Forum Replies Created
The easy one is to ask a REA. They have access to council databases listing the owners.
Doing this you obviously have to pay their fee and also may be ask to pay a higher price.
If they get the bin out every week, I would suggest that you either try to be around when the bin goes out, or I stick a letter on top of the bin.
I would even consider to make a formal offer on the property (just make sure that you have a get out clause in (eg building inspection) and an end to the offer.
The advantage is that you are most likely to get a reaction. The disadvantage is that the first to name a price usually loses.
Talk to the Office of Consumer and Business Affairs as well.
They have brochures for tenants with their rights and obligations as well as one for landlords.
I would go to great length to get them out as quickly as possible. Do not be afraid that they might not pay any more rent. They use this as a carrot. I believe that is one disadvantage of managing a property by oneself. People see you as less professional than a PM.
You may also want to talk to a PM. If they get the business once this tenant leaves, they may be interested to help you get rid of this one. It is obviously an extra expense.
I also believe that you are entitled to your unpaid rent out of their bond.
Talk to as many people that can help you as possible. Go to the local court, offic of consumer affairs, talk to REA and PM, ask the council where you can go for help.
You saved yourself a lot of money over the years, now you may have to do the hard slog.
Good Luck and keep us posted to your solutions and success/failures.
That is probably correct.
I have not looked into the mining towns yet, as I am wary of the tenants.
– Lots of single blokes with nothing to do after hours and plenty of money for booze => damaged property
– Many mining jobs are very well paid but often boring and repetitive. Coupled with lack of females this can lead to frustration and anger => damaged property– Most workers stay for only shortish periods => high turnover = high management fees
I believe you have to be part of the RESULTS program for that. And there are non available right now.
Does anybody know if CGT applies if you sublet two rooms in your PPoR?
I think you will be amazed how much info you get out of the council planners if you ask them nicely. They normally also have development maps stating the different areas. However they may not be a lot of help to you. It is not just a case of in this zone you can do this, etc.
Also if you see a property, you can just ask the REA about the zoning.
It is often important to ask what Matin Ayles calls ‘Quality Questions’ to get the answers that you are looking for.
While you can try to do the work sitting on your office chair in front of your computer, I believe that you will only get limited results.
Go out there look at the places, talk to people and you will get a lot further a lot quicker.
I have not heard of this good faith payment before, but I am sure it forms part of your purchase price.
I normally staple a $1,000 cheque to my offer with a clause stating that banking of the cheque constitutes as acceptance of my offer. You should never lose your deposit if no contract gets signed.
Offering the cheque is used as a carrot to demonstrate to the vendor that you are serious.
Other fees to consider:
-Letting Fee (normally charged on top of the management fee)
-PM often also charge extra for postage, advertising, inspections, etc.
-Emergency Service Levy
-Vacancy Rate (allow 2-6 weeks per year)
– Rise in interest costs (consider the effect of 2% rate increases)In regards to the tax Steve warns to include that in calculations to decide if property is cf+. He just takes it as a bonus if available.
Good Luck
Jonno
welcome to the forum.
Another point to consider.
Don’t look in the bottom 20% in whatever market you are looking.
Because it is often all that people can afford for their first property, there is more competition and often less value for money.
You will often also attract more difficult tenants.
There are several considerations regarding buy & hold and promblem + solution.
-They do not have to be mutually exclusive.
– It depends on you plans. If you are happy to start slowly, buy and hold is fine.
– If you want to move forward quickly, you may have to become more proactive and do some reno deals or subdivisions.
– You can just keep going with these deals or use them just to build up additional capital.Good Luck
Hi Rory,
welcome to the forum.
There are a lot of questions and very little information. How much income do you have? Do you have any savings? Are you looking for an investment property or for a PPoR? Just because the market rises is not a good enough reason to sell. What is your thinking/strategy?
Here are some general recommendations:
– Read some books on property investing.
– Create a good team around you (mortagage broker, accountant, real estate agents, etc)
– decide on the correct investment strategy for yourself.
Your approach seems to go for capital growth, where you buy a property and hope that it gains in value. My believe is that the market will be fairly flat for the next few years.
Most people on this forum look for cash flow positive investment properties.
– Do more research about just about anything to do with investment before you proceed.Good Luck
You say the property has no CG potential. I find this hard to believe. My experience is that some properties just lag behind others.
The other point is, that I do not believe that the market will move dramatically in the next few years anyhow. So you will be much better off with a cf+ property where the rents will slowly go up, than a cf- property that may grow slightly quicker.
Your positive cashflow will allow you to save up for the next deposit.
Go for it and good luck
But remember to do good diligence (eg building inspection, etc) so that the property stays an asset and does not become a liability.
Hi Shiny,
welcome to the forum. Hopefully we can help you.
Generally you seem to have the right approach to things.
To answer your questions:
1. When you look for a place, you can probably select houses that other ‘reno’ people would shy away from because of the cost. I am especially thinking places with salt damp. Your father being a brickie could do it slowly over several years.
