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I think if you are time poor it can be a good investment.
Researching an area can take months, and that's before you even look at a place. Buyers agents have expertise in certain areas.
BUT be careful. I'd go with a small individual person rather than a big company. Also go for one with a fixed price. What's the incentive for them to get the property cheaper?You need to decide what type of property you want eg high growth area, CF+, reno required, under market (a must for me). I'd want the property to be under market. This in itself pays for the BA.
Look at http://www.somersoft.com/forums/ There are a few well recommended BA's on there.
Go to this link and it tells you what the stamp duty is for different states.
Keep reading and asking questions. Only way to learn.
Read heaps.It can also be helpful to go to a few seminars. Just don't get sucked in to paying thousands for courses.
Some of the free ones are Ok. You don't get heaps out of them but it all adds up.I wish I knew this type of forum existed 10 years ago.
You seem to be confusing terms. Equity is how much you have after paying the loan. Eg a house worth $350K with a $300K loan has equity of $50K.
When you talk cashflow you are talking borrowing power. Of course if your properties are CF+ the bank will lend you more than if they were CF-.
freerenterprise wrote:As a Buyer's Agent I back myself to create a win for my client as well as myself. My clients can choose between a flat fee or paying me 20% of what I save them off verified list price. So if I can negotiate $50k discount, my client saves $40k and my fee is $10k. If I can't save my client the equivalent of my fee there is no charge. We are all experts in some areas, but hard to be expert in all areasHow do you determine the "discount"? I've seen properties marketed incorrectly (out of area real estate etc) and while on the surface it may seem like there isn't much of a discount, in fact it may be $20K under market value.
Buy under market, reno and there you have it. Equity. Reval and buy again same, same.
Not all CF+ deals are in low CG areas. You MAKE them CF+ by buying low, do a reno and THEN they attract more rent, MAKING them CF+.
Use your PPOR equity as deposits and legals. Get individual loans for each IP. That way they are not crossed with your PPOR and you can sell any whenever you like.
I suggest to deal with one bank for the first few then switch. It's too much hassle having half a dozen different banks. Most people say don't borrow over $1.2mill with one bank.
It's also easier to get the next loan when they already are dealing with you. I've had approvals in 5 minutes. Just call in and see the person you're dealing with. They crunch the numbers and Hey Presto!!!
People tend to buy emotionally. If it looks pretty they'll buy it.
That being said if it looks pretty but the building report comes back with defects negotiations will ensue.
Can't comment on double glazing, heat pump value as I'm in Sydney. It doesn't get that cold (except for THIS winter). LOL
No sorry. If you were renting the one you buy then you can but you can't legally just dump a mortgage on the first property then claim it.
You can claim ONLY on money that is borrowed for investment. As the money will be used to buy a house you will be living in you can't claim.
That's why people have offset accounts instead of paying down their mortgage. Then you can pull it out and do what you want with it and still claim the loan if you rent it.
Sorry.number 8 wrote:A unit in Mt Druitt as a good buy?Depreciation as a factor or reason to buy? Definately for the selling agent to market the property as a good buy (refer below to see this is not the case).
Good yield?
Lets look at this…Buy $230k and rent for $310- Her goes the positive gearing salesman again? Further to the fact that it is not good yield, it is in a low growth area. A development site like this is not exactly family orientated or like. Is this the type of property you want to hold for thirty years?
Lets look at this, Buy price for $230k, legals, stamp, LMI if applicable, pest, building etc Total $250k-
On $250k, Interest p.a. = $17.5k @ 7%
Expenses including strata, rates, management fee, maintenance, insurance, water = $5k
Rent= $16k at $310 (if you get a solid tenant).loss= $6.5k + the opportunity of Nil growth.
Oops, I forgot the depreciation, throw in building write off on this property value of say $1500.
Net Loss: $5000 p.a.
Stay clear,
You have overestimated buy costs. eg You don't get pest and building with a unit. That is covered by body corp. Strata search is $40.
$5K for yearly costs is a bit high too so deduct $2,000 a year. Depreciation is higher that $1500 because the ones mentioned are not that old. So another $1,000 min.
So it's down to $2,000 a year. AND there IS capital growth. Hythe st units were selling for $180K in early 2009 (2 bed).
Are you making the assumption that all of Sydney (except these units) will go up or are you saying no where in Sydney is going up? or only the west will not go up? It doesn't make sense to me. I just look at the data.
