in Metro areas or just regional? I have been looking at Metro areas and yields seem to be much lower than that. Or am I just looking at the wrong areas? haha
Very interesting thread as I am new to the whole concept of drawing down a line of credit (equity loan as described above). Just to clarify in the above example am I right in saying that the OP will effectively take out a loan of $350k for the second property ($200k + $150k equity he already has)?
So he is ultimately obtaining 100% finance for the 2nd IP? What about the purchase costs such as stamp duty etc?Assuming he purchases the 2nd property using the example given above, he will now have 2 properties and effectively the same amount of equity (~$150k), so what would be stopping him from repeating the process over again and purchasing a 3rd property? Would it come down to servicability and whether he is negative/positive geared?
Sorry if the questions are very basic but I am still trying to get my head around the concept. I’m looking at purchasing my 1st IP which has similar numbers as what the OP mentioned above (costs around $350k and returning approx $320 per week) so now I am wondering if I would be better looking at something a bit more positively geared for my 1st IP. In saying this though, I believe to expect decent capital growth for the property/suburb I am looking at.
PS. Sorry cs_rlewis for semi hijacking your thread! I figure my question is closely linked to your topic
Given the property was your PPoR it should be exempt from CGT under the 6 year exemption rule
You may want to look into “OnProperty.com.au”. There are various podcasts and other resources on positive cashflow property
Hi Mark, do you know how the $90 per week is being calculated? If it is simply taking average rental income less interest expense (at 80% lvr and current market interest rates) the property could very well end up actually being negatively geared.
If it is not being accounted for above you may need to consider other holding costs such as insurance, rates, repairs & maintenance etc. Plus your interest repayments will obviously be higher since your lvr will be closer to 90%. You may also want to consider a scenario analysis with the impact an increase in the interest rates will have
Wouldn’t the 6 year exemption rule apply if it was initially my PPoR though? Or am I missing something
I have a couple more questions relating to CGT which might be easier to explain with an example.
If I bought a house for $400k, spent the first 2 months renovating it (while the house is vacant) which cost me $20k and then immediately got it revalued for say $460k, then got tenants in and then sold it 2 years later for say $500k, what would be my cost base when calculating CGT?
I read that the revaluation acts as the new cost base if it is revalued before being rented out. Would this apply in the above scenario or does this only apply if the house is lived in before being rented out (as opposed to being vacant like in this situation)?
Thanks for your input guys.
Terry: are you suggesting that if I employed strategy #1 the proceeds may be classified as assessable income even though the property may be CGT exempt?
Terry – that is what I was asking. In the case of being audited, how do people generally prove they lived there in that time? Would being able to reproduce bills showing electricity/gas/water being used along with having mail redirected to that property be considered sufficient evidence or do the ATO require some sort of other evidence?
JacM – thanks for that. I think I will definitely need to talk to a broker to fully understand the costs involved so I can take them into account when doing my analysis
JacM – thanks for the reply. While I had considered some of those entry/holding/exit costs, I hadn’t considered other such as mortgage early exit fees and some legal fees. I might need to do a bit more research into how much these are likely to cost while analysing potential properties. Would you happen to know roughly how much these costs are as ball park figures?
Thanks Terryw. In relating to claiming it as my main residence, if I did sell the place after say 2 months, am I required to prove that I did live there during that time? If so, how would I prove that? Would I need to show the value of my bills, have my mail re-directed there etc?
