Forum Replies Created
- ILIKEMONEY wrote:I would like to know if anyone had any suggestions on how to invest 200k.
The question is can i get a better return than this in NSW through property
Hi ILike,
You do not need to limit yourself to a $200K purchase.
The $200K could become deposit money. Further borrowings on this could realise further borrowings of around $800K (subject to income checks). While the additional borrowings may not have a commensurate increase in net rental income it does mean you will have a larger asset base than you would if if you simply purchased a $200K property.
Not sure how such a leap would fit into your risk profile but food for thought.
newJo wrote:I feel quite loyal to my bank and figured they would know what to doHi Jo,
Recommend you grad yourself a good broker – your 'loyalty' could become very costly further along your journey – if it hasn't already.
A banks first priority is not to you – it is to their share holders. For this reason they will more often than not structure your loans so that their interest is looked after, not yours.
The second point I would make is that, in some respects, getting the finance rights is equally as important to getting the property selection right.
Grab yourself a good broker – a few have already responded to this post and this would be a good place to start.
hi Wez,
Your state based Building Services Authority can also provide you with advice. Typically the normal process is:
Contact builder first and see what sort of reaction/response you get.
If you are unsuccessful then use a building inspector to help you determine whether or not the fault is a warranty issue or not.
If it is use the inspectors report to put more pressure on the builder.
If no success then use the building authority in your state for further action.
Couple of key points – communicate in writing and keep copies. If conversations are held make notes and send follow-up email to confirm your understandings,
renel wrote:. Just recently I saw advertised one run by a lady name Cherie something.Probably Cherie Barber – there are a number of discussions on her 'stuff' on this forum. If you do a search on the forums you'll get some feedback on people's perceptions of her material.
Hi David,
A comment that may be of some assistance to you.
If your property is negatively geared then you may wish to consider completing a PAYG Withholding Tax Variation which when combined with a depreciation report (if relevant) may provide some short term cashflow relief.
Your first post indicates your cashflow is 'OK' but you may wish to give some thought to to depreciation and PAYG tax variation if you haven't already.
davidts wrote:My question is, if I am forever leveraging off my IP to purchase more IP I will be forever negative gearing. How do I change this positive gearing so that I have CF+? Eventually I want to live off the CF+.Thanks.A couple of quick comments.
Rents will rise at some stage in the future at which your existing property will become positive.
If you purchase positively geared property or can make a property positive through improvements and increased rental returns you may find that your new properties are positive and positive to such an extent that they help offset any losses on your existing property.
PS – good result on your existing IP in this market – a great launching pad to build upon your existing property
Pat Mc wrote:My long term goal is to stop working FIFO in 3-5 years and be a full time property investor .Hi Pat,
This is the key statement for you.
How to do you propose to achieve this? Are you looking at a passive income stream or are you looking for a capital growth and sell down strategy?
The answer to this question then determines where & how you invest.
Hi Adis,
Not impossible.
Some of our clients were in a similar situation as you are with $140K available. The borrowed another $274K to complete a development worth $550,000+ . Rental estimates have indicated a gross rental income of $1300/week is achieveable.
They intend ploughing the rental income back into the construction loan (or offsetting it) so the principle is either paid out or incurs zero interest because of the balance of funds in the offset account. If they do this it is possible loan interest will be covered either through the offset effect or by paying out the loan. Allow some leeway and a reasonable estimated timeline of up to 6yrs is possible.
Some of our clients are also looking at second property with similar numbers to increase rental income further.
N.B. Plans are based on one property with gross rent of $1300/week and with interest rates of 6.3% – any variation to these will have a commensurate impact on timelines.
Hi Thanh,
In many cases retiring on a single property is 'difficult'. For this reason some property investors build a portfolio of properties, that is they own more than one property. Some people also refer to each purchase as an acquisition – so it is just a phrase to describe each property purchase.
Some general statements coming up – so do not accept them as fully factual as exceptions can be found.
Rents in Perth generally hover around the 5 – 6% mark. At this rental return your property will not be paying for itself and you'll be required to put some money into meet your shortfall. On this basis alone it will take some time for your rental income to be sufficiently large enough for you to retire on rental income.
Without knowing the ins and outs of your circumstances it is difficult to provide any more clarity and direction for you.
But paying off the loan is one option – there are better options in my opinion.
Hi Thanh,
With all due respect you do need to step back and spend some time learning the ins and outs of property investing. Your questions indicate to me that you are a vulnerable position and could be sold anything by a smooth talking salesperson.
