Forum Replies Created
- Diane Hunt Valuer wrote:I would say buying a property to live in would be the best bet as you will save $580 a week rent and there is no capital gains tax payable on your residence.
Remember to get any property you are thinking of buying valued by an independent valuer to ensure you are not paying above market value.
Cheers Diane Hunt
Not always the case Dianne. You are not "saving" $580 a week. Also- If you live in an area with low rental yields, financially you are better off renting and buying an IP in an area with high yields. Plus you gain tax advantages. Yes you will pay CGT at the end but the longterm advantages can be better. That's why you ALWAYS need to look at the numbers.
Do your DD is all I can say.
There are too many unknown variables to give you any sort of answer. Income? Are you planning on staying where you are long term? Servicability (can you afford any out of pocket expenses each week). Deposit? Borrowing power?
If you are not staying long term maybe buy a PPOR then rent it when you move. $580 a week is a lot but sometimes it is more viable to rent. You need to sit down with a calculator and work out whether buying a PPOR is better financially for you. Don't forget to factor in costs other than just the interest (rates etc) plus stamp duty, solicitors costs, loss of interest on not having your deposit in the bank.
Most new investors worry that an IP will not be rented. If you do your DD you will know the vacancy rates, what type of IP is in demand etc etc. This will alleviate your fears. I don't know your area at all. If it's not an ideal place for an IP (or PPOR) maybe look elswhere.
Good luck.
And that's the difference Qlds007. Finding a GREAT PROPERTY savvy accountant.
I thought I found a good one until I asked him (early days of investing) if I should get a depreciation report. His answer- Up to you. It was then I started searching for a new accountant. I LOVE my accountant (well at tax return time anyway.
http://www.depreciator.com.au They have done all of mine. Fantastic service, competitive prices.
They cover all of Australia.
Can't fault them. Check your private messages. I sent you more details.
What difference does it make if it's a hot market if the price is below market value?
Just do the numbers. If It's CF+ from day 1 after the reno and you have increased equity then it sounds OK to me.
I have several ex housing comm places. A few are fibro. I painted one outside when I did the reno as it had graffiti.
Regarding area. I look at the presentation of houses in the street and how many are privately owned.
There are some streets in the middle of suburbs that are no go areas. I like the edge of bad suburbs.
I have never had a problem with tenants. After a great reno you can pick your tenants as people are lining up to get it (that's my experience anyway).
Look for asbestos (not a deterent, just be aware of it).
$40K is a pretty big reno. It must be a real mess. Structural? We do a full reno for $15K.
Just saw the 2 bedroom. I won't buy 2 bedders. More difficult to rent, especially if vacancy rates go up.
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Hi, welcome to the forum.
You'll need to give a bit more information? Do you want to do any renovating to MAKE it CF+ or do you expect to just buy one that is CF+ from day 1?
Are you interested in country towns?
How much do you have to spend?
What's your definition of CF+
Do you earn enough to service the loan alone?
Can I ask why you need to do this? I'm assuming tax reasons?
Think carefully if so, for long term as well as short term.
I buy/reno/hold because I don't need the cash. Glad I didn't sell as my portfolio has had some lovely growth in the last 2 years. I buy under market and reno which makes the properties CF neutral or positive from day 1. The banks will have no problems lending you money to go again when you have built in equity and are CF+. So your idea makes sense. After you sell the first one or two to get a good deposit there is no reason why you can't buy/reno/reval and go again.
Unless you need the money to live on that is. But you won't get ahead that way.
Ok just a question on your figures. How did you borrow $363K on a $370K property?
Sell price $470K – ( $370K buy price + $30K reno + $30K holding etc) = $40K You had the $7K already so can't count as profit.
Does your $30K include stamp duty, solicitors costs (in and out), holding and sellers fees, AND CG tax?
Are you experienced in reno's? Most people blow their reno budget. This can't happen if you want to sell. You wouldn't believe how many properties I've seen on the market from buy/reno/sell people that are making no money.
Also are you assuming you'll sell it straight away and at the asking price. Nice but doesn't always happen. Your profit can soon erode. Then again there may be a boom and you make more.
Good luck. You are on your way!!!
Jamie M wrote:Melissa97 wrote:Hey all,I have owned mine for 7 years and it has not appreciated very much.
Hi Melissa
This reason would be enough for me to give it a miss – unless you're getting a significant discount.
