Forum Replies Created
Hi Mike,
An offset account structure keeps things a little cleaner for everyone. Lines of credit as promoted by Westpoint are for the more disciplined spenders /budgetters and provide few (if any advantages over an offset account).
As others have said stick with your current structure.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by The Mortgage Adviser:They sound like developers to me.
Not developers.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Shane,
All our IP loans are I/O while we have some non-deductible debt on our home. When we get to the position of owning our home outright then we will review the state of play.
All income is deposited into an account offset against our home loan – this way the ‘income’ helps reduce the interest for the period that it remains in the offset account. This too will be reattched to another loan when our home loan is paid off.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Elika,
There are a couple key pieces of information missing from your post that could significantly alter the suitability of your investment.
Lenders get very wary about lending at 80% on small holiday letting units. Anything under 50 sqm (?) will see them expecting you to put in more than the usual 20% (or less with LMI). In effect an excess use of equity or cash with such an investment may delay subsequent purchases.
In recent years lenders have firmed up some lending policies and small holiday units tend to one of the first that have their lending policies adjusted. As was mentioned earlier lenders have had a reluctance to allow any equity in small holiday units to be used as security for other lends – as such you may run into a ‘lending brick wall’
You will also need to find out how rents are distributed – some apartment blocks use a rental pooling system which helps overcome any periods without a tenant in your unit – this is to your advantage if you unit is the one without a view and near the airconditioning unit.
As Scott has indicated the figures used were likely to be based on a 4% capital allowance claim. This would be significantly enhanced by the large number of low value pool write offs and plant and equipment claims.
Be aware that the projected figures also probably used a high income level to maximise the effect of any depreciation claims.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi all,
Bear in mind a number of state governments have adjusted stamp duty rates, thresholds and allowances for FHO in their recent budgets with a number of the changes to come into effect on July 1 2004.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Marisa,
I would suugest you do not transfer a ‘Perth’ idea into the investment property as the climate differences are significant both in winter and summer – and while you will pay a little more I would invest my hard earned in the local nursery so that you buy plants appropriate to the area.
Steer clear of large trees as they will create maintenance issues further down the track.
After living in the area we found that most ‘locals’ do not want a full lawned garden and often had ‘bare’ yards – it is totally inappropriate for the area due to the climate and requirement for less water and maintenance – a small patch of lawn (sufficient for a single sprinkler/retic popup or two) is more than sufficient – kikuyu seemed to do the trick as it is drought tolerant and will come back to life with a drenching or winter rains and yet still gave reasonable coverage. Native couch on the other hand didn’t cover quite as well but had the same advantages with respect to renewal after drought.
One thing I would strongly advise is to make sure the property is fully aircoonditioned – ducted evaporative is sufficent and very effective for the area – it is airconditioning that will make the difference to having a tenant or not in the summer months.
You will also need some sort of effective heating as the winter nights & days can get very cold. Once again the attractiveness of tthe property is directly related to the tenants comfort level.
If an external patio/pergola structure is on your shopping list I recommend you do not build from timber as the climate will dry out the timber very quickly and create another raft of maintenance costs. If you are using timber use a good quality oil based paint to seal the timber more effectively.
I suggest some galvanised legs colorbond metal sheeting to ensure longevity as being more appropriate for the area with shadecloth strung over it as a cheap yet effective cover – sure the initial costs may be a little more but the long term benefits are more pronounced.
Given steel is lighter you will also be able to save on freight by transporting the materials from Perth.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi All,
Not sure if this was the development David was referring to but it makes for an interesting read anyway.
http://www.theaustralian.news.com.au/common/story_page/0,5744,9955343%255E25658,00.html
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
HI Redwing,
Those numbers look like Rockingham area – certainly on the high side – as Mel says shop around.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Marisa,
While the town serves 15 000 the town itself is only ~3800 – this may be the essence of your problem.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Perry,
See https://www.propertyinvesting.com/forum/topic/9554
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi All,
I have edited a number of posts that included personal attacks – by all means debate the topic – or in sporting parlance play the ball not the player.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by CornelBasson:it’s just the receipts and stuff from when I did my renovations that I can’t find half of…
Hi Cornel,
Just remember renovations are not claimable – they are depreciable – but not claimable.
