Forum Replies Created
Hi Kerri,
Check this post out – it may be of assistance.
https://www.propertyinvesting.com/forum/topic/12167.html
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Your distinct personality, The White Knight, might be found in most of the thriving kingdoms of the time. Don Quixote was a White Knight as was Joan of Arc, the Lone Ranger and Crusader Rabbit. As a White Knight you expect nothing in return for your good deeds. You are one of the true “Givers” of the world. You are the anonymous philanthropist who shares your wealth, your time and your life with others. To give, is its own reward and as a White Knight you seek no other. On the positive side you are merciful, sympathetic, helpful, giving and heroic. On the negative side you may be impulsively decisive, sentimental and misdirected. Interestingly, your preference is just as applicable in today’s corporate kingdoms.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Hi Rob,
Haven’t looked at this thread for ‘yonks’ as I have no interest in options and just because I am registered as being ‘here’ it doesn’t necessarily mean that I am here reading.
Of course there is nothing to stop individuals from editing their own posts and thus preventing a he said type discussion.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Hi all,
Just spent some of my time deleting inappropriate comments.
Count to 10 before you post.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Originally posted by wendyb:[suave3]My husband and myself are looking at a L/O with my Daughter as Landlord. (due to us being newly discharged Bankruptcies, and needing to prove out credit rating, also daughter being able to help us to gain a new start). We will lease from her for 2yrs, then endeavour to cash her out, so she can carry on with her PIing. The property we are looking at is on the SW coast of WA and is valued at $245K. My daughter is paying off (P&I) a block at Exmouth (direct beach frontaage), and currently has approx $80K equity. I have a few questions that I’m hoping some of you “experienced ones” might be able to help me out with.
Have you discussed the possibility of borrowing money from a low doc/no doc (?) with a reputable broker. I am not sure if you would qualify but……no harm in asking.
A) What rate of deposit would be better to place against L/O prop? (given that may daughter would like to use some of her equity for more PI’s)
This is a ‘how long is a piece of string questions’ as the correct answer will depend upon what else is happening in your daughters life and their subsequent plans.
b) Would it be more appropriate if she paid IO on her Exmouth block due to Non deductable tax. Her and her partner are on very high tax brackets, as she is a NorthWest worker.The issue of high salary earner has little relevance under these circumstances Wendy. Costs of a block of land are not deductible as it is not an income earner unless there are plans afoot to build an investment property on the block and within a short timeframe after purchase.
As such your daughter and hubby would be better paying the principle down as quickly as possible. Recommend an offset and/or redraw account so that the other money can be ued for deposits on other investments.
C) Can anyone point me in the direction of info on Trusts?Recommend you look at http://www.gatherumgoss.com and find a link to Dale’s online shop. He has two books that are invaluable investment tools. At $99/each or $169/both they are not cheap but good quality information abounds.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Originally posted by Kerri-67:what is churn?
It is the practice of redoing ‘deals’ unnecessarily so that the broker earns extra commission.
Churning has been known to apply to some finance brokers who regularly and unnecessarily refinance deals. It is also known to occur in stockbroking trading when advisors tell clients to ‘buy and sell’ more frequently than they need too.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Originally posted by Bonnie:Just wondering if it’s possible to get out of a contract with a property manager before the agreed time.
Clause 14 of your PM agreement gives you the exact conditions under which you can terminate your management agreement.
The standard agreement gives three options for termination of services of which wo include such as 28 days written notice, or immediate suspension if clause three of the agreement is not met by the PM.
As SMTM indicated the PM will ask for 50% of their expected fees unless you have crossed this clause out. The fee being calculated based on the time remaining on the exclusive authority to act – another reason why you should never sign a fixed term authority to act as PM..
If I were you I would mount a case based on their inability to perform their responsibility – ie locate a tenant. Having written records of issues you have had will be advantageous here.
Notwithstanding the 50% fee – you would be still better off advertising the property with other PMs and copping the 50% fee even if they do not waiver it.
This is far better off that leaving a property vacant for longer than you already have.
We have a property that has been vacant for over 3 months. I know that doesn’t sound like a very long time but our PM doesn’t really seem to care. I have constantly rang her and e-mailed her telling her that it’s urgent we get a tenant, but her standard reply is “oh we’ve advertised but it’s just a quiet time at this time of year. We’ll pick up in January”.
Where is your property? (Westminster?)
Have you held discussions with the PM to find out why people have rejected the property? Is it marketed at the right price? Are other properties in the area renting? For how much and what extras do they have?
The line about waiting for January is all bulldust. Rental properties have been renting well for the last three months in Perth. Sure December is quieter but…….what about November and October.
