Hi Kristy,

As per your request.

https://www.propertyinvesting.com/forums/property-investing/help-needed/4335538?highlight=members%2Calliance

https://www.propertyinvesting.com/forums/property-investing/help-needed/4325306?highlight=members%2Calliance

From The Australian

http://www.theaustralian.com.au/news/nation/union-link-to-broker-angers-members/story-e6frg6pf-1111116817419

From Not Good Enough

http://www.notgoodenough.com/viewtopic.php?p=330072

But as always people need to make up their own mind.

Hi BB,

Is your friend a property investor or have you briefed him/her on what you are looking for?

Sometimes locals look at their area with 'rose-coloured' glasses on and may not be looking at the property from an investors point of view.

Agree with the others get in touch with your broker asap – given you have a couple of properties under your belt and are now lookign for number three it is important you have your finance structure right. Now is a good time to get someone to look over things for you.

If it is necessary to do some restructuring – missing out on this property and getting your foundations right now is very important. .

HI Jackie,

No – Terry is saying that the 6 yr exemption rule only kicks in after you have initially moved in.

Based on your earlier post the time when you have a tenant in the property (just after purchase) will be subject to CGT. When you move in and establish the property as your PPOR you will then be eligible for the 6yr exemption rule should you move out again in the future and provided you do not buy another property and make this 'new' property your home.

Been off line for a little while here.

The key is as Luke (?) said earlier – it all depends upon an indviduals circumstances.

For me bottom line is portfolio should be at least genuinely neutral (exc tax breaks) at time of retirement. This means the portfolio is being held without any erosion of other assets to hold the portfolio either through an injection of cash from savings, super-fund, share dividends or using a line of credit to fund shortfalls. Such a structure will allow for a gradual sell-down of assets in retirement  and for the individual to live off any capital proceeds.

A staged sell down in low/no income years also reduces CGT exposure. The downside of this strategy is that once the asset is sold – its gone so you have given away future growth. Mind you in the current climate you cannot live off growth. Or at least the brokers I speak to indicate it cannot be done.

Obviously a cashflow postive strategy will be dependent upon the individual building up sufficient income to meet their lifestyle needs. And you will need a lot of $100/week cash flow postive properties to do this.. Once again other assets such as shares, savings, super, part-time work etc may be sufficient to supplement a smaller, less cash flow positive property.

Of course then there are the properties which are significantly cash flow positive. We have done some modelling on Pilbara property which indicates it could be, based on current projections, be possible to retire on $67K/annum on one property in about nine years time. Clearly throwing all eggs in one basket is a higher risk strategy so individuals need to consider a more diversified and balanced portfolio.

Bottom line is – one size does not fit all. We are all different, have different super balances, cash savings, share portfolios, managed funds, property portfolios, appetite for part-time work, inheritance capacity etc. Suggesting anything else is erroneous.

Final comment – cashflow is important – IMO a growth strategy that still has a negative cashflow portfolio in retirement HAS to be sold to release funds. 

The 'cooling off' period really allows a potential purchaser to rescind the contract simply because of a 'change of mind' – the key thing is to understand the length of colling off period in each state.

Qld – 5 days
NSW – 1 day
VIc – 3 days
SA – 2 days
WA – no colling off
NT – 4 days

Each state has a outline of how the 'cooling off' period works in their state and these can be found using google.

Conditions such as finance, inspections, etc all fall outside the cooling off period and need to be written in such a manner that they are unabiguous and very clear as to who is repsonsible, what happens if and so on.

Th eexamples provided by Phil are very clear, detailed and there seems fo be little/no room for different interpretations coming into play. I recommend you get your solicitor to write the conditions – these are your safety net should something go awry in the purchase.

Sheeez – I need my eyes tested.

I skim read the first post twice and missed purchase dates. I'll go off into  the corner and slap myself.

That aside Crag makes good points – if the sale of the property is made in a low/no income year then there are signifciant benefits to be gained by claiming depreciation now. 

Hi Karen,

Looking at the numbers provided it would seem you may have a few hurdles to jump through before you can tuck this one away.

The appraisal you rceived for your property is not a lot of use to you as a number for finance purposes. Banks will want a certified valuation done on the property and this may (may not too) vary from the $370 appraisal you have received.

Now for one minute let us assume the valuation is the same as the appriasal.

If you can get a 95% loan on your current home you'll release a further $71K (less LMI costs). This money will be sufficient for you to leverage into your new property as follow:

If you purchase the new property with a 90% loan you'll need around $32K (5% deposit) + a further $16K for purchasing costs.

On top of this you will need to allow for LMI of around $6K (using an indicative rate of 2% as LMI premium). In total, if you bought this second property with a 90% loan you will need to access approximately $55K in equity.

After all said and done it seems as if pretty much all of your available equity is going to be consumed by these two properties. This means you will be very highly leveraged at this stage of your journey. In the current market I am not sure this is a great place to be.

Is the 'lady' an employee of CUA?

I always recommend using a broker as they look at things from a borrowers perspective rather than the banks. This is moreso the case if they are investors  themselves – Jamie is this. People tell me he doesn't bite.

Hi Simone,

You will get a better answer if you identify which state you are located/investing in. Some of the charges above are state based and vary from state to state.

Hi Da,

WA is not an austion state. so statistic would be based on a small proportion of sales. Any refernece to clearance rates would not be reflective of the what else is happening in the market place.

Temper your belief about property prices being high with the knowledge that WA has the second highest per capita income in Australia.

Supply on the market seems to have tightened recently and there has been a sudden reduction in properties available to rent. It has recently been reported that Perth vacancy rates are now below what they were pre-GFC. At that time it was not unusual to see rent bids being placed by prospective tenants and rental increases when tenants changed were significant, especially closer to the city.

Hi Pete,

Given the estates are 'eligible' for financial incentives this implies, to me, thet the estates are targetting first home owners. If this is the case you are likely to be surrounded by larger than normal numbers of people who are very susceptible to interest rate movements and thus your property is likely to suffer from it's proximity to such owners.

For me you would be better off looking at something more mainstream where your neighbours are more representative of society demographics.

Rent returns are only one part of the whole equation.