Forum Replies Created
If one is only 2.5yrs old there should be a lot of depreciation on that. How come it is still negative?
May I ask what your getting in depreciation?
"they" do say lots of things.
The problem is people tend to lump property into 2 baskets
1) high CG negative geared
2) low/no growth, positive geared.
While there are loads of properties that fit this criteria there are a lot more than 2 baskets.
If the "they" that Bardon is talking about are correct then over time city apartments will double in price and western city property will remain the same price. This will never happen.
Also a property that has been negatively geared for years doesn't magically turn into a very positive property to live off. Sure "IF" the CG is there you could sell it and have equity to live on.
Everyone has their own strategy and if you have time on your side you can wait for (possible) CG. I always wonder when people mention how much their property is worth now compared to when they bought it if they even know how much they have "really" gained considering the losses every year.
Being a number cruncher I know this which is why I changed tactics. I buy low, manufacture equity and cash flow. So I am CF+ AND have equity from the beginning. No "hope" in my strategy.
NHG wrote:cs_rlewis wrote:From what i read i believe a negatively geared property is more suitable to lower the amount of tax you pay and is more likely to appreciate in value over time.So from that perspective I do hope my property is negatively geared.
Well to claim back on tax, it means you are making a loss. Your property would have to go up considerably to offset that loss and also consider your reduced ability to purchase more property in the meantime.
Lewis read something else. NHG is right. Just because you're making a loss EVERY year it doesn't mean you'll catch up on the roundabout.
Remember -if you are paying tax you are making money.
What? that's ridiculous.
If you have separate meters you get 2 accounts right? Or they listed separately on the one account? Either way you just photocopy the account and send it to the agent. They forward to to the tenant.
Where in Western Sydney? It's a big place.
Elliot Shiner in MT Druitt is great.
Insurance on anything you very rarely use but can you afford not to have it?
If you own houses your building insurance will cover a certain amount (like public liability).
But if you own units the public liability only covers common areas.
So can you risk a tenant getting injured (or dying) or a workman getting injured? got a cool $10 million sitting around?
So if you have great tenants in a house then sure you can not insure and run the risk. But without public liability insurance I couldn't sleep at night.
Hi Joel, some great advice already.
I think you need to look at some numbers first (I'm a number cruncher).
How much can you borrow? How much deposit do you have? Look in a few areas that you can afford. Look at the yield and work out how much you are out of pocket each week (can you afford that?).
This will narrow down where you can afford to buy. Then the research begins into areas.
As others said you need to have an end goal and a strategy that suits you. This doesn't need to be set in concrete. Strategies change as we grow. But without having a strategy you'll just go round in circles.
Are you open to regional? or do you prefer Sydney? What areas have you looked at so far? Western Sydney is taking off but still has some great opportunities. There is CG and great yield.
Posters have already given great advice.
You can use the equity in your home without crossing the loans. Just take a loan (or LOC) on your home and use that as deposits. Then get separate 80% (or more) loans on each property. A good mortgage broker will help with this.
LMI is something some people hate, others love. It can increase your borrowing power and allow you to move forward at a faster rate. It depends what you SANF (Sleep At Night Factor) is.
Not all regional has good CG (you need to research this) and having little or no CG will not get you to retirement. I think you need a balance of CG and CF.
As mentioned buying one negatively geared property in the city at $400K won't get you to retirement in a hurry. You will be hard pressed buying a second if the cash flow is restrictive.
OK so now you know it CAN be done keep moving forward and DO NOT pay any more financial advisers.
I always go interest only. Put extra cash either into your PPOR if you have one or into an offset account.
That way YOU control your money (not the bank).
Just curios- How are you calculating CF? 80% purchase? 100%? 105%?
Different people calculate it differently. To me CF+ is taking into account interest on ALL purchase costs + outgoings.
If the granny flat has a separate water meter and you have water efficient taps etc you can charge the water usage portion of the bill.
If your agent is not sending the tenant the bill show them the legislation and/or change agents.
Some agents don't like charging it. I had one say it discourages the tenants from looking after the garden. (shaking head).