The Perth rental market is and has firmed up quite considerably in the latter part of the year.
By the way – three months is a long time. That is 25% of your rental income out the window.
Having spoken to another PM in the same area, he can’t believe that the property has been vacant for so long.
Could also be a ‘line’ to get your property onto their books. Ring a few other agents in the area to find out what they are saying.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Originally posted by Sonja:After reading the council’s article I’m not altogether convinced I’d buy a house there but winning that raffle sounds pretty good to me – definitly +ve CF! I wonder if they are still going to run it…
Hi Sonya,
The raffle has been ‘done and dusted’ – just goes to show the lengths some councils will go to encourage people to move into a town.
As for Norseman as an investment – forget it.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Originally posted by OSienna:The other issue with depreciation is that when it comes to paying Capital Gains Tax, all the losses you’ve been claiming as depreciation over the years is factored into the final CGT amount. So what the tax-man giveth with one hand he taketh with the other.
Hi Osienna,
There have been a few changes to CGT and depreciation in recent years and one of the changes specifically addresses this point – If an investment property purchased after May 13, 1997 is sold, depreciation eligible to be claimed on the building must be factored into CGT calculations whether it has been claimed or not.
This ruling is not well known around the traps and there are accountants who are yet to pick up on this point despite the ATO’s Guide to CGT 2003/04 has this ‘rule’ explicitly stated “you must exclude from the cost base of a CGT asset the amount of capital works deductions you claimed or were entitled to claim in respect of the asset”
And then a little further for good measure ‘the amount of the capital works deductions you claimed or were entitled to claim for expenditure you incurred in respect of an asset is excluded from the reduced cost base.’
As such it would seem that from a taxation perspective alone you might as well claim the depreciation available to you anyway.
Notwithstanding these comments the obvious question is ‘how will the ATO determine how much you should have claimed if you didn’t?’
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
It isn’t your computer it is the latest ‘gimmick’
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Check the floor size – anything less than 50sqm lenders get ‘touchy’ about and generally do <edit – insert ‘not> lend to 80%. As such there can be growth issues with these properties given they only appeal to the ‘niche’ investor market.
You will also need to check tenancy rates, sound proofing between rooms and whether or not the ‘possible’ rent is achievable.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Originally posted by BouncingBenny:True enough, I haven’t got a budget in place, nor any other savings. I was paying off a car loan and my credit card, so paying off debts was my main focus. Now that I can afford to pay these debts off immediately, I would like to start putting my money into investment.
I would suggest that initially you put the money into a high interest bearing deposit with ING or someone similar for a 6 month period. This will give you time to really explore your investment alternatives and to narrow down the focus a little more.
As a little rider here – if the car and credit card debts are substantial then it would be prudent to clear those debts first. But on the proviso that you ‘repay yourself’ as quickly as possible.
During this 6 month period I would read some of the books reviewed on this thread as a couple of the books discuss a change the mindset approach too – which can be invaluable when you embark on an investment program.
https://www.propertyinvesting.com/forum/topic/6845.htmlA common thread that comes through in a lot of books is that a good budget is necessary with the concept of ‘paying yourself’ first a feature.
On an income of $140K you have the capacity to live well without being wasteful or frugal. There are many people who get caught up in the next gadget craze and will expend significant sums of money that could otherwise be used elsewhere – often this is a hard learned lesson that comes much later in life when the horse has already bolted for some.
In terms of what type of investments, and what my goals are, I would like to make some good capital returns and, if possible, do that through positive cashflow vehicles. With those goals in mind, does it make more sense to invest in several properties instead of one? And what level of gearing is thought to be appropriate? Is there a rule of thumb?
There is no investment ‘rule of thumb’ as like fingerprints we are all different and what suits one person may not suit another.
By way of example we initially geared to 80% and then 90% and now back 80%. While this may seem conservative to some people, others thought it aggressive. It is really a horses for courses approach.
Bear in mind that borrowings over 80% will incur some mortgage insurance which, while deductible over 5 years also costs around 1.5% (give or take a little) of the total loan.
Your long term and short term investment goals should also consider things such as career security and changes, family/marriage commitments, lifestyle changes, length of time in the work forces and your capacity to ride out investment risks.
By way of another example my investment plan, in a nutshell is to buy well researched property in long term growth areas of Perth and SEQ and then to leverage off these as they increase in value.
Supplementing this is a share fund and a couple of other income producing investments that provide the cashflow.
As an aside you may well find that your brother is able to mentor you through the infancy stages of the journey. I am assuming here that he has some business or investment acumen given the generosity of his gift.
