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Catalyst
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November 16, 2014 - 12:41 pm
Ok so it’s approved as a games room. So it is NOT approved as a grannyflat, ie as habitable dwelling. Be careful then when dealing with council. If they are friends could they not share a letterbox (and bins?)?
I’m surprised your insurance company will insure it as one dwelling when it is rented as 2 dwellings.
I could not find any that would do it and mine is actually one house that I split. Who was that with?
Catalyst
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November 16, 2014 - 12:31 pm
Terry what is your book called? Where do you get it?
Thanks
Catalyst
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November 16, 2014 - 12:29 pm
Selling in a boom is obviously the best time. Heavy bidding drives the price up.
But it really depends on your situation. Will you be buying a new home? If so your buy price will also be high.
Can you buy before selling this one? If so buy before the boom then sell this one in the boom.
There are buyers markets and sellers markets. Obviously if it’s a buyers market ie not many people buying, properties staying on the net for longer periods, then this is NOT a good time to sell.
Also sometimes you save money building new and other times you pay a premium. How does your 5 year old house compare (price wise) against new ones? Of course if there are new ones still being built this is a factor.
Lots of variables to consider.
Catalyst
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November 15, 2014 - 10:42 am
You need to speak to a property savvy accountant ASAP.
You can claim all outgoings on both properties if rented out. And also declare the rent on both of course. You can rent out the PPOR for 6 years without having to pay CGT. I’m not sure about your tax because you are not an Australian resident. That changes everything.
I doubt you’d be adversely affected. It sounds like a great opportunity and if someone is paying your bills even better.
There are a lot of factors to take into account in your situation. You must ensure you get it right.
good luck. Living in Canada sounds like a great opportunity.
- This reply was modified 10 years, 1 month ago by Catalyst.
Catalyst
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November 15, 2014 - 10:36 am
Hi,
Is the granny flat approved?
If not be VERY careful. Insurance will not cover it and if there is an accident you may lose everything you own (and then some).
Ok so I’ll assume it is legal.
You cannot rent separately if the power and water are not separate. If it is together most people just rent as a whole then the tenants sublease the granny flat. Of course this is the easiest option but the rent will not be as high.
Is there privacy between the house and the granny flat? If not then this also causes problems (maybe why agents aren’t interested?).
Just get a second letter box and label them house number A and B. eg 5A, 5B. Tell tenants to direct their mail to 5A or 5B. Not sure if you need council approval. Just do it and see. You also need to think about garbage bins. If you need to get a set for the granny flat you are looking at about $300 a year for a second set (depends on your council). When you get the new subboard for the electricity just put the A or B address on it.
Have you looked at the cost of getting the new subboard and separate water meter? You might find the cost prohibitive. If the granny flat is not approved this may Also raise red flags with council. Then council may ask you to take the kitchen out (so it’s no longer rentable).
good luck.
Catalyst
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November 14, 2014 - 5:17 pm
Work out what the net yield will be for 2 $350K properties VS one $700K. That way you know what the holding costs will be. Lower priced properties often have a better gross yield (but, as mentioned factor in rates etc) to get a NET yield.
Holding 2 cheaper properties helps alleviate worries for new investors. What are the chances that both will be without tenants as opposed to one dearer one without a tenant? I like cashflow so like lower priced properties. But everyone is different. Others say they would rather a “better” property as the CG is more.
I have a good number in Sydney’s west. Never had a problem. I have friends with “good” properties in “good” areas that have bad tenants. It’s not area specific.
Remember your buy costs will be more expensive too on the 2 cheaper ones you have more stamp duty, more solicitor costs etc.
Crunch he numbers. It’s all about the numbers.
Catalyst
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November 13, 2014 - 5:14 pm
Yes think 5 people is too many.
Maybe for a short buy/reno/flip but not for buy/hold.
What happens if the couple separate or one person gets in a relationship and wants to buy a home?
Even with a trust or company people change and go in different directions.
If you simply cannot go it alone maybe just get with one other person. But you need to sit down and decide on a goal and discuss all possibilities.
