Forum Replies Created
Comment to Kris’s (Krautcan) question.
I do not think that a good MB can negotiate a lot on the interest rate with the lenders. His/her job is more to find the best product for your individual circumstances.
Obviously low interest rates are important, but that is where the competition comes into play.
If we have a few IP we are much too little fish for the lenders to write incividual rates and conditions.
Each lender will have their criteria when they offer extra discount because of the size of the loan.
But I also believe that there are a lot of other considerations (besides interest rates) to take into account for the best product.
A good accountant is worth his weight in gold, but a bad accountant is like a lead.
It is properly too late to change the structure on your existing properties, but make sure you set up any future purchases correctly.
Also consider how your properties are performing. Use Steve’s template at the back of the book for this. If they are not doing too good, you may be better off to sell and buy more lucrative IPs.
One more point to accountants. It often helps if you have a list of questions and goals when you see him/her. The field is so broad, that you have to put them on the right course to get the correct advise.
Imagine you had a brilliant navigator on your ship but you did not tell him where you want to travel to. Pretty hard!Good Luck
Thanks all.
Millions could you give me some more details on the book (eg author)pleaes.
Cheers
All good points Sanjiv.
With the property agent I would investigate them with each property.
Remember that Ray White, LJ Hooker, etc are only franchises and the property managers are often only employees.
You can find this absolutly fantastic person in one town, only to find the PM from the same real estate group in the neighbouring town is a complete dud.
I would set up a checklist to evaluate each one of them, and give them a phone interview if you cannot get to their office.
The checklist should include day to day things (tenant evaluations, property inspections, fees, etc) as well as problem scenarios. See if they have standard procedures for certain events (no-payment of rent, damage to the property, etc)
Books to read:
Margaret Lomas, Jan Somers, Neil Whittaker, Steve McKnight, Property Investor Magazine, Dolf de Roos, Monique Wakelin, Neil Jenman, Terry Ryder, Robert Kiyosaki, Peter Spann, “Think and Grow Rich” by Napoleon Hill,
“Millionaire Next Door” by Stanley and Danko, “The Richest Man in Babylon” by George Clason.Be especially careful with Sanjiv’s point 4. Devellopers always seem to do this in their favour. Insist on an independent benchmark.
Good point Richard.
Remember Quiksilv. Most properties have a yield of about 5% but costs of about 10%. If you rent you do not get the capital appreciation, but that is only a problem if the property prices go up.
Wylie’s idea certainly has a lot of merit as well.
You have to way it all up and make a decision that BOTH of you are comfortable with.
Good Luck
So you have to make a call
No you do not need a company.
A trust is similar to a company in many ways but with a different set of rules. My accountant gave me two pages of pros and cons.
Main disadvantages are the setup (about $1500) and running costs (about $1500/year) as well as you can only offset losses against future gains (that means you cannot negatve gear them to gain a tax advantage unless you get other money/divident into the trust as well).
Main advantages are the asset protection and income streaming (eg if you make too much money it may be better to put the profit into your wife’s name, etc).
If you are serious about this, you definetly want to invest in it.
Talk to your accountant.
Good Luck
Joe
Do you want to do all the work yourself?
Than be prepared for long hours and no free time.And is it your PPoR or an IP?
It is a lot harder to renovate PPoR as you tend to do it better than practical.One of the main tricks is to add perceived rather than actual value.
Examples for this is obviously a repaint, perhaps modern handles on cupboards, replace mouldy/stained silicon, get new light fittings, etc.
Concentrate on the bathroom and kitchen. But be careful not to overcapitelise.
If you have to spent a lot of money on little seen repairs (saltdamp, roof and gutters, etc) you will really struggle to make money. You should already have a budget and plan in mind when you purchase a property, because only 1 in 10 will be suitable for profitable renos.
Hope that helps, good luck
Sue we should ask Steve for a commision. I have been advertising his book as well. But the point is, he is really making sense .
As it is the newest book that I know off, Steve has taken the change in the property market into account.
