Forum Replies Created
- Originally posted by FW:
However one thing is a must – I ALWAYS have building insurance, with an extremely good public liability cover.
This is the critical point – while we can all afford to cover a few thousand here and/or there to varying degree. Having a public liability claim come across your desk could run into the millions depending upon the situation – that is where the ‘insurance must have’ lies.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Dannads,
I am curious as to the reason you bought these properties in the first place and whether or not they are performing as desired – because the answer to these questions will largely determine what you should do.
Looking quickly at the situation.
Your PPOR is fully paid for and as a consequence you have no non-deductible debt in property. So you are well placed from this perspective.Your seond property would be costing you around $1500 and the third property will be costing around $7500 per annum.
Note all figures very ‘rough’ and based on interest only loans for the loan figure quoted and there is no allowance for any depreciation claims that may be available to you.
Is the ‘over committed’ thought largely related to the third property as you indciate that rent is estimated to be $240/week? Does this mean the property is yet to settle or find a tenant?
There are a few steps you can take to improve the cashflow; change a loan or both loans to interest only; apply for a PAYG income tax variation; get a depreciation report done; fix loans as per Yack’s suggestion; revisit your goals to see if they are still current; do the properties still fit this criteria; and/or maybe (if the comment about not yet settled is accurate) you are suffering from typical buyers remorse as completion of one property draws near or a proeprty is untenanted.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Romina and Luca,
That is terrific news – Redcliffe will be a good long term investment.
What does Nicholas think about it?
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by Lainy:Hi I have three investment properties in London and have always used a Buy to Let mortgage with the same finance provider. However there is a limit of £1,000,000 that any one can borrow.
Hi Lainy,
The key point here is that your are limited to 1 mill pounds with a single lender.
I suggest you speak to a broker and see what they can do in terms of getting funds from other lenders.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Servant Heart,
It seems to me that you have done all the theoretical training but still have a difficulty taking the first step. First of all be assured that this is not unusual and that you are not the first and you won’t be the last.
I wonder if part of the issue is that you do not know why (in specific terms) you want to be a property investor. Work out your preferred investment regime and your goals and then go for it.
You need to be aware that no amount of theoretical learning will adequately prepare you for the practical stuff. Sure you can do all the reading you want bt at the end of the day you only become a property investor when you own an investment property.
I suggest you do set yourself a time limit (write it down), find out what you can borrow, do your research and then buy a property starting with something ‘safe’ – let time come into play and bed down the process you need to have in place to run your property business and start expanding if/when you can do so.
Who has told you that you cannot borrow money, a bank? There are some brokers who can ‘do magic’ and still work within the guidelines so I suggest that you get in touch with a reputable broker. Someone I know was told that he couldn’t borrow anymore money yet going to a different broker saw him secure a loan for $200K+.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Greatpig,
Thanks for that. I have provided the link here for anyone interested in seeing what is ‘in the book’
http://www.gatherumgoss.com/shopping.htm
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by ridi:the finance side of things very tricky but thats how they (the banks )want it to be[evil5]
thanks for your reply[specool]Hi Ridi,
That is why having a good broker as part of your team is fundamental to your long term success. They will get you organised correctly from day one. Suggest you email some of the brokers who regularly post here – they should be of assistance.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Laurence,
Pure Trusts are an American structure. Different country = different rules and phraseology.
Suggest you do a search of the forum for posts about trusts – there are plenty. Or better still grab a copy of Dale Gatherum-Goss’ ‘Trust Magic’ $99 at http://www.gatherumgoss.com – drop me an email with subject line trust book and I’ll email you a copy of the index so you can see what the book covers.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by NolaO:Have just been watching Hot Property and once again saw somebody renovating a property and putting it back on the market in 12 weeks. Have seen this done on a number of occasions and am wondering is there some tax loophole re CGT that you benefit from by taking this approach??? If not – what is benefit is there in taking this approach????
Hi Nola,
Please note I am not an accountant and Julia may be able to shed an expert’s light on the matter but………..
If there is no rental income it may transpire that the property can be determined to be an ‘active asset’ and as such may qualify for deferral of CGT – hence the desire to buy, renovate and flick approach. Under these circumstances the gains would be classified as ‘income’ taxed accordingly so the minimisation of tax would be compromised.
Having said that I now stand to one side to see what the expert says.
I will move the thread to ‘Accounting and Legal’ where Julia is more likely to see it.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by richmond:Some people hear the 11 second rule and then tune out… there’s a lot more to it than that, and a lot more research to decide if a property is a good investment than just looking for 10.4% yields.
Hi Richmond,
I suspect the reason people come here asking for properties meeting the 11 sec rule is because that is the easy bit – a bit of quick maths and its a ‘yes’ or ‘no’ answer.
The harder part is the research to find out whether or not the property is a fundamentally sound investment. This is where the work begins.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by ridi:.you can have your money in 5 seconds if you so wish… carnt do that with the ol bricks and mortar
Hi Ridi,
If you set yourself up with a LOC you can access the required money very quickly and easily, and retain the asset, if ever required.
