Forum Replies Created
I haven't invested there but have spectated on their market over the years. If it was me and I wanted to go for FNQ, then I would go for Townsville over Cairns. Townsville has more going for it in terms of economics and demographics.
Freckle wrote:Bardon you would make the consummate politician. Whenever we have our little chats I'm reminded of interviews in the past with John Howard and many an interviewer. He was the master at obfuscation and talking around the subject without ever addressing the points raised.John would be proud of you.
I though I was being more succinct than that, maybe I have came across as been evasive in my view on the property burst and not stating my opinion clearly.
So for the sake of clarity I am saying there hasn't been a property bust yet and there wont be.
Portfolio PI wrote:I think the Labor governments initiative the ULDA have done their job in doing this. Personally, I doubt an initiative like this would go through, i guess time will tellJosh, good news, you were right with your view. I caught up with the messenger yesterday and probed her a little bit deeper on this topic. She completely backflipped, denied that she had gave the impression that they were going to devise and implement such a policy in the first place. Frecking pollies.
Sorry about unsettling the horses on this one.
Freckle wrote:bardon wrote:There is a saying that "hydrocarbons beget more hydrocarbons" (unless your a Peak Oiler god bless them) cheaper and more available energy is the very thing that will power the economy along and also produce even more cheaper and abundant energy. We are seeing the natural progression of energy sources from wood to coal to oil to gas towards the natural conclusion of an ultra efficient hydrogen based economy.
I was kinda with ya up until about here. I know you luv your straw man arguments but this one definitely gets you a Master of the Universe badge.
Freckle, I know that you are a one eyed bear but you ought to do yourself a favour and just for once open the other eye, just consider for a moment that you may even increase your knowledge base.
As for hydrocarbons begetting hydrocarbons its a pretty well established fact if you were to look and to understand it you only need to look at the Jevons Paradox,
As for decarbonisation this is another established trend that has been going of for over two hundred years. The trend is not driven by some greenie desire to eliminate CO2 either, rather consumers demanding denser energy sources allowing them to get more power, its all about power.
-Wood C10H1
-Coal C2H1
-Oil C1H2
-Gas C1H4.
Can you guess what comes next?. The technological advances in producing hydrogen fromm methane are massive and proven, we now have the ability to handle, store and transport the small hydrogen particles as well. It is perfectly feasible for an existing gas pipeline to have a branch into a nuclear power plant (another carbonless energy source) and reform the gas to produce pure hydrogen, that's what you call value adding in a big way.
Yes it is amazing how adaptive and creative the human species are. This human dynamic is often not considered when projecting the end of the world.
I have been following this as well and would say at the very least it is pointing to higher yielding suburbs, some under your nose I found.
A very good friend of mine Is a member of the LNP and she says that they are very close now to introducing rent control legislation in "housing stress areas" this will be like the strict controls on maximum rent and tenant right that they have in Germany. Housing stressareas is their definition of mining towns where rents are higher than the state median. She reckons there is votes in it.
Hello Freckle how are things on the darkside?
Freckle wrote:bardon wrote:As time goes by there is a lesser chance of a property bust.How do you figure that? The economies in every major market are in a worse state now than they were before. Underlying fundamentals haven't improved they've gotten worse.
Busts follow bubble, we haven't had a bubble for a very long time its been a complete fizzer for donkeys years now, there is nothing to bust anymore. The wealth of Australians will now start to grow again and its well known fact that 70% of a nations wealth is stored in residential housing.
Quote:Now we have affordability back the same level as ten years ago.Affordability has never driven markets. Affordability is still at all time lows but it never stopped the boom cycle of the last 20 years. If affordability had ever been an issue your property would be worth half it is today. Credit and the ability to leverage has been the driver over the last few decades. Credit has tightened and there is very little leverage available today. The market is now heavily inclined to deleverage and reduce risk as economies struggle
Your right affordability isn't a driver,sentiment is. Better affordability means less forced sales and guess what that means for the likelihood of a bust. As.for leverage (debt), if you would care to check the money supply (debt) has been increasing as it must do. I think you might be referring to dis-leverage, but I will let you figure that one out.
