Hey, fun, riddles, just discovered this.
Do you know this one already?

The one who makes it sells it
The one who buys it doesn’t use it
The one who uses it doesn’t know it.

What is it???

Yes rental income is calculated but I thought only about 80% of your rental income.

Why is the plural of mouse mice
and the plural of louse lice
but the plural of house not hice????

You should do a search on this forum about retirement villages and pensioner units, they have been discussed a few times in the past and you might find more useful info there.

ABout a year ago I was also looking into buying one of these units, or rather they came per 2 units under one title. SInce they are pretty small as you say, they coupled 2 of them for sale.

I decided not to go ahead with the purchase because they were so hard to finance, I think they were treated as a commercial loan and I’d be able to only borrow 60% of the value plus at a higher interest rate.

Yes it was CF+ but not hugely, just something like 6 or 7% yield.

There was heaps of depriciation, because these units were brand-new, something like $9000 a year but it included furniture package.

THe last lender I tried who went to value the place, came back to me saying they valued it about $30K under the asking price. (I guess because of all the furniture included which the bank won’t lend against).

About the occupancy rate, this was extremely high, almost 100% with a waiting list. Rents were paid by government and rental subsidy.
Management fees (on-site manager) etc were extremely high I thought.

Just be careful and if you go ahead, make sure to read the contract from cover to cover especially about things like management fees, because in the contract I read it said management fees go up every year either 3% or with the CPI increases, whichever was higher!
I’m not sure the aged pension actually goes up as much as CPI, so your income may start to lag.
Same with the laundry service and other costs. Things like that, look out for these traps.

Health also health of my family

Happiness, also of children&Husband

Education of children and wealth creation

Coincidentally, Steve’s tip today is:

TODAY’S TIP
Your deal’s in trouble if the difference between making and losing money is claiming a tax deduction for depreciation.

I think I’m less confused about it now, just have to re-read what Steve has to say about it in his book, and also do some more reading by Lomas on this topic. Different points of view are good ways to learn about something.
It is true, that if one looses his/her job, or just wants to retire, then they’ll loose all the benefits from depreciation.

CHan, this is the way we set it up, and have bought our 1st IP last year according to this plan.

We have more equity available for deposits and costs for another few IPs, but still looking for the next suitable IP (CF+ or neutral at worst).
I think it’s a good way because you can just keep topping up the LOC.

ALso, it’s handy to have this available to buy property straight-out of the LOC, so you don’t need a financial clause in contract for sale and don’t have to wait for financial approval.
THis may, hopefully, give us a good negotiating point.
THen refinance the IP later and top up LOC again.
Now all we have to do is find another IP![rolleyesanim]

Thanks Rubba, I get it so far, and this sounds good. So, I understand that by depreciating you can end up in a lower tax bracket.OK

But if I assume that now, because of this depreciation, I have arrived in the lowest tax bracket, then for my next purchase there won’t be anything left to depreciate (because I can’t get into a lower bracket) so there’s no use to even get a QS out. Is this right?

Until, of course, in time, this benefit wears off as the properties that you are depreciating age. And you’ll end up in a higher bracket again.

THen you’ll be ready to start over again with another newish property so you can use depreciation again to place back into the lower tax bracket.
Is this the way it works? I just want to make sure I understand correctly.[biggrin]

You’re right Blackjack[smiling], I also feel that compared to others, ‘me know nothing’ but have really found this forum is here to help everyone from beginner to experienced (lucky for me).
This is what I like, you can ask anything and they understand, because one day (a long time ago or not so long ago) they were a beginner, too.
So I give [thumbsup2] to this site and it’s fantastic that we can ask anything we don’t ‘get’.

[bawl]
We will have to keep guessing, people!
No more hints?