Forum Replies Created
Hi Loukediva,
Your question intrigued me, so I set about finding my copy of “0 – 130 properties” to get your quote from the source. But, on a quick “skim through”, I wasn’t able to spot the part you were quoting.Can you help? If you could provide a page reference, or even just “which chapter”, that would be great – thanks,
Benny
Hi JC,
A good reply there from CRJ – but lets visit their warning :-
“Bear in mind the high costs of entry and exit probably about 10%”Going by your words, I “think” the property you are talking of selling is your own PPOR – is that right? If so, then one of the common costs (CGT) of selling has gone away. But yes, there are still several other costs to consider when buying/selling.
My income is relatively low (60k) so the temptation is there to sell up in the next 6-12 months or alternatively purchase my first IP.
Another option would be (subject to serviceability) to borrow against the Equity to provide a deposit for IP#1. Do talk with one of the Finance Advisers re your possibilities (you may be surprised at how many options you might already have). Of course, any final decision should be taking you closer to your goals, not further away.
Re Gold Coast, I have the impression that GC prices (like Brisbane’s) have been suppressed for some years. With Brisbane now moving, it is likely the GC will be moving already, or might be ready to start moving. We had our dip following GFC – now, 6 years later, I’d think a gentle increase is on the cards. But note, I don’t “follow” the Gold Coast in any depth – so that’s really just another opinion…..
If I use the strategy of selling soon and then looking to buy again when/if prices fall, due to the market cycle, am I losing valuable time in the market.
I was just reading one of Jason’s recent Articles – and one of the points made therein was on that very subject !! Go here to take a look:-
https://www.propertyinvesting.com/the-7-most-fatal-property-investing-mistakes/ Now scroll to subject “#5 – Buying at the Wrong Time”. Have a think around that, as it also has a bearing on “Selling at the wrong time”.In short, know WHY you are wanting to sell before actually selling. Know just how the figures will work, the advantages selling will provide you, and the disadvantages too – BEFORE you sell. Having a chat with one of our members who is an adviser on money matters would be a good idea too. Use the knowledge of someone else who knows things you need to know – and maybe make them part of your “team”.
Benny
Hi all,
Well, thanks to Jason Staggers, this Article (the Seven Most Fatal Property Investing Mistakes) hit the website recently – and it SCREAMED to me to post a reference into this “New Readers” thread. Take a quick look by all means, but then go back and read it all deeply. Commit the thoughts therein to memory, make this link a Favourite, or whatever.You will WANT to find this one again to review prior to buying your first IP. Or when you receive your first “cold call” with the “Real Estate offer of the Century – guaranteed to save you Tax!!!” Buyer beware when that happens !!
Here’s the Article:-
https://www.propertyinvesting.com/the-7-most-fatal-property-investing-mistakes/Well done Jason, and thanks,
BennyHi Loukediva,
When I tried to calculate this all I could see was that there was a -$42,000 difference between our current annual expenses and how much we would have available for ‘guilt free’ living.
It would help if you shared the data you were using (even if not “actual” figures – e.g. you might not wish to share your actual income on a free-for-all website) but at least show us WHAT data you used.
Like this – If your ACTUAL Income is $152k per Annum, and your expenses are $110k, you might retype them as $82k Income and $40k Expenses (a $42k difference). See, we DON’T need to know the actual numbers in use, but more WHAT data you are using (what is being subtracted from waht, etc).
I quite appreciate I have probably picked the WRONG data as I haven’t taken 70% of anything yet – but you tell us which is the data you are using so we can help,
Benny
Hi Mat,
Is it essential to have a cash deposit saved up to buy a house up for auction? Or is equity in an investment property I own enough to do this?
No need to have a cash deposit, as equity in a property will do – but the auction rules might state 10% deposit. Call the RE agent ahead of the auction, as even these rules are negotiable.
It is a good idea to have your finance “pre-approved” with your lender as, with an auction, there is no cooling-off period. If the hammer falls and you are the buyer, then you would lose substantially if unable to complete the deal. By the way, I am not an accredited adviser – Some who are may well follow on with more useful information, so do listen to them if their words disagree with mine. :(
Good luck with your auction foray(s),
BennyHi Coogee,
Probably more important than “which suburb?” is your answer to “What kind of purchase leads me toward my goals?” e.g. Are you wanting to build positive cashflow, or are you looking for a different outcome?“Set and forget” by buying in a +ve cashflow area (like Woodridge or many other outer burbs)
“Reno and bump rent” to bring your purchase near cash neutral, with a more likely equity growth advantage. (Any suburb)
“Go for Equity” and don’t worry if negative geared (your other IP’s might be funding an Equity “giant”?). Inner suburbs better?But first, let us know what your situation needs at this time.
