Forum Replies Created
- Tracey B wrote:When purchasing I always ask myself: Will this purchase take me closer to my goal or further away?
This is a great question Tracey. So simple yet oh so important.
Wendy – without trying to pull the rug out from under you or anything like that.
You really need to understand what you are trying to achieve and Tracey's question and your answer to it will determine which of the current properties on your shortlist are most suitable for you. Being a successful property investor is based around making as many right decisions along the way as you can – knowing which path you are walking is the key to success.
Hi Mick,
There is a nexus between depreciation and capital gains tax but the key thing is the ATO can make a calculation based on what you could have claimed rather than just what you have claimed – see below extract from the ATO's "Rental Properties Guide 2011"
"You must exclude from the cost base of a CGT asset (including a building, structure or other capital improvement to land that is treated as a separate asset for CGT purposes) the amount of capital works deductions you have claimed or can (my highlight) claim in respect of the asset if:
1) you acquired the asset after 7.30pm (by legal time in the ACT) on 13 May 1997, or
2) you acquired the asset before that time and the expenditure that gave rise to the capital works deductions was incurred after 30 June 1999."Note the implications of claiming, or not claiming, depreciation only applies to capital works deductions. It does not apply to plant and equipment depreciation claims.
But – disclaimer applies I am not an accountant.
Hell Terry – Kris will now spend another 3/4 years learning about trusts
Find out how your friends got their properties tenanted and follow that trail.
Some companies have preferred agents in selected localities.
I suspect the bigger companies prefer to work with agents as they like a 'professional' in the middle between them and the landlord.
newbiebeginner wrote:buying an investment holiday unit on the sunshine coast,Generally speaking holiday units do not make good investments.
Make sure you speak to a good broker and talk through the financiing of this particular property. You will probably find the lending institution will see increased risk in this type of investment and will lend you funds at a lower loan to value ration than for a standard residential loan.
Are you holidaying there at the moment?
Reason I ask is holidays makers tend to associated there last holiday with a good time and romanticise about having their own unit at that location. If this is the case then you are not approaching this important decision from the right angle.
Reading your post it would appear as if everything is happening too quickly – slow down and do more research. If the property and the area still stack up after your research has been completed then make an offer based on your research.
I would not be worried about missing out on this unit – there will be others.
Hi Mandy,
Terrible news.
You should also speak with the bank to let them know of the looming hardship.
Make enquiries about converting loan to interest only immediately – this will relieve some of the financial pressure you are under.
Also recommend speaking directly with the bank about their hardship provisions. They may/should give you a release from the requirement to make regular payments to them.
If you are ahead in your payments you may be able to buffer the above two points by utilising any redraw capacity you have in your loan.
FWIW – I also agree with Terry and Michael. While selling your home may not be terribly attractive. Long term it may be the best option. Having said that the Sunshine coast property market ain't shining at the moment.
Hope it all works out for you.
Shiny_Suit_Man wrote:Does the offset account come into play with the equity or is it literally based on what you have paid off the actual loan?When assessing your level of security banks will assess you on the limit rather than the balance of the loan.
west57 wrote:I would conservatively estimate current market value to be $350,000. I have $90,000 still owing on the mortgage.The bank will assess your asset level in conjunction with your income level.
Based on the information provided your equity position is assessed as follows:
80% of property value ($350) = $289K less existing debts ($90K) = $199K accessible equity which is often set up in a line of credit type structure. This line of credit (or similar) can be used to pay any deposits and purchasing costs for subsequent purchases.
It is important to remember these are only numbers on a pieces of paper and the bank will make an overall assessment by also considering your income level when working out how much and what you can do.
west57 wrote:My main salary is about $55,000 but I earn an additional $20-$30k/pa from my self-employed business. I have no credit card or other debts besides my mortgage.I am not a broker and I suggest you contact a good broker who is also a property investor to get your structure right and maximise your borrowings. I do not recommend dealing directly with a bank as the bank will put their interests ahead of yours. If you are stuck for a broker there are a few who post regularly on here who would be good starting points.
west57 wrote:I am looking at investing in the Geelong area, ideally with about $350,000 Research tells me that rental could be $300/wk.To purchase this property with an 80% loan you will need to use $70K as a deposit. You will also need a further ~$18K for purchasing costs (stamp duty, solicitor etc). These funds totalling $88K can be drawn from your line of credit (explained above)
west57 wrote:My question is – how does the whole equity thing work? Do the figures stack up and is this a feasible plan? How much extra would I actually need to borrow? Please excuse me if the questions have obvious answers but I'm very new to the investment game and all things financial in general!Plan is theoretically feasible – you'll need to work with a broker to see if it can be done practically.