What renovations do you want to do and where in Sydney (it's a big place and I know my tradies won't go to all areas of Sydney (that can be 2 hours travelling from one end of Sydney to the other in peak times).
Streamlineinvesting. Your post sounded like a newby question and then I see a link to your blog where you are offering property advise. Hence my confusion.
You asked about $200K properties then offer advise that Maitland is good with $300K properties. Which price range are you looking at? Western Sydney has some good opportunities between $200-300K for what you are wanting to achieve.
In the last 2 years that has been our strategy. Buy/reno hold with increased equity and CF+. Works a treat. Although reno is the buzz word in property and every man and his dog thinks they can do it. I'm seeing some horrendous renos and also some that look great but the buyer hasn't made any money (I looked up buy price on RPdata and the asking price now). You need to know your end price AND your reno costs.
Once you decide on an area do loads of research to make sure you don't fall into that trap.
OK my mistake but Lilian- You need to grow up?? Come on- are you 5 yrs old?
Your post asks 2 different questions- how much cash should one put into the deal (10%, 20%).
But you are asking how much cash to have in reserve. This is a different question.
In answer to that- you need to have enough cash in reserve to cover any problems that may arise. Again everyone has their own comfort level. Some people have 6 months rent for example.
If you have no cash reserves you can quickly find yourself in a position where the bank takes your property if things go wrong.
If your tenant stops paying rent for 2 months are you still able to pay the mortgage? This is not a far fetched scenario.
I have a friend that had a very high LVR who lost a lot of her portfolio. She had no cash buffer and had to sell some properties in a hurry.
Nice self promotion.
Doesn't take a fool to see both posters registered on the same day. Coincidence? I think not.
If you want to promote yourself people would be more likely to trust you if you gave advice.
Hi, will use the new site for a little while before commenting but one thing that was missing and still is-
Is a place to put your location in your profile.
It's VERY frustrating as people ask questions but you have no idea where they are from (which matters often). I'm tired of posting "where are you located? so we can answer'
seqel I guess it depends on the state of the walls/windows. Get a few quotes.
Sometimes there can be a lot of prep time if walls need to be repaired and windows are peeling etc.I have only paid to get the outside done on one major reno (time was getting away).
I always do the inside myself. Of all the trades that's the one that is easy to do yourself (no respect to painters). It can be really hard work though if you have to repair and that's where a professional may be needed.If it's straight painting do it yourself but make sure you get some advice on correct procedures. I saw the almost worst reno in my life last month. Walls were rollered straight over flaws in the wall and only one coat (you could see through it in places).
If you don't have the ability to do a good job, don't.gpfstuff wrote:I would love to replace my income through reno's as I do like to get my hands dirty. My situation at the moment and the reason for this post is that I am frustrated in trying to find time to perform a reno. When I did my last reno kids weren't in the mix. But now, having two young ones I need to work out with my wife a set period of time where I can dedicate to perform a reno, ideally 6 weeks,taking some time off work.
I did read that you performed a basic reno (long distance) and it took 1 week, did you sell and what sort of profit are you aiming for in your renos? I dont want to be greedy in my renos but I would like to have a goal profit in mind and work towards it!
I enjoy hearing from like minded people and I love, "the strangest secret", Earl Nightingale
Thanks.
GlenOur kids have grown so our time is our own (besides working). Last year I helped a guy who wanted a break from his profession (no experience with tools). He bought a house and took 2 months off work. We really loved it and went back to his job refreshed. He rented it out. He's even thinking of doing another at a later stage.
We haven't sold any yet. They were all bought to build our portfolio. We are close to having enough (if there is such a thing) so want to move into buy and hold. Mainly as an income source as we don't have enough yet for us both to quit work.
Lately I've been seeing a lot of buy reno sell deals on RE.com lately in the sub $400K price. You can tell they have been renoed to sell by the staging. I look them up on RPdata and I see a lot of people are either under estimating the cost of the reno or over estimating the price they'll get or not factoring in all the costs. One example- paid $370K and is for sale at $419K. There is NO profit in that.