Repairs are claimable – with the essence being repairing said item to workable condition.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by GreatPig:Hmmm… perhaps I should just get my wife to follow me round with a super-8 movie camera [rolleyesanim]
If it doesn’t impress the tax office, I might at least be able to release it as a movie…
GP
Just keep your clothes on[biggrin]
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Tony,
The general thrust of most comments on the forum are that positive cashflow properties (as per McKnight definition) are generally located in country areas and looking for such a property in a city such as Brisbane (even in outer suburbs) is a little like looking for a needle in a haystack.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Greatpig,
Not an accountant so disclaimers apply.
You can claim costs associated with the acquisition of a property such as travel and accomodation – these are not deductible but rather they are used to offset the cost base of the property and reduce any capital gains liability.
As to whether or not this equally applies to the general looking process – I would contend that while you are not classified as a ‘professional investor’ probably not – however when you get multiple properties then you may have a case to claim the general looking stage of research.
You would need to have some sort of paper trail to verify what you are claiming – diaries, appointments with REA, records of kilometres travelled, receipts/invoices for expenses incurred and so on. Ultimately you need to prove to the ATO that you can justify the claim.
As with all travel and accomodation ‘claims’ these are apportioned in accordance with time spent doing property related work – in essence spend a fortnight in the area and can only prove one day of proeprty activity – claim/cost offset is one forteenth of total costs.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Cornel,
One of the keys to successful property investment is to maintain good records including matters related to tax. You need to develop a ‘business mentality’ so that deadlines and records and met and maintained throughout all aspects of your ‘business’.
I suggest at the very least you buy yourself a lever arch file and create a number of partitions. One section for documents relating to rent matters (tenancy agreements, management rights etc) another for loan/finance documents, another for purchasing documents and others as appropriate.
One section should be devoted to receipts and income statements and these should be filed as a they come in. Stay on top of the paperwork and you’ll find the task isn’t onerous – and you accountant will love you.
I suggest you develop these habits and processes early so they are ingrained as your portfolio grows.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Richard,
I am not a wrapper and I was just curious for my own knowledge and was wondering whether or not the increased difficulty was related to some of the negative (and loud) media hype or just a change in policy or a reflection on changing bank policies or …………
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Shane,
One of the myths of property investing is that you need a cash deposit to start investing.
In reality if you have sufficient equity in your own home and income to service additional loans then you can start as soon as you want.
Typically lenders will recognise 80% of the value of your property as suitable security. If your loan is less than 80% of the value of your property then the difference effectively equals funds available for a deposit.
Eg House valued at $200K debt $100K. Lenders will recognise 80% of $200K (ie $160K) – $100k loan = $60K to be used as deposit for other property. You can go to a 90% level if you are prepared to pay loan mortgage insurance.
I recommend a discussion with a broker and they will be able to determine your borrowing capcity for you.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
HI Cornel,
Like Yack I too use an accountant as the world of tax is too complicated for many of us – I also subscribe to the theory that use the experts for specialist jobs where trained expertise is required – my time is valuable.
In essence keep all pieces of paper that relate to either income or expenses associated with the property and retain them for the prescribed period of time after your return is submitted. Just because you receive the refund you though you were due doesn’t mean the tax office has approved what was claimed.
You will also need to retain all receipts and statements for sale and/or purchase of the property for 7 (or is that 5?) years after disposal just in case the ATO has capital gains questions.
I also recommend you develop a functional filing system so that your accountants job is made as easy as possible. Better records on your part should result in a more accurate tax return.
If you PM me your email address I’ll happily email you a copy of a tax claims list. I can’t attach files here.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by Qlds007:Del
I think starting out and disclosing that the property is to be wrapped in this day and age is a lot harder than it was.Cheers Richard
Hi Richard,
Just curious – what makes you say this and why?
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
