Forum Replies Created
DD, you should get a pretty fair price in Perth at pres. Selling poor performers is a good idea. Once the capital growth has been achieved during a cycle, it is no fun at all to hold a maintenance high property till the top of the next cycle.
Market wise on my sales, I had no impossible dreams of what price I could get by selling. I think prices in most areas are too high anyway and could do with 20% off immediately. You are supposed to take your profit when you sell, not dip into the next buyers future profit by ramping up the price.
For my sales, the houses were on the market around 4 to 8 weeks before I got a bid. I listed the ips at the overvalued market price and just kept lowering the price each week, till I met the market. I had already worked out my lowest amount wanted, but thankfully, all three ips went under contract much higher than my lowest expectations.
Results were IP 1, purchased for $50k, latest rent $150pw, sold $130k.
IP 2, purchased for $30k, latest rent $105pw, sold $72k.
IP 3, purchased for $52k, latest rent $125pw, sold $86k.
None of the ip’s were nightmares or anything to own, I just needed to reduce debt and those 3 Ip’s seemed to be the hardest likely to sell. I thought whilst there was still a fairly interested market, now was the best time to sell them.
If you want to get out of a hole, first stop digging.
1) I am currently reducing debt by selling some Ip’s and taking the capital gains. With a very large low value depreciation pool, I can, currently, offset most of my capital gains from sales. This won’t occur for long as LVP’s tend to run out quickly.
I am willing to keep and maintain IP’s which I own outright, but I am not happy to become a contract bank employee by maintaining IP’s for which the bank holds the lions share of ownership. Repaying loans and reducing debt is effectively ‘buying out’ the bank’s share of your Ip’s. I want to retire on the rental income, not pay it all to the bank in interest payments.2) Lot’s of my Ip’s were ‘cheap’ buys because of crook fences, no carports, worn carpet, need painting etc. Now is the time for me to rectify those shortcomings and hopefully increase the rents too.
3) With a better income and less debt, I can be on the lookout for the occasional bargain which comes along and actually be in the position to buy it.
4) Probably most important: With a cooler market, I can devote more time to my children, who, during the crazy time of property investing ‘full-on’ did not get my undivided attention. Time to stop and enjoy my ‘roses’.[biggrin]
If you want to get out of a hole, first stop digging.
Quote:Originally posted by Karl and Rita:Ipswich, QLD here.
K&R
Hey, We’re practically neighbours, I’m Lowood.[biggrin]
If you want to get out of a hole, first stop digging.
Originally posted by woodsman:Yet when you consider that only 1 in 200 property investors owns more than five investment properties, you have to conclude that something is horribly wrong.
Under today’s tip (5/2), there is the above statement. Can anyone confirm the source of this data?
I cannot confirm the data, but I was wondering at your 1 in 200 investors own more than 5 properties quote. Is it really that high? I would have thought the ratio to be much lower, like 1 in 2000 at least.
If you want to get out of a hole, first stop digging.
I am not familiar with developments but somewhere in my head a rememberance from a workshop I attended is surfacing.
If you sell a new property within 5yrs you could or will have to pay GST. Does any experts know the proper rule and details of this?
If you want to get out of a hole, first stop digging.
Originally posted by allymac:mustang66,
I got no child support and never had the family support for child care.Note: You may have been better off without child support from the gov’t. For some unknown reason, carried forward losses in realestate (usually a result of depreciation allowances) are added as a plus income on your income assessment.
Tip: Make sure you start a Low Value Pool for depreciation (items under $1000). This is shown in a different area of you return from normal income/expenses on rental property. It can make a difference in qualifying for centrelink payments. Tell your accountant and they will know how to set it up.
If you want to get out of a hole, first stop digging.
Originally posted by Gonnaberich:BUT the wife is pregnant they already have 3 kids and they cant find anywhere else to go so
JillLast time I looked there were very attractive government benefits and subsidies on children and bonus’s for babies. For a low income, there would also be a rental subsidy available to them.
Why are you feeling guilty, are you a charity or an Australian government?
I have a tenant also, who has defaulted 3 times and then caughtup because he worked a few days then left and there were delays in regaining his unemployment benefit. Well, no more, he is being evicted. I do not feel sorry at all for him, especially after my PM told me about the new boat and 4WD in the yard, when she went to find out why no rent was being paid.
If you want to get out of a hole, first stop digging.
Originally posted by Brenda Irwin:Hubby and I will be attending. I’ve been having withdrawal symptoms during the Christmas break. I love meeting everyone at the BIG meets. Hope to see you all there next Tuesday.
