Hi Bob,

Just going back through some old posts and caught this one.

Note – vested interests apply here. I am employed by Eos Property Group so take what I say with a grain of salt.

Just calrifying some of your numbers.

Intiial buy in figure is correct at $133K
Construction is correct at $262K
Total investment is $395K
Feasibility showed an estimated on completion value of $530K.

We have since had off the plan valuation done by Australian Valuation Services (http://www.avsproperty.net.au) which came in at $550k. We wanted to double check the feasibility prediction. Obvioulsy this valuation is no good for finance purposes and will need to be upodated when individuals refinance at project conclusion.

Local independent agent did not realise the units are being furnished and have reassessed the rent at $1300/$1400/week and not $1,100/week.

This gives rent return in excess of 17%.

Bird Property Group is employed as development manager by the investors and is employed by them to complete the project on their behalf. Website http://birdpropertygroup.com.au/

As Karratha is a 'mining town' it is important to monitor the market more closely than say, Perth metro area.

Whether Karratha suits you is ultimately your decision – Terry Ryder has just updated his Karartha report. This can be purchased for $30 and is available at http://www.hotspotting.com.au/report/107-karratha

You dag!

Ooops – that comment is probably showing my age

Ditto

For me:

Park the cash in an offset linked to your PPOR loan and use the equity from existing properties for deposit. Just make sure you set your loans up correctly – see a broker about this.

As for second part of the questioon – I am big on having a property. Not sure that a simple 'buy and hold' strategy is going to be that beneficial in the short/medium term. I'd be looking for something with inbuilt equity (undervalued), value adding potential and/or small scale developments. Based on figures I suspect buying undervalued or based on reno potential is the best option at this time.

Are you saying you put a 5% deposit on a property without first consulting with a broker/bank to determine you can afford the loan?

Or is that just the way I am reading it?

HI Steve,

Michael has covered a lot of key details in his responses – if you feel the need to talk with someone face to face, while I don't live in Perth I am in Perth this weekend on my way to Sydney. Happy to chat over coffee somewhere.

Hi Goldies,

As Jamie has said – they can be revised.

Key issue is to stay composed in discussions and only use current comparables.

Would also be to your advantage to have evidence of the errors (as stated in your post) so you can show the bank.

HI GW,

Ahhhhh – I now see the confusion.

The term PPOR is a term only used for the place your reside in and own (or are paying off) – so really you are not living in your PPOR but are simply renting.

CGT is only calculated and levied upon the sale of the initial block of land. It will not be payable when you move into the house currently being built on the block. I'll have to look around the ATO website (or wait for a tax guru to come along) to determine if you'll eventually be liable for CGT on the land.

As you initially intended to build an investment property on the block you could well be entitled to claim interest, rates etc on the land as it was your 'intention to build' an investment property. This, by the letter of the ATO, does mean you are eligible to claim relevant expenses on the land.

Now that your intention has changed and you will be moving into the property any expenses incurred after you move in will not be deductible as there are no tax deductions for your own home. The cut off date is determined by when you move in – or even possibly when your intentions around this property changed.

Now all of that stuff is a little more complex than I made out so I suggest your grab your accountants ear for a few minutes to verify what has been said here.

PS I live in WA too

Hi Tiger,

I really don't know enough about your situation (age, income, long term plans etc) to pass detailed comment but reading your comment above it would appear as if you are on the right track now BUT it also appears as if 'saving tax' is still your primary focus.

I would like to see you change the focus to 'making a profit' first and then if there are tax savings to be made that is a bonus. Investing to save tax should never be your priimary goal (Great Southern anyone?)

Food for thought?

Hi Richard,

Interesting comments you make.

Quite different to the way the possible entry of Japanese banks was promoted as that of bringing more competition, better options for borrowers etc. Or was that just my hopeful mind going into overdrive again?