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Catalyst
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May 9, 2011 - 11:52 am
Hi. If you have a large mortgage (as you do) it can have great benefits.
Yes the rent is added BUT you deduct the interest as a tax deduction + other things.
Do the sums. Add interest + land rates + water rates + insurance. Minus rent. The amount left is what you claim as a tax deduction. There are other things (like depreciation) but I've just simplified it.
If you move back in within 6 years you will NOT pay capital gains tax (assuming you do not buy another house to live in). Commonly known as the 6 year rule.
Any more questions just ask.
Catalyst
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March 24, 2011 - 12:51 pm
scotty8911 wrote:
Hello everyone, thanks again to all your advice and suggestions. I have another question. I have been considering taking on the strategy of reno's. Mainly due to the fact that I am in the trade industry myself, and have a few close friends who are too. Is it wise to think that I can buy a investment property that is in need of renovation, carry out the work within a set time frame and budget, then I can rent this out and charge a premium rent? (looking to obtain CF+ from the property) SO, I guess my question is, can you buy a property, renovate, then expect a positive cashflow? Thanks in advance for your input.
Yes it can be a good strategy. It does tend to be in fashion now so be careful of properties that need a reno but people overpay thinking they can make big money when in reality they could have bought a much better house with the work already done for a little more.
With all my purchases they must be under market value. With reno's I must be able to do it in under a month and get at least $4 (in extra equity) for every $1 I spend. We do a lot of the work ourselves. I only buy if I could do the reno and sell straight away with $20K min profit (clear- after tax). Not that I sell but I like numbers and those figures make me happy. It makes it easy to eliminate lots of properties. Of course area is the first decision.
It also like it to be CF neutral (before tax benefits). So likely CF+. Doing a good (but not expensive) reno gives you the increased yield you need to make it work. Newly reno'ed properties give you the yield plus the pick of the tenants.
In the end it's a numbers game. I don't care if it's a house, unit, townhouse. I "just" want equity, CG + yield.
Catalyst
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March 22, 2011 - 11:02 am
Ren10 wrote:
Im pretty confident you cant claim the cost of seminars unless the ATO considers you to be 'in business' in relation to your rental properties.
http://www.ato.gov.au/rba/content.asp?doc=/RBA/Content/14120.htm
http://www.ato.gov.au/rba/content.asp?doc=/RBA/Content/52466.htm
Also your not able to can claim books/magazines based on this
http://www.ato.gov.au/rba/content.asp?doc=/RBA/Content/76764.htm
You can claim them if they relate to helping you run your property. So not one on where to buy but yes to ones on increasing yield etc.
Catalyst
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March 10, 2011 - 8:18 am
Or just say you are self managing. Give them the required notice then pick up the paperwork and sign off. I've done that, no problems. Rang them, put it in writing then picked everything up.
You made the classic mistake in any business (giving out too much information.
They are just covering themselves but if you are taking responsibility you can then decide to let someone else do it for you after that.
Catalyst
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March 8, 2011 - 5:20 am
When one sees that you have made 5 posts ALL promoting yourself one wonders whether you are interested in helping people get started or just in making money.
There are many experienced investors here who freely give their time to help others for no financial reward.
Now I know you have a business to run but really if you were truly interested you would have seen ONE post that you could have contributed too.
I wouldn't go to one of your presentations based on your performance here.
Catalyst
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March 6, 2011 - 4:49 am
Terryw wrote:
I would be careful about getting the utlities in your name. If they don't pay the utility company will come after you, then you will have to chase them – extra hassle.
That was my thought. Why would you want to do that? Sounds like a tax dodge to me. Asking for things to be paid in cash. What's the advantage except to hide something. Are you going to go and collect it each month?
what if you get a tenant that sits for months and you can't get them out. Not only are you losing rent you will be paying for their electricity and phone bills. They might have some overseas relatives to ring every night???
And, No, you can't just turn the electricity off.
Catalyst
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March 5, 2011 - 11:51 am
TC62 wrote:
Just sounds like all the same <moderator: delete language> you get from all those east coast wealth creation companies like ABC, Premium Finance Services, Ironfish, Optima Equity Solutions that fly you interstate to flog you one of their investment properties. BTDT, not interested!
CHEERS!
TC
Not exactly the same. Your examples fly to to JUST hear their spiel and you get your flight reimbursed IF you buy something.
I figure if you are going to the place (say Thailand) for a holiday why not stay an extra week for nothing (other than your 90 minutes).
As I said- read the fineprint though.
It's like the "free" seminars TAGR and the like. You go, you get free books etc and SOME people pay thousands of dollars to join their mentorships etc. THAT's how they make their money. Everyone else gets the free information and books etc. Up to you how much you want to pay.
Catalyst
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March 5, 2011 - 8:01 am
maz_lc wrote:
My question about the return is regarding negative gearing, you can't claim more than you pay on tax, so if your rent is to low you are not earning income, you are spending additional income. So then there isn't room to claim on deductions such as wear and tear.
What????
Catalyst
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March 5, 2011 - 7:46 am
It's Timeshare.
I went to a presentation and got a "free" weeks accom. You also had to go to the 90 min presentation at the resort. It cost me $90 to register. I got a "free" week in a lovely resort on the Gold Coast for a week with my kids. Booked the presentation in one morning. Went, listened and said no thanks and went to the beach.
I went to 2 presentations in Las Vegas and got free show tickets and a free seafood buffet.
You don't HAVE to buy.
Some of them put too many restrictions on now though. I have one coupon here but you have to name 3 different months AND three different areas. Too hard. How can you say you'll be able to travel to different parts of the world at different times when you don't know what you'll get?
Catalyst
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@catalyst
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March 2, 2011 - 5:11 am
You get it to see if there are pests. Or more importantly damage from pests.