Quote:The bears are all giving each other high fives on commodities but that is merely a blip.Depends on which commodities you're talking about. Base metals like iron, alluminium, copper and their respective minor metals are for the chop big time and it's no blip. The idea that these resources will bounce back are a pipe dream to say the least. PM's will go higher as this story unfolds. Food especially cereals are set to skyrocket this season and continue an average upward trend as demand and production costs continue to rise. Energy (oil & gas) could go ballistic if the Iran thing turns to soup. If that happens a property crash would be the least of your worries. Energy simply isn't going to get any cheaper and that's going to crush some economies over the next 20 years. Coal especially steam coal is in for a hard time. Shale gas is crushing coal prices and that trend isn't going to end anytime soon. It'll be interesting to see if we get a price cut from coal powered generators. I somehow doubt it.
There is a saying that "hydrocarbons beget more hydrocarbons" (unless your a Peak Oiler god bless them) cheaper and more available energy is the very thing that will power the economy along and also produce even more cheaper and abundant energy. We are seeing the natural progression of energy sources from wood to coal to oil to gas towards the natural conclusion of an ultra efficient hydrogen based economy.
The worlds population is increasing rapidly and will continue to do so. This will increase the demand on all available resources, water, energy, food and minerals. We are a prime supplier of most of these. Not to mention what all these extra takes for housing means to us suppliers of such.
Quote:Nope cant see any sings of a bust this month.It's already happening. Your asleep at the wheel Bardon. Not every part of a market collapses at once. The top end of property has been smashed. Some regions are struggling others are on the cusp of a major down turn (resource areas). States like WA and Qld could take a serious hit if China doesn't stabilise its markets over the next 6 months. Darwin's seen a hefty jump this year but everywhere else has either gone sideways (if it's lucky) or down.
But like any market there will be areas and regions that will hold their own and if you're really lucky you might even see some growth.
Some big hitters getting haircuts on the top end a bust does not male. I don't know about being a sleep at the wheel as in the last few months I have been more active than normal and am selling two and am looking at some prospective purchases to live in.
Anyway one thing that you are 100% spot on about with your prediction of a bust is that just just like a broken clock you will be right at one stage of the cycle, so chin up and seize the moment when it comes.
As time goes by there is a lesser chance of a property bust. Now we have affordability back the same level as ten years ago. The bears are all giving each other high fives on commodities but that is merely a blip. Nope cant see any sings of a bust this month.
Terryw wrote:bardon wrote:It sounds complicated but its not all the banks do it and its just plain vanilla unit trust, you dont need a financial planner but I would recommend a tax agent though.Its not just a plain vanilla unit trust either – you would need a special fixed unit trust. If the trust is not classed as fixed the land tax exemption may not apply (in NSW and VIC) .
You will also need a solicitor to do the conveyance. Getting a private ruling from the ATO can also save a lot of worrying too.
Fair comment on trust deed, just saying its not hard to do. I ain't a big fan of trusts for properties but in my case it was the only way I could make it work with the transfer of a joint name PPR to an IP on a 105% deductible loan.
PS I ended up selling that property, it well settle on Friday for way less than the bank valuation in 2006. The upside is that I now have a capital loss…without really having one.
Okay I understand that's what I thought. In that case Raj cannot increase his borrowings, but also doesn't need to pay stamp duty a simple calc by Raj will show the pros and cons. Also depended on who is the highest earner of course.
It sounds complicated but its not all the banks do it and its just plain vanilla unit trust, you dont need a financial planner but I would recommend a tax agent though. Just check if you can refinance the whole amount and get it into your name without incurring stamp duty as Terry W suggested and that would be better way to go, no trust and no Stamp duty. I am in QLD and the trust option was the only way I could make it work up here by having an arms length transaction that would massively increase the borrowings on the property. From $56k up to $740k.
Terry, do you know if raj can increase the borrowings in his own name up to the total value of the property with half of the property going back to him ie can his current share of the lending also be increased and classified as an investment in that property.
