Forum Replies Created
You might also find that a vendor won’t want structural alterations done before you pay. After all if you start, don’t finish and don’t complete your purchase, they’re between a rock and a hard place
Seems like your accountant might not have caught up with the changes that take efect from 1st Jan 2005
I’d question why you want someone who is negotiable on commission rates. How hard are they going to try for you. Is she negotiable because she thinks you might sell at the lower price.
Maybe you should spend a few hundred and get a valuation done so whatever agent you use you’ve got the facts.
Companies do not get the same CGT concessions as people. Suggest your property purchases should be in the company as trustee for a family trust.
Have the valuer and builder seen the correct property? I heard of one scam where an owner of a flat who was wanting to refinance borrowed another flat in the same building, changed the number on the door and got the valuer to inspect that flat.
Personally I like to get a feel for the neighbourhood etc. A house might be “good value” and built well but there might be difficulties in tenanting it or later resale if it’s out of place in its area.
Maybe you should select one area, get a few properties and then fly out and check them out. At least you’d reduce the number to be valued/inspected or might be able to identify some undervalue or other potential. Also you can do a number of minor things when you inspect eg check all windows work,doors shut properly, etc which might mean you save an inspection fee on something that looks good on paper but isn’t as good as the ad.
Also you can interview some potential managing agents etc.
You might save some money with self-management, but the management fee is tax deductible, and you risk issues such as longer vacancies between tenants, selection of tenants, getting tradespeople to do repairs promptly.
1.Does an agent in a neighbouring town offer property management to the town your property is in (can the agent suggest someone?)
2. Can you do a long term lease eg with police department, teaching or health which will minimise your risk with tenant selection
3. Employ someone (possibly under the Agent’s legislation in that state they will need to be your employee rather than an independent contractor)
4. Try the local chamber of commerce or progress association.I’ve been considering an investment in another town where there is no managing agent. These are the types of solutions I’m thinking of. I did think to ask my managing agent in another town whether they could vet the tenants, check references etc for a fee as they would have access to credit/tenants checks I wouldn’t have.
The other thing is it could be harder to sell as outside investors could be less interested
If your purpose is to buy using “pre-tax dollars”, the company is still going to have had to pay tax on its profits unless it has losses that it is carrying forward. Might be better to look at maximising contribution from company to a self managed super fund and then using the funds in the SMSF subject to the various requirements for purchasing assets for a SMSF
What’s the expected life of the mine? How easy is it for other investors to build in these towns? How easy would it be to resell if you needed to?
just to ask whether to invest in +ve or -ve cashflow properties is to miss the point. The issue seems to me to be to answer the question what are you trying to achieve by investment.
In my case I want to invest so that I can achieve a certain taxable income by a specific time.
Then look at what you’re comfortable with as an investor. Do you want or have the time and other resources to do things that might increase the value of the property or its income eg development, rezoning, renovation or do you want to buy a place where there are minimal worries or lesser risks.
I’ve taken a choice with one investment to buy something that was a problem to the vendor. Since I did that I’ve increased the return substantially, but it’s because of doing additional things. I’m considering another investment which would need to be managed by me from a distance. Gross yield 11%. But there are risks. Is the return sufficient to compensate me for these risks? or can I add value somehow? Can I minimise any of the risks?
My answers are not necessarily going to be yours. My answers today for myself might be different one or two years down the track if I look at a similar investment then
There is a somersoft thread on investing in the US in the past couple of weeks by quiggles. Very detailed. Sets out some issues that we might not have thought of re maintenance of buildings particularly roofs
They could, but unless they’re doing it regularly there are a couple of different steps in the process albeit to end up with the same result.
You could try the Law Society and see if they know of any or use a solicitor up close to the Qld border who probably could be familiar with conveyancing in both states.
Just giving gross yields and COC returns does not give much to assist you with.
Do either of the properties thata re negative have potential for capital growth? What CG do you consider they will have?
If you sell one house are you going to be in a position to buy more than one and if so will the total return you get better that of the house you sell?
Ultimately the decision is yours. The “right” answer will vary for most of us depending on our own circumstances.
Are there things you can do to increase the value of any of the properties?
I’ve spent part of the weekend number crunching to look at expanding my portfolio:
a.do I keep X and refinance it to acquire Y
b. do I keep X and develop it
c. do I sell X;
d. do I look for a partner
and various combinationsSo far I’ve got about 12 permutations, say 8 of which are feasible, and a couple need more information.
Bear in mind that you’re going to have selling costs.
I’ve seen two properties recently where prices have been reduced by about 15% from their listings 12 months ago. One was grossing 10% 12 months ago, so will now gross 11.5%.
I’ve seen one property that I looked at 12 months ago sell at auction for 65% of the asking price then. 24% gross return on auction price. I was in the middle of settling something else so I wasn’t in a position to bid. I know Jenman might not be too popular with some, but I’ve seen a lot of auction agents cost their clients. With this auction they used an agent over 100 km away, short auction advertising period, only open for inspection twice before the auction from memory on weekdays.
I was over in Broken Hill a couple of weeks ago. Seems to be a bit of uncertainty with the NSW Gov’t changes to Area Health Services. Far West which was based in Broken Hill has become part of Greater Western which will be based in Dubbo. Noone’s certain of what it will mean in job losses yet.
If you don’t want to manage the first property yourself is there a managing agent available? Can be a lot of hassles in self management. Have you checked yourself if rent increases are possible or are you just going on the vendor or his agent. Furnished can be good but they can be a hassle too.
I’d suggest that you’re best to instruct a solicitor in the state or territory the property is in and probably one close to the property eg if in NSW the property might come within the Agricultural Tenancies Act. In this case trying to save a few $ might become very expensive
Can you look at increasing your income from the farm eg if you’re close to a town is there demand from people for room for their horses which might mean you need a few small paddocks with water and shelter
Speak to your accountant re the Capital Gains Tax issues.
From the interest/rent point of view you can’t rent from yourself unless there another entity like a trust involved. Why don’t you sell your former PPOR (which you want to anyway), pay off the loan on the property you are living in, then borrow against that property for your new IP. Since the purpose of the borrowing is to make income from the new IP, the interest will be deductible even though it is secured against your PPOR
If there is a caveat on the property the purchaser will not settle unless a withdrawal of caveat is handed over.
Your mother needs to get legal advice. If your father has lodged a caveat and does not have a “caveatable interest” the solicitor can lodge with the LTO (at least in nSW) under Section 74J Real Property Act an aplication by the registered proprietor to remove the caveat unless the caveator(your father) does certain things within 21 days.