Benny
Hi Dean,
I’m with you in saying “No, they won’t change it”.Maybe that is because I read 70+% of pundits are saying “Yes they will drop it”, and I like to be different :p
I don’t think we NEED this, and I hope the RBA feels the same way !!
Benny
Hi Ben,
Good name BTW – :p You have a few questions (or doubts?) re Pimpama, perhaps with good reason…..Here’s a link to an earlier similar question.
https://www.propertyinvesting.com/topic/5004119-coomera-queensland-a-good-area-to-buy/Take a look – it has several replies already – maybe you can add your findings to that post to help others?
Benny
Hi Jesse,
One I know, and used personally while based in Sydney a few years back, is Nick Moustacas of Strategic Wealth Management. He is located around Hurstville. Here is his website – http://strategicwealth.com.au/financial-planning/There are some on here too who are FP’s, but I don’t know any of them like I know Nick M. I hope others on here can recommend other FP’s to give you some choice,
Benny
Hi Jeh,
As a new member, welcome aboard – you have come to a good place !! And good on you for asking the questions you need to.It is always good to know how to EXIT an investment before getting into it – hence, useful advice from Catalyst.
Re Pimpama, I don’t know that there is a lot there – are there plans for schools, shops, etc? Or, is it mainly being considered for “tourist rentals”, with its easy access to Dreamworld, Movie World, etc.
What I do know is that there is PLENTY of land there, so scarcity is unlikely to be a problem for some time to come. Do you have documents re expected prices, rentals, land sizes, facilities, etc?
Put it up here and let’s see what it shows eh?
Benny
Hi Draytone,
I’m currently renting out to great long term tenants for $450 a week, with a balance of $315k,
.. which makes you about neutrally geared at the moment (or even positive geared?)
Would you look at cashing out the Sydney property to gather a few 20% deposits for some strong positive cashflow properties here in the USA? The ultimate goal is to generate a passive income from rental income.
I’d probably look at using some of the Equity and KEEP your Sydney place while immediately releasing enough Equity to buy your first few US ones. Selling involves a lot of extra cost.
With Valuation of $530k and $315k owing, there is over $100k of Equity available even on an 80% lend.
Let’s see what some of the finance people say about that one – oh, and maybe some “US centric investors” too,
Benny
Hi Brunowa,
I bet you are delighted that you asked on forum eh? There are so many of these little traps that “the average Joe” leaves to their professionals. If accountants got it wrong, how would you have known? I’m glad you thought to get a second opinion.As you said, it didn’t sound right, and could have cost you dearly. But now it won’t – and you should reach around and pat yourself on the back for “double-checking”, rather than just accepting that “my accountant knows best”.
Well done champ, :)
BennyHi Janelle,
Sounds like your gut is trying to say something !!! Another popular saying is “If in doubt, don’t…”If you had no doubts, then you would be feeling quite different about things. Since you are not, ask your gut “Why not?” :p It may simply be that you don’t yet know enough to be SURE. It may have nothing to do with Yale themselves, but simply “YOU are not yet ready for this!”
Give yourself some time to get “easy” about property and investing in it. If someone is trying to rush you, it is not usually to your benefit !!
Benny
Hi Calderan,
Welcome aboard – and please don’t worry about any “dumb questions” – ‘cos the only dumb ones are the ones you DON’T ask (and we never get to know about them…. :p )I’d like to share a couple of pointers with you – you sound like you are as keen as mustard, so I’d suggest you take some time to read heaps – good books, this forum, some links especially (see below), and really start to get to know HOW it all works before choosing which way that you would make it work. You see, there really are many ways to “make it” with Real Estate.
Currently, Steve has a free book offer (pay P&H only) that is a well-written look at “How he would do it again today, knowing what he knows now, but starting from scratch”. I found it a very worthwhile read.
Go here to get your copy – https://www.propertyinvesting.com/store/0-financial-freedom/Also, take a look here – it is a thread I am working on that contains several answers to new members’ questions, including a couple of stories of “How people can make it in Real Estate Investing”. https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/
Other than that, check out future posts for “meetups” where investors get together all around the country – endeavour to get to one or two of those, just to meet up with like-minded people. There is usually one a month in several of the major centres.
