Forum Replies Created
Hi Vikki,
Mortgage Hunter knows what he is talking about as I said before there are many ways to do it[biggrin]Martin
Hi Michael,
Where are you living now? As for better places to invest, I believe Australia at present is difficult. I used to be able to find properties that were cash flow positive/neutral with good chance of capital growth. These properties are much more difficult to find. I’m currently looking at New Zealand.[biggrin]Martin
Hi,
If you buy a property for $280k you will need to pay stamp duty on that property of approx $15000 this is a very rough guess as it also depends on which state and even which country you invest in. On top of this theres solicitor fees of approx $1500. Then you do 20k of renovation bringing the total cost up to 316k. Then you have to take into account selling fees of approx 13k for the agent and $1000 for the solicitor. So up to here your $280k house has cost you roughly 340k to sell. I havent calculated how long it will take you to sell the property and settlement time., but lets say it takes 7 weeks to sell and the vendors want a 60 day settlement. If the house is vacant you are making repayments roughly of approx $420 pw over 15 weeks adding up to $6300. So after looking at all these details I dont think you need to worry about capital gains. This is just a scenerio and a very rough glance. Your circumstances may be a lot different so I have just looked at one particular scenerio.Good luck[biggrin]Martin
Hi Vikki,
You can utilize the equity in your house to put a deposit down and pay the fees. There are a number of ways you can do this. In the past I have purchased properties using only $4000 as deposit and when I have finance approved I borrow the full amount plus the fees. The bank holds my house as security for the loan. As long as I have 20% equity when all the loans are added up and it is shown I can service the debt I have no problems getting the loan. Sometimes I have difficulty raising the deposit so generally I borrow off my inlaws, wait until it all settles and the $4000 is returned back to me and I pay back the inlaws. Now I use a Line Of Credit. This is where the bank will give you a certain amount of money in direct relation to your equity for you to do as you want. The amount you utilise is charged at an interest rate either the same as your home loan or a little higher depending on your bank. Remember the slogan “Equity Mate”. So you can use your line of credit as part of the deposit but remember as you use your line of credit your equity is reducing. There are I’m sure plenty of other ways but this is what I do. Good luck. Please be sure to do due diligence before you buy, too many people have been caught out by rushing in at the height of the boom. Good luck.[cap]Martin
Hi Michael,
Where are you from? What made investing in Australia look good for you?[biggrin]Martin
Dear Michael,
I’m no expert but I believe if you sell your property and realize a capital gain of roughly $120000 the government will be very interested in you. They will add this amount of gain to your taxable income and tax you at the appropiate tax bracket in your case 47 cents in the dollar. So after you minus your capital loss on your shares and then half your capital gain you are looking at an approx tax debt of $23500. I think that is roughly correct. It does depend also on how much you earnt in the financial year of the property being sold. I only wish they would have taxed my wife on the capital gain she made in her tax bracket ie she is in a very low tax bracket but the capital gain pushed her up through the tax bracket. The Govt is good it takes a slice of the cake when investors take all the risks and have a win but when we lose it doesnt help until we win again.Martin
Hi Westan,
Just regarding your comment about the seller keeping 20% in the deal how would you broach this. If a deal like this is accepted, how would you structure it. You would need a solicitor to write it up surely.[biggrin]Martin
Is the flat a I/P or your own? A unit that is costing you $250 p/w is a fair cost and if the capital gains are not going to be great I would suggest you sell and start looking around. How long have you owned the unit as this will have a big bearing on how much the tax dept likes you.There are positive cash flow properties out there but these are sometimes located in areas which arent going to show much capital growth. A few years ago it was easier to pick up positive cash flow properties in major regional towns that had good chance of capital growth but at present they are difficult to find. The good news however there is news that the market is turning into a buyers market and with that will come opportunities. I believe if we throw in a couple of interest rate rises more bargains will appear from those people who have over capitalised. Lets face it the realestate market has been great for the past 4 years, with low interest rates and good capital growth but lets see what happens with increases in interest rates and slowing of capital growth.[biggrin]
Martin
Thanks G7,
For your advice I will check with council this afternoon on the zoning.[biggrin]Martin
Hi,
I first ventured into property investing due to how negative gearing was being pushed around 8-9 years ago. I purchased a number of properties during this period. Then I heard about the cash positive theory and started purchasing those. I have never regretted buying the negative geared properties as they have recently been sold for very good capital growth. I could never hope to achieve that sort of money for positive cash flow properties over such a short period of time. A good balance of both neg geared/good capital growth and positive cash flow properties are in my sense the way to go.[biggrin]Martin
Hello Mutleys Mum,
I currently have a Defence Housing Investment property, I purchased it just over 12 months ago. At first the returns didnt seem to great but the property was located in a very nice area (Cairns, Forest Gardens) the house was in good shape and the tenants looked after the property and had been there for approx 4-5 years. I purchased the property off a private investor not defence force housing. The DHA take 15%. In the time I’ve had it I have not seen or heard from them, I visited the property recently and it is in great shape. The DHA direct debits the money into my account each month on the day due or a few days early, no hassles. They review the rent each year and last year we got an increase.They have an independant valuer assess the property.We received an increase in rent of $15 per week.As long as you do due dilgence there is no reason as to why you cant get capital growth.[biggrin]Martin
Thanks Landburn,
Has anyone had any daelings with Jim Webber Realestate?Martin
Hi Bonnie,
I agree with both Brenda and Monopoly.Positive cash flow properties are becoming increasingly hard to find. Well done on finding one. On a personal level I wouldnt over expose myself in a mining town due to the risks associated in investing in a mining town. A mix of positive geared property and property which you believe will give you capital growth in the future will hopefully provide you with equity to continue investing. Anyway I think you know the importance of gaining capital growth and positive cash flow. Its just the balance of these and the uncertainity of what the future holds that creates the risk.[biggrin][biggrin]Good luckMartin
Hi Qwerty,
I totally agree. I dont believe I am a sceptical person but anyone who is about to invest an amount of money should do due dilagence not only on the area mentioned but on the person recommending it, I did and Yorker sounds like someone who has obvious interests in places he promotes. I’m no expert in the property game thats for sure but I have been investing in IP for past 11 years, have owned up to 10 IP’s, hold at present 5. Have immenseley enjoyed the property boom which allowed us to pay off our home and an investment property and make a huge dent in another. So Yorker I believe we have done alright. So as DD notes watch out for cannibals.Martin
The problem I have is people promoting areas where they have an obvious interest. There are other forums for that so at least try them. People experienced and those wanting to look at property investing come here to look for advice, not to here advertising. If you dispute what I have said please say so, if you think I’m lying please say so. I’d hate to think that a new comer will act on your “Hot Tips”.I’m glad a few other people have seen through you.
