Forum Replies Created
I use a very basic formula when calculating what I need from a property.
The ideal is 7.5% return or better. So to achieve this you need to get a ratio of 1.5/1 per property.
A house for $100k then needs $150/wk to hit the ratio or 7.5% return. This is very basic and does not include body corp fees or council rates but is a clean easy to remember ratio.
So $100k needs $150 rent
$110k needs $165 rent
$120k needs $180 rent and so forth.So if you hit this figure it usually covers the IP payments on the mortgage(around 7%) and the management rate (the 0.5% balance from the rent).
So if your body corp fees on $100k townhouse are $800/yr and your rates are $1300/yr, your upfront owning costs are $2100 for the first year. A depreciation schedule will achieve between $2-3k for a property like this, so lets add $2500 to the $2100 in costs and you have a tax deduction of $4600 in this first year.
Depending on your taxable rate you then determine your actual tax saving (say 30% or $1380) which then means that after tax this basic property costs you a whopping $720/yr to own.
Seems that from either Steves perspective or mine you are looking in the wrong places for the right kind of properties.
DD[buz2]
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!I have just had my cereal with a really nice soy milk and you do this to me, arghhhhhhhhh!!!!!![puke][puke][puke][fart][fart]
Where do people get these sick ideas??
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!We bought a house in Redbank Plains knowing it had a structural issue, there is movement due to black soil in the area. But getting a house on a 1/4 acre for $73k now worth $240k as is, im not too fussed. Rent is $195/wk.
Sometimes something wrong means money to you.
DD[headphone]
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!Congratulations on the chrissy bargain.
What work needs doing for the $135k price tag??
What suburb?
I love Ippy
DD[inlove]
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!Always happy to read good news Redwing.
Main thing I find in dealing with agents in WA id their inflexible “our way or the highway” aproach where a principle, rather than upgrade some computers and train staff(customer service training wouldnt hurt either), would prefer a new BM softtop for themselves.
The PM with the emails is admitting to poor staff retention so that would send warning bells through me and finally, get them to lease a digi camera and PC so its all 100% tax deductible for them and they actualy have something modern and professional.
Good Luck
DD[snitch]
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!Agents in WA think they are gods gift. When deregulation hit the west, the west unlike the rest of the country put their prices up thinking they offered superior service. Give me a break.
Due to the inflexible nature of the holier than thou agents there we have this year sold both of our investment properties and now hold nothing in this wonderful state due to these agents and their head in the sand approach.
As this problem is more and more brought to light, there will slowly be changes. Watch the paint drying, its faster!!
The worrying thing about WA agents is that they then have the gall to charge extra for everything. $66.00 for an initial inspection, $45.00 for a qtrly inspection, no mid month payments as their 1984 coal powered dos program would die if it tried, charge you an additional fee to draw a cheque mid month if you insist(no DD of course, thats too modern), and the icing on the cake is when they add an additional 2.5% on top of any maintainance invoice and they have arranged the tradesman.
WA for investing……..not this little black duck!!![thumbsdownanim
Another question, where in Qld are you getting the low rates for management?
DD[happy3]
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!Most buyers agents will offer a service based on their expertise. I only offer property help in areas where I have knowledge of the local area, infrastructure, upcoming job prospects, and government plans concerning the area and amenities.
Make sure your buyers agent handles SA properties. I lived in Glenelg and Henley Beach for a whopping 6 months in ’87. I dont think this would even come close to what you need.
As Redwing says be aware of their true standing and any associations. Most of all, happy hunting.
DD[rambo2]
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!One of our property managers is so proactive when soucing new tenants for us that she has their income and expenses and the amount they can afford worked out before even presenting them to us. We then have an easy yes or no as the agent is very thorough in background and previous rental checks too.
Pay the money. It may seem that that is your money evaporating into someone elses pocket which could cover your costs a bit better, but believe me, been there done that with managing ourselves and NEVER AGAIN!!!.
The agent then gets the midnight phone calls and not you. The SANF(sleep at night factor) is so worth it.
