Hi Paul,
These units are pretty close to central Perth and are located just below Kings Park and in close proximity to the recently opened Perth Convention Centre. No doubt the developer is trying to cash in on the Convention Centre.

The units themselves are below 50sqm and as such 80% lending may be difficult (impossible ?) to secure. Given the units are classified as short stay higher than normal management fees may apply and associated costs may be proportionally higher.

Medina is also the name of another Perth suburb some distances from this development and as such if you are looking for statistical comparisons this may confuse the issue.

Derek
derekjones1@bigpond.com

Property Investment Support Available. Ongoing and never stopping. PM welcome.

HI Kp,

I do agree ‘never say never’ and if the time did arrive when there was a federal government rethink on the ‘negative gearing’ rules it would require some adjustment to my investment plans, timelines etc. – however all things being equal I find it difficult to imagine that I would not be still buying property.

Overseas is an interesting comparison – information (a little dated now) I have seen suggests that 8% of the Australian population lives in ‘public housing’ whereas the overseas ‘norm’ is 20% of the population living in public housing. I am sure the bean counter have factored this into their calculations along with the increased funds collected through changes to CGT and the imposition of GST when considering the long term future of ‘negative gearing’.

I also suspect the Federal Governments are very aware that a number of ‘close to retirees’ have a far wack of their wealth in residential property and as such ‘tinkering’ with related tax laws could create fallout in other areas.

As happened in the mid eighties the ‘herd’ stopped buying and/or left property – whereas seasoned, more informed investors kept buying. The growth rates in property values remained largely unaffected and continued their upward momentum during this two year period (albeit a couple of cities were flatish at the time) and ‘surged’ when the herd reentered the market in late 87.

At the same time rental returns were very high (around 10%) for metropolitan properties. Between high rent returns and depreciation claims a number of educated investors would have been cashflow popsitive anyway. Bear in mind the interest costs were the only disallowed claims – costs such as rates, taxes, management fees etc were still claimable.

But – to cut a long story short – at the end of the day property needs to be selected based on what it adds to our portfolio and not on tax benefits and over time rents do rise in actively managed properties.

Having said that I am quite comfortable using some of my money to create an asset base for my future. Jan Somers likens it to planting a seed, watering it, waiting and then harvesting the benefits in the future – and I have more than one tree to cover the untimely death of any other tree [exhappy].

Derek
derekjones1@bigpond.com

Property Investment Support Available. Ongoing and never stopping. PM welcome.

Hi Ben,

You have the correct understanding of how depreciation works – and as you correctly pointed out a quantity surveyor can determine the appropriate building costs and also the value of the depreciable plant and equipment.

However depreciation should be seen to be the ‘icing on the cake’ and as such you need to firstly ensure the property will provide the income or growth you are seeking from your property portfolio. These are far more important considerations when selecting a property than the value of the claims attached to the property.

As a guide though you may be able to locate a website that has a summary of building costs per square metre that, will however assist you with your calculations.

Scott (AKA Depreciator) will be able to add some expert commentary to the discussion when he next logs on.

Derek
derekjones1@bigpond.com

Property Investment Support Available. Ongoing and never stopping. PM welcome.

Hi Bonnie,

Cloverdale and surrounding suburbs have had their growth spurt, but in saying that it would still be one of the closest suburbs to Perth that is developable and as long term investment fairly safe.

You will need to check with the city council about issues surrounding rezonings so that you do buy a block that can be developed in acordance with your wishes.

Derek
derekjones1@bigpond.com

Property Investment Support Available. Ongoing and never stopping. PM welcome.

Hi Marisa,

As per previous comments – however I believe the ‘stigma’ will live on for a long time. I do know that the local schools do it pretty tough.

Derek
derekjones1@bigpond.com

Property Investment Support Available. Ongoing and never stopping. PM welcome.

Hi Kp,

Even when negative gearing was abolished in the mid eighties it only applied to people who bought property during that period of time and, in the main, it is rare for tax adjustments to be retrogressive.

Something else often overlooked by people who use the what if negative gearing was abolished line is that – the removal of negative gearing in the mid eighties coincided with the recognition of depreciation (at 4% then) during the same period and a 40% explosion in public housing waiting lists in NSW alone which caused an increase in rental returns at the time.

I understand (and I stand to be corrected here) that when the ability to claim interest costs was reinstated in late 1987 investors were able to redo their previous tax returns to include the period from mid 1985 – need to check this out but reasonably confident.

People should also understand that the ability to claim interest costs is a legitimate business deduction and has been available to Australian property investors since the 1920’s (approx).

Will future governments remove the ability to gear or modify – who is to say yes or no but over the long haul property continued to grow in value during that period in our histroy.

Derek
derekjones1@bigpond.com

Property Investment Support Available. Ongoing and never stopping. PM welcome.

Hi Jo,

Thought you would have something to add on the area – that is a good thing[exhappy]

Derek
derekjones1@bigpond.com

Property Investment Support Available. Ongoing and never stopping. PM welcome.

Hi John,

I come from a property investment position that good quality property in good locations is my first concern. I also recognise that I am investing to make money rather than saving tax – any tax savings are considered a bonus.

For this reason I buy with a long term perspective and on the understanding that there will be flat periods and there will be good periods of growth (and don’t anyone highlight their growth in outback properties – to me the risks are too great buying, selling and renting in out of the way places – I am of the opinion the property bubble is more pronounced in these places than the metropolitan areas)

When buying I consider the long term growth prospects first and then look at the cashflow scenario second. Any money that I am required to put into the property is considered in light of my total situation and includes, impact on borrowing capacity, what the property adds to my portfolio, what is the alernative use for the money required to sustain the property and can the budget sustain it.

Using other complementary strategies such as PAYG variations, depreciation reports, interest only loans, considered expenditure at home, surplus funds in line of credit and redraw account for emergency situations and so on I know that I am able to sustain any purchases before I embark on the journey.

If you choose wisely and manage your property actively through your PM you will find that rental returns do improve and a negatively geared property need not be negative for a long time.

Running alongside this I also have some funds invested in an income producing share fund and have recently provided some development funds to a commercial development in satellite city centre in the Perth metro area that are projected to provide very good returns over a two year period.

Having said all of that – your strategy needs to fit your goals and for me I see greater certainty in metropolitan areas.

I cannot add comment about South Blackburn as I am not familiar with the area – however there are few Victorians who visit who may be able to provide detailed comment about the area.

Derek
derekjones1@bigpond.com

Property Investment Support Available. Ongoing and never stopping. PM welcome.

Hi all,

Put simply – To make a positive difference.

Derek
derekjones1@bigpond.com

Property Investment Support Available. Ongoing and never stopping. PM welcome.

HI Wanewbe,

Terry has given you a accurate and quick overview of some of your options and their implications. – but the key question is – what are you wanting to achieve?

This property should only be considered as part of a bigger picture – until we know what the picture is (your goal) then we really cannot pass effective comment beyond the implications menetioned by Terry.

Derek
derekjones1@bigpond.com

Property Investment Support Available. Ongoing and never stopping. PM welcome.