Ultimately the journey you take must be yours as it comes back to a question of what do you want to achieve.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Hi Benny,
The answer to your ‘what shall I do with the money’ question really lies in what your plans are and how the money can best be utilised to help you achieve those plans.
For some people their investment goals focus on capital growth and yet their are others who focus their investment goals on income streams. Of course there are also those who tend to like a bit of both.
I would also counsel you to establish a budget and because at the moment you haven’t indicated any other savings or investments that are actually in place – is this the case?
On an income of $140K/annum you are well placed to to borrow considerable sums of money and the $250K can be used to stump the deposits on any borrowings.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Hi Leanne,
A list of other reads;
https://www.propertyinvesting.com/forum/topic/6845.html
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Hi Possie,
For a quick skim of information look at
https://www.propertyinvesting.com/forum/topic/14446.html?SearchTerms=interest,only,loans
But as Jo said try the search topic as this comes up often.
BTW – I am an interest only advocate.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Originally posted by dave78:The property is a 3BR house on a large block of land that have sub-division opportuniies. Has a new tenant that has signed up for $120pw for 12 months. The house is on the market for $59,000. The average home is selling in this area that is of similar age, size, and quality has been sellig around $45,000 to $50,000. I am guessing the owner is going for the hihger selling price as he has a good rental return. I have also been told it is rare to pay more then $100pw rent in this town.
Hi Dave,
In providing the above information you have provided sufficient reason not to invest here anyway.
Not only is the house priced at the upper end of the market, the rent is too and as a rule of thumb country people like their little bit of space – so to consider a subdivision in a wheat farming area is a bit pie in the sky – given subdivision costs are likely to be to close to or more than the cost of purchasing a block of land in the same locality.
1000 people in a one industry town leaves you very vulnerable to changes in the state of the wheat industry – which continues to experience increasing farm sizes with fewer families remaining in the town. WA is littered with wheatbelt communities that see the young adults finish school, go to boarding school, move to the city and rarely return and thus they see a downward population spiral effect taking place.
These departing people are not being replaced by others who move into the town seeking a cheaper lifestyle. The bulk of people who do this prefer coastal communities and/or areas with appropriate infrastruture commensurate with the needs of their age group. The lure of proximity to friends and families is still too strong – the proliferation of retirement complexes in city areas is testament to this trend.
Placing ~$50K (give or take a bit) into a town this size is courting disaster – and that is assuming the lender will recognise 80% of the value of the property.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Originally posted by aussierogue:came to the sobering conclusion that should things go pair shaped in general (recession or small growth) our greatest assets may infact be our own ability to earn an income. ie to have a secure well paying job….to keep cashflow at a good level to take advantage of the deals as they come during a downturn
Hi Aussie,
People often overlook the high unemployment rate of the early nineties (~11.5% from memory) and the effect this had on a whole raft of economic matters.
You can bet your bottom dollar that people in work at the time considered their job their greatest asset.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Hi Wendy,
Without knowing the specifics of your current structure it is difficult to provide clear cut advice.
Each of the properties is sufficiently valued to be stand alone loans. For me this is the first thing that I would investigate if I were you and if the loans are cross-collateralised then take steps to make them stand alone.
Once this is completed you have sufficient equity remaining to create lines of credit of 129K, 90K and 324K (@80% LVR) enabling you to then leverage off these dollars into other investments. Your income may be a limiting factor here – a discussion with a reputable broker will see what your options are.
As an aside I wouldn’t be overly worried by the ‘loss’ on the second IP as the growth has realised approximately $190K in the time you have owned it. The ‘loss’ can be offset with other income producing assets as at the end of the day you do require assets and income to service future investments.
But ultimately – your goals, exit strategy, home factors etc all come into play and will determined what the best options for you are.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Originally posted by yarpos:move to another bank? am I missing something?
move to another bank to finance overpriced apartments?
move to another bank because they went out of there way to protect this persons interest (and of course longer term their own). Seems like they may have actually earned some loyalty, if that word means anything these days
The difficulty MGR has is that he is overseas and if he still wants to purchase the property despite the previous comments and the figures provided by his bank – he should try and secure another lender – one that may value the property higher than the one he is currently using.
Based on their own research the current lender is not going to recognise anything above $470K and as a consequence the property will require too much of a ‘deposit’ which will be hard to claw back in an inner city apartment market at this time.
BTW – I would be looking elsewhere.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
Hi Andy,
I am not convinced that a REA course will make you a better investor if that is the ultimate aim.
The information you require to be successful is available through ‘walking the street’, research or for a minimal cost from various government agencies.
Bear in mind REA is a high turnover industry and a great many of them are not investors themselves, as such your hands on and theoretical learning will be somewhat limited.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping.