There is a way to do this but it will cost you in terms of stamp duty and setting up a trust. I have done it successfully with a previous PPR and it works and the ATO have no issue with it as long as you don't live in it. If you do live in it then you may not be able to negative gear it as there are a few tax rulings on this area.
Assuming that the existing house is a good un and one worth keeping. What you could do is set up a trust, the trust then buys the house, you take out a loan in your name to purchase all of the units in that trust. That way you can maximize the deductibility of the loan and depending on your set up may be able to go 105% on finance. The purchase price would be the current valuation and the proceeds of the sale would go to you tax free to buy your next house. This would also be the threshold that would be used in calculating a future capital gain for that property. It is relatively easy to calculate the negative gearing benefit and work out how long before this would pay off the stamp duty, which should not be more than a couple of years after that the negative gearing benefit is pure cream. What you have also done is minimise the PPR bad debt which is not deductible. So in theory you have the two houses same level of debt except the majority of debt is for investment purposes and is teherfore deductible so you have a far higher cash flow position.
The other benefit is that you can buy your next house in a relatively hassle free way ie not depending on the sale of another one. Make sure you set it up so that you do not live in the transferred house after it is transferred and if you do then be careful about classifying it as an investment property. I got dinged by the ATO for renting an investment property that my trust owned, it wasn't my ex PPR but they still deemed it to be of a personal nature.
The reason to maximise and keep your borrowings high are so that when it becomes and investment the interest on that loan is fully tax deductible, this and being I/O will mean that you have a better cash flow on the investment. You should keep as much of your own cash/savings/capital in separate accounts so that you have it on call and when it is a house to live in you can use that cash to offset against your I/O loan.
With respect to timing if you are going for a grant there is a minimum time and I think there may be one with respect to stamp duty but other than that you can convert whenever you are ready to.
colmphibbs wrote:anyone have any advice for me?
would be much apreciated
Colm
Best advice is to get cracking and buy one.
possumpal wrote:I think you may find that even if they did drop stamp duty house prices would rise as a result effectively leaving purchasers in the same affordability postilionThis is exactly why I had a brief moment of joy when I read the post headline.
I have done a lot of work in the South Gippsland area over the years which has involved numerous trips through there and adjacent towns when traveling to/from Melbourne. It has all the hallmarks of an outlying suburb that due to urban sprawls is becoming less of an outlier as time goes by.
If you are going to live in it and then convert it to an investment then I would recommend that you get maximum borrowings on it, interest only and don't pay the loan down.
I was looking into some of those suburbs that RP Data claim are cheaper to buy than rent. Which means they are CF+. On face value it looks like a good pointer, not that I am buying though.
I have just been through all of this for a sale of a rental of mine in Brisbane. I know Elwood as well and have a place in Hampton.
I finished the tenant up, done some maintenance, painted all of downstairs and the kitchen, reoiled front deck, got a the furniture pack and went down the auction route. Even though I don't like auctions I went for it just to speed things up, he auction was a disaster and the high bid was that low that it ruined my weekend. I am convinced that the agent can use an auction to soften you up.
Lessons learned auction are good for flushing out buyers and forcing bids, the bids can be shockingly low, empty is good, furniture pack is good, but at all costs avoid the big marketing fees that they try and bung on you. Also when you empty the joint and have a furniture pack in you have stopped receiving rent and have more outgoings, this clarifies your thought process.
Mine is settling next week, I never sold at auction and I was on the cusp of reletting it when an offer came from left field about $30k higher than the auction bid. The rent I would have got was a lot higher due to the clean up, painting and furniture pack.
Lastly do you really have to sell as a two bedder in Elwood might be a good keeper.
Maximum lending and I/O loan would be my advice.
This has happened to me and the approacher made initial contact via letter. He introduced himself, enquired whether I would like to discuss potential opportunities and gave his contact details. As a cold contact it came across as a professional way to commence dialog and I contacted him after receiving his invite and am still in semi negotiations with him to this day.
