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Hi Gail,
PMs are the best source of information about rental market conditions in the area of your research. They know the market in detail and will, when you develop a relationship with them, let you know exactly what is happening and what local needs are etc.
If you are unsure about the validity of their comments you can always cross reference their comments with other PMs in the area – assuming there is more than one agent in town.
Government statistics are delayed too much and as such are really out of date when they hit the streets.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Jay,
As a broadbrushed statement yes – property more likely to meet the 11 sec solution tends be located at the lower end of the scale and in country/regional areas – having said that I am sure some of the passionate and learned cashflow investors will come along and give examples outside the range you indicated.
Bear in mind median prices in the major cities in Australia are all over $200K. (Adelaide?)
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi MJJ,
To mortgage insurance or not – that is the question.
For us we initially used mortgage insurance so that we could stretch our available equity (the same issue applies with deposit savings) as far as we felt comfortable doing so.
This allowed us to buy additional properties ahead of time and as such was particularly beneficial for us.
Now we have equity to spare and as such do not envisage using LMI in the short term future as there is no need to do so.
On a related matter LMI is a deductible expenses over five years (20% of premium/annum) or the life of the loan – whichever is sooner.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hey MM,
Way to go – enjoy your posts and may you stay awake endlessly keeping watch.
Derek
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Seachange,
As Mel said it is considered a capital cost and will be offset against capital gains.
The exit tax starts phasing in when profits exceed 12% and are fully (2.25%) implemented once the profit exceeds 15%.
While no-one likes to pay such an impost do not neglect the bigger picture.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Rip,
Found this on the ATO website.
http://www.ato.gov.au/large/content.asp?doc=/content/42604.htm
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Jo,
My reasoning (and it is only my reasoning) is based on the tax departments definition of initial repairs as being ‘remedying defects, damage or deterioration that existed at the date you acquired the property’ which are classified as being capital expenses.
Cleaning as a deductible expense more typically applies to a change of tenants scenario as I understand it.
But then I don’t have an accountancy degree either. [biggrin]
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Rob,
Yes rounded up 47 = 50 but that rate will only apply over $70K – and affects a smaller proportion of the total income – and up until that time the tax rate of 26% is a fair way from 50c/$.
Using the gross salary figures provided most of the income is taxed at the much lower rate and as such tax payable is considerably less.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi dhen,
Talk to the PM and find out why they have been unsuccessful and how many iinspections have they done.
Being winter there tends to be fewer tenants looking and as such you may need to consider reducing your rent.
Also ring other PMs and see what they are saying about the Orange market – compare the rent with other agents, see what is preferred by tenants in the area, how are their rentals moving and so on.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi all,
Condition 11.7 of the REIWA General Conditions of Sale of Land documents states ‘The property is sold in the same state and condition as inspected by the Purchaser or the Purchaser’s agent on or immediately before the date of contract’
And 11.8 ‘The Vendor shall give the Purchaser a reasonable opportunity to inpect the Property within 7 days prior to the Settlement Date’
Quite clearly the purchaser has capacity to delay (and should do so) settlement if these conditions are not complied with. Additionally an inspection just prior to settlement is essential to ensure that there haven’t been any significant changes to the property.
A series of dated digital photos at time the contract of sale is agreed is a prerequisite and if there are issues (tenants mess) needing the attention of the vendor these can be written as coonditions of the contract.
As an aside – under these circumstances I believe that making the premises habitable will be considered a capital cost as the buildings were acquired in that state and such will not be deductible in the normal scheme of things.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi all,
Couldn’t we call this the law of supply and demand – as the price of money (interest rates) change up and down then the number of renters and/or buyers changes in accordance with the movements in the money market.
Interesting to read in this mornings Australian – Sydney and Brisbane rents have risen over the past 12 months (evidenced by bond lodgement records) and in Brisbane’s case increased by up to $20/week depending upon nature of property.
Melbourne reports suggest that apart from apartments there is a general upward trend in rent figures.
This is assisted by a reduction of almost 0.5% in the Sydney and Melbourne vacancy rates (Perth too) and Brisbane has experienced a 6% increase in the number of tenants over the last 12 months.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Rob,
Your points are well made however the figures are ‘out’ a fair bit.
Bear in mind under the new tax scales coming into effect in July 1 of 2004 the highest marginal tax rate of 47% only kicks in when gross taxable salary exceeds $70000/annum. Up until then the tax rate is closer to an average of 26.5% – i.e $18612.
As such on $100k tax = $32712 with similar reductions up and down the line.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Miss Curiousity,
There is no right or wrong answer for everyone – ultimately what you are talking about is a philosophical difference and as such there are conflicting points of view.
In the end you are investing in property to make money – whether that be via a rental sream, via growth or a combination thereof can only be determined by yourself. As such the preferred investment strategy is largely dependent upon your exit strategy/ies.
Investing to first and foremost reduce tax clearly means you are investing for the wrong reasons – any reduction in tax could be a bi-product (and not the main product) of your investments – bear in mind your accountant is employed to reduce your taxation bill and as such that is why a positively geared investor often creates a dilemma for many an accountant – the focus is different.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
But Yack – it is English[biggrin]
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi OZstar,
Definitely see your local council and they will be able to tell you what your rights are. It is possible the ‘appeals’ period has closed and you have missed the opportunity to get plans adjusted to suit your needs too. On the otherhand maybe not…..
While you are there the local council will also be able to tell you what is required for you to do the same to your block.
A bit of further research with REA, development groups who specialise in such undertakings, builders, architects etc will give you the information you require to establish what is the best course of action for you.
Methinks being a virgin developer is a risky proposition at this stage in the property market.
However selling a block with developmental approval may add siginficantly to your selling price without the building/development hassles to go with it.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Y,
Be aware that you are dealing with other people’s property and there are ‘correct’ ways of disposing of their rubbish and supposedly ‘unwanted goods’.
Vaguely remember somewhere that you need to determine who owns the stuff and give notice (either directly or when the owners are unknown through public notice in the paper) that you will be disposing of the goods.
Suggest a call to the appropriate authorities or a friendly PM who will be familiar with this scenario.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Banderos,
Where you looking?
For example I have Perth suburbs stats that go back 30 years but only on 10 year cycles showing annual average growth rates. Unfortunately it is not transmissible.
Residex may be your best bet.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
HI sixpac,
Not an accountant but here goes.
The property you sold September 1-04 is CGT free as it is your PPOR.
The block bought on 1/1/04 isn’t CGT free as you have a declared PPOR which you sell on 1/9/04.
You can transfer PPOR status to the block from the moment you sign a contract to build a new home. However the ‘dual PPOR’ rule of 6 month will apply. You will not get full CGT exemption on the block as the overlapping period is more than 6 months.
The new house once completed will become your PPOR and as such is CGT free provided you live in it for 3 months.
As an aside it seems to me you rae buring a lot of money in builders fees and costs and real estate agents fees.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Misty,
Check with your state’s builder’s registration board.
As a rule of thumb statement new properties have a maintenance period within which time you need to contact the builder and inform them of any maintenance required.
There is also a structural period of ~6 years depending on which state you are in.
If you have any issues with building maintenance then contact your Builders Registration Board and they will be able to point you in the right direction.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Wayne,
Could be a wild goose chase but it may be worth a search of the Chamber of Mineral and Energy’s or Mines Department or WA Government website (if such a thing exists) – gien the size of WA – you’ll probably need the name of the mineral to be mined to be of assistance.
All the best in your hunt.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
