Forum Replies Created
Hi Bobbackoz,
Are there other costs – like management fees ? Body corporate ?
Any other costs that wouldn’t normally apply to an IP investment – like (perhaps) built-in laundry costs, registered nurse subsidy, ….
I don’t know, as I’ve never chased this kind of deal. But I’m seeing a HUGE return, and I’m looking for the catch. Is there one ? Do let us know, Bob, as we’re all learning too
Benny
if instead had you got some bhp shares today you would have made 40k – then you could have bought maybe 2 IPsThis is of course assuming that the same deposit could be leveraged to purchase that same value in shares as the property.
e.g. If the property was purchased at 90% lend, this would mean a $12k deposit (+ costs of maybe $8k with LMI inc.). Would you be able to buy $116k of shares with a $20k down payment? If not, then the amount of $40k profit might be somewhat over-stated, yes?
But I agree that resources certainly have the sun shining on them ATM,
Benny
Well, EZ-rent, this is for your wife, not you
“Grand-children are your reward for not strangling your kids when they were teenagers”
Benny
PS I hope she likes it – it’s one of my faves
Investment property purchased for $285K with $57K deposit (20% required because we were ex-patriots at the time); $228K owing on interest only loan; value recently appraised at $450K.Hi Krookfamily,
Although I’m normally a buy and keep kind of person, I think I can see benefit for you in selling the IP. Here’s what I think:
Taking your figures as reality, you’ve made a profit of $165k on the IP. Subtract the buy/sell costs, and maybe $150k profit. Now, if it is owned in Joint names, then each of you own half. Thus, $75k profit each. And, since you’ve owned it for >12 months, that gain can be halved – so $37.5k each added to your wage as Income Tax is calculated.
Now, if you haven’t earned much in Oz, then the Tax is likely to be 30% (or ~$23k total in CGT). But I’m not sure how your earnings in the UK are considered, so you’ll need to allow for that. And then, if you don’t sell until 1 July, then you won’t be due to cover the CGT until ~Oct 2007 (by which time, you may well have garnered further investments, and can easily handle the $23k CGT).
So, initially, the $165k profit can cover MOST of the building cost of your PPOR, then be “clawed back” by using an LOC to fund another property (or pay your CGT). After its built, it seems you will have a $600k PPOR with mortgages of around $200k.
This leaves plenty of Equity to go shopping (depending on your DSR of course). Good luck
Benny
Tonyy mentioned one of my favourites “Buying property with OPM’s” by Allan Falkner (?).
If you’re trying to find it (often in libraries, but no longer available for sale) you need to know the author’s correct name – it is Alan Falkson – and well worth the effort in trying to find it.
You were close Tony – I’m sure you don’t mind the correction, as your question mark indicated. One other thing, I think this book was released under 2 different names (the other name was something like “Buying RE on a budget”), so check out everything by Alan Falkson when in the library – it’s probably all good stuff, based on the one I read,
Benny
Aquila,
My reason for this is to evaluate the scenario based on a cash flow only.From my recollection, the cashflow is not huge. Are there other mitigating factors that might be worthwhile? (Like Capital Growth?)
Based on a “cashflow only quote” (your words) I’d say “Go find something else”. To me, I’d want a fair bit more than a 0.13% return (or maybe I’ve read that wrong).
I see you’ve spent a lot of time on presenting your data – so it seems you are quite diligent. If so, rather than just saying “find something else” I’d be wanting to know more about this investment, like what else do see about this investment, good infrastructure, likely future growth (above the norm perhaps)
What more can you add here?
Benny
Hi swifteagle,
and welcome aboard…. First, can I say there are literally HUNDREDS of ways to build wealth in property. I think it is worthwhile for you to consider where you are at, and what you need to “move on”.
Let me explain – if you are on a lower wage, with little chance of buying (and holding) without having the investment paying its own way, then “positive geared” is possibly the best way for you.
But, if you have a wage that has a lot of slack dollars that are screaming out for an investment (rather than buying “the latest flat screen TV with coffee-maker thrown in”) then negative geared might be better for you. (sorry Steve [exhappy]) Buying in “better” suburbs has its own reward – though maybe not immediately……
First off, though, I should say to spend some time EDUCATING yourself before launching – this forum has a wealth of information that will give you some useful ideas (and some of them will “ring bells” with you).
In the end, it’s gunna be YOUR decision, so go for a decision that suits YOU. For some, negative gearing is good – for some, positive gearing is good. Both work (imho)
Steve has a quote that makes a lot of sense – “success comes from doing things differently” I take this to mean “look for THE DIFFERENCE that I can make in any investment opportunity – e.g. can I convert this little 2 bdr cottage to a 3bdr house? Or, can this 3bdr with no garage be better suited as student accomodation (and can I make this happen?) Or, is this ugly, tired, shabby property able to be transformed with a couple of weekends work (and a barrel of paint)?
