Forum Replies Created
Gee thanks Terry – I'll just go and speak to the missus right now.
I need to get in before she tries to charge me some rent.
Not sure what sort of returns you are after or what risk profile you have.
For mine – in an offset account linked to your home loan – the same as earning approx 6% tax free.
Hi Dan,
Commercial property is a different world altogether.
I recommend you learn to walk before you run and focus on one property only at this stage (whether that is an IP or PPOR is your call) and then when the dust has settled on that purchase look at number 2.
I have seen people with grand plans to take a really big step with their first one – trouble is the step they planned is so big they never take it.
Based on information provided it sounds as if you are planning to operate outside of the tax act. Big penalties may apply.
Hi Radley,
My broker and accountant are both in excess of 400km from me.
With modern technology there is often little need to meet your professional face to face.
You may find the best broker and accountant for you can serve you from afar.
There will be additional costs beyond a standard IP that you will need to consider. Might also be the case the bank will not consider this as a standard residential loan so you may be looking at lower LVRs and higher interest rates.
I suspect July statement comment refers to figures from last financial year – not a big issue but worth asking questions about.
Hi Shangrila,
While some of their comments may frustrate you – don't totally ignore what some of them are saying. This is certainly the case if the person 'giving advice' has built a sizeable portfolio over a number of years. While their underlying strategy may differ from what you are doing by listening carefully you will still be able to glean some pearls of wisdom.
I have also seen first hand example of groups of people being overly optimistic and making rash decisions and comments. Maybe you fall into this camp – I don't know, just asking the question.
The challenge for you will be to distil what is reasonable caution and what is outright negativity. Remember also that some people simply cannot give messages of caution without sounding negative.
If, on the other hand, they are not property investors then turn the listening switch off.
Hope this helps.
Real Estate Industry is not the best industry to be in if your ultimate aim is to be a property investor.
Remember reading about 10 yrs ago a quote from the REIV President (?) of the time claiming only 1 in 5 REA is also a property investor.
Slow down and work out what you really want to do – with your property investing.
I have done the REA Sales Reps course in WA and didn't learn a thing about property investing. Learn more mixing with like minded individuals, reading, reading, reading and generally just immersing myself in property stuff.
Now involved in a niche real estate/property development company.
Hi Dan,
Not quite.
All banks have their own policies with respect to calculating your serviceability – how much can you afford to borrow. What Merlin was doing was using 80% of rental income and adding this to your income to determine how much you can borrow. I suspect the bank uses 80% because they tend to be conservative by nature – rather than allowing for costs.
From memory some banks allow a little more than 80% and some did allow negative gearing benefits when determining serviceability.
To be honest with – I think you are wasting your time with online calculators. The results obtained tend to bear little accuracy to actual results a broker can get by tweaking the numbers.
Whatever you do – use a broker and not a bank.
If you are trying to find out what your cashflow will be after buying an investment property then look at Jamie's website – I understand he has a cash flow calculator on it.
Ballpark maths – allow around 11% in WA. This tends to cover PM fees and all of the costs associated (letting fees, monthly charges, inspeptions and so on) with getting your property managed in WA.
Shedin wrote:We do have a broker whom we have purchased the previous 2 properties through and whom we are very happy with, but always happy to expand and not have all eggs in the one basket
Hi Shedin,
While that is all well and good – your loan structure doesn't look that terrific. and I wonder if the loan structure you have is because it was easy to do it that way rather than being the right and better way. Sometimes loan structures are set up because it is easy for the broker.
Now I am not a broker but it looks, to me, as if your loans are cross collateralised. Given your Kangaroo Point is not your standard residential property this makes for an 'interesting' situation.
Just reading your original post – is there a home in your property assets?
Adding to Scott's comments about Kangaroo Point.
Noticed you are paying P & I – is there any reason for this? Can it be converted to I/O?
Being an apartment any growth you get (or not) is inextricably tied to the sale prices achieved for similar units in your complex. You have no means of adding value and the property will just track the local market.
Nothing wrong with cutting loose an underperforming property and redirecting your hard-earned elsewhere. Sure it means, by extension, you could have made a better investment choice originally but plenty of time to tweak your current approach and strategy.
danfresh wrote:Also – how much should I be expecting to pay a broker for the whole "first home" experience?
Brokers earn their income from bank commissions – you shouldn't pay anything.
HI Yobbo,
Without knowing your full position – why are your looking at using cash for your next purchase?
If you use cash then you have lost any flexibility the cash can provide you with. For what it is worth I would prefer to put the money into an offset account – (a bit like earning approx 6% tax free) – and, if possible leveraging off you r existing properties and their equity.
The use of an offset account means you'll be able to use cash towards your PPOR if, and when, the time arrives.
Cash to the value you have can be used to great effect if used wisely – from my perspective I would spend some time strategising the opportunity you have in front of you.
Hi Matt,
I wouldn't be frustrated with your 'predicament' if I were you.
You have saved $15K as a student and secondly at the age of 23 you are already looking to make investment decisions for your future.
Both of these are big achievements in themselves so recognise you are a long way ahead of others at the same age.
As a starting point work out what you want achieve with property. Are you looking to invest for growth or cash flow or a combination of both?
Hi Yobbo,
Just to clarify – is this your first investment or do you have property already?
Might help others to frame their responses.
Hi Hermelinda,
Of the three options you have provided I would always choose real estate investment. Mind you if you posted exactly the same question on a share forum you will get a high proportion of people saying shares.
You are the one that is going to need to make the choice on this and the sum of money you receive will also play a part in which asset class you choose to invest in and how you go about it.
By your own admission your level of investment knowledge is limited – for this reason I would seriously consider placing all of the money in a fixed term deposit (say around 6 months) and spend the time reading, reading, reading to broaden your knowledge levels.
Given you'll be exempt from stamp duty (that is the big one) you'll probably cover the others for around $3K – does depend on a few things like which bank you are using.
Settlement Agent (not solicitor) Fee Guide for WA here
You'll also need to factor in building & pest inspection fees – allow around $500 (give or take)
Bit of debate about NRAS property here
Hi Dan,
I know you directed your question at Jamie but as a ball park figure you'll need a minimum deposit of approx 5% (give or take a little depending on the property chosen)
So if we use the $500K as your buying mark around $25K would be a reasonably good guide for you to aim at. You may need a little more for loan establishment costs, valuation fees, solicitors fees and so on.
Would cashing in of your shares realise $25K?
If you can come up with the deposit then it is highly possible the bank may not need a guarantor. You have, by virtue of having sufficient deposit to make your purchase alleviated any need for a guarantor.
Now just wait for Jamie to come along and finetune/correct what I have said.
