Forum Replies Created
Hi Kirsty,
No worries – understand the logic behind your decision.
If the situation changes and you want to revisit the PAYG option don't hesitate to drop me a PM. The offer stands.
Cheers
Hi Aidan,
The last three years (in general terms) have been pretty average in many areas – so take the so-so performance of the property with a grain of salt.
If you do sell you'll crystalise your losses – can these losses be used to offset any capital gains you may have. Note I not advocating selling a performer to neutralise an under-performer. It just may be you had some plans to sell an asset that is increased in value.
I don't know the area nor do I have enough information about your overall situation but sometimes selling and buying in the same market, albeit in different states, is not a bad option. From my point of view selling, crystalising the loss, and stepping out investing altogether would be counter productive to what you initially set out to achieve.
Looks like the property is also costing your a bit to hold annually. If this is the case the capital loss will hurt a little less because of your annual cashflow savings.
Hope this helps.
Agreeing with others – not a good investment.
If banks require a higher deposit (see Terry's comment) then it means the banks have determined this type of property to be high risk. If they are risky for a bank then, by extension, they are risky for you too.
While chasing cash flow is understandable don't forget to make sure the underlying fundamentals are suitable too.
CharlieJoe wrote:She said that the government would give me $98,000 paid over 10 years at $9,800 per year, to invest in property. She said the properties were "all over the country" and the consultant would explain exactly where they were at the "information session".Hi CharlieJoe,
Sounds like NRAS properties – which basically a subsidised rental scheme (I hate that word) to help certain sections of our community to rent affordable property. In essence reduced rent is offset by tax benefits to largely offset the overall cashflow situation.
IMO NRAS properties are heavily marketed for their tax benefits and would be investors need to look beyond the tax benefits to make sure the property offered, as an investment, still stacks up.
Hi Kristy,
Good to hear from you again – often people come on, ask a question, never to see or heard from again.
Sounds like you have managed to turn the ship around ever so slightly. Good on you for doing so.
As I suggested in an earlier post it may also be to your benefit to submit a PAYG tax variation – depending upon your situation and the numbers associated with your property this strategy may also release some of the pressure. The ATO recently released the necessary forms for next financial year so this is something you can do now so the reduced taxation comes into effect from 1st July.
The PAYG form is a fairly easy to complete. If you want some more information send me a PM, we can exchange phone numbers, and I can walk you through the form.
Hi Corie,
Report in this morning's edition of Perth Now (Sunday Times online daily version) certainly casts some doubt on MAX and to a lesser extent the Airport link.
Both projects were promised in the expectation a 'lot' of federal money would be forthcoming. The 'lot' hasn't been forthcoming and the time for delivering the money extended beyond the intended/promised timelines.
Hi Bruce,
Given the Federal Budget last night the two rail projects I expect we won't see light of day for approx 10 yrs.
If you have identified MAX and the airport rail ink as 'look for' factors make sure you find out when they will be built. Mind you MAX, in particular, runs through good areas anyway and MAX may be the icing on the cake.
Hi Dave,
Love your commitment – this will put you in good stead moving forward from here.
I am not a renovator so take what I say with a grain of salt but if you have learned 'something' from your first effort then you are on the right track. In my opinion those who claim never to make a mistake aren't being honest with themselves.
There are a number of glib phrases that may provide you with some comfort – "Rome wasn't built in a day" or "Success comes to those who wait" or "Wealth is the transfer of money from the impatient to the patient" and so on.
Hang in there.
Have you thought about networking with a real estate or buyers agent? May help
A few web pages that may assist you.
Historical price data – http://reiwa.com.au/Research/Pages/Price-growth-by-suburb.aspx
Suburb rental information – http://reiwa.com.au/Research/Pages/Perth-Rental-Data-Search.aspx?reg=perth
This page – http://reiwa.com.au/Research/Pages/Market-indicators.aspx – links to stats for regional areas too.
Hi Propty,
Drouin was always going to end badly – especially when you were trying to flip the property. Small market, finite and unforgiving timeline, and risky strategy. For these reasons I, for one, certainly wouldn't be making all future investment decisions based on your Drouin experience.
Perth is a major capital city and many of t he key fundamentals look rosy for Perth – the current market is moving well (even though the stats don't show the whole picture) and looks OK moving forward. Stock levels are extremely low and rental vacancy rate remains below 3% – albeit it is showing a slight rising trend in more recent months. Fundamentally I would argue that Perth offers better options than Melb (but I am biased)
Re-reading your post it would appear as if you need to clarify what you are trying to achieve. The three options you have provided all have different reasons underpinning them – a lack of clarity means you may have difficulty clearly identifying which property and area is most suited to your goals.
