Hi Dave,
I can’t help with the Super thing at all – just a passing thought re the opportunity though:-

As I read it, you have already gained $125k from the Sale, and were allowing a further $125k to be set aside to pay CGT. Given that it is likely that the CGT owing could be far less than allowed, would a cash amount nearer $180k (rather than $125k – and yes, I’m guessing…) be able to be parlayed into some other opportunity that will nett you a great return? Of course, you might simply want to pay down debt, rather than invest. And that is valid too.

Maybe have a bit more of a think, and perhaps a long chat with an adviser, around ALL of your options before settling on the Super one. Then take the best option for you. ;)

Benny

Hi Dave,
I’m with Corey on this – I think you need assistance with calculating your tax bill. From the little I can see, it seems to me that you think your Capital Gain is the Tax to be paid. That is not the case, and you don’t appear to have allowed Buy and Sell costs either which would have impacted on your Gain.

As such, I think you will have a nice surprise if you sit down with an adviser who handles this stuff on a regular basis.

Benny

Hi Debbie,
In case you weren’t aware, propertyinvesting.com itself works with a finance group to get really good deals. I don’t know what they are right now, as the recent APRA changes may have changed things. Suffice to say that Steve mentions he can source a great rate based on the size of the membership of pi.com.

Go here to check it out:-
http://www.PropertyInvestingFinance.com

A few months ago they were showing rates in the 3’s. Give them a call to see what can be done today,

Regards,
Benny

Hi Asou,
Welcome to propertyinvesting.com – and good work for seeking to understand a bit more by ASKING. One major thing that we need to develop is the ability to separate opinion from fact. And, right off the bat, I can put the lie to these guys:-

However, after seeking advise from my friends and colleagues. They suggested I should not invest in Brisbane since I am not familiar with the areas. And properties don’t really go up in value there.

….. and on both counts. By that, I mean that I can show you PROOF of Brisbane’s values going up in value. They have an opinion that Bne’s values don’t go up. Maybe they mean “don’t go up as much” and they could be quite right with that – but wait….

By buying where houses are cheaper you can afford MORE of them. And rent returns are typically higher, thus, while you might stretch to buy one $600k house in Sydney (and lose money as the yield is lower, so rents don’t cover all costs), you might be able to buy THREE in Brisbane at $300k each.

Re “you don’t know the area”, that can be learned quite quickly – internet, phoning agents, and maybe a quick trip or two to suss things out. There is a “big picture” topic around (I’ll send it to you) and in there, one bloke goes out and buys all around the country – cheap, needing renos, and positive geared. Then he gives them a quick reno and lifts the rents. Perhaps you can look at what he does and ask yourself IF you might be able to make that work. Maybe you can meet up with the bloke and buy him dinner to chat. I dunno – but, there are ways !!

And to get a look at the growth in values over time, go searching for “australian median house price history” and check out a couple of the earliest searches (by that, I mean Google – not a Search of this site). One of them will show you how Sydney nearly always leads the charge, with Melbourne next. Brisbane comes well after the first two have surged. And a current point of interest from the median price table I found:-
In 1992, values in Bne were about 90% of Mel’s values. Values then tanked for a while until 1997 when Syd and Mel took off – Bne lagged. By 2001, Bne values were just 55% of Mel’s values.

Then, in 2002, Bne started catching up in a helluva rush – so much so, by 2004, Bne was back to 86% of Mel values. But here’s the point – today, Bne is back to about 55% of Mel’s values. And Mel remains growing in value. At some stage, Bne will get another kick along, and, like from 2001-2004, it will likely near double in values in a very quick timeframe. (Now Asou, that is another OPINION – mine – so take it as a point to ponder, then draw your own conclusions).

The facts remain though – Bne has typically higher yields with lower prices, so you can afford to hold more properties. If Bne goes up in values by 10% in a year, and you hold $900k in property, you just made $90k. If a $600k Sydney property goes up 12%, you just made $72k in equity. Bne is $18k ahead in that scenario. As well as that, if you have one tenant vacate, you still have 66% of your income coming in. If a tenant left your single Sydney property, you have lost all income till you get another tenant.

