Forum Replies Created
Hi Sha,
Yes, a big welcome to you and hubby. You will have already seen from Richard that there can be “lots of different ways” to do things. Some work better than others of course, and some work for one couple, but may not work so well for another. The whole subject is quite complex – and there is where we need the knowledge of people like Richard and a host of others on here.The good news is that 1. You are here, and 2. You are asking questions. So, where to next?
Well, I wanted to introduce you to my “Big Picture” thread that sets out to answer a lot of the early questions that new investors have. Some useful things are “Do I buy a PPOR or an Investment Property first?” and then there are financial things that are discussed, and how/when/where to buy properties. So go make a cuppa, then sit down to tackle this thread:-
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/
You might want to “skim through” and only reading what seems of interest to you. And that is fair enough. Just be sure you do go back later to pick up on the other stuff that “sounded complicated” as these will all help you to learn to make better decisions. It will also help as you will be more familiar with some of the words and phrases for when you sit down in front of a Mortgage Broker to discuss your situation.
Anyway, again welcome – now go enjoy that cuppa and the read !! ;)
Benny
Hi Dean,
As far as the ATO is concerned the date of purchase then becomes the first date of the deposit right?
As far as I know, the Contract Date is the date that is used by the ATO. This has likely “caught” many people in the past (e.g. the seller wanting to sell a property in a new FY for CGT purposes – they are expecting a lower income in the new FY). So they put it on the market and have an offer on contract signed in June to settle in August.
ATO uses the June date (contract date) for CGT purposes, and the seller then has the relevant profit added onto his higher salary from the past FY, instead of onto the lower expected income of the new FY. His debt to the ATO has also moved forward by several months (eeekk!!). Check it out to be sure …..
Benny
The Theory can improve over time but scientists are scientists because of their actions of “experimentation and observation” & not because they are experienced or not.
Another “takeaway” I got from you right there, Pimobpi.
I once heard it as – When does a child ‘learning to play piano’ graduate to ‘PLAYING the piano’?
As you say – the moment they start is when they are ‘playing the piano’. It may take them 20 years to become well-known and experienced, but there is no switch that is thrown that takes them from ‘learning to play’ to ‘playing’.
It is an interesting thought, and (to me) quite valid !!
Benny
Hi Brett,
The only point I would challenge is that negative gearing increases housing supply,
I agree with you – negative gearing on its own does nothing to the housing supply. But it does affect the ratio of available rental properties from that total supply. Many have been lured into investing in rental properties BECAUSE of the promise of “Having the tenant and the Taxman pay off the place for you – look, after your Tax refunds, this property puts $10 in your pocket, AND you get the equity growth over time too.”
And, if the law were suddenly changed, watch out. Really, that is the thrust of my message above. Having the Project painting such a false impression does no-one any good.
Most major residential developments are sold off the plan or sold after completion, from my understanding the majority of negative gearing occurs on established properties.
The first part is a given (except for perhaps a small number that are never sold…) so no argument there. They are either sold before they are built, or after they are built. Yep, I agree !!! :p
With that second part, I can’t agree or disagree as I have no figures that support one side or the other. Suffice to say that my beef is with the Project for peddling misinformation that could influence people to vote for a party that has a damaging piece of legislation as their election promise – get rid of Negative Gearing except for new properties.
There should be WAY MORE THOUGHT GIVEN before implementing such a piece of legislation IMHO,
Benny
Hi Macc,
Depends where you are… If in Qld, perhaps a long-dated contract with $20 down and a few extra weeks than usual for finance would allow you to make it happen – if accepted by the seller.If in NSW, I wouldn’t know for sure, but I believe it might still be possible to get gazumped in that situation.
Of course, options are an option :p but not commonplace, so I would think the agent would be key in getting it to work. In fact, the agent would need to be onside with the first option too – they usually fight hard for a “decent deposit” so they can be sure of picking up their commission (but that should only be 2.5%, not 10%, so $10k for a $400k house, yeah?)
Anyway, this kind of thing is not in my day-to-day, so I will leave those few thoughts at that, and hopefully others with more knowledge will come by to add some more thoughts…..
Benny
Hi Pimobpi,
Well, you just took the wind right out of my sails !! I was about to comment on how I enjoy your dissertations (there was a similar longish, well-thought-out answer to someone else a day or two back).But now I can’t say it – otherwise it sounds like I am patting you on the back for saying nice things about me…. Ah what the hell, your words did give me a chuckle, so thanks for that. Love your work – keep it up…. please. ;)
Your thoughts resonated with me – and your words about “which subjects to take” reminded me of Steve Jobs taking Calligraphy as a subject – hardly expected of a computer nerd guy, but look where it lead him !! The Mac became the first computers to use proportional spacing and pretty fonts.
I also liked your earlier comment about failure (making mistakes, but still being successful). That reminded me of the IBM dude who urged his sales staff to “Go out and fail more”. Success is just over the hill from failure, right?
Anyway, well done for that sterling effort with the keyboard. I can tell you that my sticky mouse wheel is now working flawlessly, thanks to you. Awesome !!