If Perth is your preferred option you will need to give due consideration to how you will go about your research and purchase. Get these two ducks lined up and you'll enjoy success.
Stats and suburb profiles for Perth suburbs can be found on http://www.reiwa.com.au website
hemi3000 wrote:it's like buying orangesOr, ………………………………… lemons.
It seems as if not all professionals are created equally.
This example is a case in point to show that while we should defer to professionals for advice it also pays to 'know a bit' yourself.
Couple of possibilities.
Shreeve & Carslake (S & C) in Herdsman Business Park, Herdsman and the other Sondergard and Associates (S & A) in Hector St Osborne Park. Both very accessible off the freeway.
I use S & C for my personal stuff.
Came across S & A when looking for SMSF and JV developments advice. Meeting them next week again to explore further options we have in t his area.
North or south of the River?
Got a couple of options north of the river.
davejohno wrote:We don't want to make a huge amount of money off them but any money made, is taken up buy stamps, holding and selling costs.Hi Dave,
You haven't stated your 'target figure' and it would be interests to see what you are aiming to achieve.
Have you considered the cost of your time in your profit/loss calculations?
Reading this comment it would appear as if you're still in the learning phase and either paid too much, over-capitalised and/or got your 'sell price' research wrong. Without knowing a lot about your or your background I would consider this as part of the learning process and wouldn't be overly concerned by the lack of profit provided you review your experience and learn from any mistakes made and then use this knowledge to make a better success of your next project.
As others have said you are battling against the media's current love affair with renos – every Tom, Dick and Harry is trying to emulate these shows which makes the task of making good selections difficult.
Hi Bruce,
I would be looking at your budget and trying to get something in 'closish' proximity to the railway lines running out from Perth. Match this up with proximity to employment nodes and you'll be on a winner.
REIWA recently (Jan 2013) released a socio-economic report showing the reduction in 'large family' households and the increase in smaller households with the numbers of two people households being the growth area at the moment.
So in answer to your question – look for something that meets the market and which can be value added.
I am not sure the American economy could sustain a lengthy period of conflict – Afghanistan and Iraq sucked much of their reserves dry.
Korea V America will make Iraq and Afghanistan look like an argument between kids.
Hi Mizfitz,
Various 'gurus' get asked about from time to time on this forum.
You'll find a swag of discussion and comment on this forum by using t he search facility located at the top right hand corner of your screen. Plenty there and you'll be kept occupied for hours.
Hope this helps.
wanttosuceed wrote:Fears for future financial stability have recently become a reality when our parents were denied a retiree pension a few years ago as they have two properties and no morgatage. The houses (one in Guilford, one in Albany) have been on the market for a number of years. Albany has been in the family for generations but is empty for 3/4 of the year. The parents combined land value is approx 900K completely owned. Whilst in desirable suburbs and perfectly livable however the houses are very old, unappealing plasterboard structures which have received very little interest..
Our parents, unable to work at all, are now down to their last few thousand dollars of their savings and facing an urgent problem as we cannot afford to support them due to our second morgatage.
Why is the Albany property empty 75% of the year if it is the family home (in reference to a comment you made elsewhere in your post) – Is this Albany property a different one than the family home?
Your parents, or you on their behalf, need to grill the agents to find out why the properties aren't selling. It is usually the wrong price that is the reason for an elongated selling period.
The Albany market (at the lower end) has been moving reasonably well in more recent months. Where is the property and who is the listing agent? I would suggest getting another agent onto the job. There are a couple of more dynamic agents and agencies in Albany that would be worth speaking to.
You could also consider, as an interim measure, a reverse mortgage. While this is not an ideal situation it may keep the wolves from the door.
wanttosuceed wrote:THIS IS WHERE WE NEED ADVICE.
Is there anyone that could offer their opinion on a profitable and simple solution. As we are the only children we feel that it is our obliga.tion to try our best to make their lives more comfortable.
Would it be difficult/ expensive / legal for us to take on ownership of their properties in order for them to receive a pension? Should we decrease the already low asking price for quick sale (easy out) and miss out on a profitable opportunity? We are prepared to focus on a project to in order to gain as much return as possible with access to resources within the building industry.