DD[sleepyanim]
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!Hi, DD here with the answer you are looking for (i hope). Yes it is possible to both work on nothing but properties. My wife and I started about 5 years ago with our first neg geared(yuk) investment in a unit in Blacktown NSW. Annette was pregnant and holding the tummy in so we could get the loan through. She was in HR at the time and I was the self employed computer consultant. So her stable “mainstream” job got us over the line in the first place. Then on seeing the actual figures after the first 6 months we went “oh poo”. We had hoped that just investing would be enough to show some return early on. What we had was costing us money every month and with the loss of Annette’s income imminent it sent warning bels through both of us.
We sold it 14 months after buying it and made $60k. This paid off the last of our home loan and we were free and clear. Annette was the motivated one going to seminars and reading all the books, I was the “aww, do we have to” partner.
Someone asked is the wife more astute when investing. I say NO!!, just more determined to change things(you included), and not willing to compromise on plans.
Late night feeding, she found a house at Regents Park for $95k. I asked if it had a roof or termites or how many inches to the industrial estate. We found no reference to any of that for the 4 bedroom brick veneer home. Then realised it was Regents Park QLD accidentally listed in the wrong state.
This was just before chrissy 2001 and the rest is history.
My main point is if the fiancee has the wedding in her sights, get involved and have a say in how elaborate or not it is. The more you save there the more you have for the first deposit after its a sweet memory and some piccies.
Spend time with her, learn to communicate at all levels first then as true partners you will both move forward and wonder what all the fuss was about.
This type of thread appears regularly and is always a great read. So many of us start from so many different places and end up here chatting online that its great we all have similar stories.
Helping others find property now as my full time work whilst my wife does all the paperwork and pays rates etc and manages the managers in her totally professional way, we have a good balance with 2 kids, a cat and a widescreen TV.
Keep up with it and there is always a smile and a chat in here for us all.
Happy Hunting
DD[rolleyesanim]
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!The meeting was relaxing and all attendees had a great time. A few chrissy drinks were had and some yummy nibbles too.
No January meeting as this is of course the silly season, so 14th Feb which is again a Tuesday is the first for 2006. Annuka Beach Resort, Firman Drive Coffs Harbour at 6.30pm.
See you all there.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!Dennis was keen but the wife had other ideas. Sadly he has cancelled for December and hope to see him sometime next year.
Meeting time hasnt changed so see you at Annuka for some well earned chrissy drinks.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!Wife and I settled on 2 in tassie on friday.
2 houses, $116,500 and $116,000 each. Rents are $165/wk each. This seems good enough for me for now.
SEQ units and town houses 9% growth last qtr in Logan area.
Now is a bit of consolidation for us too.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!With 12 attendees it wasnt the highest turnout, but it was a great meeting. We started by checking on new purchases and projects from the investors present and heard about what the banks need to see to get loans through easily from Dennis Mrljak, our guest speaker. from Smartline Home Loans.
Dennis went on to answer specific questions regarding refinacing options and using the FHOG. A lot of people were definitely smiling when they left the meeting, as new options and strategies were made clear with the new lending products and flexibility available.
The meeting ended with some number swapping and contacts to be chased up so everyone had a great and informative evening.
See you all next month on Tuesday the 8th November again at the Annuka Beach Resort Bar, Firman Drive, Diggers Beach, Coffs Harbour at 6.00 for a 6.30 start.
Happy hunting.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!Bought a house 3 years ago with a tenant that had been there 8 years. After 2 years of them being late with payment at least once a month, enough was enough and we got them out.
When I went to do a reno the week after they were out, I find obvious termite activity and quite a bit of damage. Lucky I got them out (the tenants) or I would never have known and they (the termites) would have feasted on my house until bulldozer time.
Catching when I did, getting it sprayed immediately and all of the old timber replaced downstairs cost me about $4k. The termites had just started on the joists for upstairs. That was the size of a grapefruit the amount of the timber beam they damaged. All the rest of the drama was all internal walls to a storage room downstairs, and an external entertainment area.
All im saying is that sometimes its better to go with the gut feeling and get the tenant out occasionally. I prefer $4k to $150k rebuild.
