Hi Jaxon,
An interesting take on the question. There I was, about to say to myself “Jaxon just doesn’t understand…”

…………. and then it hit me – you are right Jaxon – we really don’t know WHAT might happen in the next 10 years.

Thinking in terms of a Govt that wants to squeeze more people onto smaller blocks of land (maximise urban infill), perhaps laws might be passed that makes having a large block of land financially disadvantageous.

Just like what happened with cars in the 70’s when the first oil shock hit – no-one wanted big engines after that – everyone flocked to buying small engined vehicles as the huge running costs hit home.

In this case, any financial impediments (taxes) that might be imposed on those owning larger blocks of land could swing the average punter toward buying only homes with small blocks. Supply vs demand would then do the rest to push the “house on 600m2” way down in value compared to a “duplex with 300m2”.

Or, thinking again, maybe that could push people even more toward apartments (with really tiny land allowances). As Jaxon said “It depends on a bunch of things” – one of which could be that Govts might go overboard attempting to affect free markets by “steering them too much in one direction”. Any bets that Govts WON’T do this? And if they do, which direction would that be?

Well said, Jaxon, your response was a good catalyst for further thoughts,

Benny

Well Frank, now I see where you are going – but again, comparing an “out West” house with an “inner West” duplex introduces so many variables. Location being key. The suburb itself could well add value to one, and not to the other. A different Council for one might give one property another advantage too.

So many variables. But OK, since “I get you”, let’s put aside values, locations, and just compare a duplex with a house (of roughly similar values in roughly the same area).

My money would be on the house as being the winner in CG stakes. The main reason would be that whomever buys a house, buys the right to control the block of land it sits on, as well as the structure on the land.

If buying a duplex, then whatever you might want to do to the duplex and/or the land it sits on, there is another party who will have quite a “say” in what you want to do, thus lowering the amount of control you have. e.g. If you own a house, you can choose to knock it down, subdivide and rebuild, and add a granny flat or similar.

It is a LOT harder to “knock down” a duplex without profoundly upsetting your “neighbour”. ;)

So, you might own the land your duplex sits on, but you DON’T own the structure – you only own HALF of it. Hence the lower desirability of a duplex.

Add to that, your “neighbours” are way closer in a duplex than if you lived in an ordinary house. I hope you don’t get the kind that SHOUT !!! (Another mark against a duplex in my book).

I’m sure there would be other differences that might spring to mind too…. Let’s see what others think….

Benny

Hi Ms Trump,
Your first post indicated that your family member didn’t build – just had a developer divvy up the blocks, pay all fees for subdivision, and take “one or two lots for free” as payment. Your situation sounds like it could be similar, but that you might want to build as well. Would you perhaps clarify a few more things for us?

So where’s the developer’s benefit in all this?

It would be beneficial if you were able to call on more detail – like, how big the land was, and how many lots were created, where said lots were located, approx year of subdivision, approx value of each lot after subdivision, etc. Were the “one or two lots” given to the developer really more like “four or five lots”, etc.

And then, more importantly, how does your situation compare? Are you also holding a “massive block of land”, or are you looking to make some $$ by subdividing a suburban block (what size, and where?). I am sure many things change over the years – so any costs you have today are likely to be way more than costs from many years back. In essence, what you might be able to do today might bear little resemblance to yesteryear.

I am sure there will be similar developers “out there” today who may be able to assist you in a similar fashion. And, who knows, they might be reading this right now. Why not add a tad more detail (without giving too much away just yet) so that their interest might be piqued. Perhaps provide a few answers to those earlier questions re your situation, and let’s see where that might lead.

Benny

Hi Simon,

Am I correct in guessing you are suggesting I would run into further trouble if I put the IO funds in the offset against my PPOR?

That is a good thought, and that might be quite right – but really, it was an earlier comment from Terryw that I wanted him to clarify (and this goes back some time too – but could also be related to your situation). The words I thought I recalled went something like “Don’t pull the money out of the Offset when you want to use it – instead, use that cash to pay down a Loan, then borrow directly as a separate Loan, not from the Offset”.

Now, it appears you HAVE DONE something like that by creating a separate loan. The only difference is that you drawn down that loan already, and the settlement is still a month away. Terry’s words MIGHT have indicated that you should pay back the money INTO the Loan and NOT draw it down just yet…..

…..OR, I might have mis-interpreted him completely. I don’t know.

