Forum Replies Created
Sam, it is a very bad mistake not to get a building and pest inspection done, development plans can always change, if your spending hundreds of thousands on a house $450-700 is a very small amount to pay to make sure the house isn't termite ridden or has serious structural damage and if you are purchasing a house with a rental agreement in place the moment it settles you're responsible for maintenance and must maintain the property until the tenants lease ends.
Also is does the current property manager work for the same agency that is selling the house? If so they have a massive invested interest in the purchase going through.
If the contract hasn't gone unconditional and isn't conditional on building & pest you can still get the inspections done, you won't be able to pull the contract if anything unexpected comes up but you could decide that you can't find suitable finance.
If you start reading a few of the well know property magazines out there you'll hear a lot of horror stories about not getting building & pest inspections done because of development plans.
Also on another note I would have asked for a copy of the current tenants ledger prior to it going unconditional to make sure they've been paying rent – I would have put this as a condition of the contract. Don't go on verbal information from real estate agents. If there are issues with them paying it doesn't mean you are going to pull the contract as you've mentioned you're purchasing for development but you could renegotiate a small amount off the price.
Also make sure you do all the other council checks & property searches to make sure you're going to be able to develop as planed.
Have you arranged a building & pest inspection??
Just did research re CGT haven't yet sold property so hadn't looked into it myself, was just going off what our tax accountant told us!! Thank you very much for this information, does make more sense having all as IO, I've just been putting it off as I liked seeing all the loans go down but it's not going to help up when we buy a PPOR.
Thanks again!
I only just read this post so you've probably already made your decisions.
One negotiating tip I've found very useful is renegotiating after the building and pest as at this stage you already have a contract so nothing to lose if they say no and you have a good basis to negotiate, you need to use a very good building inspector to help you with this though and it won't always be available depending on the property although we've found it available on both newer brink and older timber houses.
I don't think it's rude at all to ask for pre-settlement access especially if the tenants have moved out and it's vacant for a couple of weeks, I would talk to your solicitor and ask them to put it into the contract, the worst that can happen is they say no.
As far as negotiating more off the purchase price before you have a contract it just depends how happy you are with the numbers, if your happy for someone else to offer more and miss out although if it's already discounted then it's a good sign they want to sell and will discount further.
That's my advice anyway..
Hi Terry
Cheap accom will last as long as my partner is employed and if anything happened with that I'm sure my employer would help us out, then when we leave this town (12-24 months) we'll have accom for as long as we need at his parents place. The current plan is to stay with them until either we find our own place or if we decide to move into one of the properties we'll need to wait for the tenents to vacate. We may end up living in either property No3 or 4 or but not 100% as there are so many variables.
I lived in IP No1 from 2008 when it was purchased it until late 2010 so I'm still treating it as my PPOR for CGT purposes. My partner lived in IP No2 for 8 months when he purchased at the start of 2011 (8 months of renovating) so he's still treating it as his PPOR for CGT purposes, we have talked about selling it before 2018 or before will move into a new PPOR to avoid CGT and because having a property in this town isn't a long term strategy, especially when we've been so lucky for the value to go up in the last couple of years (thank you qld gov for announcing lifting the ban on uranium).
We might move into property No3 to renovate then move into property No4 before purchasing another one to renovate (especially if the dates lined up so we'd reduce any potential land tax).
Any more advice with the above info? Again.. really appreciate it Terry!!!
Hi Jason
It's going to be a crazy time for you getting all the ducks to line up given the time frames.
I'm pretty sure the 3k was more to do with the stamp duty concession (either because he was a first home buyer or maybe it was just that it was our PPOR as it turned into an investment the moment we moved out at 8 months. I'm pretty sure the trigger for them sending us the 3k bill was when our new tenets lodged bond with the ATO.
Make sure you paid for good up to date advice closer to when you move in as no doubt the rules will change a couple of times in the next year…
ps Our strategy is Buy & hold/ Buy, renovate & hold and goal is to have a very positively geared portfolio in 10 years hence paying P&I right now. Another reason behind paying P&I right now is we're on good money right but this will change when we move out of mining in a couple of years and/or go to living on one income (in maybe 2 years) so thinking do P&I while we can very comfortably afford it and go to IO when our salary change so our cash flow doesn't change much. Also worth mentioning the more money we have in savings/offset the more we end up spending on liabilities however if on the loan and less in savings/offset the better we seem to be with money…
Thanks Terry, I really appreciate your time taken to offer advice!
