Forum Replies Created
Hi Dan,
Based on limited information it would appear as if your underlying concern relates to debt.
Debt, when managed carefully and used judiciously, can be your greatest ally. If you go back to the time when you bought your Moranbah home I bet the level of debt wasn't insignifciant for the time. No doubt you had a few nervous sleepless nights coming to grips with yoru debt level.
I suspect your 'old home' is pretty much paying for itself. If this is the case I see no need to sell down & re-investing at this stage. I wouldn't be adverse to adding other investments to your portfolio – just need to select somethign thta suits your financial situation, goals and long term outlook.
Nathalie74 wrote:Very interested to see what he has to say. He knows exactly what my budget is, so why would he bother to ring,
NathHi Nathalie,
He would have found 'somethign else' in you rbudget range that will suit you perfectly.
Booge,
Selling your PPOR to buy a new PPOR is not a BAD thing.
The non-deductible debt associated with your own home is the hardest of all debts to deal with (no rent & no tax deductions) so keeping this debt level low is always to your advantage.
You can play around with selling current PPOR to partner etc but I am one for keeping things simple.
FWIW we are in similar situation at the moment. Will sell our existing home to buil new home.
CGT is a process applied to the buy and sell of all assets.
If you are renovating some of the capital costs of the renovations can be used to offset profits made – Eg you put in a new $20K kitchen – then your taxable gain is reduced by $20K.
Hi Tiger,
As your rental income increases there will come a point in time when the property is no longer negatively geared as rental income exceeds expenses.
The trouble is this is not something you can set your clock by as there are so many factors that come into play. I have heard some people suggest after about X yrs the property will be positively geared. What happens if your rental increases are slower than normal? What happens if interest ratesincraese by 2%? What if strata fees, rates etc all increase above inflation rate? And so on. Clearly there is no definate timeline.
If you are factoring tax deductions into the equation and trying to determine if the property is cashflow positive this will be very much dependent upon your income level. As a strategy (or technique) negative gearing is more suited to higher income earners as the percentage rebatable by the ATO is higher on a higher income becuase of the way our tax system is set up.
The other thing you need to be aware of is that as your negatively geared portfolio grows your gross taxable income falls. This means that while negative gearing with a high gross income was beneficial (if the property grows in value) it becomes less beneficial on a lower gross taxable income.
as an aside you also need to consider the impact negative gearing has on your serviceability calculations for future financing options.
Hope this helps
Hi Peachy,
Not sure what exactly you want your software to do but if it is of any help I used a simple self-designed excel sheet just to record and tally up the ins and outs during the financial year.
Since then I employ a book-keeper and she uses MYOB. She is MYOB trained and is qualifed as a certified MYOB trainer.
I have always used MS Outlook's Calendar function to tracj when inspections are due, leases expire and other reminder type tasks associated with owning properties.
Hope this helps.
Getting a builder to take on someone else' half finished work could be problematic too. Who is at fault if …………?
As Terry has said make sure that you only make progress payments after the work is completed. I have heard of people making payments before the work is completed and, the rest is history as they say.
You will also need to check there is no corner cutting in the balance of the project. Some builders may be tempted to save a few cents here and there.
I would also check with the relevant housing authority in your state to see what they recommend. Having said that make sure you temper your comments so they are not slanderous or misleading.
Hi Marcus,
Well done on you rpurchase.
As Jamie has said grab a broker who is a little more upmarket than ME.
Not sure where you live but the brokers on here do know their stuff and having a knoweldgeable person in the brokering profession will be invaluable to you.
Why not give Jamie a call and chat – see how you go. You may be surprised to know how much business now gets conducted without the need for face to face contact.
Paulie and Luke,
That is so right.
Roy Morgan/ASIC did a survey of investors a few years ago and (Report 121) and two key findings for me were a number of people got their advise from family and friends and ‘media’ sources including daily newspapers and the internet.
You can imagine the scenario being played out – media reports 'houses up' – friends at BBQ 'bought house last year and price has jumped' – individual thinks 'I better do that too' and so a herd is created.
A number of people bought at the end of the 'Perth Boom' and many of them, I am sure, are now sitting on negative/neutral equity despite the intervening years. Clearly these people bought following the herd.
Andrew, Thanks for you valued feedback. Michael seemed to think there was a lot of song and dance about not much.
Hi Andrew,
I haven't been following the Gold Coast market closely for over 18 months and was wondering what your opinion on the likely effect the 2018 Commonwealth Games will have on the GC market. I notice Michael Matusik thought the impact would be negligible at best.
My understanding is that mist of the facilities required for a games are already in place and only minimal additional structures are required; from memory boxing/wrestling (?) in Coomera.
If this is the case it will be interesting to see whather or not some marketing groups etc start trying to create the image that the GC is due for a games led boom.
Your thoughts?
Hi Andrew,
Not all states have an OTP discount on stampd duty. For example Qld and WA determine stamp duty payable on the value of the finished product whereas Victoria used to (not sure if they still do) determine stamp duty on the value of the land andscaling up depending upon when the contract was signed.
With stamp duty it is certainly not a case of one size fits all states.
FWIW I would prefer to use a solicitor from the state in which the property is located. Some states have little tweaks that are best known inside the relevant states.
Hi Paulie,
Know what you're saying – my contention is that the big four have now made redundant any RBA decisions. Decisions which are used to manage the economy for the benefit of all. I might add interest rates don't impact on 30% of the populatin who own their home outright and their is a lagged effect on rents (another 30% of the population) so, in effect, interest rates only have an immediate impact on 30% of the population. Clearly there is some psychological impact even on those without home mortgages.
Not saying it is easy, palatable etc but sometimes I wonder if GST manipulation would be a better economic lever.
