Forum Replies Created
Hi Twobob,
I have used PIA but found the projections beyond the first couple of years a little meaningless as they are straight line projections based on annualised rates of growth etc.
I have another (copyrighted and not commercially available) program which projects cashflows (after tax) in the first two years – I find this more than sufficient for my purposes.
Like Terry I use a simple excel spreadsheet as a book-keeping tool. This keeps things summarised for my accountant at the end of the financial year.
Of critical importance to a lender is the amount of security you hold and your capacity to service the debt levels – in essence they only want to know that their money is safe – they are not generally worried about the deal you are doing.
To do this a lender will get valuations done on any related assets, check your income through tax returns (if self employed) or payslips (if employee), get a rental appraisal done and check your account status.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Hi Terry,
People should be increasing their rents at the moment. The Perth rental market is firming but landlords do need to take a proactive position as most PMs are happy to let the status quo remain.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Hi Abby,
Owning outright an asset such as you do puts you in the enviable position of having a number of options available to you.
1. Remain in the place and use the equity on as deposits on other properties.
2. Use this place as a rental, rent somewhere else and use the equity as per suggestion one.
3. Use this place as a rental, buy somewhere else and use the equity remaining as deposits per suggestion one.
4. Sell and realise your gains and move onto something else – either other rentals or a new PPOR.Ultimately it comes down to what do you want to do in the short and long term and how can this property best help you to achieve that aim.
Just realise that buying a new PPOR will mean that you are taking on a new non-deductible loan (interest fee loans aside) and is probably not the best suggestion – subject to your family goals.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Hi Alex,
Most lenders do not like these and will only lend to around 70%. As such they ‘suck’ more of your equity/cash than you would otherwise need in a standard property.
Because of this many investors will steer clear of them and resales (and consequentially growth) becomes somewhat problematic.
Also recommend you do a search as this topic comes up quite frequently. Top left side under ‘forum boards’ button.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
I have a 3 bed unit in Rockingham (over the road from Rockingham City Shopping Centre) and it has increase in value by 50% in the last 18 months.
Just waiting for my tenant to move out so we can repaint etc and add considerably to the current rental return.
As for expected growth in the next 12 months – who knows but I would suggest that if you adopted a longer time frame then you would be well placed to realise the gains into the future.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Originally posted by gazzasliquor:Yes, property in question bought prior to 1985. Will take all sugestions on board…now to find the properties….cheers.
Hi Gazza,
This is critical – this particular property is CGT free while it remains in your hands. To sell it now is, in my opinion, shortsighted.
By far and away you are considerably better off hanging onto it and using the equity for something else.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Originally posted by gazzasliquor:This property is also Capital Gains Free.
Hi Gaz,
Why is this property CGT free?
If it was bought before 1985 then hang onto it forever and use any equity as ‘deposits’ for subsequent purchases.
If on the other hand it was a PPOR it will only be partially CGT free as you also have another PPOR – if I read correctly.
But back to teh key question ‘should I sell’ definately not. If you do want to invest elsewhere I would hang onto Sydney IP – it is paying for itself, set up an appropriate account structure and use the equity elsewhere. Sell it now and you’ll kick yourself big time in 10 years time.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Hi Michael,
You will need Landlords insurance which covers you for many ‘tenant’ issues. This should include contents coverage for the fixtures and fittings in your property.
If the property is free standing you will also need suitable building insurance. If the property is strata titled then the body corporate group will buy the building insurance on your behalf.
Above all ensure you insure yourself against third party claims – tenants tripping on things that are not there and trying to take you to the cleaners so they can retire on their misfortune.
Most large insurance companies/groups will have the required policies. Just shop around a little or get an insurance broker onto the job.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Hi Obi,
I have no reason to doubt your stats. I am not interested in the inner city market so I don’t follow it that closely.
From time to time people have come here and said ‘I have bought a Melbourne Apartment – should I sell’. The consensus of most comments in response is along the lines of this article ‘They will have their day and if you can hang in for the long haul they will be good investments’ – it seems the corner may be turned sooner than many people thought if BIS prediction and research is on the mark.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Hi all,
Not an apartment investor myself but thought this little article from today’s ‘Age’ may attract some interest.
http://www.theage.com.au/news/Business/Apartment-market-on-the-way-up/2005/01/09/1105205977323.html
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Hi Ben,
Understand the thinking.
A couple of points that you will need to take onboard.
The ATO is not obliged to approve your application for 15.15 variation to your PAYG tax. They get a little narky if you do complete a 15.15 and then owe them tax at the end of the financial year and will consider not approving any subsequent applications.
This is not an issue if you do not need the reduced taxation to help you hold your properties but if you do you can create a problem down the track.
I prefer to have a little something up my sleeve so that I push the envelope during the financial year and also still get a return for using as a lump sum payment on PPOR mortgage at the end of the year. This, and an offset account structure, is helping us to make significant inroads into our mortgage.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
It comes down to return on your investment dollars.
Will you get a better percentage return by selling block without house on it or by building and selling/holding with a house on it?
Having said all of that the information given so far is somewhat limited so the responses will be a little superficial too.
For example what are you investment plans, have you the financial capacity to borrow (and support the extra borrowings) for additional property and/or to build something on this block of land. How long have you had the block andthe expected ‘profit’ margin and whether or not more growth is expected.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Hi Brownegaz,
As a general rule of thimb – you won’t find an off the shelf cashflow positive property in Perth at the moment.
You will either need to look further afield or look for something that can be turned into a 10% return.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Hi Dazzling,
The critical issue for us was how long to retirement and how much to live on when we chose to retire and would we have enough – answer probably yes, but…..
Then bought one property and let matters take their coourse, wife got used to owning a property and could see what it was doing for us. Then another, then another, then another and so on.
For my wife it was a series of small steps and not overloading her with ‘we need a large portfolio’ type message.
In the interim we also budget and review the budget very 6 months so that we can both see the progress we are making. Comments like ‘our net wealth increased by X% this half year, this property has gone up in value by etc’ as we go along the way.
Key message start small – messages like we can own 100+ properties may blow her out of the water.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Hi Simon,
RPDate have a suburb snapshot that gives a lot of the information you require. It costs ~$10 per suburb and is readily available (as is a sample) from realestate.com.au.
domain.com.au also has a free suburb snapshot that covers much of the same information.
Then there are the relevant city/shire council websites, state real estate association websites, organisations such as PRD, etc also have some information that may be of use to you.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Hi Ryan,
I am one for diversifying. Prefer to have my properties spread in proven higher growth areas so that I can enjoy the different cycles as they occur.
But having said that – I am aware some people do prefer to focus their energies into one basket. If this is you just make sure the basket is a good one and doesn’t turn into a basket case.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
HI Mulan,
Recommend you do a search of the forum as the ‘retirement village’ question has come up a few times before.
The search facility is available under the ‘forum boards’ button top left side of the screen.
In a nutshell many lenders will not go to 80% lends – most around 70%. Hence they are a niche market and their growth prospects doubtful.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Why do it yourself?
I prefer to keep an arm’s length distance from my tenants. Any issues are solved by the PM intermediary.
Having them next door leaves yourself open to all sorts of ‘abuse’ – knock on the door at midnight – hot water is kaput, please fix – not for me.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
Stick to the big ticket items – airconditioning and/or heating as appropriate, security and storage.
Derek
derekjones1@bigpond.comProperty Investment Support Available.