Reno $15K (if they did loads themselves)+ stamp duty and solicitor $15K + holding $5K? So cost is $405K. Then there's selling costs $9K. So IF they get asking price they'll make $5K (minus tax).hahaha.CRAZY. And that's not a one off. I'm seeing them all the time (well not that bad but not worth it.Renovating is the buzz at the moment and people are overpaying (in my opinion anyway). If I'm going to work into the night after work and on weekends for 5 weeks I want it to be worth my while. I don't have a $ figure as it depends on the amount of work I have to do. If you are paying tradies then your profit is for just keeping an eye on it (or you could employ a manager). Also if you start moving into structural renos you and make $100K+ (high end properties). I"ll buy sub $400K so the margin isn't as high.
I guess you have to work out what your time is worth. But over estimate cost of the reno (at first anyway) and under estimate the sale price. Then that will determine your buy price.
I'm getting keen to do another now but frustrated at people overpaying. Hubby is getting withdrawals. LOL It's been nearly 6 months since we finished the last one but that was a biggy (burnout) so we needed timeout.
When looking you need to know the area and the streets very well.
I have a few in Mt Druitt (Sydney). First thing I do when I see a house is look on googlemaps. Look at the street and see what the surrounding houses look like. Are there lounges on the verandahs, unkept lawns, toys all over the lawn?
Next is look up RPdata to see how many housing dept houses are in the street. The less the better. If there are too many you can have problems and may have trouble keeping tenants. I'm not saying all dept tenants are problems but there are really problem streets.
If you are still keen drive in the street at different times of the day to get a vibe for the street. Or walk through and say hi to some people. If there's an open home neighbours may be out to sticky beak. Say hi. Ask them what the street is like.As far as getting good tenants- if the house is presentable you will get better tenants. If it's run of the mill or needs repair you can't be fussy. We reno ours and always have to choose between those that want them. We have fantastic tenants.
opee wrote:Just a quick question regarding property investing in general. Below are not quick questions but I'll try quick answers. Is it a good idea to always put deposit on to any property one buys. Not always. I always borrow the full amount. It's all tax deductable.If you have other debts you are better doing this.
WHat happens if you don't have much initial deposit. You can use equity in your home.How does one have positive cash flow property as there are not many left in market nowadays. OH! the ultimate question. If it were as easy as just looking on the net everyone would buy them. You don't always "find" CF+ properties unless you buy in mining towns etc. You make them (reno, subdivide, add second income stream).
Whats the basic strategy ppl use to buy one after the other property. Main problem I guess everyone does have is cashflow and nowadays most of the property valuations are coming below the actual value. Lot of ppl tell me its not a good idea when you buy negative cash flow property and keep paying 800-1000 dollars per month from your pocket to cover repayments. But I guess unfortunately this is how good location properties work. Is it still worth doing this way. Everyone has their own strategy and it goes with what their goals are and what they can afford. You need to work out how "you" will achieve your goals. 90% of property investors only own one IP. Most of the reason for that is they can't afford any more. Negative cashflow properties will do that to you. You need a balance of CF and CG in order to "make it" in property.
Someone suggested me to invest in Narre warren, Berwick, Pakenham suburbs of Melbourne.Other person advised me to buy off the plan apartments or town houses. But I guess thats too risky and most of the time they have their own profit shares in that. But I want to be close to CBD as risk factors are less. Hope my questions do make any sense. Please Any Suggestions?
I personally do not like OTP except in a raging market (which we haven't seen for some time. Set yourself some goals. Keep reading and it will fall into place.
One bit of advice when listening to people " only listen to those people that have what you want". You'll meet lots of "experts" who will tell you what to do and what not to do. Stop them and ask what's in "their" portfolio and how they are able to generate income without working (or whatever your goal is). That will stop 99% of them. LOL
Well done ion starting your investment journey young.
Difficult to say with so few facts. Yes looks like you have about $120K at 80% lend.
What is your cash flow like? I'd assume negative.
Can you afford another negatively geared property?
Cheaper properties may give you a better yield to improve your cashflow.What are your long term goals?
Have you got your loans structured correctly? Is the equity due to CG? or are you paying Principal & Interest (P&I)?
If you are paying P&I on the IP stop now and go interest only and put the extra into your PPOR (via an offset account).