As Kinnon says, we don’t (usually) race to pay off good debt. It is too advantageous to keep it in force. Now bad debt (credit cards, car loans, etc) – that is another story altogether. THAT is the debt to get rid of.
Anyway, grasshopper ;) A lot there is to learn, but learn it you will. The ride you will enjoy !! :p
Benny
Hi Ryan,
Welcome to you, new member – you have come to a good place !When starting out, there is lots to learn, and I would suggest you take some time to devour the articles in the “Training Centre” on the Home page. read some good books, and make friends with some of the professionals on here (Mortgage Brokers, etc) as they can guide you, based on what all of your situation is. Share your whole financial situation with one you grow to trust, and be guided by their answers.
As well as that, take a look at the following thread, which is geared to answering many of new members’ early questions. Who knows, you may well learn the answers to questions you didn’t even know you had !! :p
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/Enjoy !! Keep on questioning – as you question, some answers will resonate with you, and help you to form your goals and thus set your path.
Benny
Hi Shaun,
Yep, sounds CF+ to me. Sounds like a commercial premises, and that the builder is renting back the place from you UNTIL he sells the other nine. Then he’ll be gone, and you will need to fnd another tenant (but they have already signed up for the other nine – is there a tenth waiting in the wings)? Being commercial, the rental returns are often good, but, when down a tenant, you can be without rent for quite some time.Now, there is just a small chance that the builder wants to stay there as a long-term tenant after all – but I’d think the earlier scenario is more likely.
Benny
Hi Terry,
An interesting first post – I guess you are new here, so welcome aboard !! Your comment below intrigued me, and leads me to ask how you do it?:-all have been cashflow positive from day one, with gross returns between 10.3% and 7.75%. More importantly the net return is around 7% at purchase date.
That bit about Net Yield at 7% – I was most interested to learn how you do that if you wouldn’t mind sharing. See, even with the super-low Interest Rates of today, a 10% Gross would usually struggle to get 3% Net because a 5% mortgage Interest Rate would be having its effect, as well as the other ongoing expenses (Rates, RE fees, Ins, etc).
But if you eliminate the mortgage…… 7% is likely – is that what you have done? Or using wraps, lease options ?
Benny
Hi WTR,
Does anyone know if when using an offset account and redrawing on it would affect LMI?
The simple anser is “No, it won’t affect LMI at all”. This actually highlights the major difference between an Offset Account and a Redraw. With a Redraw, you have returned the money to the Bank, and being able to access it again is not as simple as with an Offset.
With an Offset account, it is like having a Savings Account that is NOT joined at the hip to a Mortgage account, but it DOES offset the mortgage while funds exist in the “savings account”. e.g. If you have a $300k mortgage, and have saved $30k in your Offset account, then any Interest owing on the mortgage is calculated against $270k, not $300k. If you had $300k in Offset, then you would owe NO Interest on your mortgage.
And, AT ANY TIME, you can remove all funds from the Offset, and the mortgage remains as it was (i.e. you owe $300k and Interest on it). This last bit is extremely useful when changing a PPOR into an IP as your cash can become the deposit on a new PPOR, and the original $300k mortgage stays as a (now) tax deductible cost of running the (new) IP.
There are a few other things to consider (like, will your lender allow a 100% Offset, etc) but by and large, that is how they work. No LMI stuff – you are simply withdrawing your funds from a “savings account”>
Benny
Thanks Richard – please do if you can,
Benny
Hi WTR,
Well done – you are obviously giving this a lot of thought and effort. I recall doing similar figures when starting out – it all helped me to go into my first deal with confidence.I am not sure if your $60k to $75k is correct (these numbers are different in this day and age from when I started – e.g. WAY lower Interest Rates today) but certainly, it is worth doing the numbers as you have done. Just a couple of cautionary points to add here though:-
1. Some Banks won’t lend up to a full 100% of Rental Income, so be ready for that. One of our excellent MB’s could give you chapter and verse on this side of things – just allow for that possibility for now.
2. At some point, Banks will refuse further lending to you because “..you are too rent reliant!” (Um, it is a bit like saying a shop is too reliant on their regular customers, isn’t it?). Again, a MB will be able to guide you re this too.
Meanwhile, keep on searching – these little gems still sparkle, even though their lustre might be dulled a little !! Great find, and good hunting,
Benny