You indicate you are looking for capital growth – if this is the case then look for areas in Perth that have grand plans for infrastructure investment in place either by private holdings, state government or local government. This is a good place to start.
Once you have identified your suburb then look at proximity to schools, transport nodes, shopping centres, recreational facilities become important micro factors for an investor to look for.
Buying and selling is one way or realising profits for further investment. But buying and selling real estate incurs signifciant costs such as stamp duty, agents fees, capital gains tax and so on. These figures can heavily erode profits thus slowing your progress enormously.
Most investors tend to hang on and use the services of a broker to release equity for further investing. This process allows them to hold their properties while adding newer acquisitions to their portfolios.
If you want to buy in Perth and use rental income for retirement then you will need to wait a while, build your portfolio and/or pay down debt to realise this goal.
Hope this helps a little.
hi all, As this discussion has morphed into tenants starting to buy I thought I would share this newspaper article.which is based on a RP Data report.
Hi Kate,
What you have described is entirely possible but that is very different to the article which talks about breaking leases – very different to moving out at the end of the lease.
Looking at the Perth market at the moment – I would suggest tenants who want to pay the same rent will be, in the main, either looking further afield or downgrading their premises or moving into some sort of shared living arrangement.
In general terms rising rents will see some tenants doing the maths and working out that a 'purchase' over 'renting' is an economically sound decision. All part of the normal property cycle really.
Catalyst wrote:I borrow 105% on each new property but my overall LVR is around 50%. .This is the really important part – high LVRs on individual properties but keep overall LVR lowish. What is correct is dependent upon a whole raft of factors, not the least of which is your personal situation and aversion (or not) to risk.
Hi Pat,
No worries.
The forum homepage is located at https://www.propertyinvesting.com/forums
The forum then breaks into various sections in an attempt to keep similar and related topics in the same section.
For example your accountant question would best be served in tax and accounting forum
Forum > Legal and Accounting Section
And your finance question would be best served in the finance section.
Forum > Finance
Hope this helps.
Welcome Pat Mc.
Pat Mc wrote:Questions.
Anyone recommend a good financial advisor in Perth and a good accountant.
I use Shreeve and Carslake in Herdsman Business Park for my accountancy work – they also operate as FP.
Having said that most FPs are not pro-property as little (or none) of their training focusses on direct property investing. I have made all of my own property decisions.
Quote:What mortgage would be best, ie interest only, or would it be best to start paying loan even though capital may be needed for next property.Generally speaking you are best to use interest only loans for your IPs. Adding to this I would also recommend you find yourself a good broker to provide you with the assistance you require. Having your loans structured correctly from day one will be invaluable to you in the long run.
PS Would also add you will get more feedback by asking your questions in the relevant section of the forum.
Hi DS,
Rent return is 7.8% which probably would not leave a great deal of surplus rent after all the bills have been paid.
Looking at the price I assume this property is a smaller country town – if this is the case you may be in a position to negotiate heavily on asking price.
But rent return is only one part of the equation as you also need to consider what sort of capital growth you can reasonably expect for this property.
simple wrote:50% TAX discountCGT is not necessarily the big beast some people make it out to be.
Warning here – rough maths being applied.
If an asset is sold in a high income year approximately 25% of the total gain is lost to CGT. Assume a $300K profit approximately $75K is payable to CGT and this assumes top tax bracket. Even this figure can be reduced by selling an asset in a low or no income year.
Hi Coota,
Picking up on Richard's thoughts – make sure you're not 'over-leveraged' across your portfolio. I don't believe high all round LVRs, particularly at this stage of the property cycle, is a wise move.
Leaves little more for you to manouvre if things go wrong.
Simonchua87 wrote:Hi, I am a newbie in property investment. I just wanna get some advice from some veterans out there regarding NRAS property. I am close to securing myself a land & package deal in Rockingham, WA.Hi Simon,
Not sure where you are up to with your Rockingham NRAS – have seen a few NRAS properties advertised in the area which I consider to be over-priced. Admittedly the ones I have seen are more the unit style – but the 'beware and do your research' message still applies. Make sure you are getting the property at the right price.
Sometimes in their haste to get the $10K/annum tax rebate investors forget the basics.
bugeye23 wrote:i have a car loan for my gf that owes about 15k and i have credit cards to a max of 8k.
How much more could i borrow?
Hi Bugeye,
Part of being a successful property investor is being a proficient money manager – I, for one, would see some advantages to you and your borrowing capacity going forward if you managed to get rid of some of this debt asap.
Having personal loans and large credit card limits (used or unused) will be a hindrance to your borrowing potential.
