The only concern would be if the reduction in property values is followed by a reduction in rents or a difficulty in finding a tenant (maybe no one wants to live in that area any more, hence the decrease in property value).

In this situation your position would obviously be affected (but not until your current lease expires), otherwise, as the others have said, a decrease in property values is a book reduction only and will only have an affect if/when you want to sell.

Clint

I’m not an expert, but I believe that Australian Self Managed Super Funds (SMSF’s) cannot “borrow” for the purposes of investing.

Therefore, you can’t buy an IP with the traditional deposit + loan arrangement – you have to go and buy the IP outright.

Hope you have enough money in your Super Fund for that one!

PS, could someone confirm the above for me. That is my understanding of the rules (my father has his own SMSF).
Are there any tricks around the “no borrowing” rule?

Regards,
Clint

Hi Chris,

the first thing to consider is that you own the property, not the tenant. Therefore, it is for you to decide whether or not you want to make any improvements over and above it’s current state.

If the tenant won’t live there without the improvements they request, they can always go elsewhere.

However, it is quite possible that the improvements that your tenant has suggested will improve the value of your property both in CG terms as well as attractiveness to other tenants – think of it as the market (in this case your tenant) giving you some free advice about your property.

How you go about negtiations with your tenant is up to you. I remember a point from Steve M’s seminar in July where the Landlord went to the tenant and asked if there is anything that they would like done in return for a small increase in rent (eg, A/C unit, new fence). Often they would not mind as it improved their standard of living for a relatively small weekly amount.

Regards,
Clint

With regards to renting it out now or waiting for the “right time”, try this exercise;

1) Wait 2 months now, rent it out in January and then keep re-leasing every January.
RESULT: A definite 2 months of no rent.

2) Rent it out right now and then try to re-lease it next November. If you can, great. If you can’t, well just keep trying until the January period again.
RESULT: Possible 2 months of no rent. Possible 0 months of no rent.

All other things being equal, I’d go for the “possibility” of losing 2 months of rent rather than “definitely” losing it.

I think what Derek was getting at originally (and what I was in agreement with) was that if you are doing things that force you to go without rent for a while, try not to miss the Jan/Feb commencement of uni, otherwise it might stay vacant for another 6 months or a year (or the only applicants will be those people who get turfed out of their current places and are looking for somewhere else…. not the ideal tenant!).

I haven’t missed anything here have I guys?

Clint

In the interests of getting back onto something resembling the topic….

I looked at CBD carspaces around 2000/2001 (but bought a house to live in instead).

At the time, CBD spaces were around $70k – $100k (asking price – not sure what the final sales were) and were renting for a bit over the $100/week mark from memory.

Some on the city fringes seemed to have a lower entry point at the time yet still receievd similar rental.

One of the potential risks with the current CBD parking spaces is any legislation that may reduce cars in the CBD. I’m not saying that it will happen but if it does, who will need a car space?

On the positive side, people may be more willing to drive to a place like Ultimo, park and then walk into the city [smiling]

Clint