I can supply some if you like.Sorry I have to ask -6-7 months? That's one hell of a reno.
What did you do? Is 5-6% typical there?
do i just have 54k of equity because that is 20% of the original price of the property (20% of 280k = 56k) ??
YES
Yes- cross coll is when 2 or more properties are tied together. Some people borrow 100% or more on an IP but it is crossed with their PPOR so together they are under 80%..
Get a line of credit on your PPOR. Use that for deposit and legals. Set up a new loan for the IP only (80%). That way it;'s not crossed with your PPOR.
When you get more equity either in your PPOR (increase LOC) or IP1 (increase loan amount). Use this equity for deposit and legals on IP2. Get new 80% loan for the purchase.
That way everything is separate. You can sell any one anytime.
obvious wrote:hey guyswhats does everyone think about the property boom ?
What boom??? You obviously don't live in Sydney.
Hi, the bank takes 75% (I think or close to that) of the rent into account as you don't get all of that (with charges etc).
If you are going through a broker tell them of your plan so they know how to structure to suit your needs.
I would use the equity for deposit and legals. Get pre approval for a separate loan for the purchase. Best not to cross coll if you don't have to.
Buying in separate names depends on your personal situation and what your goals are for the property. If the property is in your name only you claim the tax deductions. When you sell the CGT is added to your income.
If you want to build a portfolio quickly buy under market value (and/or increase equity through reno) then revalue and use the increased equity to buy again. Repeat when practicable.
Can I ask about your plan? You plan on selling it in a decade. Why? What then?
What's your purpose in buying the property? Sounds like your goal is purely capital gain?
How much money do you have for a deposit and legals etc? This will pretty much determine what you can buy. Also how much can you afford to pay out of your pocket each week.
Why are you stressing out? Time is on your side.
Sorry about all the questions. Just trying to get a clearer picture of where you're headed.
It's not really about house vs unit vs new vs old. It';s about A particular property that has the right numbers and gets you closer to your goal. You first need to work out what that goal is THEN look at property and choose something that leads you there.
I would only bid if it sols under market value. Especially if you are borrowing 90%.
Banks sometimes won't lend 90% in some areas (for example if they are heavily invested in a certain area). This is the reason auctions aren't popular with many people. But that is also the reason you can get a bargain.
As mentioned you need 10% up front on the day.Melb is PPOR you can move out and rent it and not pay CGT for 6 years. You can also claim sydney as a tax deduction (but will pay CGT on Sydney).
If you move into the Sydney one that becomes your PPOR and you pay CGT on the Melbourne one.
Work out the finances to see the difference in weekly costs and CGT benefits. But if you are renting a cheaper place and gaining tax benefits on Sydney and not pasying CGT on Melb I'd say you will be ahead by renting the cheaper place and renting both properties out.
If you go to the Somersoft forum and look up Living Off Equity there are a few people following that strategy. The consensus seems to be that it is becoming more difficult (with credit squeeze etc).
Hi, it sounds like you just want something written in case you change your mind. Is that ethical?
Why not find a place you REALLY want. Get the pest and building and if there are no major concerns buy it. IF there are major concerns you're covered.
Please explain – you sold a place that's 10 years old so you're wary of buying a place that's 10 years old?
BTW that is NOT old for a house/unit/villa.blocka wrote:my plan is to bye something negatively geared and when it gains enough capital gains sell it and use the equity to purchase something positively geared and then use its equity to purchase another negatively geared property and repeat this process over and over again
assuming you have your own home to use as security…..
using an investment company is OK some offer a rental and maintenance guarantee which can be peace of mind, you will pay for this service but is a tax deduction but remember they have to make a profit as-well ie sale price ,,,,,,,,, i use a company called
WHITE HOUSE FINANCIAL SERVICES 1300363738
GOOD LUCKHi, just wondering how this will work. You'll buy a place and lose money for years while you wait for it to go up then sell it and buy a positively geared place that will go up also. That could take MANY years. Why not just buy the positively geared one (under market value) and keep buying?
Is this a strategy the white house people are advocating? I wouldn't touch a rental guarantee with a barge pole.
You don't need and investment company. Speak to your bank and find out how much you can borrow. Work out yourself how much you can pay and start looking. Do your due diligence on the area and your figures on purchase. Jump in.
