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You are not talking big money here (for one property). Put the rent up $10 a week. They can't argue VCAT over a $10 difference. Well they can try but really!!!! Let's be realistic.
JacM wrote:I would be very interested to hear if anyone has opted to put the rent up to cover excessive water consumption and been taken to VCAT (or equivalent) and had the rent rise over-ruled on the basis that the rent is above market rent in the area?You don't have to stipulate that's why you are putting it up. Mention it as I said then if it doesn't improve just put the rent up. They might get the hint.
Ok, unless you misunderstood your accountant – sack your accountant and get one that knows something about property tax.
Ask how many properties an accountant has- it's a good start.
I changed accountants when I asked my previous one whether I should get depreciation reports for my properties. His answer was "up to you". When I changed accountants my new one backdated the depreciation reports, saving me thousands of dollars. When my old accountant asked why I was moving I told him. He actually had a few properties himself so surprising answer considering. I guess you don't know what you don't know. That's where these forums are fantastic. I have gained a wealth of knowledge and saved myself money and mistakes by learning from others successes and mistakes.
Thank you to everyone that takes the time to answer questions and contribute knowledge.
$220K for a reno? What, are you ripping it all down and starting again? That's crazy!
Based on your limited information it's impossible to say which is better. We don't know the area, what is in demand there, sell prices, build prices etc etc.
Numbers talk and you've given next to none.
You need value now + reno = value after.
Then
Value now + cost of demolish + building townhouses = value after.
THEN you will know which is best. At the moment I think you are just guessing.
Good luck with your research.
I don't understand the 6 month CGT point. You've bought it? are buying it? Are you living in it while renovating?
If it's a PPOR there is no CGT period. If it's not it's 12 months from purchase to get the 50% discount.
What sort of reno are you doing for $10K that will take 2-3 months?
All part of property investing. If that's the law then I guess you have no choice. You could get the agent to give them a ring and ask about it. Go out and check that there are no leaks. Let the tenant know you are concerned about the high bill and kindly mention that you may need to put the rent up if the bills remain high..
In NSW taps need to be water efficient.
I've met landlords that don't bother collecting the water usage. I think this is crazy. I have one house that always has a usage of over $150 a quarter. That's $600 that's not out of my pocket AND that's just on one property.
Qlds007 wrote:Agree with what has been said already.Poorly structured loans cause so much work going forward and are the biggest killer when it comes to potential lost interest deductions.
Cheers
Yours in Finance
YEP!!!!
The November 1st interest is for October (31 days). The October 1st interest is for September (30 days).
Amend- the extra day probably as the Dec one was taken on 2nd, not the first as the others.
Make sure you compare the product with similar places in the same area. What is a similar place, say 5 years old, selling for in the same area?
Remember strata for OTP is an estimate. How accurate it is is anyones guess. My guess would be that it is conservative.
There's no yes or no answer about whether a certain OTP is good or bad but head the warnings. Google "off the plan". There is a mountain of info.
It's not the Breakfast Point ones is it? Strata there in the existing ones are out there.
Agree with Terry- not good paying down the investment as you now need to borrow more. What is this $100 loan based on?
Speak to a good broker. The fact that you are going to live in it makes a difference as you won't be paying rent so your outlay shouldn't change much.
I would definitely keep the IP. A good broker should be able to make it happen (of course I make this assumption without knowing your income).
The 1st November one is higher because October is a 31 day month. The other 2 are 30 day months (so 1 less day of interest).
Yes interest is calculated daily. If you have the (say) $5,000 early just stick it all on. If you get paid weekly, pay weekly. It doesn't make much difference really. The thing that does make a difference is paying fortnightly instead of monthly. The major gain comes from the fact that you are paying 26 1/2 payments instead of 12 whole payments so you have an extra payment each year.
If there is ANY chance that you will make this an investment property in the future STOP making extra payments.
Get a loan with an offset (NOT a redraw) and put extra money into that.Can save MANY thousands of dollars later on.
I always count ALL costs which usually amount to 105% (purchase, stamp duty, solicitors fees). I borrow all of it.
The $400,000 with $400 a week rent was used years ago but now people chasing yield want more as it's a negatively geared property.
Even 7% will be negative normally. Nathan buys under market so that's why he can get 7% yield. Sometimes he'll do a reno to increase yield. That's what we do, buy a place, do a reno and it is then CF neutral at worse from day 1 with increased equity. After the reno (including all costs) our last one was 8.9% yield.
If you own no other house you were claiming as your PPOR then you pay no CGT. When you move back in the clock resets and you can move out again and claim another 6 years.
Nice hey!!!
Good points Wilko about the cost of DIY.
