Forum Replies Created
Hi Cars,
If there is any rental income earned then the property is classified as a passive asset and as such you cannot defer CGT liability.
For a full explanation I suggest a search on ‘CGT deferral’
Please note I am not an accountant and as such more learned comment than mine needs to be sought out.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Rusty,
It depends on which theory you subscribe to.
A) Put all you eggs in one basket and watch it like crazy. Ie know the area, research it well, choose carefully and work the area hard.
Spread you eggs around many baskets.Me I am a type B investor and am spreading my risks around the place.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Oztexs,
Firstly let me say that you have done exceedingly well at your age.
One key point missing is what are you wanting to achieve over the long term? As such this will largely determine what is the right decision for you.
You haven’t indicated your respective income levels (and you don’t have too) but as you are considering a family in the near future you will also need to factor in a reduction of income levels.
This eventuality has the potential to make significant inroads into your cashflow – either one of you stays at home or you use child care facilities.
If you convert your existing PPOR to an IP then you will lose any capital gains advantages you did have.
You haven’t indicated why you would prefer to live elsewhere – it is possible that with a reflection on your reasons for moving that the current area isn’t too bad after all – sometimes a little sacrifice can be worth it in the long run. If this happens to be the case then you may be better off staying put.
Good luck with your decision.
Derek
derekjones1@bigpond.comPS Jo – Rents need to be at market rate to ensure deductibility of expenses. Under the circumstances outlines (no debt – any claims would be confined to rates, land taxes and insurance and I am supposing the parents pay these in return for free board)
Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Marisa,
You will find that the ‘total product’ for low doc and no doc loans have become more comparable to a standard lend as more and more ‘lenders’ add them to their product list.
Initially no docs and low docs were for more ‘unusual’ circumstances and only offered by a limited number of lenders but that too has changed in more recent times as wider competition creates a market more beneficial to the borrower.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Linda,
(Phew – that sounds much better)
Absolutely no offence taken.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Wilko,
This topic has been raised a few times before so I recommend you do a search. Click on forum boards and there is a search facility just under that.
In short – retirement units are an untested market and as such there growth is problematic – sure Australia’s aging population is proportionally expanding and the retirement village concept is well marketed but………a few unknowns abound.
Banks will typically not lend 80% of anything less than 50sqm and as such these properties may take more than their share of your available equity. Be also aware that the same banks may also baulk at allowing you to use equity gained in these properties as security for another property.
Banks have been known to change their lending policies so what exists today may be different tomorrow – sometimes this works in your favour and at other times it doesn’t.
On the surface the gross rental returns look very inviting but there are a number of costs incurred in providing the accommodation for tenants. Some units include catering and laundry costs and these tend to make the net rent (as distinct from gross rent) a little less attractive.
Rents are generally tied to the aged pension and rental subsidy scheme and usually equate to 85% of this figure. Rental increases are somewhat certain but increased management fees over time may negate these gains.
Retirement units also, by legislation and/or design, are only open to people who meet an age criteria and as such vacancies may be a little more extended than for a standard residential property.
You will also need to check the management agreement as their may be some issues hidden in the fineprint.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Dandan,
If the agent is that sure ask them to put it in writing and to commit to funding any shortfall – see how good the ‘guarantee’ is.
My guess is they are offering an opinion that the property will rent for $X – it would pay you to ring around a couple of property managers, independent of the selling agent, and see what they say. After all some agents have been known to inflate expected rent to make the deal look more attractive.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Monopoly,
Some of those Housing Commission areas in Perth have had huge (many above other suburbs) gains in recent years with urban renewal programs in place.
WA government has adopted a policy of spreading housing commission tenants around Perth and as a result the ‘old cheap’ suburbs are now largely being redeveloped in a big way.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Lee,
cannot comment upon the group in question but here are some question you may like to fire at them.
How long have they been finding investment property for their clients?
What methodology do they have for researching the market to find value for you?
Can they support you with other services such as finance, strategic advice on your total
investment portfolio, insurance and risk management, property management and conveyancing?What has been their past success for other clients?
Do they listen to and understand what you are trying to achieve by investing in property or are they just trying to sell you a project?
How many properties do they review before providing a short list for you?
How do they get paid?
Can they get you a better deal than if you had purchased direct?
Do they know the pitfalls of buying investment property and avoid them?
Do they look Australia wide for the right investments or just in their own back yard?
Taken from http://www.propertyreview.com.au
Some comments I have made on another group that may be of use.
1. How long have PRG been in business?
2. How many investment properties does your ‘consultant’ own?
3. How long has your consultant been investing?
4. How does your ‘consultant’ earn their money?
5. What will they get out of each and every purchase?
6. What service do they offer?
7. How much does it cost to use each aspect of their operations?
8. Can you use your own mortgage lender? property manager? valuer? If not – why not? (it is a free world)?
9. What sort of after sales support do you get?
10. Does their approach fit comfortably with you?
11. How much pressure is bought to bear?
12. Are all decisions made in PRG’s presence and without pressure?
13. Are there rent guarantees? (Run away fast if there are!)
14. How does the price compare to similar properties on the open market?
15. ASIC/ Ministry of Fair Trading Issues?
16. Where have CWB’s past sales been? What were they? How much is the open market paying for them now? What are they rented for now?
