Andrew,

The disadvantage of buying a new property, is similar to buy a new car. In one year, it is no longer a new car. Imagine you paid $300,000 for a new place. You paid this much because it was brand new. In 5 years, although property has gone up, you are no longer selling a brand new house, so have lost value in a way.

The advantage is, the tax advantages. (Don’t quote me on these figures, but here goes)… on a brand new property, you can claim 5% of the value of the building as a loss in income due to depressiation. This is claimed against any income you earn, and can be claimed for the first 20 years. Also, get a quantity surveyor to assess your fixtures and fittings (light fittings, door handles, curtains etc), and you can write off the depreciation of these (all at different rates) for up to 10 years too.

Dan.

If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.

nm,

First of all, ausdmx came up with a great point. buy renos cheap, fix them, borrow against the new value.

Second, so did richmond, although it was a little hard to follow (sorry richmond[]). I find it easiest explained in numbers.

Say you bought your 5 IPs worth $200,000 each. That is $1mil worth of property. Say in one year they went up 5%, that is $50,000 worth of increased equity. You can then use this equity for another deposit or 2. Sure you have to wait a year, but you got 2 more properties, and this will grow exponentially.

Hope that made sense.

(Sorry again Richmond, didn’t mean to be rude[])

Dan.

If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.

Here is a little trick to get some tax free money (and it is legal). Rather than just owning your property free and clear and letting the taxman get a chunk, why not re-mortgage. Using your example, say you pull out another $80,000 cash. This cash is tax free, because you have not sold. Now the rent you are collecting is taxable, but is written off against the interest you are paying on the loan. So now you just got $80k tax free legally.

Dan.

If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.

Cameron,

Not sure if you are wanting to buy/fix/sell or rent out, but if you intend to flick it straight on, here is a trick that will increase your profit. See if you can talk the old man into an extended settlement. Make sure on the contract of purchase you put the term name or nominee (this means you can assign the contract to someone else at the last minute), and get permission to access and fix the property in the time before settlement. Fix the property up, then on sell it before you have bought it. The reason for this is that you won’t pay any stamp duty. Even if you have to offer the old man half of what the stamp duty would have been to clench it, he gets more and you get more… a win/win.

Worth a thought.

Dan.

If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.

showus,

The sooner you start, the sooner you can retire [] it’s a good thing to take an interest in. First of all… my story. Before i tell you, I will say that i got a bit lucky, and in hindsight i would do it different (even though it went/is going well).

I am currently in the UK, have been for about a year, and was in NZ before that. Bought my property before I left Oz (will come back in about a year). I was interested in fixeruppers, but was leaving the country, so this was a problem. What i did was go halves with someone that had a good income, but no deposit. I put up most of the deposit, he lives in the house for cheap rent and is doing the renos. He does not charge me labor, and pays for all materials till he has made up the deposit. It is a win/win.

Why was I lucky. I bought in Rydalmere (Sydney) just under 2 years ago for $300,000, it is now worth roughly $430,000 and rising steadily.

Why would I not do the same? I took a long term position in a -ve cash flow. fixeruppers are good if you fix them then sell them for a quick buck, but the disadvantage of keeping a -ve gear property, is you can only afford to do so many till you have no more money. From now on I will only look for +ve geared properties, then I can get as many as i can lay my hands on.

Your situation. Since you have no money, and being a student i assume not alot of income, it will be a bit more difficult for you. The only way I can think of for you to make money in realestate at this stage is sourcing great deals. 2 choices… come up with about $5000 somehow. Through loads of hard work and due dilligence, find the deal of the decade, and put an option to buy it. (This will take alot of time to find the bargin). You can then either 1. sell the option (and you don’t have to pay stamp duty) or 2. Find a partner for the deal. If the deal is good enough and there is money in it, you should be able to find a partner.

Happy hunting, hope i helped.

Dan.

If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.

here here… please get rid of him.

Dan.

If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.

I agree with Benny. Certain people have racked up around 126 posts (not naming and names) without actually adding anything to any conversation, while usually being a pain in the rear at the same time.

Dan.

If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.

Another little trick that not many people use… say you fix your interest rate at 6.3% for 5 years, then in 6 months, the rate hasn’t changed, you can always fix it for another 5 years from then. You can do this as often as you like, but only at or above the initial rate fix. The advantage being, you know it is fixed for longer.

Dan.

If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.

Keep us posted as to how you get along… i would love to check it out.

Dan.

If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.

Hi all,

I think this new forum is a great idea… something that i think might add to it furthur though: If you find a great deal you would love to be involved in, but don’t have the resources, use this new forum to find a partner. For example, with Sooshie’s post, she might have said “I found the deal, and will put up the equity, but i need someone else who has the time for the renos”.

Could be a great comming together of complimentary skills and resources. What does everyone think?

Dan.

If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.