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Heard on ABC News Radio tonight that Biz Schapnel (sp?) is still indicating that while property prices are slowing down, they are still predicting up to a 36% growth in Brisbane over the next 3 years. Sounds promising for the short to medium term.
It will also be slightly higher next year as it is a leap year (one extra day to take into account). You need to work off the daily rate that the bank uses.
Well I bought the property (settled 2 weeks ago) and got the depreciation schedule back. The building cost came in at $83K, and this year I get a $4K depreciation allowance (not bad for having only had it for 3 weeks before the end of financial year), next year it is close to $10K and goes down from there each year onwards.
After tax, this will be $1K per year +ve cashflow. Not much, but appreciation will be good.
My experience in Brisbane has been at least 7%, but more likely 7.5% or 8% plus GST, so up to 8.8%. On top of this, they may also charge postage and petties, which can be another $5.00 per month, plus GST. Some property managers will not charge this, other will charge more. Check that you don’t have to pay for advertising as well (internet, signage, shop window, newspaper).
You will lose the first weeks rent plus GST as the letting fee. This will happen on each new lease. You should be able to get the removed or significantly reduced if it is a renewal of a lease by an existing tenant that wants to stay on.
They may also have provisions to charge you for reading any of your meters. You need to check the agreement carefully. If they engage tradesman on your behalf, make sure they do not charge a handling fee for this.
When you add all of this up, it can easily come out to a total of around 10% of the rent collected over the course of the year.
If you are on the North side of Brisbane in the McDowall area, I can recommend the Property Manager (Sherri) are Bertie Realestate.
Hi Rissa,
This is how we started. We had no mortgage on our PPOR and wanted to get into property investing. As we could secure the purchase of an investment property against our PPOR, we could borrow 105% and not have to pay mortgage insurance.
I would suggest setting up a Line of Credit against your PPOR as this will give you a working account to pay stamp duties and deposits out of.
Good luck.
Harryson,
I am led to believe this is open to anyone. But again, not everyone is going to be able to have finanance pre-approved, have 10% deposit and be able to settle in 2 days, so it will limit who turns up.
Personally, I am going to look out for them, and go along to see what happens – all part of the education.
Cheers
Hi
After a little more research, apparently there are occassional adds in the papers, but in the Business sections under General Auctions or Bailiff Notes, not the realestate section.
The Auctions happen at a local magistrates court, and you need to ensure that you have finance approved. You are required to pay 10% at the Auction and there is a 2 day settlement period, so you need to have already inspected the property and potentially done any checks.
The last one advertised was in the Courier Mail on Saturday 25th of Jan.
Hi Ursh,
I use EBM’s RentCover Plus. It is $245 per year, but gets cheaper with more than 4 properties. Personally, they all seem pretty similar.
Hi Keith,
Sounds about right, they would have also had to buy the land, do all the water works, electricity to each site, subdivisions, etc and landscaping and recover costs for the common areas (e.g. pool, driveways, paths, stairwells, etc). This is probably another $10K to $20K across each apartment without taking the land component into account.
Hi David,
I have to agree with AD, you need to be able to sleep at night and be comfortable with what you are doing.
For us, we went down the interest only route. If we elect to pre-pay the interest, we get a cheaper interest rate and the added tax benefit for the current financial year. We also chose properties that would have excellent capital growth, so we were comfortable that the equity would grow without us needing to top it up with principle repayments. The other factor is cash flow, the repayments are less for IO rather than P&I.
Good luck
Thanks Marie
Hi,
I would suggest working with someone who has done Development Applications to the council in the past – there are lots of hoops to jump through in order to get the approval to do this. You will also need plans for what you propose to build on the land and ensure that they comply with all of the regulations set by the council. Some DA guys will have plans that you can just re-use rather than having to get new ones drawn up. I have examined doing 4 townhouses on a block that we have, the cost just on doing the DA was around $5000. There would also be at least another $20,000 in preparing the block (water, sewage, electricity).
If you are going to build units, you may find it hard to get a builder as they are off doing their own thing, and it is quite different than building a house, so chosing any old builder may not be a wise move.
Cheers,
StephenHi,
The office of state revenue gives the sliding scales for land tax and what rebates and deductions you can make from the amount. As Steve indicated, the rates notice is a good indication, but for a small fee (around $10) you can get this sent out as well, and it also includes information on the property such as the last purchaser and how much they paid for the property.
Cheers
Hi,
The property.com.au website has a search category which is “Mortgagee Auction”, this is the closest I have found for this, but often there is nothing listed here anyway. Some newspaper adds will also indicate that the house has been re-posessed. The other avenue to look at is the Public Trustee. Again, this will typically be an auction as well, but you can find some good deals.
Cheers
Hi Learner,
I am also based in Brisbane, but have not used a Mortgage Broker. All of our deals are done through the Commonwealth Bank and we tend to borrow about 105-110% of the property price (still managing to keep them cashflow positive). The bank secures the loan against the equity across all of the properties we have. I suspect that provided that you have demonstrable income from various sources to meet your living expenses and any loan commitments then you should be ok in getting finance. The lender would take a mortgage over your properties to secure them (easier if it is the same lender on all of them). Some banks (e.g. CBA and Westpac) have Wealth Creation packages that have some good side benefits for the $300 per year that you spend, such as no loan establishment fees, no loan fees, discounts on std variable and fixed interest rates, no account fees. Utilising this, we save a couple of thousand dollars a year in fees and interest amounts.
Good luck.
Hi Trying,
Not sure. Should check the implications with an accountant.
All the best
Hi Trying,
If you hold an investment for more than 12 months, then on the sale of the investment you would be subject to CGT. As you held the investment for more than 12 months the rate of CGT that you will pay is 1/2 of your nominal tax rate at the time. The 50% reduction will not change if you hold it for longer. I believe the rules are also different if you hold the investment within a trust or company rather than as an individual.
The other tax that will come into play the more your invest in property and that is land tax. The office of state revenue can supply information on this, it is a sliding scale based on the unimproved land values. There is a deduction for your PPOR as well as a general deduction of $200,000 and a 15% rebate. The maximum rate is 1.8% of the value. This is payable each year.
Cheers,
StephenHi Dottie,
I would suggest the following steps:
1. Decide to be an investor
2. Determine what you want to achieve by investing in property
3. Choose an area that you would like to invest in
4. Start small and look at the deals
5. Continue to invest in your education
6. Build relationships with your accountant (find one who also invests in property), loans manager.
7. Find an agent that understands property investment and what you are wanting to findGood luck.
Cheers,
Stephen