17. What are similar properties (to the one being considered) renting for? Check with a couple of REA in tthe area?
18. What is the vacancy rate in the area like?
19. What infrastructure is planned for the area?
20. Are brochures high on ‘gloss’ and ‘glitz’ and low on facts?Also do a check on ASIC website.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by zuluwarriordog:Hello,
banks do not want to lend for remote properties in rural areas as they do not think they can recover their money if necessary.Hi Zulu,
You also need to be certain you’ll be able to recover your funds within a reasonable timeframe if the ‘manure hits the fan’
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Ezt,
Ring the Queensland Building Regulatory Authority (or whatever it is called in Q) and/or MOFT to see where you stand.
In my experience of building houses in Queensland and also in WA the first payment for building costs takes place with the completion of the slab.
All the best with the matter – I trust it is resolved to your son’s satisfaction.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Scott,
Would love a copy please.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi all,
Ibuy’s comments are spot on – was talking to an accountant on the weekend who indicated an audit is relatively straightforward for those investors who maintain a good paper trail and comply with the various legislation.
There is nothing to fear if you follow the rules.
Bend the rules and enjoy your ill gotten gains at your own peril.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi MA,
Such between tenancy cover was uniquely available, as Gatsby indicated, for Investors Club members for Club purchased property.
The rental coverage program, called No Tenant No Problem, had previously been approved by APRA (Australian Prudential Regulatory Authority) and was entirely optional. Fees were proportional to the expected rent and were also affected by the tenancy status of the property at purchase time.
A change in jurisdiction saw the program fall under ASIC’s Managed Investment Act and was challenged on this basis.
Despite there never being one complaint about the program the court ruled in favour of ASIC and the program ceased for individual investors as their 12 month fee period expired.
In response to member enquiries we are currently in discussions with the relevant authorities to reinstitute a similar program as soon as possible.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi David,
All things being equal I would do as Cremin has suggested and use the spare $200K elsewhere.
However things are not always that straightforward – you may find one has greater potential for increased growth with refurbishment or there is better demand for a 1 or 2 bedroom property in the area, or one is undervalued in comparison to like properties or there is more potential to be more creative with one proeprty over the other.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Kay,
I believe Gatsby was asking about rental insurance between tenancies as distinct from broken leases, damage making the property uninhabitable and so on.
Rentcover doesn’t cover the between tenant vacancy – from their website
“RentCover Plus is not a general rental guarantee. The first criteria for a claim is that the tenant must have done something wrong (such as broken their lease, defaulted on rent or damaged your property). If these circumstances have occurred there may be cover whilst your property manager finds a new tenant, however if the tenant has simply moved at the end of their lease there is no cover.”
As far as I know there is no such cover for this eventuality currently available in Australia.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by depreciator:a holiday unit on the NSW coast.
And on the place I bought they used the wrong percentage for the building write-off. They had it at 4% instead of 2.5%.
ScottHi Scott,
I was under the impression that property classified as ‘traveller accommodation’ and built after 27/2/92 is eligible for a 4% buidling write off.
I thought, and based on your description, your holiday unit would be eligible for the higher rate. Have I missed a ruling change somewhere?
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Ritchie,
As MB has indicated you have a big bucket load of equity available to use and depending upon your serviceability capacity you have the ability to leverage these funds even further.
My counsel would be for you both (wife and you) to sit down and work out what you want to achieve and then seek the advice of a good accountant and broker and make these people part of your ‘team’. Spend some time now setting things up correctly to maximise your capacity while at the same time ensuring the structure you employ to own properties is consistent with your plans.
Having good people working with you will minimise the likelhood of you defaulting. Sound research will also maximise your likelihood of enjoying success.
Above all you need to remember to start slowly and get used to owning an investment property and then when the time is right coonsider another, and another and so on. There is no need to ‘rush things’ – make haste slowly.
Changing the status, and informing the bank, of the property from owner occupied to investment as per your wife’s property won’t affect repayment rates. That thought is a ‘hangover’ from the ‘old days’ when banks charged different interest rates for owner occupier and investment loans.
As Tasman indicated the ATO expects property to be rented at market rates for full deductibility to be maintained. A letter from the local Property Manager is usually sufficient to establish the going rent for the property and ensure you fully comply with ATO requirements.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Scott,
Didn’t realise you had a ‘branch’ in Perth – I’ll adjust my comments accordingly.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by kay henry:How can you tell if someone is checking your profile?
kay henry
Hi Kay,
Click on ‘more’ in the whos online section and you’ll see what people are doing (figuratively speaking only – for those of you who browse in the buff) if their settings show when they are logged on.
It was interesting seeing which threads were popular at that moment in time – however the move to thread numbers, as distinct from thread titles, removes that capacity.
Whenever someone clicks on your profile – you get a little pin prick sensation in your left shoulder – much like a voodoo doll. [biggrin]
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Spread you eggs around many baskets.
