Forum Replies Created
Sounds like an investors has tried to make the best of an average property and stuffed two 'units' into one house and the one you are looking at gets short changed without a laundry or parking.
A 2 bedder without even a single car space. Not a good idea.
Maybe you could target the 16 old years working night shift at Maccas, who don't own a car to be tenants
Cheap doesn't always equate to a good deal.
Wouldn't touch it,
Never too late – just depends on the strategy you employ.
For what it is worth simply buying and waiting at the moment will be a slow journey. If you continue to buy the type of property that you have been then you will no longer be able to service new loans and you'll be hamstrung waiting for the general market to improve.
In the current market I would be looking for two things; one opportunities to buy under value or increase value. Typically this would be sub-divisions, renovations and small scale developments. These three strategies also provide a higher rent return this improving your overall cash flow position.
Suggest you sit down with a broker and work out what your capacity to borrow additional funds is like at the moment. Obtaining finance is a primary consideration of all property investors and knowing this will help you determine your next step.
Hi LB,
There are a number of companies that provide depreciation reports. Deppro, Washington Brown, Depreciator, BMT are some of the bigger companies. Give them a call and get quotes etc.
The depreciation report is prepared by a quantity surveyor and will have a 40 year (from date of build) life span in most cases. When speaking to the quantity surveyor. They will also be able to advise when it is best to get the report done.
You cannot claim improvements as a tax deduction – they are depreciable but not deductible like repairs.
If you make a like for like repair then that is a deductible expense – if you make an improvement (new carport & paving) then you will be able to depreciate the value of the work done. Speak to the Quantity Surveyor about this too – they may suggest getting the work done before you get your depreciation report done.
Worst case scenario keep your receipts and use that to make your depreciation claim – typically this would be around 2.5% of value over 40 years for a carport and/or paving.
Reality is you may get better benefit (increase in value and/or rent returns) from doing the work now rather than trying to crib a few dollars on your tax return.
Hi Lb,
Loan structure if fine for the conversion from PPOR to IP.
As far as tax goes – all you need to is keep a record of your expenses and income relating to the property. At the end of the year you include your rental income in your income declaration and can claim your expenses as a deduction.
Suggest you grab a copy of the ATOs Rental Guide
Make sure you take out landlords insurance and get a depreciation report done.
Hi FF,
That is exactly what I meant – means people can frame their responses on the basis of you are planning to work for another 16 years. We now have a specific target to work towards.
When I last looked at some REIA stats median property prices in capital cities tended to double (on average) every 10 years. This is not a straight line growth rate so allowance needs to be made for price flat spots and declines in any planning.
For what it is worth I believe a simple buy and hold (of mainstream property) strategy at the moment is not likely to realise terrific results in the short term. We have just come off an incredible growth phase in most capital cities and country areas which has largely been fueled by easy credit, media exposure and a self-fulfilling prophecy. I am not convinced we will see the same circumstances repeated for sometime.
For this reason value adding strategies such as sub-divisions, renovations and small scale developments look like being successful strategies during this time. Not only do these strategies add value it also means your rent return (on funds invested) increases which means the next property is closer.
Hi FF,
There is a critical piece of information missing in all of your posts.
You have told us you are 39 and then proceeded to ask a question to see if you were 'told old' – you haven't told us what age you want to be independent/retire. What age is in your plans?
This information may put an entirely different slant on things.
Property is generally considered as being a 'long term investment' – according to businessdictionary.com this is defined as being plus 10 years.
PaulDobson wrote:the one that always comes back to bite us the most is rushing the choiceWise words there Paul.
The issue of rushing doesn't only apply to choosing VF buyers.
Agree with Terry – use a property lawyer from the state the property is located in.
The process of buying property in different states is slightly different – your lawyer needs to be familiar with the nuances of the state you are buying in.
Look for someone who specialises in property.
Not sure how property transactions are handled in SA but in WA we tend to use conveyancers for straight forward transactions. In the past the conveyancers have been able to recommend good property lawyers. Might be worth a call or two.
Hi Mattsta,
Not all new properties have warranty.
From memory NSW warranty does not apply to buildings higher than 3 storeys with underground carpark. I am sure this is what Scott's link was to. Been a while since I had an understanding of NSW building warranties so double check.