Of course this then brings into question farienss of distribution, trust, management of variations at the till etc but I think it could be done.
Whether it will is an entirely different matter.
Hi Rachel,
I'll sleep more easily now.
Hi Rachel,
Are you suggesting you are handling the purchase of this property yourself?
Now I must admit I don't know you or your background but I must admit that seems to be a strange decision.
Spending lots of money to buy a property and then try to save a few bucks by DYI conveyancing is not the way I would be operating. The purchase of an IP is the largest purchase outside of your own home and poorly written contracts and mishandling of contracts can be very costly indeed.
ElizabethKruze wrote:Has anyone else done it the other way around? Buy a few IP's before getting buying the PPOR?
Hi Liz,
I am aware of a few people who have gone down the IP first route and they wouldn't have it any other way. Similarly I know people who have gone the PPOR first route and wouldn't have it any other way.
Our story:
Wife and I were teaching in the WA bush and decided to buy a house to rent out just so our money was going into 'something'> as we were in the bush at the time we rented this property out for two years before moving back into it when we returned to Perth.Lived in the place for two years before career promotions took us 'bush' again. This time our 'bush' appointment was 13 years (no, I didn't do anything wrong). During our time of absence we continue to own and rent the house we had bought and at one stage even managed 12 months leave without pay with the house paying for itself at this time.
About 11 years ago I was appointed to a locality of choice in WA, sold the house and ploughed the considerable profits into our own home. The profits made significant inroads into our mortgage and gave us a healthy equity position.
We then restarted our investment journey and used the equity in our new home to leverage off again and bought multiple properties in the last 11 years.
We are now at the stage of downsizing (anyone want to buy a large home?) and will sell this place, move into another dream location and if necessary sell another IP or two to ensure there is no non-deductible on our books.
Not sure if the story helps – but maybe you can distill something useful from it.
Hi Jazz,
All advertising needs to be accurate. In saying this some people make genuine mistakes.
In your case the paperwork is accurate (it states 700 sqm) but the photo needs some work.
Rather than trying to catch the agent out ring and ask the question and then politely point out you found the photo misleading.
I find working with people rather than trying to catch them out is more beneficial. The mentality that seems to pervade society of catching people out and 'smacking' them is a little strange to me.
Thanks for the compliments Sum – they are appreciated.
To help your learning I would see if you can grab a book or two: Margaret Lomas, Jan Somers, Steve McKnight, Michael Yardney and Peter Spann all have useful overview type books. While each of them has a slightly different perspective on how to invest they do give a pretty good perspective on property.
PPOR V IP first? People can make good cases for both and this is where knowing the rough outline of your grand plan is helpful. In many respects I believe the PPOR V IP debate comes down to emotion V economic. Both types of property have pluses and minuses in both of these fields.
I know people who have gonme down the IP road first and would not have it any other way. Equally I know people who have gone down the PPOR road first and wouldn't have it any other way. Then there are those people who make sure they fulfill the requirements of the FHOG and turn their new PPOR into an IP as soon as they can in an effort to get the best of both worlds.
The process you are wanting to follow: simple IP, small scale developments for cashflow in the north and capital profits in Perth, and eventually commercial is the same route we will offer our clients. Long journey with many small steps to be taken along the way. Fortunately we have built a team around us who can provide the necessary expertise. For what it is worth I am of the opinion that simply buying and holding in today's market is a very slow road – need to look for value adding strategies at the moment.
Re: Wattle Grove. It wasn't a plug for Wattle Grove. More just to show that some infill areas (mini-suburbs and estates – house and land packages in areas closer to Perth) can be secured closer to the city rather than confining your search in the burbs a long way from the city. If you want to pursue this type of strategy recognise that Joondalup, Fremantle, Midland etc are becoming mini city centres in their own rights. Proximity to Perth centre or one of these centres would be a useful consideration to have.
Sub-dividable blocks – my bad. Look for a block of land that has a house located at the front and which can have the back subdivided to create space for a new villa/townhouse/small house. This way you can add value by adding an extra property to the one you bought. Many councils and the state government are actively promoting 'in-fill' and would be happy to assist you with this strategy.
A word of caution though – finance can be an issue so it would pay to have a really good broker on board who can help you with the financing of such projects. A number of banks like to see pre-sales and this can be problematic without experience.
R Codes determine whether or not a block is sub-dividable and how many properties can be fitted onto a block of land. The State Planning Department has a really useful website at http://www.planning.wa.gov.au/publications/1172.asp
Reading these posts it would appear as if some of the names mentioned have joined the 'platform speaking' industry.
It uses a very formulaic seminar structure to create a sense of urgency so you race off and buy the product that is heavily discounted and only available to the audience and only for the first X number of people who come up with cash to buy the latest you beaut package.
It will be interesting to see what, if any, response to ANZ, Westpac's decision comes from Govt and RBA.
At the moment Wayne Swan is expending a lot of hot air telling the world how naughty and profitable the banks are, telling people to swap lenders (in a small market where the banks tend to follow similar interest rate paths), doing a bit of jawboning about the naughty banks and so on for what purpose – nil.
At the same time the RBA has made the decision to leave rates on hold for the benefit of the 'wider economy' because of economic conditions and so far two of the big four have stepped out on the own. In effect the profit margins of ANZ, Westpac have been seen to be more important by the two banks.
Time to move the economic levers from interest rates to GST manipulation.
This way all consumers pay proportionally, only the government is involved, funds raised go into govt coffers to be used for the benefit of the wider community and so on. The only problem with this is selling it to Joe Public and the fact we don't trust any government to use the money wisely and it is doubtful whether or not the GST board would manipulate GST rates or just put them a slow, but upward trend.
The ramblings of someone short on sleep.