I would be looking at a reduced sale price rather than you buying old your folks' property. Emotion will cloud your judgement and it is a time for cool heads to prevail. Having gone through the exact same thing with my folks last year I know how challenging it can be. But keep a cool head.
wanttosuceed wrote:I had the thought of sub dividing the large Guilford block and building two 3×2 simple houses. The land is currently worth approx 400K and has recently been zoned for industrial/commercial (don't know if that is relevant or benificial…) if we build smart and simple we could sell each house for around $370K each….securing the parents retirement and paying off a large chunk of our morgatage. Whilst keeping the Albany property as their residence and still in the family. However land prep/clearing, demolition, sub division and license approvals etc are all beyond my knowledgebase. The project could be completed within the year providing sizable guaranteed return in the current market
The current zoning of the Guildford property will make building of two house an extremely difficult and lengthy process. Firstly you will need to get a zoning change and obtain development approval. A straight sale is a preferred option in my opinion. Keeps things simple. Once again drill the agent to find out why this property hasn't sold. Chaneg agents. Get a second opinion. Don't wait for things to happen – make them happen.
wanttosuceed wrote:HOW THE HECK DO WE GO ABOUT EXECUTING OUR PLANS???
Were not too impressed with bank lending as they over complicate the lending process (which shouldn't have happened with the amount of equity and security we have) and we feel that they tend to apply sneaky and unnecessary requests to gain caveats all of your houses. Is there an investment/lender/builder service around that direct the project for a percentage in the return. Or better still a lender that requires no deposit based on security alone with very low or no repayments until the return is received? Are there private investors that would be interested? If so, how do we apply/find them? is there a standard investment presentation/plan that I would need to start on? We are not really in a comfortable position to take on another financial commitment as our current morgatage repayments leave enough for our family of five to live comfortably without accumulating savings. We also have the other problem of the need an immediate cash boost that his parents require to simply live on until completion. Are there lenders that provide investment loans which we can use toward project at own discretion?
Use a broker – banks are more inclined to look after their shareholders than you. A good broker will be able to provide you with a full range of options for you to consider. Their focus will be very much on your needs and wishes.
It seems to be property is not your parents issue – rather just a lack of knowledge and direction. Certainly if they had their time over again they may well have done things differently and this is where educating yourself will help you to avoid similar mistakes.
I'll try and break things down into more sizeable chunks so my answers make more sense.
wanttosuceed wrote:Were desperately looking for some direction or advice here. My partner and I have recently purchased our second home and jumped into the world of investment.YOU ALL STARTED SOMEWHERE…..WHAT HELPED YOU TAKE YOUR FIRST STEPS?We are a couple with a young family with a combined income of approx 120k p/a. No education on investing / finances whatsoever, adequate tax knowledge. With a secure and sizable asset ownership.
We started out as accidental investors many years ago. Bought a place to stop us wasting our money at the pub on weekends. Had the property for a few years and the worked out the property had significantly increased in value due to the rising market at the time and then started a self-education process. Since then have become more and more involved in property including building a portfolio and now running a property investment company.
The key is 'education' – while that is so simple to say there is no real shortcut. I know some people are happy to follow the advice and suggestions of 'professionals' I prefer to see people undertake some self-education so they have control over the decisions that affect their livelihood and future.
There are plenty of books on property investing and investing in general. Then there are a swag of resources on financial matters. Reckon grabbing a couple of these is a good place to start.
wanttosuceed wrote:OUR STATS
Total current Assets value = over $2.1million Total current debt = $750,000 Total yearly income = $120,000 Total yearly rental income $31,200
We have a rental property generating a $600 per week rental income with tenants that wish to sign on for 5 years (currently started on) Worth approx 650k with 280k guarantor by parents, remaining on loan.
Where is the property? Is it commercial? What is the value of this property?
A five year lease gives you a bucket load of certainty with your tenant but make sure you include regular (6 monthly) rental reviews otherwise you could see your tenant paying $600/week for the next five years. Inflation over this period of time will erode the value of that $600.
I would be taking all possible steps to remove the $280K parental guarantee on this property. I would suggest that you speak to a broker (not your bank) about this process. A good broker will help you get things in place so that your interests are looked after.
I know a couple of brokers in WA who may be of assistance. Equally there are plenty of good brokers on this forum who could assist.
wanttosuceed wrote:Our second property is our family home in Busselton worth 500K with 360K remaining unseccured. Lastly a total personal ( I thinks its called liquid asset, cars, caravans goods all owned) estimate of around $90K.
So your debt level on this property is 72%.
Typically banks will happily lend up to 80% of the value of an asset so you have a possible $40K which could be released here if you desire. It is possible to go higher.
wanttosuceed wrote:We had no real desire to buy more property or increase our portfolio (if that is the correct word) due to lack of knowledge, guidance and fear.
However we do recognize our advantageous position which is probably going to waist where we could be building a more secure future for our family.
It could be your lack of knowledge is the hurdle that is preventing you from seeing the possibilities that could open up for you if you wanted to. This is where having a good knowledge base comes into play.
End Part 1.