All buyers should check that the building they are buying has any form of warranty. Ring the building supervisory board in the respective states to check.
Edit (11/11/12) changed 4 storeys to 3 based on link to article provided by SNM
hi Scott,
Gee that is an interesting extension of issues with builders warranties.
Have NSW government made any efforts to address this matter?
This ruling could have, if it hasn't already, a knock-on effect to other states.
You meet them in all walks of life – it is a people thing.
Hi Loren,
Not sure if you have seen the list in this thread.
https://www.propertyinvesting.com/forums/community/heads-up/6845
Might be something there that is of interest to you.
Nothing in your post surprises me.
Regularly hear of owners of heritage property owners having to jump through all sorts of hoops. I would suggest the 'heritage'rating' of the property would determine how much approval you need and whether or not approvals are required for any internal work.
Most states have a website explaining the rules as they apply to that state. Recommend you jump on google. You'll also probably find that the council website will have similar information.
1.what kind of insurance should i be looking at
- If the property is a house then you will need building and contents insurance. If the property is strata titled then building may be covered, depending on the strata type, I would also add landlords coverage to your insurance policy.
2.how much would it cost me
- Landlords is about $240 ish depending on who you are with, excess levels and so on. Building insurance will vary according to the value of the property, location, construction and so on. Too many variables to give indicative costings.
3. is this tax claimabke?
- Yes.
4.who do u have insurance with and recommendations
- There a number of insurance companies around. Unfortunately you only find out how good they are when it is time to make a claim.
5.when should the insurance be taken
- From exchange or when contract is unconditional depending upon which state you are in.
6. what insurance do i need to start with or need as a must (ex:Income Protection Insurance (IPI) and Life Insurance (LI),rental income,property damage etc)
- Depending upon your situation you may find IPI and/or LI of value. You'll need to assess your personal situation to determine whether or not these forms of insurance are of value to you. While doing this make sure you run a stress test over your situation if you were killed, severely injured and could not earn an income.
Market still patchy at the moment mattsta.
We are no-where near being at the stage when everything purchased turned to gold as it did in 2006.
We have noticed development blocks were are buying for our clients have increased slightly in the areas we are focussing. Competition for these sorts of blocks has increased in last 6 months.
Could be an early sign …………………………………… then again it may be a false dawn.
Hi Rob,
Did some work with a single mum a few years back.
She was keen to get ahead. Spent some time talking through a range of issues, finding out whether she really wanted to invest (or just thought it a good idea at the time), her current financial situation, plans for the future and so on. She was late forties at the time.
Ended up she bought a property.
If she does nothing else she will have at least one asset she can sell and utilise the capital profits in some income providing capacity.
Bottom line she is better off with one property than none.
I don't have the full picture so some of my interpretations may be incorrect.
I am going to be one of your siblings for a moment – be fortunate I aren't in real life.
If I was one of your siblings I would be interrogating this proposal with a fine tooth comb.
For example – why are you 'deposit poor?'
What is the likelihood of your fulfilling any financial commitments made under this arrangement.
And finally the biggie –
I wonder if you have looked at this situation from their perspective too. To me your post centres on your benefits and all it does is clear their debt without leaving any surplus.
Your parents have worked all of their life and got themselves a home and are now struggling as they enter the later years of their life. Your solution is to buy their property at less than market value, allowing them to clear their debts without anything left over and pay out the
face2facerentals wrote:balance of the market value would be paid either in a set time or to the estate on their death (of course I am a beneficiary of the estate at this time).What benefit do your folks get if you pay the balance remaining into the estate?
Exactly what are your parents going to live in and what are they going to live on? Are they going to remain in their home?
You also need to look at their overall budget situation to make sure they have sufficient cashflow in their pockets.
Just going through this situation with my folks at the moment and it can be a tricky situation working with alot of sensitivities. I am not sure your focus is sufficiently on their needs – while you claim to be helping them become debt free – there is a potential big upside to you.
They should be your first priority.
Bugger – seems I spoke too soon.
My other puter got the same error message today while I was using Mozilla.
Hi Dazed,
As an extension to DWolfe's response – tenants need to take out their own contents insurance.
Might be an opportune time to remind them of this. Sounds like they got off lightly this time.