We have some spare cash available in a LOC that we keep up oour sleeve. This is separated off into a separate LOC so that we can use the money for personal expenditure if the situation necessitated such an input. This way our personal and investment expenses are separated and we can identify interest payments easily and also can pay back the ‘personal expenditure’ without compromising oour investment deductions.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by Roofarmer:I truly believe that this area with it’s beautiful award winning beach and new train station is set to boom.
Hi Roofarmer,
The Warnbro/Rockingham area has been booming for some time as savvy investors starting getting in some time ago.
The train will maintain the growth (but not at ‘boom’ rates) as later investors and homebuyers seek proximity to the rail line and coast – but the big money was made sometime ago.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
I still smell a rat.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Billy,
Suggest you have a look at the following thread – it discusses some ‘investment books’
https://www.propertyinvesting.com/forum/topic/6845.html
Not sure if Peter Spann’s books crack a mention, if not, would add them to the recommend list.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Wake,
I would strongly suggest that you do have a chat to another broker (or 2) and see what they say. I don’t mind limited cross collateralisation but from the sounds of it you are ‘crossed’ to the eyeballs – as such it may even be a case of one step backwards to go forwards again.
But in answer to your initial enquiry regarding LMI or not. We initially used LMI to stretch our equity as far as possible when we got serious about investing. Since then we haven’t needed to and have equity to spare hence we have steered clear of LMI for our most recent purchases.
To me the critical issue revolves around the cross collateralisation and I would address this first and then consider the next move.
By way of interest LMI is a tax deductible expense and is deducted over 5 years or the life of the loan – whichever is shortest.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Marsden,
Having a time limit in which to make a decision is a sound strategy as it does allow you to time to make a decision. Having said that – in some markets 10 days can be too long, in others too short and in some just right – so the ‘solution’ can be problematic in some respects.
As for the ‘current economic factors’ you mention – these types of factors have been around for years and there is always something similar just around the corner. I suggest you look back through the recent histroy – interest rates ~18%, unemployment ~11% in the late eighties/early nineties, Gulf War (1), fuel crisis, banana republic, international trade wars, cold war, Vietnam, EEC created, and so on and see that property still did its ‘thing’ despite all the reasons why it shouldn’t.
You need to make decisions on what is right for you – can you afford the property, what about if rates rise, no tenant, does the property fit your investment goals and philosophy, is it comparable (or better) to those in the area, is it tenantable? and so on.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by alvinmercado:Does this mean landscaping to increase value of the house is not tax deductable? In general does that mean any improvement to the house (if not considered maintenance is not tax deductable?
Hi Alvin,
Improvements are not tax deductible rather they can be used to offset any future CG liabilities.
Do not forget that considered improvements do/should help to maintain a property’s value and/or rent return and/or general state of well being.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by ridi:[purple]I offered my knowledge on property for his exertise on multiplying money for deposits he would have to place the same money down as me but of course the joint venture would mean the properties belong to both of us…dose this sound fair??
In terms of financial commitment this seems a resonable arrangement – the question is do you both have similar capacity to raise the finances and a simialr desire to invest in property at the same rate?
he is so absorbed in the share traiding game and also seams to think his shares will exelorate his waelth faster that property I told hime he was wrong and needed to diversafy his wealth to 70% prop 30% shares or aleast there abouts he seamed keen on the idea at first but days later he said “why should I get off a concord to take a train
It seems to me your friend is experiencing a degree of success with his current investment choices and as such will stick to what he knows, or will require some ‘educationo’ about property. A ‘throw away’ line will rarely convince someone to throw their hard earned into something new.
!!! that comment blew me over maybe he doesnt beleive in my ability OR he simply doesn’t realise how damm good property can be provided the right choices are made…….well not sure to tell you the truth whether I should pursue this idea…..my prioreity is to keep the good friendship …
It is possible that property is just not ‘it’ for your friend. If this is the case focus on the friendship and do what you believe is right for you. Alternatively you may have to get some runs on the board to show him what can be achieved – but at the end of the day there are people who invest only in shares, or those who only invest in property and then there are those who have a bit each way.
sorry for bad spelling [blush2]
You can get around this issue by typing your post in a word document and then cutting and pasting it into here
Hope this helps.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by depreciator:2. 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. So you might as well claim it.
Very few accountants know this obscure rule. I mentioned it in a seminar
Buggered if I know how the ATO would enforce it.
Hi Scott,
And yet 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 ansset is excluded from the reduced cost base.
Speaking to an accountant last weekend he indicated that the ATO is looking to uphold this statement as written. But also like you – I am intrigued by the process the ATO will use to deduct an amount you haven’t claimed.
Switch to image of people in room with a roulette wheel laden with various dollar amounts.[bigeyes]
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by bigben:The tree is probably on the boundary of the 2 properties and mostly on my side of the boundary as the base of the tree is around 1m diameter.
its between a pair of gunbarrel houses that only have about 2 m betweenMethinks you are best (if able to) removing the tree now anyway. A small spot like that for a growing tree means big problems in a few years time – says he with visual picture of cracking foundations, cracking brickwork, rusted gutters and so on.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