How long will you hold it, how will bills be paid. How will it be funded (do both have equal deposit?). The problem when you get a loan with someone else is the bank assumes you have full responsibility for the loan. This can be detrimental to building a portfolio.
Instead of buying multiple properties together, I’d look at getting one with someone else (if you can’t do it alone) and use that as a stepping stone to build your own (separate portfolio). Eg if you bought a property, did a reno to increase equity then pull money out to buy further properties in your own name. That way if your goals change you only need to decide on the fate of one property.
I agree with Jamie- Speak to Terry.
Catalyst
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November 12, 2014 - 5:04 pm
No, I’ve only heard good reports about Granny Flat approvals. He gets lots of customers from Somersoft forum. He’s a regular poster there under the name of Brazen. He has been very helpful to people asking questions on forums.
He was very helpful to me when I split a house in two.
Catalyst
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November 12, 2014 - 4:58 pm
Rents were not typically $400+ a week in Mt Druitt. I don’t know where you got those figures. Or are you talking a different Western Sydney?
Rents rose sharply in 2012 and have been steady or down a little since then.
It’s all part of the cycle.
Rents rise, sale prices rise, wait a little while and rents will have another rise.
In order to grow a portfolio you need Capital Gain (or a big income to save deposits).
Cashflow though is what allows you to be able to afford to buy more also. If they are negatively geared you soon run out of cash to pay the mortgage.
A good balance is needed.
Depending on your situation as to where you start. Do you have enough wages to fund negative cashflow? Do you have a big deposit?
Everyone’s situation is different.
Agree that it’s very difficult to get anything decent for a reasonable price in Western Sydney at the moment. I wouldn’t be buying there now.
Catalyst
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November 11, 2014 - 9:48 am
Friends of mine used
http://www.grannyflatapprovals.com.au/
If you are going under SEPP you are limited to 60sqm so I wouldn’t try to fit 3 beds in that. I think 2 bedroom is great. Layout is most important though. No use having 2 bedrooms if there is a tiny living area.
Read the website it has lots of details about things like that.
Make sure you check on inclusions when comparing prices also. Some things may b e additional with some builders.
Catalyst
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November 10, 2014 - 4:30 pm
I’d recommend speaking to a good broker.
Catalyst
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November 10, 2014 - 9:54 am
I know with a few units I have, upgrading fire ratings have been an expense. Mainly adding fire sprinklers etc.
I don’t think anyone could ask to build firewalls etc (which are the current regulations). This would mean MANY buildings would need to be demolished. But you do need to comply to basic regulations.
You need to ask Council if the building has a Fire Safety Certificate.
Found this below.
Fire Safety is an extremely important part in the maintaining of a Strata or Community scheme but sadly is, in many instances, one of those matters that’s put into the too hard and too expensive basket thereby possibly putting the lives of the scheme’s lot owners at risk.
The NSW Environmental Planning & Assessment Regulation 2000 requires that “the owner of a building, to which an essential fire safety measure is applicable, is required to maintain each essential fire safety measure in the building”. Failure to comply with this legislation can lead to significant fines and possibly serious legal ramifications for those responsible.
The bottom-line is: everyone MUST comply with the fire safety legislation – no excuses
Fire Safety measures include (but are not limited to):
fire mains and water supply services
fire hydrants
fire shutters & windows
fire doors
fire dampers
fire hose reels
fire extinguishers
smoke detectors and alarms
automatic sprinkler systems
emergency lighting
stand-by power systems
exit lighting & signs
Fire Safety Installation Certificate
An appropriately qualified person, such as a Fire Engineer or Building Surveyor, must inspect the fire safety measures and provide a Fire Safety Installation Certificate to the owners. This certificate must then be provided to the local council and Fire Brigade each year and a copy displayed in a prominent location within the strata building. Complete details on all the requirements for fire safety compliance can be found on the following websites.
Catalyst
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November 5, 2014 - 9:35 pm
Unfortunately you just missed one on 27th October.
http://somersoft.com/forums/showthread.php?t=84714&page=14.