When we reno we generally do nights and weekends so no loss of wages (just a damn hard 5 weeks slog). But if I earn more than a tradie so wouldn't take time off to renovate. Also a tradie can usually get the job done more quickly and you don't have to put up with your hubby nagging. LOL
Even if you just rip stuff out that can be a big saving. You're not paying a tradie $400+ a day just to, for example, rip a kitchen out.
As soon as we sign the contract my hubby makes his list and starts looking. One time we bought a brand new sink with flick mixer for $15. And we bought enough tiles for a bathroom floor and 2 kitchen splashbacks for $70. We bought 2 showers, a vanity and a toilet for $50. We bought a new bath for $10. The list goes on. Keep your eyes open. Problem is finding somewhere to keep the stuff we keep finding before we've bought again.
Past CG are not an indication of future growth. Maybe the suburb next door has been experiencing good growth and now it's time for your suburb to get the flow on effect.
I've bought in areas where people said "that area has had no growth for years". AHH music to my ears. It was overdue for growth as neighbouring areas had growth.
It's more that just numbers.Do some more research on why the other areas have grown more. Therein lies your answer.
I still am not clear about what you hope to gain out of the clearance rates. How will they give you an appreciation of the market? So if it's 70% what does that tell you? Sometimes agents talk vendors into dropping their price. So it sold but below market. Auctions in some areas are a very small percentage of total sales so won't give true figures of total sales. A lot of people dislike auctions so there may be low clearance rates but good sales overall. If it's a FHO area they are more likely to be fearful of auctions.
Just looking at auction clearance rates tell you nothing about demographics, infrastructure, what's driving the boom/bust etc.
More useful would be median price, how long are properties on the market before selling, rental prices and vacancy rates (assuming it's for an IP), research the area (streets-good and bad), how prices differ in different parts of the suburb, neigbouring suburbs (have they shown growth? will you get a flow on?).
Look at trends- sales, rentals, infrastructure, population growth.
In most cases we do everything except electrical, plumbing and waterproofing and tiling the bathroom.
Last one we paid a painter to paint the outside and a builder for 6 days. On one we paid a kitchen installer to install the new kitchen.
If you take care and have a bit of an idea it's not difficult to end up with a quality reno.
We are very proud of our reno's and "experts" have commented on our good finishes.
If you are a hack, then pay someone to do it.
We basically do it ourselves to not only save money but to control the timing. We get in and out with a full reno in 5 weeks. It would be difficult to do that if you had to co-ordinate tradies. Depends how close it is to home also.
And also how much time you have and how good you are. If you are slow and take 3 days to do a job a tradie could do in one day you are better off getting a tradie and going to work.
And some tradies aren't that schmik either.
I agree with Freckle.
Why are you interested in auction clearance rates? What are you hoping to gain from this knowledge?
There are a LOT of other things that will be more helpful than auction clearance rates.
Some cities don't tend to use auctions as much as others. Sydney used to be one of these. The reason they are gaining popularity now is that people are getting into a bidding frenzy in the fear of missing out.
Why are you willing to pay $235K if to you it's worth $225K?
The truth is you don't know what the owner will accept. Try to find their reason for selling, if they have bought elsewhere etc. 6 weeks is not a long time. Also going from $240-250 to $245 is not a drop in price. It's just what they want.
Is this for a PPOR or an IP? I know with a PPOR there is more of a tendency to be emotionally involved. If it's for an IP just go with the numbers.
Knowledge is power.
I bought a house that was advertised for $610K. 6 months later it was advertised with a different agent for "offers over $$560K". I offered $548K and they said yes (no negotiation). Now I'm thinking I may have got it a little cheaper? Who knows? There was another very interested buyer back having a second look and measuring etc so I didn't want to miss it. It was a deceased estate and they just wanted it to be sold. I've made good money on it so all is good.
Good on you. We (hubby and I) were thinking along those lines but we have been busy with other things this year so haven't looked any further. We have done a few reno's but held them as we have been building our portfolio.
We will be semi retired next year so may look at doing one then. We do most of the work ourselves but the tradies we do have are out west. I hope you find some reliable tradies. It makes life a lot easier.
Hi, No the tenant will not be paying your mortgage off. If it is negatively geared that means the rent is NOT covering the costs. Or have you worked the negative gearing based on P & I plus all the outgoings? If that's the case it wouldn't be really negatively geared and you can't claim all of that on your tax. You can only claim the interest.
Are you basing this on a specific property? If so can you give the figures? It might make it easier to see where you are coming from.
You need to cost ALL outgoings- council and water rates, strata (if applicable), insurance, management fees (including an approx maintenance amount). Most people only count 50 weeks a year rent to allow for vacancies.
Depreciation is an amount you can claim as a deduction. A property can produce an income but still (on paper) be CF- because of depreciation benefits. That's why some people prefer to buy newer properties as the depreciation is higher.
You're getting there. Keep asking questions.
