Wayne,

It is possible to “change a valuer’s mind” (I’ve done it a couple of times) – but then, I’ve also been UNABLE to change a valuer’s mind MORE than a couple of times.

On the occasions when I was successful, I presented “comparables” that showed that my property was worth far more than the “comparables” they used. And questioned their use of “comparables” that were in NO WAY the same as mine (inferior).

On the occasions when I was UNSUCCESSFUL, I presented “comparables” that showed that my property was worth far more than the “comparables” they used. And questioned their use of “comparables” that were in NO WAY the same as mine (inferior).

In short, sometimes you’ll win when fighting with valuers – and sometimes you won’t. And, if using a broker, be sure to work THROUGH them as there is a certain pattern to be followed when making a challenge to the valuation.

With only 4 days left, there isn’t a moment to lose – go find some worthy “comps” – and good luck. Failing that, take your credit card out of the freezer…..

Benny

As “Debtdogg” said

Probably the most important thing to understand is this:-

If you are positive geared, then a positive cashflow is a given – your expenses are all covered, with an amount left over for your pocket. Any Tax deductions will only serve to increase that cashflow.

If you are negative geared, it’s possible to still have a positive cashflow, BUT ONLY if your deductions give you a Tax refund big enough to offset the losses that you would otherwise have.

Lose your job, and you will have paid no Tax, thus no refund, resulting in a negative cashflow because of the negative gearing.

Better?

Benny

To me, it doesn’t matter what you call it (but it can lead to confusion, especially in forums) and it seems different people call it different things. The important thing is to understand what your situation means to you, rather than what it’s called.

FWIW, my take on things is that “negative geared” is when the investment returns a loss BEFORE tax, and “positive geared” returns a profit BEFORE tax.

Negative gearers can produce a “positive cashflow” from a negative geared property AFTER Tax as long as they have paid tax that they can claim deductions against. If their job disappears, though, there is a non-cash deduction, but no Tax paid which they can claim against, to bring it to “positive cashflow”.

That’s the way I’ve learned it – so I guess that aligns me more with Margaret Lomas than Steve (now THAT’s a surprise). But then, Steve has a helluva lot more runs on the board than me, so make of it what you will. And he was an Accountant – and I haven’t been one (has Margaret?)

I should close by stating “Be reasonable – do it my way!!”[biggrin]

In the end, as long as you undertand where YOU are at, that is probably far more important than “who calls what which”.

Benny

Hi Thinker,

I believe this was an IP from the moment you advertised it as a “renter”. But there could be other issues – one of those is the CGT exemption of “your own home”. Will you get to retain the CGT exemption on sale down the track? I don’t know…

This seems to me to depend on a few things:-
1. Did you claim the unit as your PPOR?
2. Did you use FHOG to buy it?
3. Are you now living in another PPOR?

As I understand it (and, I’m NOT an adviser, or accountant, so this is just my “take” on things) you can live somewhere, claim it as your PPOR, then move out for up to SIX years – as long as you don’t purchase another PPOR in that time (are you now renting?)

The FHOG issue adds a further dimension of which I have little knowledge. If you DIDN’T use the FHOG, then the above should apply, but if you DID use FHOG, you should check this out in detail with your accountant,

Benny

Hi Grant,

I was 52 when I realised I hadn’t been doing the best I could (this was 1999) – so, congratulations for starting off so young. Even at MY age though, I spent 9 months just reading, talking to people, going to seminars, etc. to start to understand just HOW to start out with property investing. I’d suggest you do something similar – i.e. don’t be too eager to spend money.

When I did start, I bought 2 properties right off the bat, as I’d determined that this was going to work better than just one. That plan suited me, my wage, my situation at that time. And it has been beneficial.

But even MORE beneficial has been the people I’ve met who have advised, encouraged, and mentored me – perticularly in those earlier years.

So, can I say, don’t be in a hurry to “leap in” – you have many years ahead of you, and several property cycles to build your wealth.

