Forum Replies Created
Hi Lobby,
Not a silly question at all, as there are numerous ways to make money through realestate, and everyone has their own opinion of what works best for them.
In terms of capital growth, you may not need to sell in order to access your cash. You can redraw any equity you have built up, and use that to fund your lifestyle. This strategy only works well when you have a large portfolio of strong growth properties.
For a great description of this “Living Off Equity” strategy, check out Michael Yardney’s new book. He describes it as kind of a very large credit card that pays itself off through growth.Best wishes, whichever path you choose to take.
Chris
Its your property, do whats best for you.
I know good tenants can be hard to find, but sometimes you just have to look after number one.
Serve the vacation notice, do the reno, and lock in your increased equity when you inevitably sell. Sounds pretty straight forward, and it seems from your post like your leaning that way, maybe you just need to hear it from someone else??
Best wishes
Chris
Might as well keep this one going…
Me and partner each have a car, both paid for outright.
Hers: 1992 Hyundai Excel 5 door hatchback bought for 2K. Complete with 12inch rims and bonnet dents from when the latch let go on the highway at 80kmh!! Had to replace the windshield after that one as well…
Me: 1993 VR Commodore Wagon that I thought was cool when I was 18 and back in uni. Spent my entire summer earnings on it one year, 8K including 17inch rims and various other teenage mods. Worth maybe 5K now, not even worth selling. I’ll have to keep driving it till Im 30.
I am a car person though, and dream of modifying my own XR6Turbo, oneday. Paid for outright of course[suave3]
Must be an overseas loan? Some Asian country’s banks have incredibly low interest rates (by our standards).
Or else a typo (7.5%)???
Wow, I’d forgotten I posted this last year!!
Well, actually a lot has changed since this was first posted Lobby.
My partner and I did end up buying a PPOR (technically anyway), but it was bought much more with investment in mind.We ended up getting a place for 368K with a loan of 350 (95% LVR). We saved up 34K oursleves but stamp duty and fees eat most of that up[confused2]
Anyway, the house is 3×2, on a very small proportion of a 947sqm block. Not in the best nick, but very liveable for us. The land is zoned R40, and can easily be developed with another 2 townhouse / villas. Either that, or 10K on subdivision costs yields a block worth conservatively 240K. We plan do do this, and refinance the extra equity to buy again. Same style property, but a bit closer to where we want to end up living.
Servicability on the loan is no problem, even with the recent rate rise. We are DINKS, so no dependants to worry about and two salaries paying into a LOC about $700 month extra repayments.
We are pretty happy with the decision we made, if you want to know anything else just post again or PM me.
Best wishes
Chris
Hi Daniel,
Quite a recent one here. Perths booming CG has pretty much negated it, but it was a mistake nonetheless.
Trying to rush through a 18 day settlement with virtually no contacts (thats 18 days TOTAL, not working days). The vendor had other offers and we thought we had to offer that to make ours more attractive. In the end, we offered something we couldn’t deliver and paid over $1500 worth of penalty interest on the delayed settlement.We were pretty pissed at the time, but the property has gone up by 10 times those penalties in the last 9 months. We are now just happy we secured the property, but in a period of flat growth that penalty interest could have been a deal breaker.
Best wishes
Chris
Hi Arthur,
The R-Code technically refers to how many dwellings can be placed on a 1.00 acre area. ie. R-40 = 40 houses per acre, or about 250sqm per lot. That means if you have a 900ish sqm lot, you “could” put a maximum of 4 villas/townhouses on the land.
As purplekiss said however, this is the maximum, and subject to other conditions by the local government and planning commision. Conditions can include things such as minimum frontage/setbacks, number of car parking spaces, minimum outdoor entertainment area (approx 20m for R-40), access and several others.
Best thing to do would be contact the local government and ask for a copy of their residential design codes, and the relevent state planning commission for a copy of their subdivsion guidelines.Best wishes
Chris
Hi Lyndon,
I can empathise with your situation, I am currently living/developing about 75min away from my work and its a bit annoying to say the least. Especially with petrol prices at the moment!! [crying]
The thing is, its my work that is actually in an inconvenient location (Kwinana for those WA folks), rather than the property which is in a really strong “north of river” CG suburb.So, is it work that is far away from the property, or the property is far away from work? Your frame of reference will help in your decision as to whether or not you sell the property or retain and refinance.
This is on top of the associated economical analysis (ie CGT on the sale 100K x (1-Tax Rate), and other closing costs).
Personally, I would (and am) retain and refinance. Have a read of Michael Yardley’s new book if you get the chance, its a very interesting read.Best wishes
Chris
Hi Tim,
Thanx for your insights. We have just settled on a house that came with a monitored alarm system. We paid absolutley no extra on the property deal for this (ie the previous owners would have added no value through this feature). However, now my partner and I have to decide whether or not to maintain the contract with the security company who monitors the alarm.
The alarm system and installation, are fully paid for already it is just the monitoring that is on a month by month basis. We have organised home insurance based on the fact that we have a monitored alarm system and they gave us a 20% discount on our premiums (approx $180/yr). So after taking this discount into account, it only costs us a few dollars a month to keep the system monitored.
