Forum Replies Created
Hi Mark,
What people have discussed here is a fairly typical level of information supply and if your PM isn’t delivering you need to have a chat to him/her detailing your expectations.I find it very helpful to talk to my PM when they first get my property to talk about what I expect. I also make a point of ringing them whenever I get a property condition report and talk about the contents irrespective of whether or not the report is good, bad or indifferent. This shows the PM that I am also maintaining a watch over my asset.
I use Outlook’s Calendar to trigger a lease due to expire warning about two weeks out from the relevant date. This way I ensure the tenant doesn’t drift onto periodic leases and ensures that I have some control over when the respective property/ies come up for lease renewal – middle of winter isn’t generally the best time to find tenants.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Glauco,
One way is to contact the relevant authorities who may have a list of licensed operators who work in the area.
Another way is to use a reputable brand name company where appropriate.
Another way is to find a property and then ask the question on the board – does anyone know a good ….. in X?
Yellow pages.
You may find in some of the more distant localities you may have to rely on word of mouth from locals.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Milo,
You unit will be CGT free for the duration of the period of ownership as it was your PPOR for the duration of the period you owned it.
Your house will only be CGT free for the period you live in it – any gains will be calculated based on an apportioing process. Ie $100K profit – 80% of the time the property was an investment property then your capital gain will be $80K.
As such moving in for a few weeks will have negligible difference in gains savings.
You can only have one PPOR at any one time apart from a 6 month period when you are eligible to have two properties while one is being sold.
Capital gains is calculated by subtracting the purchase price from the sale price with a few allowances for things like entry and exit stamp duty, selling agents fees, any section 43 depreciation claims etc.
CGT can be minised by offsetting the gains with any losses incurred selling other recognisable assets or by selling in a no or low income year. The gain will be considered as income and treated accordingly in your next income tax return.
At time of sale you will be up for agents commission, mortgage discharge fees, your portion of land tax etc and if your IP is in NSW you may also be up for the exit tax.
Is there a way that you can retain one/both properties as they appear to be good assets and would add value to your portfolio?
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
HI Mypi,
One of our 3 bedroom properties has been rented to international students for the past four years. We furnished it to make it more attractive to O/S students and have not had a problem with the tenants.
In one year we were without tenants for around 6 weeks at the end of the academic year but have now structured leases on a 12 month basis to minimise the likelihood of this happening again.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Milo,
For details on NSW Metro leases see below;
http://www.fairtrading.nsw.gov.au/pdfs/corporate/publications/ft255met.pdf
For details on NSW Country leases see below;
http://www.fairtrading.nsw.gov.au/pdfs/corporate/publications/ft255reg.pdf
On quick read the length of notice varies between 14 and 60 days depending upon the reason and timing of the notice.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Kay,
Fortitude Valley is known for its ‘redlight’ district.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Regrow,
Oops – missed that bit.
Anything built before Sept 1985 is not eligible for any building (capital) depreciation apart from renovations and plant and equipment.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Rjk,
Katanning schools have been losing staff numbers steadily for a number of years now as the farming community absorbs neighbouring farms and one family leaves town.
Locals are rubbing their hands with glee at prices investors are paying for a piece Katanning property.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Elika,
There are depreciation benefits buying new properties as you get full depreciation claims (assuming you held the property for its full depreciable life).
However depreciation benefits should not be the sole reason for buying an investment – potential growth and/or rent returns are the key reasons for buying a property.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Andrew,
You will need to get a copy of the by-laws that apply to your strata management group. These should clearly spell out all process revolving around your issues.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Wayne,
Mother in law lives in Ocean Reef and she has a ducted evaporative unit and it seems to manage OK – humid days they are no good but otherwise OK.
The key issue with evaporative units is for the moist air to get out to prevent saturation point being reached – you will need some way of securely allowing this to occur.
On humid nights you can turn the water off and use the cooler as a fan unit.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Regrow,
Depreciation is a two part deductible expense.
The first part of depreciation is referred to as the capital allowances as is calculated as being 2.5% of the building cost of the building as is deductible over 40 years if the property commenced construction after 16th Sept 1987. If the property commenced in the period 18th July 1985 – 15th Sept 1987 then you are entitled to a 4%/annum claim but over 25 years and not 40 years.
As such a $100000 building (no land component) would entitle you to claim $2500/annum over 40 years if it was built post Sept 87 or $4000/annum over 25 years if it was built between Sept 85 and 87 as above.
If you purchased the property mid way through it’s depreciable life you are entitled to claim the appropriate deductible amount ($2.5K or $4K as per above examples)for the years remaining. Eg a property is 10 years old when bought you will have 30 years of capital allowances claims remaining in the building.
