Hi JP,
I agree with JamieM. Take it to a Broker (JamieM is a good one) and they can look at your Wage, debts, equity, savings, etc and can make recommendations re “which bank” to go with for best effect.

Who knows – maybe your MB can steer you toward a loan that has you buy a positive geared property that throws off cash that can be used to pay down the car loan. Lots of ways to cut it, depending…. ;)

Benny

Hi Pete,
Though I can’t recommend firms that are kosher, what I can do is to say that I am sure there are many GOOD firms out there. But yes, there have been countless “horror stories” over the years of marketeers who fleece unwitting buyers.

These are some of the “alarm bells” that should ring loudly if you are dealing with “bad dudes”:-

1. Bad dudes – They purport to have the answer to your financial woes and promote themselves as experts. They will “make you an investor, and have the tenant and the taxman make you rich!” They will have a “deal” that often includes a Rental Guarantee (that will be built into the price) to help allay any fears you might have, or counter your “I’m not sure!” arguments. They will often have COLD-CALLED YOU, and not the other way around.
Good firms – will discuss the kind of house you want, and talk of how to make that happen.

2. Bad dudes – They run a one-stop-shop that will sell you a property, provide you with a broker to arrange your finance through, and a solicitor too, and will have you stitched up in just a couple of hours!! If you want to have your own advisers take a look, they will apply huge pressure to get you “signed up today” in whatever way they can.
Good firms – will talk of your finances, but mostly leave you to arrange these. If you want to use your own advisers, this will be no problem to them at all.

3. Bad dudes – They will already have discussed your PPOR and will have worked out that there is “Equity to spare” in it. If that were NOT the case, they would have dropped you like a hot spud way back. These dudes NEED you to have spare equity that can offset the over-high price they are charging you to buy their wares.
Good firms – will ensure you can pay them, and will ask questions re this.

4. Bad dudes – If you ask whether they also buy/sell second-hand property, they will steer you away from second-hand – they want to sell you their over-priced new (or OTP) house in an area with which you are unfamiliar. If you “want to go check comparables with other sellers” they will up the ante on pressuring you to “sign now”. If they make it hard to leave the building without signing up, be sure to leave – and RUN !!
NB – the fact that they don’t deal in secondhand property means they WON’T be buying you out if you get into trouble, or if an area sees falling values (perhaps from over-building??). Once they have sold you a property, their involvement ends except to sell you another one.
Good firms – some builders will talk of “doing up” a place rather than building new – others might not do “second-hand” any more. They will likely share why building new works better for them. They won’t be incessantly pressuring you to go with them. Their money is often made via referrals – so if they can give you what you want at a fair price, and with minimal hassles, then that is what they will do. They will appreciate you will want to “go away and have a think about it” and will not be pressuring you to sign anything.

5. Bad dudes – will INSIST you bring your partner with you to their “information session” – as they don’t want you going home and talking to your partner, then pulling the plug. They want to pressure you BOTH and get you signed up THAT DAY.
Good firms – they may also suggest you bring your partner – so they can get to hear the needs of both of you. But there won’t be the pressure !!!!

6. Bad dudes – will usually be selling you something in an area you are unfamiliar with – e.g. if you are from Sydney, they will sell you a Gold Coast or outer Brisbane property. Their quoted prices are way lower than most Sydney prices, so they SOUND like good deals (but in actual fact they are expensive when compared to other sales in the area). By taking you “out of your own area”, they have exposed a weakness. They may even offer you a FREE FLIGHT to Qld or wherever – but there is no such thing as a free flight really!  You will pay for it, believe me.   If you find yourself in this situation, BE SURE you take your time, DON’T be pressured, and DO find the time to sound out other comparable firms and their similar offerings.  If the marketeers pressure you to stay and sign, RUN….
Good firms – Will talk of building where you want to build, or might offer some of their current OTP’s if you don’t have an idea of where you want to buy. They won’t be trying to talk you into buying in Ballarat if you are meeting them in Brisbane.

Mainly, the more PRESSURE there is, the more alarmed you should be. Tread carefully, and you should be fine. Maybe some of our members can come up with names of builders they have used who are on the “Good firms” list…..

Benny

• This reply was modified 6 years, 11 months ago by  Benny. Reason: Add extra to point 4 - re "secondhand IPs"
• This reply was modified 4 years, 7 months ago by  Benny. Reason: I forgot the "free flights" in item 6. D'oh!

Hi SJK,

You sound very sensible – and I agree that spending money on regional properties would have to be carefully considered. I think you can do far better by looking in other directions to grow your wealth.

e.g. Rather than spend too much time trying to engineer a Tax Benefit (where you might get back 40 cents for every $ you outlay….), it would seem better to look at offsetting the positive income from these with a Growth investment – perhaps a City property with some future benefit. Perhaps purchase an old house on a large block of land that can be developed down the track, or even one needing an immediate reno. You buy the house cheaper, spend money on the reno, thus adding value and creating more rental income while also benefitting from the existing Negative Gearing laws.

Thus you have a “cordial” of positive and negative gearing, and making the most benefit by using the extra rental income to pay expenses on the negative property. This grows your Equity, your growth prospects, and allows the current laws to help you build wealth.

Re your accountant – I believe they are doing the “best they know how”. Whether that best is enough for you is up to you. See, it might be this accountant is EXCELLENT in all other aspects of the accounting work that they do – so don’t throw the baby out with the bath-water.