Termites can be hard to spot and damage can cost tens of thousands of dollars.
It's a safeguard. Same as a building inspection.
Catalyst
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@catalyst
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February 28, 2011 - 8:49 pm
Jake H wrote:
Catalyst you said I wouldn't have to negative gear it if I do a good Reno, but I thought it was good to negative gear as you got tax benefits. Or am I misled? But your method of using equity to accumulate property is really what I'm leaning towards. Do you think though by doing this way I would be wasting money on interest? Again thank you for your comments. Much appreciated
Hi Jake, just to elaborate. When you negative gear sure you save on tax but it's because you are LOSING money. It's always better to MAKE money. When you reno, you are not only adding capital (as I mentioned) but you will be able to ask premium rent. I've done a few of these lately. Purchased, quick reno, increase rent. All positive with min $50k equity (after reno costs). So they will pay themselves off. I can up the loans and buy again.
Keep asking questions. You're on your way. Well done.
Catalyst
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February 28, 2011 - 10:40 am
Link us the property then you will get an answer. Maybe the price is wrong/the photos are bad/it's not worded properly/it's in a poor location/it's too small???
Anybody's guess.
As mentioned your repayments have NOTHING to do with it.
A RE agent asked me "how much rent do you want?" I said $1000 a week. She said "WHAT!!". I said yes what I want is irrelevant isn't it.
Look on RE.com and see what the rents for the area ARE.
Catalyst
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February 28, 2011 - 6:32 am
So you are paying all the costs and your parents get half the capital gain???
That's very generous of you.
Unless getting finance is a problem you'd be better off buying something yourself and getting ALL the capital gain.
Catalyst
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February 27, 2011 - 8:31 pm
lextsy wrote:
Once the external granny flat has been removed application can be made to have a legal duplex or lower granny flat approved.(apparently your not allowed 3 kitchens on any 1 property)
6.6% is not CF+. Don't buy it wishing you can change things that may not eventuate.
Application to get the lower granny flat may not be easy. To separate them you have to have a fire wall between them. VERY expensive (if at all possible).
Lot of unknowns here. Be very sure of what you CAN do, not what you might be able to do.
Catalyst
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February 27, 2011 - 6:40 am
Jake H wrote:
You can purchase property, claim the FHOG. Rent it out for the first 11 months then move in and live in it for a minimum of 6 months and keep the grant.
Yes. As long as you move in "within" the 12 months THEN stay for 6 months.
Catalyst
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February 27, 2011 - 6:36 am
Jake H wrote:
At the moment I plan to buy an old house. Renovate it pretty quick and start renting it out and negative gear it and just wait on it until I can do it again. Does this sound like a good idea?
Well yes except for the negative gear bit. If you do a good job on the reno you should be able to achieve neutral to positively geared.
xdrew wrote:
Well, at that point you fall into the 'wait for appreciation' trap. The buying and renovating is good .. its buying .. and adding value, but the best idea for a budding developer is to extract as much out of the investment as quickly as possible. So .. your idea of the reno and holding really should be more like doing a reno .. then flipping it .. and doing another one.
I disagree with this being the "best" idea. You lose a lot by selling. If you buy, reno and revalue you can extract the equity to buy your next one, thereby retaining an asset that will appreciate (above the equity you have just created) AND have your deposit back to buy again. With this strategy you can keep on buying AND holding. Repeat, repeat, repeat.
Catalyst
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February 26, 2011 - 10:43 pm
Costs to buy are Stamp duty (check website below) + solicitors fees (including searches etc) $2000 + bank fees $1000? max.
http://www.acgol.com/stamp_duty_calculator.shtml
Personally I think all this CF+ vs CF- is crazy. You'll drive yourself mad trying to decide what to buy and end up with nothing. No-one likes paying money out of their pocket but if you fork out $10,000 a year but your property grows by $30,000 your on your way. Plus as rents go up the outlay will diminish.
A newby will be battling to buy/create a CF+ property that is not regional.
What do YOU want from property? Can you afford a CF- property in a high CG area? or are you strapped for cash and can only afford something IF it is CF+? It all comes down to research.
Personally I want something that's not too CF- but is in an area I believe will get decent CG. No use having a property that in 2 years time is CF neutral if it's going nowhere. That will not create wealth.
Cash flow is great but without CG you have stagnated.
These forums are great but the problem is newbys keep waiting for that elusive property that ticks ALL the boxes and get frustrated. I know I did it. Kept hearing "it's got to be CF neutral" . I wasted a lot of time and passed up a few good deals because I didn't factor in other things that outweighed the yield. Eg under market with chance for great CG with a minor reno. So it would have been CF neutral after that + big equity gain.
So what I'm trying to say is it's not this or that. You need to value each property on it's own merits. Get out there. Look at properties. Make a choice and move. It may not be the most wonderful property when you look back on it after years of investing but you're one up on the person who reads for 5 years waiting for the "perfect" property.
Catalyst
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February 26, 2011 - 4:34 am
What I'd do differently is to keep it.
Sold it too early as I was like a lot of newby investors who know they want to get into property but don't know anyone that does it. Bought a great place at a good price but listened to the media hype in the height of the boom talking about how Sydney market is about to crash, interest rates are going to go skyhigh etc etc.
Catalyst
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February 25, 2011 - 10:35 pm
Read this thread. There are others on Somersoft also.
http://www.somersoft.com/forums/showthread.php?t=60889
Catalyst
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February 24, 2011 - 8:37 pm
As mentioned any can make the offer. It's only when buying you both need to sign.
If it's a deal that has to be signed in order to secure it quickly your brother can fill it out with his name "and nominee". Your name can be added when it goes to your solicitor.
But normally you would organise a time to sign with your brother.