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Catalyst
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September 5, 2012 - 9:26 pm
I wouldn't take anything an agent says as gospel. Ask council.
Catalyst
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September 5, 2012 - 9:24 pm
So you haven't looked for 4 years?
I'm assuming you have your amounts around the wrong way. There is no way admin is $310K. The admin fund usually has enough in it to cover the admin costs. So if it is low there is no worry.
The sinking fund is to pay for maintenance etc. If there is a big cost coming up some strata choose to raise the levies for this beforehand to avoid having a special levy.
I find it strange that you think $310K is a small sinking fund. Or is it because of the proposed expenditure ($304K). Yes that will leave very little. Are they planning a special levy to top it up? You unit block would be expensive for maintenance (lifts etc)
When buying a unit the sinking fund is something to look at and if there are any expected/planned big spends.
Yes you pay depending on your apartment size.
I suggest you go to the AGM and keep informed. This is where decisions are made about YOUR property. I'd see how it works before assuming they are doing a poor job.
I don't worry about BC when buying. I just buy then get on the committee and get rid of them if they're no good. I've changed 2 so far. Others are good.
Catalyst
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September 5, 2012 - 12:21 pm
Given your questions I would in NO WAY manage myself.
First learn the rules and what you legally need to do. You could find yourself with heavy fines for not following simple rules (like the lease, bond, notice of rent increase, eviction etc). Or worse still you could lose everything.
The current condition IS the condition report. Yes you both sign to agree to the condition of the unit.
What don't you understand about the depreciation report. You get one, you get money back for nothing. I ask my ex accountant years ago whether I should get a depreciation report done. He said "up to you". I got a new accountant.
Email http://www.depreciator.com.au  with a description of your place- year built, type of dwelling, what it's made of, whether there have been any renovations and he will tell you whether it's worthwhile doing. They won't do it unless you get your money back the first year.
Catalyst
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September 4, 2012 - 9:27 pm
xdrew wrote:
I can tell you where i've been purchasing in the last year and a half .. simply because I get the returns i want.
Albury and its surrounding suburbs.
The returns range from 6.5%-8.2% depending on the property and position.
But considering you can get property there (rental property) under 100k with a 7% return .. its been good buying for me.
With 200k you'll probably be looking for single units. But at 100k or just over they return between 120-150 per week gross. That seems to be twice the return you would be getting from term deposits at the moment … even allowing for the fact its gross..
Do you see any CG prospects there or are you happy with just the cash flow?
Catalyst
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September 4, 2012 - 12:01 pm
This is the disadvantage to paying off your property. Alwayus best to put money into an offset account.
You can't negatively gear it now.
If you rent it out also your new loan for your PPOR is non deductible.
What's the status of the IP?
And yes you will pay tax on the rent as you have no mortgage to offset it. Depends where it is in the cycle as to whether it's worthwhile selling. Buy your new IP and put extra money in an offset account (don't make the same mistake twice). When you have sufficient for a deposit buy again.
Catalyst
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September 3, 2012 - 6:28 am
The suburbs of Mt Druitt (2770), Tregear, Bidwill, Whalan etc all have housing commission houses.
I
You can look on RPdata to see how many housing commission nearby. There is a map somewhere that shows the HC houses in red. Can't remember where it was.
Look at the neighbours houses. Ig the street looks well cared for it can be a goer. When going to opens etc see if you can see the neighbours. There are some pockets that I wouldn't touch. Some streets are lovely.
Things are certainly moving in this area but if you shop around you can get 7% yield. Even more with a reno.
Catalyst
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September 3, 2012 - 6:18 am
In addition to the great advise above.-
When buying newly built properties check the price. They can often be over priced. Investoprs like them becvause they get good depreciation but this doesn't apply to you.
Look in the area for similar sized units that are 5-10 years old./ How much more expensive is yours. Because in 7-10 years time you are competing with them when you need to sell. Sometimes new is not better.
Catalyst
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September 2, 2012 - 9:23 pm
Well I wouldn't pay cash for a property as you'll be paying tax on the rent as you'll only have rates and depreciation to offset the tax. At the most pay enough so that it's cash flow neutral. That way it won't cost you anything to hold and you have more property increasing in value.
I would look at buying 2 properties around $200-250K using your $200K as deposit and in costs (stamp duty etc).
If you buy well you will be CF+.
Catalyst
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September 1, 2012 - 2:47 am
Where did you see Cherie Barbers workshop for $900? Her system is $5000 and includes all the manuals, templates etc.
It doesn't teach you how to renovate. It teaches you how to select and project manage other tradies to renovate for profit.
If you want handyman stuff look on Youtube. I've leaned heaps of handy stuff there.
Catalyst
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August 31, 2012 - 11:48 pm
Rixstar wrote:
I thought Karina was a resident Australian buying and rehabbing in the states.
To buy one of those properties you need to purchase the LLC that purchased the property.
Please correct me if I have misunderstood the process.
If that,s correct isn,t that close to a flipped property.
Karina does source great properties it,s just the rehab is fairly pricey.
If you read this link Karina outlines the structure of her company.
http://somersoft.com/forums/showthread.php?t=79222
Catalyst
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August 31, 2012 - 6:13 am
bardon wrote:
I was looking into some of those suburbs that RP Data claim are cheaper to buy than rent. Which means they are CF+. On face value it looks like a good pointer, not that I am buying though.
A lot of these "claims" take the mortgage figure only (and some at 80% lend only). So this is distorted.
