Forum Replies Created
- PC_Melbourne wrote:Well we only started last year. Can give you our opinions on these topics: 1) Using Investment Companies – Not a big fan. Heard stories of companies going under and taking investor $$$ with them. Generally prefer to be in control my own money and decisions. 2) Big fan of off the plan purchases (Plenty of research and careful buying of course) – Have the term of the build without paying much outside of deposit. On all 3 occasions the finished product was worth more than we paid. – Max depreciation income tax benefits – Minmal Stamp Duty $$$ costs – Brand New House.
Hi, mind if I ask where you bought the 3 off the plan places that were worth more than you paid. I only hear negative things about OTP. Like them being worth less and people not being able to get loans etc. Would love to hear some positive ones.
JamesSampson wrote:unfortunatley the cash flow days are gone. but all markets go in cycles so we will see them return again one day.REALLY??? I'd say they are harder to find but definitely not GONE!!!
Buy a run down place under market value (usually up for auction). Do a reno and presto there you have it, instant equity AND cash flow. That's what I did for my last 2. One in Sydney this year.
What's the price difference between the nasty and the pretty property?
May be a chance to get some equity (as other poster mentioned).
Are you buying this property or just looking? Seems funny that you don't know about an area you are going to buy in.
What's the vacancy rate like? Yield isn't wonderful so I'm guessing $260K is under market value? As opposed to under asking price (maybe the asking price was just too high). Doesn't mean it's a bargain.
Buy what you can afford, when you can afford it and where you can afford it.
One expensive property that has a poor yield may stop you in your tracks.
I believe in balance. That way you can keep buying.Also buying under value is they key. Get it revalued and use the equity to buy the next one. But serviceability is paramount. That's why I love CF+ deals.
Sorry I don't know much about the Melbourne market. Look at http://www.somersoft.com/forums/
Lots of useful info.
There needs to be a place with your name to say where you live. It is difficult when people ask questions as sometimes they are state specific so difficult to answer without knowing at least what state people are in (or buying in).
Another Sydneysider here. Born and bred. North of Parramatta.
I'd get a depreciation report done. There are too many things you can miss to make it worthwhile doing yourself.
http://www.depreciator.com.au is great. Send Scott an Email and he'll give you a quote. You'll get more than the cost back in one year. Well much more on a new place. I got back a few thousand on a really old place with no new fittings etc.
The report covers the next 20 years. Just hand it to your accountant.
Rlewis wrote:I live in Sydney and there are not many properties on the market for this amount or that need rennovating…..
Plus I can't seem to find any websites that give info on properties like this on the market.
RLSorry to disagree but there are loads of places sub $250K in Sydney that need renovating (that's why they're cheap). Some just need cosmetics. Others kitchen, bathroom etc, some burnt out needing EVERYTHING. Taker your pick..
"Go west young man". Or south.
Mt Druitt suburbs 2770 postcode. or Campbelltown and surrounding suburbs.
look up this group.
http://www.therightgroup.biz/ Their buyers agent (Nathan) was on Channel 9 tonight and is in August Australian Property Investor magazine. He buys stuff like this everyday. They are not pushy or trying to sell anything. Their fortnightly meetings are very informative. Well worth a look. Every second Tuesday at Parramatta. They will draw you up an investment plan for no cost (or obligation).
If you house is worth $610 then the bank will most likely let you borrow to $488 (80%) so you could draw $38K. Don't forget yoy need purchasing costs as well as the deposit.
Then if you borrowed 80% on the next property there would be no mortgage insurance.
CF+ means Cash Flow positive. Do you know of areas where you can achieve this? "We are looking to buy post 1985 brick, freestanding villa or unit or house, regional area with good growth." Good luck. It's not easy finding properties with great yield (to make it CF+) plus that have good growth. Not to say it can't be done. Usually properties that are under market value may need some reno's to bring the value up. Then that makes them CF+ because you bought cheap. With interest rates up at the moment you'd have to be getting amazing yield to make it pay for itself.
lisamills wrote:My husband and I are considering starting a property portfolio and have calculated that we have about $40k in equity, which would mean a purchase price (keeping LVR to 80%) of about $210k (plus $10k in buy costs). We are wondering if there is anything out there that we could afford right now to start our portfilio off (ie property for about $210k), or are we better to wait another year until we have paid down our house some more, and hence have a bit more equity in it to play with? We are looking at positive cash flow property only. Any comments or suggestions are MOST welcome.If you have $40K equity the bank will lend you a max of 80% of that so $32K. Take out $10K buy costs that leaves $22K. Or have I got that wrong and you will have $40K + $10K buy costs available to spend?
What type of properties do you want to buy? I know CF+ but how will you get this? Buying regional? Buying and renovating?