It might pay for itself – but if it's not going up in value then you've got to question whether it's a good investment and could the money be used better elsewhere?
Cheers
Jamie
Really?? It depends on the reason it hasn't had growth. Maybe it's not a good investment area but maybe it's overdue for some price correction. One unit I bought hadn't moved for years (before I bought it in 2008 in Sydney city). It went up nearly 50% in 2 years.
Short answer yes it will create problems.
I'm assuming it's an investment? otherwise you won't be getting tax deductions anyway.
If you put money into the loan and take it out again to spend on personal items you are contaminating the loan.
You need to keep investment spending and personal spending separate.
You can, however put money into the offset account and take it out again as it is your money. Money you pay into a loan or a redraw is no longer your money, it's the banks money that they may be willing to allow you to reborrow.
BIG difference between an offset and a redraw.
I actually did this with 2 of mine. Only because the property managers were hopeless.
I didn't know the tenants personally. I had met them. Both had been in the properties over 2 years. Never heard from them, always paid on time.
One stayed for another 2 years. No problems.
Other is still there 3 years later. Never missed a payment. Problem is though that I have met the woman now a few times. Single lady and I feel reluctant to put the rent up.
With an agent it's not personal.
I think in your case (personal attachment) I would not do it. What if they lose their job, can't afford the rent one week? Will they ring you up and try to take advantage of the situation?
Buy the back RH corner of next doors yard? If it's not quite large enough I'd look at that. Might be enough to get it over the line.
I'm always finding my self looking at houses and thinking -why didn't they build it to the left/right/further forward etc. haha
If only it was easier to move a house a few metres.
Have you measured to see whether there is enough room to subdivide? It looks very small and you have the line right on the existing house (which won't happen).
First thing I'd do is look at the block sizes then go to council to see if it is feasable to add the driveway. As there are no other driveways leading on to the section I'd say it isn't likely. If you can't add the driveway, end of story.
Good luck.
They install if you want them too. I got them to install one. Great job. We usually do our own but friend/installer was sick. Hubby and I have done some easier ones ourselves. They guys are fantastic. The install price is very reasonable.
They are installing my kitchen in my PPOR in a few weeks. Can't wait.
I haven't bought any of their bathroom stuff. We just buy the vanities etc and I found them cheaper elsewhere and we have our own tiler/waterproofer.
Can't comment on their bathroom work.
rachel they use Blumm hardware. Other brands are inferior. Not sure about the handles but never had a problem.
That's great babyflynn. They are great.
We usually get appliances from Appliances online. A couple we got from seconds world earlier.
A lot can happen in 5 years. Would you need to reval to withdraw equity for further purchases within in 5 years? Do you have enough money to cover in an emergency (lose your job etc).
What's the rate comparison 2yr, 3yr, 5yr. That makes a difference too.
You can change it but you will most likely pay stamp duty on 50% of the market value of the properties. In some states you can transfer between spouses but that's usually a PPOR not so you can avoid tax (it's called tax avoidance).
Not talking to your accountant before buying is a big mistake lots of people make.
Think about the future though. If it is in your husbands name only he can claim the losses, but what about when you sell. ALL the CG will go on his tax also making a huge tax bill.
What are your plans for the properties? What about when they become cash flow positive. That will be a huge tax bill also on your husbands wage.
Speak to your accountant based on your individual circumstances and the status of the properties.
So I'm assuming you need to draw money out in order to buy again? Otherwise it's not an issue. Has it really gone up? Did you buy it heaps under market value? Have you done a reno? My question is- why is it worth more than you paid?
Yep CBA tend to stuff around. I wanted to buy a burnt house. VERY cheap (land value). In the end I told them to stick it as I'd just pay cash and get finance with someone else once it was finished. At the last minute they came up with the money.
A good broker would probably be in your best interests. You may be able to refinance with another bank?
My schedules are calculated for 20 years. Most things are written off in less than that time. Plus not many people have a property for 20 years without some major reno work. Most companies will update it also.
We just ordered ours for our PPOR. Got a few mobs out. Quotes $22,000 and up. Ordered through SKB. Same as mobs that quoted, stone benches with waterfall finish soft close drawers etc etc.. Just over $7,000 installed. Excellent quality, not cheap at all (well quality). Price is amazing. Spending the difference on a European holiday next year.
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