In the end, it’s up to you – what can you see? And what can you DO ??? Read a bit, swifteagle, and don’t be in too much of a hurry – you have a LOT of years on your side. Set a realistic goal relative to your age, then work to make it happen. Good luck,
Benny
Steve,
This bit is not working for me –
In regards to the RESULTS folder… you now have the option of collapsing that forum so that you don’t need to see any of the posts that are in itI click on it, and it laughs at me [blush2]
Benny
stuck-at-2,
Total Loan amount divided by Total Value as a percentage.
i.e. LVR (Loan to Value Ratio)
Benny
Hi Steve,
I agree, too, with Paul and Sonja – I can’t detect what’s read and what’s unread.
But in thinking about font size (too small) I suddenly realised that I’m not using 10cms of width on my monitor. Is there a way for me to set the forum to display 1280 x 768 (or whatever are the correct numbers?) I don’t see this, and, if I could, it would probably solve the “small font” issue for me.
The new forum seems to have a brighter look to it – I like that.
Thanks for your work anyway – changes can become challenges, but we’re equal to ’em all, aren’t we
Benny
I’m happy to second Ben Poulson – always done me well,
Benny
Hi GPS,
I would not contemplate a CBD apartment – the major reason being that (from what I’ve learned) 50% of CBD apartments are purchased by International buyers. As such, they are shackled by the FIRB guidelines – in short, International Investors may ONLY purchase NEW properties.
Thinking that through, as soon as an International Investor wants to sell, they are then selling into a market that now DOES NOT INCLUDE any other International Investors. Or, putting it another way, the buyers have immediately shrunk by 50% !!!!!!
So why would I want to buy in a market that can shrink by 50% at the drop of a hat?
Happy to learn if others have alternative viewpoints,
Benny
Hi Milnev,
Derek was saying this
If you do rent out your PPOR then you will be able to claim all allowable costs associated with this property as deductions. BUT temper this thought with the longer term impact of capital gains tax that may come into play.But as far as I know, if you DON’T move to another PPOR – i.e. you rent yourself – then CGT won’t be payable until your old PPOR has been rented for 6 YEARS. After that, the rules change. But, if this helps you out, then check it out, and go for it if it helps you.
Benny
I am 16 years old (17 soon) and want to start investing when I turn 18.Hi Diggo,
Well, GOOD ON YOU !!!! It is great to hear of one so young setting themselves up in such a good way. You deserve to do well, and I’m sure you will. Go, you good thing…
Benny
Hi Calvin,
We learn a lot from our parents, eh? And not always the way we expect – hope they’re OK anyway.
They were going to do it in partnership with some friends who pulled out; and even-though my parents had the money to BUY IT OUTRIGHT, they let it go………..What can you do? This has become one of the driving forces for me now.
Benny
Hi Geoff,
It simply means “by quarter” – so if they are talking upper quartile, they are referring to the top 25%
Benny
Hi Audrey,
Not sure I’ve got this right – but it sounds like you are opting for a $15k loss to prevent paying $6k per annum. Is this close enough?
From where I sit, if this is a good Capital Growth area, I’d be more inclined to hold it but look for another +ve gearer to offset it. But then, I’m more a “Capital Growth” proponent than “positive gearer” – so do take that into account.
Can’t see the sense in paying $15k to save $6k pa. Especially as only 4% growth will more than cover your loss – the only question then becomes “how long until 4% growth happens again?”
You mentioned a town – is no chance of higher rents from Uni students, or providing furnished accom. for visitors, or B-n-B, or Corporate accom, or “something else”? Rent out the garage if the tenants don’t use it?
Benny
PS Am I close with my figures?
Hi KT,
Brady has provided a suggestion that might work but there may be other sticking points. One I’ve read about is that a lender might give you a Personal Loan for a holiday, or a carport, but not as a deposit on a property. Still it seems it can be done. But then you need to approach another lender and now you have a personal loan that could muck up the DSR.I suppose I’m saying “go for it if you think it’s worthwhile, but be prepared for a few more bumps in the road.” If you’re prepared to put head down and the other up, you’ll make it happen.
Someone else here mentioned 100+% loans – might be a better way, though this will probably have a few road bumps of its own. Be prepared for this so that it doesn’t “get you down” and have you wanting to give up too soon. You’ll make it work if you want it badly enough.
Good luck, and let us know how you go
Benny
Hey Skippy,
Have you already done a “Propertyvalue” search on this one? (It’ll cost you $40)
Propertyvalue.com.au lets you enter an address, and tells you the sales in the last 10 or so years (of course, if it HASN’T sold in the last 10 years, then you’ve done your dough).
But if it HAS sold in that time, you now know how much was paid for it (could be useful). It also includes demographic data, and sales in close locality.
Benny
Just had to set the record straight
I believe it can not be used with the old dial up only with ADSL or BroadbandI have Google Earth working fine on Dial-up. And, yes, it’s the Free version,
Benny