Benny
Hi Mozza7,
Click on the link in this post :-
https://www.propertyinvesting.com/topic/5025119-millionaire-mega-conference-limited-tickets-left-get-yours-here/#post-5025119and all shall be revealed !!
Benny
Hi Shane,
And a big smiley welcome to you !! ;)
Your enthusiastic arrival prompts me to point you to a thread that may well hold the answer to a lot of your questions :-
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/Have a good read, follow the links (where the subject appeals) and just settle into this place. We don’t bite unless you ask us nicely,
:p
BennyHi AB,
From what you are asking, it seems your affairs are quite complex compared to many – thus I would suggest taking advice from someone who knows finance backwards. e.g. a Mortgage Broker. You might have seen there are several members on here who are MB’s, and it sounds like their expertise might be needed with what you have going on right now.As DT said, your wife would be “deemed” as having all of the debt she is guaranteeing, but only half (or one-third?) of any Income. Perhaps that applies to Equity too (I’m not sure…) but these kinds of questions are for MB’s and similar advisers. They may also have alternative money sources that could work out better for you…. and perhaps even a better way to proceed (???)
Check out one or two,
Benny
Hi Ajax,
Are you able to suggest any buyers agent whom I can approach.
You could try contacting JacquiM who is a member of this forum. I don’t know much about her, except that she appears to be quite helpful in many posts, and that she is a Buyers Agent based (I believe) in Melbourne.
You might receive replies from others who can help too….
Benny
Hi Ajax,
A quick look at realestate.com.au tells me that Drysdale’s median price is around $400k and that rental returns tend to be around 4%. This varies with size of house and land though, so more needs to be done ahead of making a choice. I have no knowledge of the likely capital growth of Drysdale so no help there.What I would say is that a quick look at AIG seems to indicate they may be selling new properties only, and that might not be what you want/need.
Furthermore, do take a look at my reply to another member who was considering using an “investment company” to guide their steps:-
https://www.propertyinvesting.com/topic/5023872-property-investment-firms-advice-needed-please/#post-5023875Are AIG “good dudes” or “bad dudes”? I have no idea – but their actions will show their nature !! ;)
Benny
Now THIS bloke makes some sense !!
http://www.theage.com.au/comment/neative-gearing-isnt-the-bad-guy-in-the-housing-debate-20160427-gog59a.htmlBill Shorten should have a good read of it before continuing on with his plan to “Axe negative gearing”.
And Brett, I actually agree with most of what you are saying. Only problem I have is that a “lowering of prices of housing” is only a small part of the likely outcomes if this goes ahead. The problems I see are a MASSIVE distortion of the market that leads to fifty other “unexpected results”.
Much more discussion is required before coming out with such a huge change. What do you think of the linked comments above?
Benny
From the SRO Vic website :-
If you ordinarily reside in Australia, you are not an absentee individual.So, it seems this “absentee owner” is NOT everyone who is a landlord (thank heaven). The SRO has a few more tests to check though, as even a citizen or resident MAY be absentee if they are out of Australia for large periods of time.
Check the situation for yourself – here:-
http://www.sro.vic.gov.au/node/1873Benny
A good question from Dean Collins:-
what the heck is an ‘absentee owners’There is also a nasty little increase to land tax too for ‘absentee owners’ – an increase from 0.5% to 1.5%
Was that a sudden switch from “overseas investors” being affected to become “interstate investors” now being affected? Or, could a Victorian investor from Ballarat be an “absentee owner” if they buy in Melbourne?????
Just how far-reaching IS that quoted Land Tax increase? It fully depends on the Govt’s definition of “absentee owner”.
Oh, by the way – that is not a 1% increase, now is it? Nope, it is a 200% increase !! So it certainly has sharp teeth, and is looking like it could affect huge numbers of investors (depending on that definition that Dean asked about).
Benny
PS Thanks for the warning Steve !!
Hi Kevin,
Thanks for the heads-up, Kevin – I’ll ask Admin to take a look and report back,Benny
Hi Kevin,
Welcome to the forums, and what a good question (or questions) to start off. At risk of sounding “obvious”, you are finding that property investing is far from a few simple steps. Though the tenet is simple – buy houses to make money – the reality is far more complex, eh?
Now, if i have understood my reading and webinar sessions correctly, I need to find an IP that has a higher return than the money sitting in the PPOR offset. Is it as simple as, this is the return % i want eg 6%. So i would then need to find a property than would return around 10.5% or more?
The way things are today, you will be looking long and hard to find many properties that can provide 10%+ from the word “Go”. Not saying it is impossible, but it is way less likely than it was 15 years ago.
As well as that, I want to expand on your comment above (about having to earn 10.5% interest). I think we would all agree that 4.25% is virtually a “risk-free return” when it is in the Offset account. Once invested in an IP, we would certainly want to gain far more than 4.25%. True? Keep in mind that the total return on an IP is made up of both Income and Growth. So, you might be receiving a Gross Rent of 7%, and perhaps an expected Growth of 4 – 5% in your area. This makes 11 or 12%.