If you want to get out of a hole, first stop digging.
Doh, Unfortunately hubby will be working way out in Pittsworth today, and geographically it would be very difficult to get to Brisbane by 7.30pm for us. Never mind, there’s always next month.
If you want to get out of a hole, first stop digging.
Hubby and I will be attending. I’ve been having withdrawal symptoms during the Christmas break. I love meeting everyone at the BIG meets. Hope to see you all there next Tuesday.
If you want to get out of a hole, first stop digging.
5 yrs ago I was easily able to make 12% or more gross yield.
Now, based on today’s market value, it is 6%.
This is only due to market values rising faster than rental returns. You cannot have a market boom like we have just had and expect peoples wages to increase at the same rate, so rents can also rise at the same rate, although it would be very nice.
If you want to get out of a hole, first stop digging.
Having once lived in Nth Qld, I can associate with most of those observations. I’d like to add an extra one:
You become more of a night person, and a day sleeper.
If you want to get out of a hole, first stop digging.
I am not familiar with OTP investments but I presume the finance is approved and the contract is now unconditional.
Early congratulations on your first ever purchase, Andrew.
It sounds to me that despite the value slumping a little before settlement, that you have gotten yourself a really great buy. What a great asset base for your first one.Now, you need to really look to preserving your relationship with your partner. That is the biggest risk when holding a future high growth but presently absolutely negative geared investment. You will both need to steel yourselves now to cut your living and entertainment expenses to the bone. A big ‘do without’ now will show handsome dividends later, and may even bring you closer, as you’ve done it together. Best wishes to your financial future.
If you want to get out of a hole, first stop digging.
I have 11 IP’s with Statham’s as PM’s in Ipswich. Haven’t had any problems with their management at all. Nearly all my tenants are tops, although some are a bit slow sometimes. None are rough on the houses at all and I have very few maintence bills.
Stathams are 3rd generation RE agents, so they know a lot about the city and the locals.
If you want to get out of a hole, first stop digging.
Quote:Originally posted by Jenny1:I have an IP where I have been lucky enough to get someone that is a tradesman. [biggrin] He has approached me to say he could add value to my place (bathroom ensuite etc..)for reduced rent.
Has anyone done this trade off before? And did it work out in favour for both?
Thanks Jenny
Hi Jenny, If you have a property manager, they won’t be too happy at getting a reduced commission on a reduced rent.
I have had a similar situation before, whereby my tenant was a painter who worked at a paint selling store.
I allowed my Property manager to handle everything for me and it worked out well.
Here’s how it worked. PM inspected the property with the tenant and discussed where painting would occur. Tenant selected paint when PM agreed with the colours. Tenant then over a period (in his spare time) would paint areas of the house and notify PM when each area was completed. PM would have a look, and if it was good, would allow more painting to proceed in other areas.
For payment, the tenant would drop little hand written accounts into the PM when he paid his ‘full’ rent and PM would pay the accounts on my behalf with the rent money.
I would receive the accounts with PAID stamped on them and a record would be issued with my rental statement. The balance of money’s would be deposited into my rental properties account.
This worked out well as the PM got her full commission on the rent, and I got the tax deductable painting receipts.
There was a little hiccup though in that I couldn’t very well increase the rent on my tenant for a while as he was the one who did all the work to improve the place. But the great news is that he has just decided to move out, and I have a tenant going in on an increased rent of $10. [biggrin] Cheers Brenda
If you want to get out of a hole, first stop digging.
Usually in todays market, positive cashflow advertised by websites are including the tax deductions to improve the big picture. I much prefer positive cashflow from day one, and consider the tax offsets as an extra bonus.
If you want to get out of a hole, first stop digging.
I look firstly for affordability. It’s no good looking within 5km of Sydney CBD if my deposit and my income won’t support it.
So, when I’ve found a few areas where I can afford to buy, then I start to research the possible gross yields of a few areas. I want to make money, not lose it for 10yrs before I see a return.
Once I’ve narrowed the field a bit, I then really start to research the areas indepth. Things I like are population growth, very few crime reports and employment opportunities.
After this I may ring a few real estate agents and have a talk to their rental property managers. I ask such questions as vacancy rates, how long it takes to fill a vacancy, how good are their current tenants and what do they prefer when looking for a rental, what the median rents are in the area.
All being well, I will then start actually looking for houses to purchase. I may enter into a contract or two, subject to the usual ‘out’ clauses. If the pest report comes back, chokka full of termites, I prefer to back off. If the building report comes back very reactive soil and movement in house is obvious, I’m out. If the council searches find you need a snorkel every time it floods, then I’m out.