As you can see, there as MANY twists and turns, opinions and facts, cities and towns, cockroaches and cane toads (sorry, couldn’t resist!!) From weighing up all of those things, you will settle on a way that should work best FOR YOU. You may have skills that I don’t have, so you can choose to do things that I can’t – e.g. you might be a tiler and can renovate kitchens and bathrooms cheaply – that can give you an “edge” when considering which houses to buy. Kapich?

Stick around, Asou – learn a bunch, meet up with other investors, chat with them, learn from them, save up, then strike when the time is right for you to do so. Again, welcome !

Benny

Hi David,
Well, you never know – someone reading this might be willing to pay to know where this cashflow gem is, and you may be able to gain a spotter’s fee !! :)

Benny

Hi Stevan,

Before purchasing secondhand, please read this (including the attached link).
https://www.propertyinvesting.com/topic/5040648-for-your-protection-read-this/

Benny

I think the natural “order of things” should preclude rates reaching those levels. Here’s why:-

1. Back in the 80’s when we were paying 17% Interest, the average value of a house was $50k to $100k. Also back then, yields were 10% to 15%. Yearly interest was thus in the order of $9k up to $17k.

2. Over the 90’s, prices doubled, but Interest Rates had fallen to a range of between 7% and 9%. Interest paid per year was still around $10k to $18k.

3. In the first half of the 2000’s (before the GFC), prices soared to become double again, and even triple what they were in the late ’90’s. Interest was around 6% to 8% then surged to 9% post-GFC and after the Rudd election. Later that year, the cash rate fell like a stone to “unprecedented levels” as the world struggled with the aftermath of the GFC.

4. Even as the cash rate fell, Banks increased their margin from 1.3points above cash rate to 2.5 points above. Thus, the Interest rates didn’t get below 5% until these later years as the cash rate has dropped even further (currently at a Record Low of 1.5% – then add the Banks’ margin of around 2.5% to get current IR’s).

So, even though IR’s are as low as they are, the Banks are doing “quite nicely thank you!” They get around 2.5% of each mortgage. Previously they got 1.3% of a $100k mortgage (so, $1300 a year). Today they get (e.g.) 2.5% of a $500k mortgage – so $12.5k a year !!

On the flip side, wages growth has been minimal, so IR’s MUST stay low to prevent the economy from tanking. Any increase from current (say) 4.5% up to 7.5% is actually a 67% increase !! With no/low wage growth, I can’t see IR’s reaching anything near 7.5% any time soon.

If the cash rate DOES go up, maybe the banks can give back some of that huge increase they have been getting by accepting a 1.3% loading once more. That could allow the cash rate to increase while not costing borrowers any extra Interest. Oh, did YOU just see that pig flying by too? It was pink and had huge ears – and it was doing at least 80KmH….

:p

Benny

Hi Michael,
Steve McKnight would probably say “If you wouldn’t buy it today at the price it is, why are you keeping it?” … or words to that effect.

I don’t know your numbers but you will….. Consider :-

1. What it will cost you per year to hold it currently (even as its value diminishes too?) – isn’t this good money going after bad?
2. Will it cost less to hold if you were to refinance (value still likely to diminish though)
3. Do you have any kind of theory re how much the value might drop by?
4. If you were to sell it now, even if at a loss, this does a number of things:-
a. It stops you bleeding money week by week,
b. It allows you to borrow afresh for something else (i.e. your serviceability rises)
c. It locks in your Loss, preventing it from getting bigger perhaps, and
d. That loss can be deducted from any FUTURE Capital Gains even if in years to come (I think – but check that with your adviser).

Re “which broker” there are several good ones on here, and their signatures often display their history. e.g. Richard Taylor notes his investing history and success in his signature – go take a look.

Benny

The Tax Deduction doesn’t happen in Australia, but happens in UK or NZ, depending on the choice of investment.

Cool – thanks for the clarification,

Benny

Hi Propertyboy,
The reason Rami didn’t get a new 6-year exemption is that he DIDN’T move back into the place. The words quoted show that:-

Rami was posted by his employer from Brisbane to Melbourne for three years and settled a contract to buy a townhouse in Melbourne. He did not return to his Sydney apartment at this time.

Had he returned to his apartment after finishing up in Brisbane, then I believe the 6 years exemption would have started again. But he finished up in Brisbane on 31 Dec 1999, and was sent straight to Melbourne without returning to live in his home.

Benny