Forum Replies Created
The market has moved since the book was written and as such the returns have changed in the larger areas. They can still be found but you may have to look further afield where the risks are greater.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by Scotty B:My background is that of a beginner investor, as of the middle of Sept I’ll be renting out 4 properties (2 in Como, 1 in South Perth and 1 in Midland) whilst living in company paid for accommodation in Karratha. My portfolio is cash flow neutral, which isn’t fantastic but at least I’m not losing money.
Hi Scotty,
Welcome to the forum. I think you are being a little harsh on yourself calling yourself a ‘beginner investor’.
Sure your portfolio may be ‘only’ neutral but I believe you also need to consider the other side of the investment equation, that is their growth in value.
The South Perth and Como properties are in prime localities and are ‘almost guaranteed’ to continue to experience high growth levels in the short and long term.
South Perth averages 11.8%/annum and Como 11.1%/annum over the last 30 years – they are blue chips in terms of growth. By the way Midland’s growth rate comes in at a louse 8.2%/annum over the last 30 years.
Rather than gnashing your teeth I believe you should be patting yourself on the back.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Jenny,
Cannot comment on Melbourne suburbs but can offer some ‘food for thought’
By all means seek some recommendations about areas that may be worth looking at but you need to bear in mind that people’s preferences and, by default, their ‘list of must haves’ could be very different to yours.
Ultimately I would consider renting in an area that you select on a ‘try before you buy’ type of process. This way you may be able to ascertain if the suburbs is right for you because this property is going to be your home you are looking at a property and location from a slightly different perspective.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Yack & Redwing,
SOGS have (or should that be had?) gold mines in Southern Cross (~230km W) Laverton (~300km N) and South Leonora (~200km N). They also have/had Tanatalum mines in Greenbushes and Wodgina (many kms from Kal) and as such their presence in Kalgoorlie could only be described as minimal – at best.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Marnikp,
I recommend you have a good discussion with a good broker they will be able to canvas a few options for you.
Unless you are specifically ‘downsizing’ for lifestyle and/or personal reasons I would consider the line of credit/equity loan option with lo doc/no doc loan.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Tinkerbell,
I also subscribe to the belief that you need to make the decision that is right for you. When you do analyse your situation do not forget that you are $100K in front of where you were four years ago.
To assist with the ‘cashflow’ issues have you explored such options as interest only loans, quantity surveyors report, PAYG tax variation applications, is the rent consistent with market rates of the area, is your loan and account structure set up to minimise outgoings and so on.
The right solution may need a little more digging before it is found.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Arb,
As a broadbrushed statement – the current growth and rental cycles are ‘out of wack’ and as a consequence the numbers of positive cashflow properties are fewer.
Rents, in the main, have remained relatively stagnant and certainly haven’t increased at sufficient pace to keep up with the growth in property prices and the increased cost of borrowed money.
As to whether or not it is time to ‘sit on the sidelines’ – that depends – on what you want to achieve and by when, what else you would do with your money, personal situation, and so on.
Adopt a long term view and research your preferred market and you should have the capacity to succeed.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by Noob:I just found out yesterday that when the insurance was up for renewal, he decided not to renew it. I’m nervous about the possibility of him losing it all in a freak accident but he’s happy with the risk.
Hi Noob,
Agreeing with the previous comments and I would never be without insurance on my assets.
But at the end of the day it is for the individual to decide what is right for them – and as we know some people are bigger risk takers than others. Sometimes they win sometimes they lose.
Sure by all means explain the benefits of insuring the property but at the end of the day the consequences (either way) are a direct result of the decisions made by him.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi All,
Update – Tonight’s local regional news reported regional WA as still experiencing good growth and that Kalgoorlie’s name was mentioned first when the regional high achievers were discussed. No stats given but……….remember it is a regional mining city and will largely have its own cycle.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
No!
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Kwaidan,
Look at the size of my non-deductible debt/s and clear as much/all of that as possible and then set up/increase line/s of credit and invest again.
Any left overs would be offset against one of the remaining IP loans to reduce monthly interest bills and/or explore the holiday (celebration) option too.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Francois,
As Kalgoorlie is a miningtown it has it’s own cycle which is largely related to the level of activity in the mineral of concern at the time.
In the last 6 years or so gold prices and other incentives to explore new territories were on the wrong side of zero hence the ‘flat spot’ of recent years. In more recent times Nickel is having its dy in the sun and gold seems to be on the improve and hence the Kalgoorlie economy has at least stabilised.
Having said all of that – the issues I have raised are typical of most (all?) single industry towns – they will have largely have their own cycles.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Geo,
According to the linked first article in The Age
Property adviser Henry Kaye settled out of court yesterday after an earlier County Court determination that found his company, Investmentsource Corporation, had breached contracts with a former business partner.
Associate does give the wrong impression so I’ll withdraw that but the ‘partner’ referred to was none other than GM.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Leoni,
Not nan accountant but as the purpose of loan has now changed from IP to PPOR related that portion is not tax deductible.
You would be well advised to talk about this with your accountant and broker and splitting the loan portions into separate loan/s as mixing investment and non-investment loans is paramount to a financial headache for you and your accountant.
As things stand at the moment any principal repayments are apportioned across all three properties – if you split the loan/s you have capacity to make the investment loans interest only to reduce your outgoings and the capacity to put any surplus cash against your non-deductible debt.
I would also recommend establishment of an offset account against PPOR loan.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Cade,
If I was buying in Perth at the moment I would get as close as possible to the city or the satellite centres. Focus on areas with easy access to and in close proximity to the water, rail and freeways.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Dangermouse,
While you have equity of $110K you need to be aware that only 80% (higher if you pay LMI) of the total value of the property (less existing debt) is recognisable security. As such you really have $32K available as deposits (@80%) or $72K if you go to 90%.
For me I would be reluctant to incur break costs unless I knew I was going to recoup that, and some, in a fairly quick time. Given there are only 6 months to wait I would be tempted to wait for time to elapse and spend the time researching your preferred investment area.
I also prefer to use equity for subsequent deposits and would put the $50k either in an offset account or redraw on your existing property (if able) – this would reduce your monthly interest bill and aid your cashflow situation while still enabling you to have some emergency cash in case of need.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by bobfromtassie3:I have been told that I can nominate one home throughout my lifetime and claim it as my PPOR therefore paying no tax when selling???
Hi Bob,
Just a clarifying point – you can have more than one PPOR in your lifetime – you are not allowed to have more than one PPOR at any one time, apart from the 6 month rule Simon alluded to.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by arborphile:You say that repayments on a P&I loan are not tax deductible. Can you claim the interest component as a deduction?
Hi Arb,
Only the interest component of a loan is a deductible expense.
As such if you make repayments of $1000/month of which $800 is the interest component then you are only entitled to claim the $800 as a deductible expense.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hmmmmm – 1st Post and a commendation about a ‘guru’ to boot.
Methinks a little spamming is present.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Kristine,
Not sure which qualifying criteria you are using so you may have a few ‘gate crashers’ to your party.
Not saying I qualify but for me; my greatest asset is my mindset and knowledge (and that’s not a blow your own trumpet statement either) and the capacity to know what I want and what steps I needed to take to achieve my goals.
Other critical tools were/are the support of my wife, a PPOR that grew in value and the mental capacity to utilise the available equity in a carefully orchestrated manner.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