Today is FAR different than it was 5 years ago when I started – so, don’t be in a hurry. Use your $$ to educate your mind first – then your mind will fill your wallet. I’m sure there will be several threads that discuss worthwhile books to read. Go seek them out, spend a few dollars, and bring yourself “up to speed” quickly. Meanwhile, save up those first dollars as banks like to see a “savings history” for your first property (after that, it doesn’t matter so much – but we all must start somewhere). Good luck

Benny

Hi persistence,

You could try the link I provided in THIS thread:-
https://www.propertyinvesting.com/forum/topic/14183.html

The AussieValuer does give yields – and they seem to change every 3 months – but please don’t ask me any more about it. The data appears to be useful, but Aussie don’t even date it, or indicate HOW they arrived at the various figures. They simply say “it’s current” – it won’t change for another 3 months (just changed again in the last 2 – 3 weeks, so look again in Feb 05 for an update) What you see is what you get.

Still, see how you go – it’s the only resource I’ve found that even includes “yield”, so “Thanks Aussie” for that.

Benny

Hi Micasa,

Sorry – a bad choice of words with “imbibing” -all I meant was “are you using Depreciations” – as I know Steve is not one to utilise them necessarily. I don’t know how many other +ve gearers might follow his lead and NOT claim them.

To me, by using the Tax advantage of claiming Dep’s it allows us to have extra money now – even though some of this “non-cash” expense might become a cash expense later. Give me the money now, I say, and I’ll administer it to help myself in the present.

Might just make a -ve gearer into a +ve cashflow – and that can’t be bad, can it.

Benny

Hi Michael,

“The main benefit, however, is that your serviceability improves and you can then borrow even more funds.”

This sounds like Steve’s “Multiplication by Division” strategy. Must say, I tend to like this idea – on the surface at least. And if being able to buy more (better value) properties by selling one, it has to have merit. But if you don’t have PLANS for the gain, then I’d have to agree with those that say “Why sell an appreciating asset?” Horses for courses.

The other positive with CGT is that it doesn’t fall due until after the end of the current fiscal year (i.e. you won’t be due to pay it for almost 12 months). The key here being “what other investments are you going to make in those months?” THEIR gain could pay off the CGT due on this one and accelerate your gains.

Worth a thought?

Benny

Hi Micasa,

A few back of the envelope calcs, and I think I’m seeing that IP 1 and 2 are not too -ve. So, if you were to change these to IO, you’d save around $150 per week, and push them a lot closer to neutral or +ve geared.

With Int rates as low as they are, the Principle repayment becomes a larger portion of the monthly repayment. Only problem is, you MUST make it, month in, month out if your loans are P&I – but, if they are IO, you choose!!!!

I would suggest looking at:-
1. Revert to IO loans on IP 1 and 2 – this should save you something like $150 per week.
2. If you chose to, this $150 per week could be directed toward paying off your PPOR.
3. I LOVE Offset accounts, so, set up an Offset account against your PPOR into which you chuck every available dollar. This has the advantage of allowing you to “claw back” these extra repayments if the deal of a lifetime were to present itself.

I reckon all of those reading your story would have realised you have LOTS of equity. This can provide you with many opportunities moving forward – and, if push comes to shove, can be turned into an Income Stream too. There are many ways.

But, first off, take a look at how you’d be after following the 3 steps above. To my mind, this is the winning FIRST MOVE. But then, I’m just a beginner too – what does YOUR Excel spreadsheet tell YOU ???

And, you haven’t mentioned Depreciations – are you imbibing?? If not, why not? These could turn this old ship right around IMHO.

Benny

Hi Bennido,

Not many numbers posted, but I thought it’s worth looking at what can be done. For example:-

Bennido says “I did some quick calcs and I would need to pump about $100K into the investment loan before the apmt becomes +ve geared !”

From that, I assume you are negative around $7k per year (or $140 per week – close enough?) I figure, rather than injecting $100k, look at reducing the holding costs. See if you can do some, or all, of these:-

1) Add some value, and raise the rent
2) If P&I, refinance to IO loans
3) Maximise Tax deductability (if on highest Marginal rate, loss reduces to $3.5k or $70 per week immediately)
4) Buy one or two positive geared IP’s to offset the loss per week on this one.

When it’s boiled down, it sounds like you’re only $70 per week in the hole after Tax deductions. Chew away at this figure, rather than “injecting $100k cash”. Far quicker, and you can hold for the long term growth

Benny