In your opinion, is it worthwhile keeping it this way, or will it be too much of a hassle? We have only been living in the house 3 weeks, and the suburb has a fairly high burglary rate.
Your experienced thoughts are welcomed.Chris
Thanks for that flatout,
That was very inspiring. Seriously. In terms of goal setting and seeing a long term plan come to fruition.
I can only hope that our plans flows as smoothly as yours did.
We (my partner and I) are planning on having a family in about 4yrs time, and we have agreed for this to happen, we wish to replace her income with passive income from investments. We have only taken the first few footsteps along the path, and we know there will be lots of potholes along they way (like this new rate rise [comp]! Oh well, we budheted for it anyway…), but we can take some inspiration from your success.Thanks and best wishes
Thanks Derek,
It will be good to hear how you go. Please PM me if they are the real deal and I will send my business their way.
Im still actively looking for a clued on accountant![specs]
I was watching this post with interest hoping to see some more replies.
Surely there must be more investors in WA that are at least resonably happy with their accountants.
I kind of “inherited” mine from my parents, and he is much more interested in reducing my taxable income than discussing PI. Not that there is anything wrong with this, it would just be good to have a more balanced and informed opinion on the property side of things.So, any property-focused accountants out West on this forum??
Hi jac dow,
This is exactly how me and my partner were able to secure a loan for our first property. We saved about 30K but most of that was eaten up in nasty stamp duty. We ended up with a 5% deposit (95% LVR) with 20% security over one of my parents’ places, which gets released when we reach 20% equity as Terry mentioned.
Servicabilty on the loan is no problem at all, and we are paying off approx $600/month extra repayments to try and release the guarantee as quickly as possible. Perths CG also helps!Good luck,
Chris
Hi Wallace,
We may not be up to the level of Still in School, but my partner and I are both in our early 20’s.
In terms of investing, despite the fact that both of us had a very keen desire to invest (particularly in property, but we have a modest share portfolio as well) at an early age, the best thing we decided to do IMHO was invest in ourselves first.
My partner completed a 3yr uni degree straight out of school (paid for upfront by working part-time=no HECS debt), while I recently completed a 4yr degree (only small debt left on that one). We both came out of uni into a great job market on very attractive salaries and continued to live like poor students for a yr while saving bulk. All our mates were still failing around at uni having a good time, so it was no big issue for us to bring a 4L wine cask to dinner[laughing] instead of diverting from the budget.We were able to save quite quickly for a 1st home deposit (helped by 7K FHBG, and a guarantee from Dad on a 95%LVR). Settled on the property late last year – 947sqm zoned R40, 10km from CBD.
Just working really hard at paying as much cash as we can into the offset account now so we can subdivide and develop in 8 months. We figured it was best to at least jump on the Perth elevator while its still got a few more floors to up!! Though our short term investment strategy doesnt rely on CG at all, 10%pa would be a nice bonus.Wow, that was pretty long winded. Hope to hear some other exciting semi-life stories in return!!
Best Wishes
Chris
Haha,
I would really like to bid for a block in Wellard, but I have a few other things on my plate (read: budget) atm [biggrin]Definitely great CG prospects though!
Good luck Aly
Hi Aly,
kp is right about the zoning of the Lancelin block, check with the Local Government about the R-Code and whether any rezoning is planned. If you can subdivide into 2 or more blocks, that would be the one to keep and develop.
Otherwise, I would say hang onto the Wellard block. This area is still booming, even more so than the greater Perth region. The new train station is almost complete (though you never know with all these delays!!), and it is definitely feasible for a good sized block to go past 200K. Most other urban areas within 10kms of CBD are already well and truly there (have a look at doubleview/innaloo, tuart hill, willagee, lathlain etc). These are all still relativley cheap suburbs for houses (at or near median for Perth) yet most green title blocks 300sqm+ are 220K+.Ill buy your Wellard block for 160K as well please[exhappy]
Hi Redwing,
Thanks for the encouragement!
Yes we still pay CGT on the back block, back it is discounted 50% after 12 months from purchase of INITIAL un-subdivided block, and CGT payable is calculated on proportional value of each block.
It took me a little while to get my head around that ATO rule.Medium term plans are to keep the front house and rent out while we do the same thing again on another block. Thats the plan anyway.
Hi Andy,
Sorry I cant help you, but I would also be very interested in hearing if anyone has had a good experience with help setting up trusts in Perth?You just snuck your reply in before me Daz.
I completely agree with what you said!!
Hi,
I generally agree with the above mentioned points. However, I feel you may be missing a creative compromise.
The family home can also be an investment. If you do your research you may find that it is not a black or white decision, and the PPOR can be treated by you as an investment also.
My partner and I went through this decision process only 6 months ago. We decided to buy a home to live in, in an area where we normally wouldn’t consider living in, because it had large subdividable blocks. We plan to duplex the back of the lot while we live in the front house for 12 months, then move and rent/sell (depending on the market). As well as having attractive CGT implications, you can sell off the vacant back lot and repay a large chunk of your loan (fast equity) or use that cash to fund IPs.
If you can make a lifestyle sacrifice by living in a slighlty less attractive area for 12 months, then you can move towards having the benefits of both IP and PPOR rolled into one.Sorry for the long reply, just something else to think about [evo]