A Quantity Surveyor can determine the construction costs even if the building is a ‘few’ years old.
In addition to the capital allowances there are also deductions for plant and equipment (stoves, blinds, airconditioners, carpets etc). Each of these has their own depreciable life time and depreciation rate.
Average plant claims can vary between 12%-40% depedning upon the nature, age, fitout and type of building. Once again a Quantity Surveyor can determine these values.
Depreciation deductions work in exactly the same way as any other deduction. The sum comes off your gross income to determine your gross taxable income.
The key difference being that with costs such as rates and insurance you pay for these first and get a part refund at the end of the financial year – these4 costs are sometimes referred to as cash deductions.
On the other hand depreciation deductions form part of the purchase price and as such you paid for them when you bought the property. That is why depreciation claims are sometimes referred to as being non-cash deductions – you didn’t pay for them out of your pocket first.
Ultimately depreciation should be seen as a bonus and the fundamentals of likely growth and/or rental returns should be your first priority.
Hope this helps.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Igolsoft,
Certainly pay off your home first as you are the only one who can do this. Whereas, even with your negatively geared IP, the taxman is still helping you to pay for parts of this debt.
You may also want to consider converting your investment loan to interest only (if you haven’t already), getting a depreciation report done and/or submitting a PAYG variation application (if appropriate).
While these may not necessarily help you pay off your loans they can aid your cashflow situation and combined with an offset account linked to your home loan will progress the rate of loan repayments too.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Cherub,
While there is a degree of attraction in rental guarantees you will need to ensure that the sale prices reflects the wider market. It is not unusual for rental guarantees to be funded by a higher sale price and as such you could well be funding yourself.
You will also need to find out who provides the guarantee – I have seen guarantees provided by insurance companies (HIH in one case) and by $2 shelf companies. Don’t let the ‘security’ of the guarantee seduce you.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Ole,
The your own home V renting debate in many cases comes down to a matter or personal choice.
There are those that will passionately pursue their own home while others preferring to buy an investment property and renting out a property, at a rate much cheaper than they can if they were buying. This way they are in the property market with all debt being deductible rather than having a housing loan that is non-deductible.
You haven’t indicated where you are looking to buy so I am not sure whether or not $350K is a typical property price in that area. One mistake often made by home buyers is to over commit themselves and becoming a slave to a mortgage for a number of years.
You will need to factor in some interest rate rises, maybe a starting a family and living on one wage plus allowances for other ocntingencies that do come along in the journey of life.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Taffy,
Just a quick, but very important add on, you are only entitled to have one PPOR at a time and as such your Cairns plans and longer term do come into play.
A chat with a good accountant would be beneficial so you can determine what is your best course of action.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Taffy,
Welcome aboard and congratultaioon on your achievements to date.
Any costs associated with your former ppor are now deductible and if you moved into the house without first renting it you also maintain/retain a CGT free period of up to six years.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Kieran,
Welcome to the community and I am sure that you will get some conflicting comments. To be of real assistance the community would need some additional information about your long term investment goals, timeframes you are working in and so. The more information you provide the better response you will get.
I just had a scan of the weekend papers and 3X2 units in Joondalup are renting for between $250 and $375 depending upon location, standard and fitout. A rental factor you may want to consider is the imminent arrival of the Edith Cown Campus – that and the Policy Academy, TAFE etc means that there is a potential student market to be tapped into. A local REA will be able to give you a better indication of expected rental returns.
Based on the information from the weekend papers you will find that your weekly cashflow will be negative – on the plus side is that the central area is now almost completely built out, commercially viable and growing and as such future capital growth is assured. However I am not sure that you can ‘bank’ on a sale in the late 400’s in 12 months time. Even though the Perth market is still reasonably durable at the moment I suspect we will not see that level of growth in 12 months time.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Bardon,
Do a search for topics posted by ‘Dan Auito’ – he is a US based investor who drops in from time to time. Pne of his posts had a number of US based websites that may be of use to you.
You may even like to PM him.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by Derek:Hi all,
Yet, research by AMP Henderson chief economist Shane Oliver shows that since 1926, the performance of these two investment asset classes has been almost identical – property has risen at an annual rate of 11.9 per cent, while shares gained on average 11.8 per cent.Hi Westan,
This was the critical comment (for me anyway) which indicates that both investment vehicles, over the long term, are effectively ‘neck and neck’ albeit each will have their time in the sun and that each has their relative advantages and disadvantages.
There are no doubt some weakness in the data used to arrive at the final result which could be used to still maintain a shares v property position.
At the end of the day an individual will invest in their preferred area/s – and ultimately it is their expertise, or otherwise, that will largely determine the degree of success they enjoy (or not)
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