Sorry for adding doubt, Simon – but I wanted you to be sure before things went pear-shaped (and I could do with knowing more about it too – and that is where Terry comes in),

Regards,
Benny

Hi Merv,
I think it is always good to learn – going to seminars is one way to do this, along with books, structured courses, meeting with other investors, etc. One piece of useful advice is to always consider “what is in it for them?” when attending seminars. Like, are they wanting you to buy a piece of real estate from them? If so, how would you know you are getting a good deal? Do you have any experience of prices in the area in which they are selling (if that is what they do…).

So, let me suggest that you share your goals on here, to get ideas from others that seem to fit in with your plans. See, there are many ways to invest in Real Estate – which way were you thinking of going? Do you have a goal in mind re your investing? Are there ways to invest that WON’T suit you (e.g. renovations, developments)?

Steve would probably say “Buy problems and sell solutions!” To be doing that, consider that a new house is a solution, and you will be paying high dollars to purchase it (unless you are doing your own development). Does this group source 2nd-hand properties for you, or are they only selling new ones? Or are they in a different part of the Real Estate “food chain”? e.g. are they Buyers Agents, or Real Estate agents? What do they do?

By all means, go along and check out their seminar, but leave your credit card at home. Then report back to us what you found, and whether their style “fits” with you – or not.

Are they advocating selling something new to you in a place unknown to you, and do they have a “one-stop-shop” operation where they can provide finance, a solicitor, etc (but you MUST sign today….). If THAT happens, get out of there QUICK!!

But go to the seminar – should be fun… I usually learn something from every seminar, even if what they are selling doesn’t suit me. And who knows just who you might meet there (by networking with other attendees). ;)

Benny

Thank you Brett Clarke for providing us for your very informative article:-
https://www.propertyinvesting.com/the-12-most-common-pitfalls-when-insuring-your-rental-property/

This whole thread has been an eye-opener to me, and I suspect to most other members too. Now having your article that highlights all of those “gotchas” is worth its weight in gold – and so are you !! ;)

If any members find their own Insurance Company policies wanting, do share the experience here.

As you can see, this whole subject is huge, and is such a minefield – mainly because, as Brett says earlier in the thread, “As mentioned in previous post, there is no such thing as a ‘cover the lot’ insurance. If anyone tried to do it no-one would ever be able to afford it.” This means, since we can’t cover ALL risk, we must choose our armour wisely.

Certainly Brett, along with the thread originator (5c1eb9d2), have run the flag up the pole – now it is up to each of us to salute it, or remain in some danger in this area!!

Many thanks to you two for such a massive “heads-up”.

Benny

Hi Terry,
“Auto-correct” strikes again…..

1. Probably no cgt based on. Want u wrote.
2. Up to 6 years from date Friday rented

Translated, these should read:-
1. Probably no cgt based on what u wrote.
2. Up to 6 years from date first rented

Benny

Hi Simo,

I would feel all the work of the broker has been a total waste of their time & that doesn’t sit well with me. It also frustrates me the Way NAB have dealt with the whole situation.

I think you are answering your own question right there!

Like, why did it take an action from you to “go elsewhere” before NAB took any notice of you? Why did they suddenly realise “Oh sure, you DO have equity after all”.

At times like this, I would say “Go with your gut”. I have also heard Steve say “The best rate is not always the best deal” (or words similar to that).

Of course, there is a flip side – and you would need a Broker to help you with this one…. That is, NAB might be one of those lenders who you should “go to first” to use up their largesse, and then move to another for later borrowings. But that depends on how far you plan to go (your goals) and how much positive value NAB would provide at this time.

Good luck with the choice,
Benny

Hi Bomberboy,

Bank rates are heading north and can accelerate as quickly as they came down.

Can’t say I agree with you there. It “might” have been the case if rates went back up again soon after they dropped to the floor.

But they didn’t – and we have had YEARS (almost a decade) of borrowings at ever higher vals (in some part because rates were so low) and no Govt is going to sit idly buy and watch 20% of its population fall into a hole because the rates are climbing way too fast for the economy to keep up.

Going up – sure thing. But not SO fast….. it can’t happen – doesn’t pass the “pub test” !!

Benny

Hi Jambv,

This doesn’t sound right. Any thoughts?

Sounds to me like the RE agent might have already given the tenant back their bond – unless you sold with the tenant “in place”.

Had you previously sought reparation via the RE agent (like 3 months prior)? Or was this a last-minute thought bubble? Was the house/unit on its own separate meter? If not, forget it.

Even if it is metered, Qld has laws that are less kindly to landlords in that regard. It has been a while for me, but it went something like “You could not charge a tenant for ‘reasonable usage’ – only for excess water usage”.

Benny