Just a thought
DDBuyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!Hi there, i take it you have had a professional depreciation schedule done on all of your investments?? If not thats first. Secondly we pay about $3k a year for the accountant in sydney and she is wonderful. Mr tax man hasnt seen any money for quite some time.
Get an accountant that is a property investor themselves and you should be right. After all, they want the best return for themseles so would be 110% up to date with everything.Good Luck
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!do you want positive cashflow or just a property somewhere?
$300k gets you 2 x 3 bedroom units in a complex in Medina with great capital potential and less out of your pocket now and in the future.
Houses have no body corp fees so they are cheaper $$ for $$ and get better appreciation over time due to land component.
What are you looking to achieve from investing and how will the $300k rate for long term.
Answer these and you will be better at guiding yourself than getting a “go here ” or “go there” from us. After all, its your investment.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!Always do your reno between tenants and as long as it was on the rent roll as available through your agent then all of your “repairs and maintainance” are just that. Some atre treated as immediate write offs like carpet or floating floors replacing carpet, where as tiling the floor instead of the original carpet is capital and claimable only at 2.5%/yr for 40 years.
As you have derived the income from a tenant before you reno its treated differently than if you took vacant posession when you buy and reno before a tenant. That is then all classed as capital expenditure and only claimable against your capital gains at sale time.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!DD………everyone taking my name in vein.
Blogs the thoughts are to actually do something not sit back and shout “the sky is falling!!!”.
I was involved with an investor group in Sydney a few years back and when I was invited to join, I sat back for the meeting where they all discussed this data or that report. Well they were head down and missing the opportunities right in front of them. The next meeting was the same and I bided my time.The third meeting I spoke up as it was the heat of the boom and my wife and I had bought several properties just before I started attending these meetings.
While they were praising each other for being able to share data, we had actually bought 6 houses and in the time it took to settle them all, in the peak of the boom, they had all increased by over $200k in value. When I told that to these lovely, well informed people the mood changed and within 2 months 3 of them had invested with my help, 4 others had gone out and bought an IP themselves, and 2 others since have repeated the effort and now own several properties.
They knew all they needed, they just needed an active example of someone actually getting off their fat bums and actually making profit to motivate them into action.
There are three people I still keep in touch with fairly regularly from this group and am pleased to call them friends.
“Just do it” for them was being kicked in the butt to do it. If they were in the dark then of course do your info gathering and fact finding to the point where you do feel comfortable, then for Gods sake DO SOMETHING!!!!!
I love the positive aspects of this thread and feel we need more doers and less “ba humbug” from the non motivated, overly cautious people suffering from analysis paralysis.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!Well the numbers were small but we had a great meting anyway.
HI All, only 5 attended the meeting tonight which on numbers was very disappointing. We had a good discussion about property investing paperwork and the importance of cashflow being crucial to healthy investing. Several members sent their appologies this afternoon and some others were away on business and unable to attend.There was a conference on at the Annuka Bay resort that noone bothered to let us know about so our normal seating area was occupied. We sat near the log heater and by chance I said hello to Keith who was up for the conference and was from Launceston, one of our hotspots at the moment.
He mentioned the new pulpmill in Georgetown 20 mins north of Launceston would have over 2000 construction jobs and 3-400 permanent jobs, with most workers commuting from Launceston. This with the 150 new Technical College placements each for Launceston and Burnie, and the Optus Sim card division moving to Launceston and bringing another 260 jobs means all looks well for low vacancies and higher prices in the future of this lovely town on the Tamar river.
Next meeting is Tuesday the 11th October, just after I return from 4 days in Tassie.
See more of you then I hope.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!I have one investor that never has less than a 3 month settlement on anything he buys, only puts the absolute minimum down as a deposit ($500)and then gets it valued just before settlement as he himself is a broker.
In a moving market expecially, he buys where he expects an immediate growth in value, by the time he gets his val done the property he is buying may have gone up enough to cover his deposit too.
Secondly long settlements are usually required if someone is selling their old home to buy the new one. Delays can be due to titles not being available and Bank A being slow as they dont want to loose a security to Bank B. They take tiehr time so sometimes there is a combination of reasons for a long settlement. Im sure other forumites will give yu more possible reasons. Hope this helps.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!