Hi. Are they all crossed? You neglect to say what the loans are on each. Are they separate loans?
So you don't have a PPOR? More info will be helpful.
cmason wrote:OK, we plan on living in this house for the next 20 odd years(until the kids leave) and hopefully will pay the loan off within 10-12 years(quicker the better) and have no plans in renting it out, will it still be a problem?So when the kids leave home you will definitely sell it? Maybe not. So you will have a fully paid off house that you want to keep but not live in. If you rent it out you will have no interest to deduct. But you will have a non tax deductable loan on the new smaller home you will move into. (just giving alternatives here).
If you have an offset account your mortgage is still in effect getting down to zero but the difference is the money is yours to do what you want with it (maybe buy that new home and rent this one out with tax deducxtions/ have a holiday -whatever. It just keeps your options open.
I like having options.You would have been better having the extra money in an offset account then you could have pulled it out to do with what you want.
If you pull equity/and or the redraw out to put on your new home it is not tax deductable. You can do it though.Only money you spend on an asset that creates an income is tax deductable. Sorry.
Hi it depends what info you need.
Have you chosen an area? Type for purchase? house, unit etc.If you need to know how purchase will affect your tax ask your accountant.
If you don't know how to get on the path to financial freedom speak to a financial advisor (but they will probably advise against property). Have you nutted this out? Do you have a plan? How much can you afford to pay out of your own pocket every week? What's your priority for purchase? good yield? Inbuilt equity (or chance to get some via reno etc)? Are you buying an investment or PPOR?
Find a solicitor. Then when you have a property then engage them. Unless you go to auction, then you need the solicitor to look at the contract before purchase.
SSSOOO much to do before actually buying (for the first one anyway, then it gets easier.Ask if seller is open to a quick settlement or extended settlement (choose the one YOU want).
Is rental lease expired (if one). What's their rent and what is market rent? When was the last rental increase. Check on Realestate.com to see what rents should be.
Rental demand in area? Although most selling agents don't know this info. Speak to the rental agent. Friends recently bought properties and now having difficulty renting them. You need to know this "before" you buy.
Strata fees (if applicable). Some can be mind boggling. Strata issues known? You'll need to do a search if you decide to purchase to check this anyway.
Ask to look at the contract. Even if you are not that savvy with contracts look at the special conditions (may be something that doesn't suit you to purchase) and land map (to see easements etc).
Can't think of any more at the moment.
Hi Wonderland, you talk about the end of a cycle but I don't see where you wish to buy. Different states are in different stages of "the cycle". Where are you considering?
Agree with getting knowledge. Many people jump in and buy without knowing about why they want to buy property.
If your income is going to be reduced possibly buy something that has a good yield to minimise out of pocket expenses.
Some people base it on what they borrowed (eg 80%). I think you are fooling yourself. If I only borrow 50% then all mine are CF+.
I base my figures on ALL costs.
Ie 100% purchase cost + Solicitors fees + stamp duty etc etc. Work out the interest rate on this for a year then add insurance, rates, strata (if any) etc. If this is less than the rent it's CF+. You can also take into account depreciation.
If you only wait to buy CF+ properties you may be waiting a long time. Also a property mightn't be CF+ when you buy it but by doing a reno etc can make it so. Sometimes you need to be creative.
Sometimes a property may not have a wonderful yield but can have instant equity. Sometimes you can't have both but sometimes you can get lucky.
WOW!! Looking good so far. I'd love to get your final figures. Start my reno in 5 weeks. Not as extensive as yours. New kitchen, bathroom, dividing a room in two. One new window, strip ALL wallpaper, paint etc etc.
Are you going to live in it? If YOU WANT a pool put one in. Our kids were never out of ours for 10+ years so it was value for money.
Otherwise I wouldn't put it in as a money making exercise.
Maybe the property is tenanted. ie there is a tenant that has a lease. Find out when the lease expires and what rent they are paying. If it is under market rent lower your price to compensate.
DANGER!! DANGER!!
Really I would be doing a lot of research first.
These guys don't go cold selling for no reason. Check out the area, what prices places are selling for, how long are they on the market? What rental vacancies are like etc. Is it a massive development? if so there will be hundreds of places all for rent at the same time.
These guys make it sound so attractive " Your house will be paid off for you" etc.
Work out the REAL costs of owning (rates, insurance, interest) minus rent. Can you afford it if not rented?Don't rush into anything. Please do your homework. There are lots of opportunities out there. Many have been burnt by getting suckered into making easy money. There is no such thing.
Sorry to sound negative I'd just hate you to believe everything they tell you. I can't stress it enough DO your homework. Speak to real estate agents in the area for a start.
