Forum Replies Created
This a holiday rental, therefore we are the ones already paying for the gas & electricity and so we can't easily raise the rent
All I have to go by at the moment is 2 weeks data from 15th July to 31st of July for which during that time (It is winter after all) the current average daily output is 6.91KWh, therefore if I was working to your scenario the calculation for summer was actually be more like 9KWh per day x $0.66 x 90 days, so I have tried to be conservative by using 7.5KWh as an average for the whole year which might still seem a bit ambitious but only time will tell
Recently had a 2.09KWh system installed by Nu Energy but it's not offically connected to the grid yet by Tru energy as apparently the paperwork has gone missing.
Based on the inverter data logging, the system has averaged 6.91KWh per day (Quoted an average of 6.76KWh per day) in the last 2 weeks of July (14 days) so I'm guessing that I might get 8 – 9 KWh per day during summer as there will be up to an extra 4 hours of light available.
If this works out corrrectly 7.5KWh per day x $0.66 x 365 days = $1806.75, Cost of installation $5129, ROI=35.2%.
I'II update this topic in a few months time once I get my first bill that includes the net export to grid figures
I had pretty much already factored in to my calculations at the time of selling that I would be paying some of my profit to the ATO but just wanted to explore my options. Thanks to all of you for your feedback.
I think it all comes down with what you are comfortable with. If you are able to currently organise a LOC for lets say $550000 (5 x $100k plus interest) then this would buy you 5 years worth of income and provided that as you say you properties are in high growth areas, then in 4.5 years time you could then try to re-finance and if the bank says no or the growth has not been big enough then you still have a plan B- The option of selling one or two of your properties to fund further income / reduce debts.
I have been using my line of credit to pay for all of our investment property expenses excluding interest, therefore effectively making them all cash flow positive (Approx $200 per week) as this is what I am comfortable with. While $200 might not seem like a lot of money, when you are on an average income it does still make a big difference to our family (e.g. Annual holiday cost $5-$7000K and a restaurant meal at least once a month) what more could I ask for. Based on my projections I can do this for the next 6 – 8 years even if the property prices stayed stagnant.
I hope you too can find the right balance as I have found it is achievable to create some lifestyle improvements while still holding down a full time job. If I had at least $2million in equity and was considering your scenario I would only feel comfortable taking no more than 5-7% of the total equity p.a. but that is just me.
Good luck
Thanks Mr 5o1,
My estimated CGT bill is $20 – $25K and based on the feedback I have recieved so far I'm not sure I can pay my tax bill from the LOC because based on what I have read in the past the ATO does not really consider property investing a business unless it is a persons main source of income.
Thanks Greg.
The reason I would like to keep the all of profit if possible is so that I can renovate my home PPOR or buy a bigger home without having to take out a mortgage (E.g. Non deductible interest).
Thanks Matt.
I understand your point about "the business of investing in real estate" and as this is a once off and I am currently employed full time and as a result make a greater percentage of my income from a paid salary I think I would be wasting my time trying to prove my point with the ATO. Thanks for your thoughts
It seems that if the above feed back is correct that I can only make it work on one of the properties that I own at Loch Sport, on the Gippsland lakes as it is a holiday rental (booked for 6 – 10 weeks per year) and as we are the ones that pay for the electricity not the holiday makers. For the majority of the year when the property is un-tenanted , I estimate that we will end up with up to$1000 a year credit based on the above estimates.
Thanks for the feedback guys.
I called Tru energy yesterday and although the person I spoke to wasn't 100% sure of my question, he was leading towards the "power from solar panels will be offset against usage" as you have both stated.
I know of an electrician that installs the solar panels and he thinks it is possible to get paid directly so I'll have a chat with him next time to see him to see if he's done it yet & how
Depending on the size of your LOC used for you investment property, you can theoretically and legally charge your loan interest to the LOC account for a period of time provided you have enough equity and then use the rent generated from the IP to purchase you personal item(s). You need to be confident that the extra interest and loan balance accumulating in your LOC does not leave you in a negative equity as some stage in the near future. I have been told by my accountant that this is legal but suggest that you also obtain your own advice. I am currently investigating this option as I want to purchase a new PPOR and want to use some or all of my rent to help quickly reduce the loan amount. As the LOC is used for investment expenses you should then be able to claim the interest as a deduction, while using the rents to save you money on your personal item.
If you are in Melbourne, Allboards on Dorset Rd, Boronia sell bench top offcuts and you can have them cut to size for a small fee.
I spent $40 on 2 pieces of small bench top which made a big difference to the look of the kitchen upgrade
As you have pointed out Steve, the prices are over inflated and the fees are high. This would represent a safe investment for someone starting their investment portfolio, however the returns are low (Not close to positive cashflow) and I believe you can only sell the property back to the DHA at the price they agree too. There is no room for someone to add value to these properties to increase the rent, so I see them as a long term investment that is built on the hope of capital gains. There is no easy money to be made here in the short term.
Sounds good so far. I am looking forward to reading you book as there doesn’t seem to be any books out there that teach peolple about positive gearing. I have read books about negative gearing and books about paying of your investment in 2 to 3 years with the odd theoretical chapter thrown in about positive gearing. I need to concentrate on reducing my mortgage. I can see how postive gearing may help me to achieve my short (paying off the mortgage) and also long term goals (retirement by the age of 45 (10 years away)).