2.The place would not necessarily negatively geared. You would really purchase two properties. One IP that your parents rent, and one PPoR that you + partner live in. That they happen to be under one roof and not separate dwellings does not really matter.
3. The danger with doing up houses that you live in is overcapitelisation. One tends to improve the house more for ones own comfort than for the hip pocket.
4. This could be the danger time. When you buy another PPoR, you suddently have to cover 1.5 mortgages. Also the market is not moving that fast, so you would probably mainly get the capital gain due to the renovations.One last thought: Regularly talk between the four of you about the living arangement. Living with partner and parents/in-laws can often lead to a lot of friction, especially should you get children. By talking about it a lot of problems can be averted in the early stages.
It would also be good if you could look for a house that has two distinct areas so that everybody (every couple) can easily have his/her own private space.
If you need the place rendered, definetly go professional. How bad is it? You may be able to get away by using texture paint. That is a lot easier to apply and you could probably do it yourself. You will need to get some professional advise.
Next time you plan a reno before you put in an offer I strongly recommend that you pick up the yellow pages while going through your list and ringing five or ten places for each major trade.
Many trades can often give you rough square meter prices over the phone. I would take those prices and add at least 20%-50%. But at least it gives you a benchmark.
The trades that are probably hardest to estimate are electrician and plumber. But when you are serious you can ask the agent if you could show them through before making an offer. They can then check the place out and give you a firm quote or at least a fair estimate.
A point of warning. It is very hard to save a lot of money on your budget, but very easy to go substantially over.
I would strongly recommend that you allow about 50%!!!! extra over your quotes until you get really experienced.
Old houses have the tendency to have a series of unpleasant surprises in store for you.
I believe the main trick when doing renos is to think outside the square. Come up with good looking solutions that do not cost a lot.
When landscaping the place there are huge opportunities. Eg Put down a mixture of nice gravel and bark chips with some raised flowerbeds scattered in between. This is very simple, cheap and looks fantastic. Talk to lots of people/nurseries/garden centres/hardware shops to get ideas.
Congatulations on you first Project and Good Luck
Agree with all the above comments.
Elaborating on Richards comment. Talk to a good accountant as well as to a good MB.
And do not forget that 100% loan does not mean you do not need any money. You still have to come up with the closing costs of about 5-6%.
Hi Stuart and Pete,
I believe that Pete is correct that the bank hardly ever loses. For a start they normally only have 80% of the house value mortgaged (anything above is handled by the MI).
But I am pretty sure that they cannot make a profit on the sale. In other words if they receive more money from the sale than was owed to them, they have to pass this money onto the MI, 2nd mortgagee or the previous owner.
It is also a bit harder these days to spot mortgagee sales, as they are not allowed to advertise them openly anymore. That said, the REA will often tell you the fact.
Ultimately the person that is already in the <edited> will get screwed further if the property sell below fair market value unless they are/have to declare bankruptcy.
Unsure about the perceived value. Once the roof is painted, lots of people will not notice the asbestos roof anymore. As long as the roof is not obviously rusty, most people do not have a clue what material it is or what condition it is in.
However everybody that gets a building inspection done will probably know about it.
As you said that you can get several other benefits from it, it is probably worth it.
I do not know how big the roof is, but $8,500 sounds like an awefully good deal (I am a roofing contractor), while the painting sounds on the expensive side.
Is the roof the only asbestos in the house? Often the walls and eaves are asbestos too.
The one thing that it definetly does, it makes you feel like you did the right thing and I do believe that there is something like karma out there. So even if you do not get every dollar back, I would probably still do it.
or use it for further IP if you are lucky enough not to have a home loan
Marc
can you please let me know where you have heard/read off the 6 year rule.
I cannot find anything about it on the ATO website. My understanding it that you have to prorata the rental time.
Great reply Neil and Kate.
One further point on your initial post SK.
Many people think that 100% loans mean that they do no need any deposit. That is wrong. You still have to come up with the closing costs (about 5-6%) which include stamp duty on purchase and loan, loan application fee, building inspection, building valuation (normally paid for by bank unless you get one done beforehand), registration of title, mortgage registration fee, title search, adjustment of rates and land broker.
I know a mate of mine that stumbled over this hurdle and lost a few thousand dollars in the process.
The other important consideration is, that if the value of the property declines (and it DOES happen), you suddently have a negative equity. I heard of a property that was bought for about $420,000 a couple years ago in Sydney and was sold as morgagee sale for $260,000. Owing the bank $160,000 with nothing to show for does not appeal to me.
So while it is good to become proactive, caution is also important. Especially as the market is not booming any more.
Good Luck
Reading through your threat, I had a couple general observation.
– I believe the mining industry will be the fastest growing industry for the next 1-2 decades, so the prices may not settle in a hurry.
– While the market is probably not moving up a lot in the near future, I think you want to have a clearer reason to sell than just to be debt free and sitting back.