I think Sue is completely correct. You have to choose what you want. But be careful, when you make your choice. I know of several people who build their dream houses, only to realise very quickly, that it was their dream house, but totally unsuitable for their kids.
Also you two are still young. In my experience things are much more fluid = (circumstances change more often) until the age of 30-35. So my advise would be to live in something cheaper and continue investing.
There may also be a way to have the best of both worlds. Some of Steve’s mappers actually sold their properties to have more cash available. So you could consider to rent in the area you like and continue to invest.
Happy decision making and good luck.
Sue
A note of caution. I believe that wrapping is illegal in SA and we can only do it in other states.
Hi Markerman,
I believe that the closing costs are closer to 6%, especially if you get the property valued and building inspected. The costs are a summary of: Building Inspection, Registration of title, Stamp Duty on Loan and Property, Loan Application Fee, Mortgage Registration Fee, Title Search, Valuation, Adjustment of Rates and Land Broker.
The interest paid is for 12 month if you looking at a yearly picture, eg a rental situation. If you are doing a reno or development it is for the period between settlement with the vendor and settlement with the buyor at the end of the deal.
If you sent me a PM I can e-mail you an excel sheet that works the 321 out automatically.
Good LuckI agree with Richard. If you have the drive, do not quit.
The banks may be a little tougher in the beginning, but you already have 4 cf+ properties.
You may need some financial creativity, but a good MB should be able to help you.It also seems to me that you got some money from hubby’s life insurance. You will be a lot better off to buy several more cf+ properties than pay off the existing ones.
Go your hardest and good luck.
You are asking yourself the right questions. But there is no right or wrong answer. It certainly sounds to me that you do not have loads of capital. This makes it trickier, but not impossible.
I would start by contacting a good MB (Mortgage Broker) to check out what your best strategy is to maximise your equity and know exactly where you stand financially.
Go to several and see what they say and how you feel with them.
Your income would certainly allow you to service a lot higher debt. The problem is more the LVR (Loan Value Ratio). But this can probably be overcome by using MI (Mortgage Insurance).
Once you know how much money you have available, you can start to narrow down your target market. Try to find a strategy that works for you. It is very hard in the current market to find cf+ (cashflow positive) properties.
Steve’s mantra is: Problem + Solution = Profit. Lots of people are either doing renos or developments. Do you research and decide what you feel comfortable with.
Another theory of Steve’s is: Management find Money. With this he means if you have a really good project, the finance will come.Good Luck
Sue,
I can still see properties that can produce a profit, but I have not seen any high % yields.I have found nothing in the residental market and only a few dodgy ones in the commercial sector.
I think without a lot of experience I am hesitant to venture into the commercial market, being unsure of how to attract good lessees. I just understand that vacancies in commercial properties can be a lot harder to fill.
I seem to notice that you are also from Adelaide. Do you look locally or do you get properties from interstate/overseas?
Why not build something and either rent or sell it?
I personally would not like to have a non income producing asset on my portfolio unless I was very, very, very convinced I would get CG in a reasonable short time frame.
You did not mention where the block is, but apart from Perth the market seems to be fairly flat.
Good luck
Hi Dee,
I think you made a wise decision. A friend of mine also said she likes to stay slighly on a low side of the achievable rent, as she believes it is off-set by lower tenant turnover.
I do not know about centrelink payments, but advise you to give them a ring. Pleas let us know once you find the answer.
I think that 12-18 month is a good length for rent increases. Assuming 3% inflation, $10 would equate to about 5% or about 18 month.
But I would also stay in contact with you PM. They should really prompt you when it comes time to increase the rent, as they are sitting at the pulse.
Are you looking for your credit reference?
Then try this site:
If you are not in a hurry you can a free copy in about 2-3 weeks, otherwise invest $25.00 for quick response.
Good Luck
Remember Mat,
Positive Cashflow is not bought, but made.
There are a few examples on this forum, I am looking as well and am getting closer to one.
Good Luck
These are excellent thoughts Sue