We rent (cheap accommodation that's subsidized by our employer) so don't have a PPOR therefore have our savings offset by the loan that's in the name of the person on the lowest tax bracket, that's one of the reasons I thought of having an transaction account for each property that's an offset for that specific property so we can switch when it makes sense tax wise.
I would really appreciate more info on getting a LOC, below is more info on my situation, which loan would we be best off getting a LOC for and can you only get a LOC if the LVR is more then 80%, is it correct that you get the LOC up to 80% LVR?
Property 1 – own with friend, tenets in common, split loan (I have my own loan number) Loan is 124k/ My share of recent val is 150k. – probable want to leave this one along so not to complicate things. Currently paying PI but am about to change this!
Property 2 – In my partners name, Loan 277k recent val 385k – this one is positively geared (mining town that we also live in) currently all our savings offset this one. Also currently pay PI & some more but are am about to change this too although being in a mining town what is your advice with just paying it town in case something was to go pear shaped?
Property 3 – Inner city Brisbane house Loan 526k Val 575k Want to pay PI until be bring it down to 80% LVR. (We will transfer savings to offset this one when it makes sense tax wise)
Property 4 – Bayside Brisbane house Loan 317k Val 370k Also want to pay PI until it's brought down to 80% LVR
Can you tell me what your thoughts are on bringing them all down to 80% LVR? My bank will reduce the interest the moment their at 80%.
Also why I've got your attention can you tell me your thoughts on prepaying interest, I'm currently at 46% tax bracket but likely will be at 40% next year, it's very unpredictable as more of my wage is commission that can change month to month, I need to make the a decision the next few days whether to pay more deposit on property No4 (it settles in a week) to avoid LMI or use that money to prepay interest on IP No1 & 3.
Again thank you so much for your time!!!!!
Claire
Hi Jason, quick comment not relating to your question but to your situation, unless something has changed you need to live in the property for 12 months to get the full concessions, 6 months for FHOG but 12 months for the stamp duty concession that you also get for being a first home buyer and/or PPOR.
My boyfriend had to pay back 3k to the government a couple of years ago because we moved out of his house (of which he got the FHOG) after only 8 months, we told everyone including the broker, accountant and solicitor what we were doing from the start and at no stage did ANYONE mention the 12 month stamp duty thing.
On the upside the 3k was tax deductable..
Less courses more work experience, try and get a part time job working for a real estate agent or even go around to all your local agency's and ask if you can do a few hours volunteering/work experience if they say no offer to mow lawns (on their rental property list)/do admin filing or reception for free in exchange for time with a real estate agent. Or get a part time admin/reception job with a financial planner.
Courses are ok but it'll never beat real experience and building relationships with industry professionals.
Good Luck!!
Thanks for the reply Scott, I love the colour coded cards, what a great idea!
Ps I really should have grammar checked before posting..
100% a good thing, the only tenants it's going to deter are people you’d never want renting your house! I put an offer on a IP last year that was across from a police station (I ended up being out bid) but still went through the whole thought process and talked to a number of friends who all agreed it’s only good thing.
I should add it may depend what state you buy in, we bought in QLD. A quick google and look at the Office of State Revenue gov web site will confirm you have to live in it for 1 year not 6 months. May be different in other states.
On a positive note the pro rate pay back amount if you leave before the year is up is tax deductible…
Can I ask what the cost difference is to the 'good' side of town?
I would never buy in the "bad" side of town as it may limit the capital growth long term and also limit better quality tenants. If the stats are that good why not spend more and buy in the 'good' side of town which should give you much better capital growth and where you may get better tenants and keep the tenants happier as they are in the good side of town.
I'm giving this advised based on my experience investing in the Mt Isa (which I also currently live in) where the population is dependent on one industry (mining) and there is a huge stigma in the 'bad' areas in town also know as the bronx so it may be very different to what you're talking about.
Quick note if you do buy a PPOR (although note the best option by the sounds of it) you have to live in the place for 12 months – 6 months for the first home buyers grant yes but if you leave before the 12 months you have to pay back the government the stamp duty concession pro rata. Learnt the hard way over a year ago and our mortgage broker and financial planner never brought it to our attention.