All being well, I may purchase one house in an area and let it perform for a year or so and see how it, and my PM goes. If its no good and nothing but a big hassle, I sell. If it’s going well then I look to buying as many as I can get my hands on. Hopefully before everyone else does.[biggrin]
If you want to get out of a hole, first stop digging.
Great topic ‘Destined’, and by your interest, I think you should be able to get there with patience and perserverance.[biggrin]
Wow,’Oldtimer’, you have been in the game for a while. I only have $12million to go to get to your level.
I bought my first house, a neg geared beach house, in 1998 with my hubby. Our reasoning was, that should hubby lose his job in the future, at least we may have paid off enough of the mortgage to move in to the house, or have enough capital gains to sell it and make a profit. Purchase price was $125k and permanent rental was $125pw.
We followed that purchase with a little cottage to rent to my sister for only $27k. After a reno, we charged her rent of $100pw.
Our PPOR was the third purchase, a year later. It was $70k and this knocked our loan serviceability around somewhat as although we no longer had to pay rent, the interest repayments we unsupported by any tenant rental income.
In Nov 2000, and after revaluations we bought another IP this time in Brisbane for $105k which rented for $170 pw.
In 2001, we bought an IP in Ipswich for $55k which rented for $135 pw.
In 2002, we bought an IP near Ipswich for $50k which rented for $130pw.
By now, we were realizing what we were doing and in 2002, we bought a total of 8 more IPs mostly around $65k each and rented for around $140pw.
In 2003, we bought another 4 positively geared IPs plus 3 negative ones, for capital growth. The bank was not happy. Serviceability dropped with the latest buys and the bank said, “no more money, and don’t even ask”.
More than one way to skin a cat tho, and we sold our first IP for $185k and fully paid out the debt on our own PPOR. Serviceability problem solved. We also sold the Brisbane IP for $220k and a little reno we’d bought in Ipswich for $35k for $80k.
We then bought 5 more positive geared IP’s in 2003 before the housing boom came and the prices all shot up.
Latest purchase was in June 2004 for $145k with a rent of $160pw, which I raised to $170pw recently.
I have just sold one of the earlier IP’s to help with serviceability again and to give us breathing space should interest rates rise or hubby loses his job.
We got to over $3 million in value with current loans of $1.2 million in 6 years which I am very happy with. All in all, we don’t really have to do a lot more except slowly pay down debt with the incoming rents.
In the future, I may go crazy again and buy lots more but am content at present to cruise along and have time to smell the roses.[biggrin]
Cheers Brenda.
If you want to get out of a hole, first stop digging.
Hi C of G, Welcome to the forum.
I am far from an expert in accounting but by my limited experience it appears your rental average is around $230 per week. Based on your purchase price, this would represent a gross return of 7.7%. Based on todays value, it is a gross return of 5.89% which doesn’t even cover the interest rates, let alone Council rates, insurance and maintenance costs.
Buying your own PPOR means the interest payments on the loan are not tax deductable against your income which means you are paying the loan with after tax dollars.
Paying down debt via sales or just repayments over time, is a strategy in itself. You may have the equity to purchase a PPOR without selling an IP but can you service the extra loan without hardship to your finances and indirectly to your personal relationship? Cheers Brenda. [biggrin]
If you want to get out of a hole, first stop digging.
When investors become nervous, or just plain tired of it all, and want to get out of their investments, don’t always assume the bargains will be obviously listed a lot cheaper than market value.
Greed being what it is, properties will initially be listed for perhaps a little cheaper than market value, just to get an interest from buyers. Only by seriously making low offers can you perhaps stumble upon a desperate investor who will accept your offer.
The alternative is to attend auctions and pick up a great deal that way, however you need your deposit and finance all set first. A number of building inspections prior to a number of auctions may become expensive after a while.
Also a tip: If you are very serious about making a purchase in the future for a certain amount, then let your RE agents know at least once a week that you are “still looking”. Many times, IP’s never even make it to the RE agents window as a listing because it has been sold immediately from just a phone call to an investor.
Cheers Brenda.[biggrin]If you want to get out of a hole, first stop digging.
I thought the agent auctioning a MIP was bound to declare it as such?
There shouldn’t be too many up for auction yet as it usually takes around 12mths for a lender to get that far along. Tis not a great look for lenders and they usually try all other avenues to recoup the money before a MIP auction.
If you want to get out of a hole, first stop digging.