Perhaps look at using another accountant JUST for property investing – or, “go your own way” in getting around the positive income problem, then get your accountant to manage the bookwork side of things (that is what they are good at).

Benny

Hi Brett,
The very nature of “student accommodation” means that for 2 or 3 months of the year, you might not have a tenant. Or, you might be able to use airbnb or similar to “plug the gaps”. But then, that does substantially increase the risk factor surely, and would have some kind of negative effect on the Nett Yield.

When looking at 8% in your first post – was that nett or gross? As Corey has mentioned, apartments mostly have a larger delta between Gross and Nett, simply because of Body Corp fees that don’t exist with private homes.

Benny

Hi @mikesonthemic and @daniel-vic

Any plans for another one to run?

I just heard last night (at the Brisbane Market Update) that there WILL be another one this year – and I think it is in June !!

If you are going along to one of the other Market Updates this week, you will have the opportunity to put your name on a list of interested parties….. Or, failing that, give the office a call,

Benny

Hi Danny,

Been saving since 16 and its my first step in to real estate – dont want my money to go down the drain!

I can understand the excitement !! This sounds like a big step for a beginner – but then, is it really?

It may in fact be a simple buy/reno/rent to get funds coming in, and the subdivision can follow down the track. So, assuming that, let’s concentrate on the first part first :-
1. What are your goals, and what path are you planning on using in real estate investing?
2. Have you become very familiar in the area you are looking to buy?
3. Putting aside the subdivision, is this a “good buy” based on the asking price, location, potential, condition, expected rent, demographics, etc?
4. Do you have finances already in place, or at least discussed? Has a lender given you a limit to how much you can borrow? Or are you using a Mortgage Broker?
5. Have you “schooled yourself” on property investing – been to seminars, read books, planned your path, etc?

Good on you for having saved a deposit – and I agree, that you don’t just want to see it go down a drain. Hence the “third degree” my friend. I’m not attempting to derail you at all (quite the opposite) – just putting a focus on what needs to happen ahead of buying just any old property.

There is lots of good “starting information” on here. Start with the “Training Centre” on the home page. Steve and Jason have put some great articles together that guide you through many of the pitfalls. Look at the “stickies” for other good sources of information. And just immerse yourself in this place where people are doing what you want to do – i.e. it is a great place to be for one on your path.

This house you are looking at could be a good deal – or not. With the information presented, it is impossible to say. But, even if it proves to be a good deal, is it a good deal FOR YOU? That depends on where you see your path going (e.g. if you hate doing renovations, you wouldn’t buy this place surely!!)

Come back to us with a bit more, and let’s see where that leads …..

Benny

Hi Chat,
Seems to me they would have just doubled by 2029 in your spreadsheet (the Rule of 72 tells me that). That sounds a bit conservative, but then, I recall that from the late 80’s to 2000 there was very little growth in Brisbane (so, about 11 or 12 flat years).

But then it took off with a hiss and a roar, and DOUBLED house prices in about 3 years, then another 50% about 3 years after that. Thus, they went up about 150% in about 17 years – so that is more like 7% p.a. I think. No bets that it will do the same from 2006 to 2023 – but perhaps similar ???? The GFC gave us a definite flat spot, but already climbing now after just 9 years rather than 11 or 12.

To me, Real Estate seems to appreciate like stairs – a long flat bit, then a huge jump, then another flat bit, then a jump…. the time between each step can be markedly different though – so, the best we can do is guess. And of course, stairs go down too – but with Govts madly printing money to devalue currencies, I don’t see any likelihood of property value dropping in the near future (except perhaps some inner-city apartments in over-supply).

Lets see what others have to say – it is an interesting muse…..

Benny

Hi Sami,

Some useful words re the WA zoning numbers in the link below from Jason Staggers:-
https://www.propertyinvesting.com/r-zoning-codes-for-western-australia/

From a quick skim of the article, it seems to me that the RE agent might be “saying anything to make a sale” so do read it all carefully. Jason does say that the R number is not the whole picture – but the R17.5 says minimum block size is 571m2, so do check everything prior to going to contract on THAT property.

Jason explains their numbering system (quite sensible to me) in this way. The number denotes how many dwellings they will allow per hectare in that zone. e.g. 571 x 17.5 = 9992.5 (nearly 10,000m2 which is one hectare). For more density (smaller blocks allowed), the number needs to be higher – like the R25 zoning which allows a minimum block size of 400m2.

Benny

Hi Geraldine,

I had left this question alone, since it involves overseas property – but, in the absence of any other answers, I thought I’d let you know that I believe you are correct (based on the evidence you provided). Certainly, that is how it would work in Australia – if you make no gain, then there is nothing to add to your Income Tax to be Taxed on.

But, it could go deeper than that, so I do hope someone on here who really KNOWS can step in and help….

What I am thinking is that, a loss is able to offset any future Gains – and your loss would likely be way more than $2,500 – as Selling costs, solicitor’s cost, etc all come into play. So, it could be that you have a loss more like $20k that can do some good for you in offsetting some other gains.

It needs an adviser (accountant?) to affirm just how all of this works – I am not sure of the mechanics of such,

Benny

Hi Huilo,

how much does it cost to subscribe to veda?

Did you find out? If not, try here:-
https://www.veda.com.au/contact-us

Benny