I think they meet regularly. There are a few investors in Addlai de on that forum
Also Google meetup.com and type in property Adelaide.
Good luck. It’s great to network with others, its hat gave me the kickstart to get going.
Catalyst
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November 5, 2014 - 5:30 pm
Thanks for the clarification Corey. I read somewhere it eas double. I knew it was bad but not that bad.
I know early on when money was a bit tighter we were told to get rid of one of our credit cards even though we paid them out each month.
Catalyst
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November 4, 2014 - 10:15 pm
Banks count your credit card limit as double when applying for a loan.
So if you ave $20,000 limit on a credit card the bank counts it as you having $40,000 loan do this will affect your borrowing capacity.
Keep thinking. Or you could just work more and save quicker.
Or look for ways to add value to the property you be, revalue, withdraw equity.
- This reply was modified 10 years, 1 month ago by Catalyst.
Catalyst
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November 4, 2014 - 10:08 pm
I really doubt that you would have to pay CGT from the beginning. I would seek advice from a property savvy accountant if someone doesn’t steer you to the legislation here.
My thinking would be that you would get a valuation done when you build the granny flat and CGT would be calculated from there.
I’m interested in this as friends are doing the same thing.
Catalyst
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November 4, 2014 - 10:02 pm
I’m assuming you want to have it 50/50 as you are both working and getting tax benefits because of the property.
Let me guess, one of you will not be working later when you sell so you want it all in the persons name with no income?
Changing it for those reasons is called tax evasion and is illegal.
You can change it later but you’ll have to pay stamp duty to change it. And prove you are not doing it to avoid ax.
Catalyst
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November 4, 2014 - 9:34 am
Hi, Congrats on the bub and the new car.
The $30,000 loan will also restrict your borrowing power. I’m assuming it’s high interest. Get rid of it.
OK the car- yes a new car is nice but will it do anything the old one won’t? In the end it come down to what you want more financial security or a nice car. To me “things” don’t give me as much enjoyment as being financially free to travel, spend time with my family etc. What are your priorities? Especially given the fact that you are having a baby soon.
When I was young I had the opportunity to buy my first house but I had no deposit. I sold my 6 month old car (I cried for weeks) and that was my deposit. I drove a bomb for the next 4 years but I had a house. House prices doubled within 5 years and I never would have been able to get my first home.
BTW $20K won’t buy you a house. And you only get the FHOG on new houses. You really need the money from that car. $13K will be mostly gone on the stamp duty and solicitor etc.
What price houses are you looking at? And what area? There has been a lot of growth in the last few years. You may be wise to wait until the hype dies down.
You also need to crunch some numbers to see whether you are better off weekly staying where you are (is that possible with the baby?) and getting an IP. It depends where you want to live VS where you want to invest. It’s cheaper to rent than buy in expensive suburbs, then buy an IP with high yield to offset your rent.
Lots to consider. Post again with your thoughts.
Catalyst
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November 3, 2014 - 9:19 pm
In NSW.
We live in the house so we included water and electricity in the rent.
You can have them separately metered though. Or you could just pay the usage yourself. It’s only part of the bill and you can only claim it if you have the complying water taps etc. You can only charge usage if separately metered also.
If you had overflowing bins then you would need to get extra bins.
- This reply was modified 10 years, 1 month ago by Catalyst.
Catalyst
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November 3, 2014 - 9:15 pm
Hi Kevin,
as others have said it’s critical to get the setup right and to do this you need someone with lots of experience.
getting your loans etc set up correctly is crucial.
Start by reading forums. Get recommendations and go from there. I’ve used a few recommendations off forums. Some have been great, others not so.
Everyone is different and wants/needs different things.
Networking is also very important. Meet like minded people to chat about things. There are many meetups in Sydney. Go along to one. Most are casual. Some have guest speakers.
Look on meetup.com type in property or investments. There are a few others also. Message me if interested.
PS I’m not selling anything. just happy to help people get started.