Martin
Hi all,
Just enjoying the comments made on this topic. When I first came to this forum I was looking for a lot of advice and like minded people which I have found. Unfortunately when I see people pushing towns or cities I start to worry. For example Yorker pushing Rosebery. Please check his past archives he has pushed a number of towns in the past. On one of his topics Tasmania Growth on the 13/8 he stated that his last purchase was a $40000 property renting $130 pw in Rosebery. When questioned if he was worried that Roseberry is a small town which relies heavily on employment by the mine he replied on the 13/8 that he would be long gone by the time the resource boom ends. On 17/9 he again pushes Rosebery as a hot spot. He now states he has been out of Rosebery for the past 6 months and is just out to help people. My BS meter is now flaring up. I suggest everyone who encounters people who are pushing a towns to do a check on them to see if they have vested interests.MartinMartin
I agree with Westan, also not included is the recent talk of interest rate rising. Those who believe interest rates are going to remain at current levels for a long period of time are kidding themselves.The investment properties I have were recently pit under the microscope by my wife and they certainly werent putting in as much cash into my pocket as I first thought.[biggrin]
Martin
Hi Boardy,
I have been looking at your figures and please correct me if I am wrong in any area.Figures based on 7%interest only over 25 yrs
$115K loan return $155pw repay $167pw
$210K loan PPOR repay $370pw P&I
$145K loan return $170pw repay $211pw
With the addition of your new investment property you will be up for $423 pw.Now if you have the properties managed for approx 7% it will cost you approx $23pw, rates I’m guessing for 2 properties $1600 per year approx $30pw, Insurance $400 approx $8 pw. One thing I havent included is repairs/maintenance or little upgrades to your properties. The amounts adding up to $423 pw for all your properties. Your investment properties will cost you approx $142pw not counting repairs.Now I guess you will get some taxation breaks but sorry I cant speculate as to how much you will get back.My wife recently went through all our properties with a fine tooth comb, and after taking out all the fees and expenses we certainly werent making as much on our properties as I thought and now I have some understanding why the bank is reluctant to loan us more money at present. Keep in mind when the bank calculates how much they can lend you they always allow for an increase in interest rates and a vacancy period. On the other hand our properties have had some great capital growth which for a number of them we have realized it has enabled us to pay our mortgage off and reduce some debt. Our original plan was to buy and hold but our plan has changed with the economic situation.Martin
Hi,
Steps I would take: 1. Research area thoroughly you want to invest in.
2. Organise finance ie find out how much you are able to borrow.
3. Do more research speak to agents, discuss in forums like this, organise appointments with agents, have some inspections organised for properties you have found, have an idea of who to approach as a solicitor.
4. Physically go there and look at the area and properties, talk to the locals.
5. Find the right property, offer a bit lower than what it is worth ie. you can always go up but not back.
6. Have offer subject to building inspection, pest inspection and finance approval.
7. Speak to some of the property managers in the area.
This is what I would do not necessarily what everyone does. MartinMartin
Hi Geo and Dangermouse,
Plan is to research a lot of properties on the various R/E sites in NZ focussing on the Sth Island. Utilise Westan and his advice on properties. Tee up inspections with R/E agents prior to leaving. Looking only at larger towns/cities (Invercargill, Dunedin, Christchurch). Finance is currently being put together. I have received some advice regarding solicitors in NZ. Plan is to fly into Christchurch spend 1/2 days here. Next to Dunedin 1/2 days here. Then to Invercargill 1/2 days here. Stay in affordable accomadation and have a hire car for the whole time. Hopefully meet up with Westan.With a bit of luck find a property that fulfils my criteria. See how this property works out learn the process and if it works out head back and do it again. I dont want at this point of time anyone to share the costs of purchasing a property but someone to share the costs of accomadation, car, research, and knowledge. All the better if someone has already invested there. Its cheap to get there at present.
I hope this clears it up a bit. Who knows maybe a group may turn up to go.To dangermouse yes I have IP’s now. 1 in Bendigo 2 in Rockhampton 2 in Cairns. The hardest thing I found was leaving the safety of my town to invest in other states but after I bought the first one it became easier to do so especially as I was by myself( no family or friends to provide advice, not knowing the area like the back of my hand, not being able to drive by it every couple of weeks or so). Now my wife says go as she can go on holiday to the towns I’ve bought in and part of the expenses can be deducted as we also go to inspect our properties. Hope this has been of some help. MartinMartin