The point I am heading toward is that you do not HAVE TO get 10.25% from the rent return alone to have a “good investment”. See, you might be able to renovate it for $10k and add $20k of equity (and increase the rent a bit too). You might also buy something that allows subdivision into the future, where a larger outlay can generate even more equity.
So, do keep in mind the “possible future benefits” when buying. It may not be a 10% return now, but can it be made into one quite quickly? If so, can you afford to take that step? And/or, can you afford to “hold on” while you get your ducks lined up if taking a longer, more expensive step – e.g. subdviding? These thoughts are all part of that initial investment.
Steve’s “market update” recently went into a lot of this – I’m thinking here of his “4 steps to investing” :-
1. Make the most money
2. In the least amount of time
3. With the lowest risk, and
4. With the least aggravationHis examples showed how just 1. on its own can be a huge trap – and same if just 1. and 2. Get all four right, and you are sweet.
Steve’s example of the couple buying in Moranbah is a great one. They got 1 and 2 right, but 3. was either not considered, or their path was not identified as risky, and that has lead to 4. being HUGE for them in aggravation. With the outcome that occured, 1. has also been turned upside down – they now stand to LOSE a lot of money. It is a horrific outcome after it had started off so well.
Re “Who to talk to”, I’d start with a Mortgage Broker. They can advise on all of the possibilities you have when financing – and you want to be a “full bottle” on this part right upfront. Re “structuring”, this is also important, depending on your proposed path. See, if you are wanting to start a business of property investing, you would want to discuss the structure of such right upfront – that could need both and accountant and a lawyer. If, however, you are starting out with your first IP and are planning to just have “2 or 3 IP’s”, then I would think there is far less need for a complex setup.
Maybe it is better to “get into your first one” from which you will learn SO MUCH, and tweak things as you go. Or you might prefer to school yourself via a worthwhile learning package so that you get all of the good oil prior to starting out. That can be an ideal way for some people too. I believe education is paramount – you can be educated via mistakes, or you can learn from the mistakes of others (on here, or in a course for a fee). Check out Steve’s “Property Apprentice” offering – even just a chat with Jason re that might provide the answers you need.
In case you haven’t found this post already, let me steer you toward someone who DID find 10%+ IP’s right upfront, and has built up a sizable portfolio in just a couple of years (from 2011) – here:-
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/#post-4697977I hope you stick around, learn a bunch, then share your learnings on here with others starting out !! It is a good place to be,
Benny
PS In case you were looking for the Property Apprentice course, here ’tis –
https://www.propertyinvesting.com/store/property-apprentice/Congratulations, Peter. That is great news !! Will it be positive geared once rented at your projected rental? Once it is all settled, share some of the numbers with us. It will be good for others starting out to hear that such deals are still “out there” in the current climate.
Benny
Hi San,
The content on web, sentiments of people I meet say its not the right time to invest because price is going down, its selling time not buying, the property bubble is going to burst etc. They also give example of over supply of apartment sin Brissy, McGrath share price fall, 10-15% price down in Sydney etc.
We all hear such things – the first question on hearing such things is “Does the person speaking invest in property, actually own property today, and is successful in property investing?” Be careful, as you could be taking counsel from a Taxi driver, or your parents/friends who don’t own property for investing. BBQ’s are common places to hear people “sounding off” about a raft of things.
And, of course, the Internet. Sometimes “names” will make a comment, and they might be in error too. It is important for us to “prove” for ourselves what is the truth in a situation.
Speaking of “When to buy”, I recall Jason coming up with a VERY worthwhile article about that question. It is here:-
https://www.propertyinvesting.com/buy-properties-in-australia/If you can answer all 7 of the questions in that linked article confidently, then NOW is a good time to buy.
Benny
Hi Glen,
Good post, and well thought through. No, you are not missing anything at all – you have it dead right.
Top answer from David too – so many people DO lose money, with several “advisers” promoting negative gearing (the science of losing money on a weekly basis in hope of a Capital Gain down the track).
Just this week Jason resurrected a top article originally from Steve and re-presented it – take a look:-
https://www.propertyinvesting.com/negative-gearing/Your comments were describing the “usual” negative-geared property, where, to purchase it, you must be prepared to lose money weekly, then get back SOME of that loss from the Tax Office. To prevent this, you need to start looking at property differently – as David shows, profits CAN be made by buying well. But then, this is a whole new area of investing. Can you do reno’s? Or subdivisions? Or simply look for better deals in areas where property is cheaper yet rents are still high (e.g. regional areas).
Of course, with the latter, there are REASONS why property is cheap and Rents are high – few people want to BUY there. You need to consider whether YOU want to !! If you do, have you lined up an Exit before purchasing? Or, will you use one of David’s ideas and buy a loss-maker, then change its function to make it into a profit-maker?
Keep on reading, Glen – the answers are already out there…. Some of them are in the Training Centre on the Home page, and then, some others are HERE:-
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/Other than that, check out the stickies in each forum that appeals to you. And come on back with questions if you need to. See, as we answer each question, we answer it for hundreds of others who are reading and just “taking it all in”. So, good on you for asking questions – especially ones as good as your one,
Benny
Benny
Hi Ragulan,
You are just a week too soon…….
Benny