I wouldn't even stop to buy fuel in Roebourne and that was 20 years ago.
I might add the outlook for the Melbourne unit market is not attractive. Over supply and much in the pipeline with a rising vacancy rate make inner Melb unattractive at the moment.
Firstinvestment24 wrote:Derek – The property will be finished in 2014 but I am not considering it anymore. For a start I cannot obtain a large enough loan for it and from the research Ive done and the comments on this forum it doesnt seem like a smart move.HI FI,
Good decision to back out of this one.
Major concern is the OTP nature of the purchase which means you will need to go unconditional on the contract before the bank is prepared to go unconditional with the loan. In effect you will be locked into a contract before the bank will give unconditional approval on your loan.
Fast track 18 months or so closer to settlement and the valuer assesses the value of the property below the price you are paying for it and you'll have to find extra cash to put into the deal. Because your contract is unconditional you now have to make up the difference.
Key point if buying an OTP property make sure you find a good solicitor who is very experienced in such transactions and who can provide with you plenty of advice. Work with your solicitor to negotiate, if at all possible, out clauses to see if you can work around the scenario outlined above.
Make sure you find the solicitor – do not use the one recommended by the agent/marketing company.
Finally – the quoted body corporate fees seems very low for a high rise building with the amenities described and in down town Melbourne.
Often developers/builders will under quote anticipated body corporate fees to make the investment look more attractive to potential purchases. In these cases the owners (post settlement) find their strata budget is insufficient for the needs of the complex and bc fees start heading north making the cashflow position decidedly different to that expected.
Some things to consider in your hunt.
Hi Gav,
Our local council has just commenced this very same process. All landowners in the areas under consideration received a glossy overview of the proposal with invitations to view the full proposal at council offices.
The process allows residents to raise any concerns and comments – in our case this was about a 3 month window.
Any flow-on effect will be into Karratha.
Roebourne has limited appeal and pretty much all people will be wanting to live in Karratha where services etc are based and the government has distinct leaning towards. Utilities to Roebourne would be stretched to the max and infrastructure overheads extremely expensive.
Can't see anything positive for Roebourne out of this.
Hi,
A quick question before I give more detailed comments – when is the property finished and ready for settlement?
Andrew_A wrote:Should point out that there is also a namesake of mine who is an Astronaut, so there are good and bad ones aroundNever trust an astronaut
HI Jamie – Aww shucks.
Prospector – an addendum to my previous post.
A broker will be able to crunch your numbers using a fancy piece of software that they all have which also works out which bank is best for you. Just make sure you don't get to pre-approval stage yet.
So much to learn.
Key point is start slowly – you don't have to own an IP by Friday.
prospector wrote:Ok Qlds007, thanks for the advice. Could you explain what you mean about the lender doing a credit search and frying my credit scoreCheers
Not Richard but what Richard is talking about is often people go into a bank and innocently ask how much can I borrow?
During conversation bank asks how about we get a pre-approval to make sure these numbers are correct?
You says – 'Why not'
Bank submits all of your details and there is a hit on your credit record.
Make too many of these enquiries without getting the loan and your credit record looks decidedly sick. So many applications and no-one has said yes.
New bank looks at next application and thinks "there must be a problem with Prospector so we'll decline the application"
Notwithstanding Jamie's comments about doing all finance work remotely – some people need to see their broker. If you are such a person I can make a recommend for a Perth broker.
Freckle wrote:Strange kinda place from a PI point of view.Couldn't have described Mandurah better myself.
richos wrote:I would hope we both could come to an agreement on the sale price to avoid the re-estate agents feesHi Richo,
No need to pay REA fees.
Hire a valuer to establish fair market value (cost ~$500) and then hire a solicitor to write contract and handle sale. No real estate agent needs to be involved.
I use Shreeve and Carlsake for my personal stuff. They are based in Herdsman Business Park, Osborne Park.