You also have rates, insurance etc to pay,
You can make figures say whatever you like. It depends how you look at them. So that's why it is important to do your own DD. Crunch the numbers on the total cost.
Catalyst
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August 30, 2012 - 9:43 pm
It can increase value if done legally. Make sure it is legal height (the usual downfall) and approved by council.
Not applicable to your situation but- If adding bedroom but taking away from living areas this can actually decrease value.
Catalyst
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August 30, 2012 - 6:23 am
So they are going to find you a property for $1,500?
Have you looked at Select American Homes? I have lots of friends who have bought through Karina (who owns the business).
She's in Atlanta. She doesn't flip properties like some of the companies (that's how they make their commission- sometimes LOTS of markup). She sells it AT the price she pays for it. You pay a buyers fee (same as you do here in Australia).
Catalyst
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August 29, 2012 - 7:44 am
It isd illegal to obtain the FHOG and not live in it. But people do take the risk. Many have been caught.
Are you planning on borrowing 80%. If so you will have no money left after stamp duty and legals. Not to mention the reno's you talk of. It's a good idea to have cash reserves for when things don't go according to plan (eg not renting straight away, hot water system breaking down etc.
Other than that it sounds feasiblee.
Catalyst
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August 28, 2012 - 12:30 pm
tash72 wrote:
BTW: Beware of wholesalers/flippers (especially when they are based in Australia like SAH) you may do OK, but you can guarantee they will do OK before anyone they flip to – and that is forgetting any management issue that might arise when they are long gone (ie the day after you hand over the cash).
Do it yourself, in the long run middlemen are expensive. And as far as sub prime goes (and I have said this previously) it is over. These sales pitches are at least 12 months old. Think carefully about what 'sub prime' means. As I read the tea leaves, right now you are buying 'subprime' properties at 'prime' prices. Especially in GA and FL. If you are paying 'prime' prices, you may as well buy in Manhattan or Malibu – there you will have near zero risk.
Select American Homes do not flip properties. They are also not Australian based. Please get your information correct before defaming companies. When I said Karina is back in Atlanta now was because she was just here last month for the property expo.
Catalyst
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August 28, 2012 - 7:23 am
There is no common LVR. It depends on your risk profile. Some people view having a high LVR as more risky. In a way it is. If there is a downshift in prices the bank may want some money back (as your LVR will then be too high). It always pays to have a cash buffer.
I borrow 105% on each new property but my overall LVR is around 50%.
If you are at the beginning of your portfolio building you generally have a higher LVR. As time goes on your LVR reduces as CG rises (if you stop buying that is).
Catalyst
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August 26, 2012 - 12:24 pm
Yep sometimes it's not worth spending too much. You just want to make it presentable.
Wouldn't be too difficult I don't think. If you router the edges it wouldn't be too plain and that's pretty easy.
The carcasses can last 20 years. It's usually the doors and benchtops that date and get damaged.
Catalyst
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August 26, 2012 - 12:19 pm
Answers underlined in bold.
simple wrote:
Catalyst, interesting topic you have touched.
Based on your reply, your focus in Capital Gain. Let's compare it to Cash Flow:
CG for:
Can be very large over very short time
50% TAX discount
Holding cost insignificant over the return
Short to mid term stategy     Why are you saying CG is a short to mid term strategy?
CG against:
Can generate very large losses (volatile)    No more than a property with high yield and NO CG.
Generate no weekly income, must sit an wait – so cannot give up your dayli work Why is a property with CG not having a weekly income? Are you of the belief that you can only have CG OR Yield?
You are gamble on future gains Only if it's heavily negatively geared.
Rent AKA Cash Flow for:
Weekly income
Very small variation from week to week
Always inflation adjusted ALWAYS??? Have you tracked rents? They can be flat for years.
You can use it to replace you day job (weekly income) Maybe! If you have a LOT of properties. But your LVR will remain high. As you get older the bank will want some of that money back. With no CG where will you get it?
life long income, while retaining asset value Same as with CG strategy.
Still hold option to 'flip' for capital gain if you wish   Not really., If there is no CG your property is worth the same you paid for it so you'll lose money on the flip.
Rent against:
Can have vacancy (about 5% from my experience in Brisbane)
Small Income from one property
Normal TAX rate
Commitment over the long term
My favorite is Cashflow. CG is hard in steady or falling market. You need to hold significant cash reserves in case it goes bad and need to be professional to slice a good deal. It's easier if it's booming…
You still need a daily job to pay bills between deals. That may change of course if you grow fully sustainable. But I still to meet this person
I agree you need cash flow in order to proceed to the next level. You can only carry so much negative cash flow.
That's why I want CG AND yield. One without the other will not make you rich. If there is no CG rents can only rise so far then it will be cheaper for renters to buy, thus reducing rental demand which will impact negatively on rents.
I would never buy a property that was CF+ (except if it was HUGE) if there was no chance of CG.
Catalyst
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August 26, 2012 - 12:00 pm
I know someone that did it. They used a router to pattern them. Seal and paint them and they look OK. If I had time and patience I'd consider it but I don't have either.
Catalyst
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August 26, 2012 - 11:56 am
Give Karina a ring. I think she's back in Atlanta now. She's a wealth of information and is buying heaps in Atlanta.
Karina Perez Ronderos
Select American Homes LLC
Phone +61 412 900 111
http://www.selectamericanhomes.com