Hi guys,

I’m 21 and just finished Uni, i’m on about $40k p.a. as well and have a $20k HECS debt. Now you are telling him that he can still buy a $300k house. I’m sorry, but that simply is not the case. I’m not a negative person but I will point out some interesting facts:

Stamp Duty on $300,000 approx $13,000. Now if you add in all mortgage insurance, setup costs etc.. then it will be way over $20,000! And it will take you a year and a half plus to save up that money if you are careful with your money.

Secondly, $300,000 with a 7.2% interest rate is a $540p/w on repayments alone! Not including water,electricity, council / land rates etc.. And $540 p/w is what your wage is for $40k minus 9%super, minus HECS etc. So firstly, no bank will lend him that much money. And even if you can rent it for $200 p/w take out management fees and you are still paying $360 p/w! Now take out rent money that peter is paying, food, car rego etc.. and there is no way he can afford to buy a house for $300,000! ! ! Even the tax man can’t help you that much. I know that because my parents are building a rental house for $302,000 and there repayments even with PAYG is $180 with INTEREST ONLY. So if you add P & I it would be $300++ p/w.

I agree that he is whinging a bit about how hard his life is, but to also be realistic there is no way he could afford to buy a house and rent somewhere else for atleast a couple of years.

And I know this because being a TOTAL TIGHTASS ON MY MONEY, and renting with a friend to save on rent (because my parents live interstate) in 11months I have just managed to save $19,000 ! That includes not drinking alcohol, not going out for tea, spending almost nothing but food, rent, car fuel & rego, and sport registration every 6 months.

Having said that, my plan is too move back with my parents in Adelaide at the end of 2007, hopefully with $35,000 in the bank and then buy some land and build a rental property on it to save on stamp duty, and increase my depreciation schedule. Also, I will be able to save money for a couple of years paying cheap rent at my parents place.

Anyways, Peter is you really want to go invest. Then be a tightass for a couple of years. Spoil yourself every couple of months, but don’t buy expensive things that you don’t need and don’t waste money on alcohol, drive instead and that way you don’t need a taxi fare home either!

Cheers
Paul[suave2]

Hi,

I’m a bit confused as well… Is the property rented out at the moment? Your not clear, because the tenant should have first contacted the landlord first not you (unless it is privately rented).

Anyway, it sounds structural to me and i’m a structural engineer and have done a few reports that sound very similar to this. Especially in regional Victoria where I live because the soil is mostly clays which makes for highly reactive sites.

Anyway, what normally happens is you contact your insurance company and they will contract two independent engineering companies to undertake a comprehesiveness report and site investigation as too what has caused the cracks in the walls. This generally will require an onsite meeting with the builder, the original design engineers, the building practitioner who certified the house during construction and obviously the engineer engaged by the insurance company to undertake the report. The engineer will then write a report, (making use of any old documents and calculations previously used for construction of the dwelling), highlighting their findings, the causes of the cracks in the wall, who is generally at fault (builder, engineer or geotechnical engineer) and what steps (if any) should be taken to fix the problem.

This process can take a couple of months for the insurance company to engage the engineers and get their findings back. The most important thing to do is make sure you document everything you see and what happened and TAKE PLENTY OF PHOTOS ! ! ! (Inc. dates of when everything happened)

Hope this helps.

Cheers
Paul[suave2]

I don’t know about wrap deals…. Yes, you are making money each month. But at the end of the day, you are making the property available to buy by the tenant. Doesn’t this kind of defeat the purpose of being CF+ if you have to sell the property in 3yrs time anyway if the tenant wants???? What makes a WRAP deal so good????

Cheers

Paul[suave2]

Hi guys,

Foundation you seem to be very ridiculing of Simon quite unnecessary. He is simply giving him his opinion based on his personal experience. And in an unpredictable market the only thing you can do is base your opinions or your experience and previous history.

If you have a different opinion than you can tell the person that but that doesn’t mean you need to ridicule someone else for trying to help. You attitude is what turns people off investing! And i’m not talking about being what you think as “realistic”, i’m talking about giving people the worst case scenerios! Their are many ways of reaching the same outcome, everyones situation is different.

I am in the same position of Marlow, I have saved up almost enough for a deposit ($20,000) and now I need to know what is my best course of action. I’m thinking of moving back with my parents and buying an IP. However, that would be in Adelaide and I would prefere to invest in Queensland somewhere. Is Queenslands stamp duty and general purchasing costs a lot lower than most other states?

Cheers,
Paul[suave2]

Hi,

can I ask, does multi-tenancy accomodations work in an area of Adelaide or is it work particularly well in just one of two suburbs? Also, does the property need to be 3BRs or more to do this?

Thanks
Paul[suave2]

Hi Ben,

Its not quite that easy to just quit a job and take up property investing. Especially if you plan on borrowing a lot of money, you need to be able to prove to the bank/lender that in the case that no-one is renting your properties you still need to be able to maintain the repayments. Which means you need to have a steady income from outside of your investment properties. Property investing is a long term thing, you need to work towards the final goal.

Also, unless you find cashflow positive properties (which you are unlikely to do in any cities), you will still have additional payments to make on top of the rent.

In addition, you need to consider landlord insurance, property management (up to 10% of rent p/w), etc..

I don’t mean to scare you, but one thing I have learnt is that you need to do lots of research, reading books, attending seminars, before you go out and buy a couple of investment properties.

Having said that, well done on taking the first step and make sure you stay enthusiastic about investing because that is very important when looking through properties, reading books, attending seminars etc… Set short and long term goals to keep youself enthusiastic!

Hope this helps!

Cheers
Paul [suave2]

Hi,

I noticed all these feasability studies are for large developments. Is their any similar design spreadsheets that can be used for single residential dwellings?

Also, how do people go about researching an area and identifying areas that are likely to have good capital growth? Is it just a matter of talking to real estate agants in the area, finding out how many rental properties they have on their books, working out their vacancy rates etc..??

Cheers
Paul [suave2]

“The choices we make, not the chances we take, determine our destiny”

Howdy,

I can help if your willing to wait 6-12months when I move back to Adelaide. Otherwise, i’m sorry but your out of luck?

Cheers[suave2]

hi,

Who should I talk to if I wanted to set up a trust for IP’s? Also, can anyone list the advantages of a trust (as opposed to in your name)? I’m sorry, but i’m not really sure how trusts work and how they are set up.

What would you do if you are buying a property, taking your FHOG, but intend on moving out in 12months and renting it out? Do you have to buy it in your name in this situation?

Thanks,
Paul[suave2]