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Most depreciation companies can/will do a phone assessment to help you determine whether or not it is worth getting a depreciation report down. Some also offer a fee refund if they cannot depreciate more than their fee.
As an aside being an older property doesn't by default mean there is no depreciation left.
Look for more recent renovations, new whitegoods, airconditioners, ovens, floor coverings, etc While there probably isn't much left in the building (aside from renovations) the plant and equipment may be worth depreciating.
PS Deppro (Depreciation Company) go far and wide.
Hi JK,
Whoa – slow down……………….
As a property investor it is just about guaranteed you will encounter a 'not perfect tenant' along the line at some stage. The key is how you manage your property manager during these times.
At the moment you have 'found a property' that suits your investment needs. Go back to the reasons you selected the property and if they still stand then you may be jumping at shadows.
Find out;
Is the contract of sale subject to vacant possession?
How long will the lease be?
Can it be 6 months to see how things pan out? (You can always go through a formal 'I am not renewing your lease process' at the end of the lease)
What reasons give you cause for concern?Given the existing owner is trying to put a new tenant into the property suggest they may have cashflow issues. This may give you room to negotiate further if you haven't exchanged.
As an aside the current owner will be wearing the letting/leasing fee so it may not be all a bad thing.
Step back and think big picture.
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Fantastic article mate cheers for sharing. [/quote]No worries – enjoy the read.
It is apparent many of us have heard of the mining activity happening but how many people really appreciate the values involved.
Terry is far better at this stuff than I but transferance of PPOR into trust should not, under normal conditions, incur CGT. The exceptions being those I highlighted above.
Howver the PPOR, once owned by your trust, will be liable for CGT at the sale of the property sometime in the future.
Self managing?
Hi Ceekay,
65 hmmmmm – too old?
Average life expectancy in Australia is around 84 years (give or take a little). If you have an 'average' life expectancy then you can look forward to hanging around for another 19 years or so. What quality of life do you want during this time which equates to approximately one quarter of your total life span.
At your age borrowing money may be an issue and it may worthwhile seeing if family members would be interested in some form of trust structure.
Be looking at a cashflow investment at your age – without knowing the ins and outs of your situation it is a little hard to give further comment.
Certainly the costs of making a mistake are going to be high. Equally the cost of doing nothing are equally high.
Would your super amount make a Superfund investment worthwhile.
Normally CGT willl be payable for the time the property was an IP.
If you did not buy another PPOR while your original PPOR was rented out you may be eligible for some exemption under the 6 yr rule.
Only for investment properties.
If the PPOR has been an investment property in the past there may be some CGT payable.
EDIT.
If land area is greater than 5 acres – CGT may be payable on the PPOR
Point of accuracy.
It was Rory Robertson (Mac Bank) who had the bet with Steve Keen.
Costs of getting in and out of property can be expensive.
Need to consider agents selling fee + stamp duty on each transaction.
Stamp duty on the sub-divided blocks will, in all likelihood, become an issue too.
I remember going to Teachers College for 3 years and then learning to teach when I got a teaching position.
Hi AJ,
Not really familiar with the western parts of Sydney.
Sound like you are really committed to your plan. I suggest you have a good discussion with a good broker before advancing your plans much further.
Hi AJ,
I must admit I am not one for buying cheap.
Budget limitations of that magnitude can really restrict your investment options which may compromise what you end up doing.
Eg If you end up buying in smaller country communities with limited positive property attributes. If you look at larger centres or cities you could be confined to serviced apartments which are not a good investment.
Given you are both studying I assume you are relatively young so a couple of years finalising studies and getting employment and an income to match isn't a bad thing.
PS Terry explained perfectly why using a large deposit and redrawing later can be problematic. If there are further investment plans in place redrawing isn't a major issue. If the redraw is for personal expenditure then there is an entriely different outlook.
Hi AJ,
You guys have come a long way since your earlier post about 'investment companies' and you have given your whole situation plnety of thought at a macro level.
While your asset level is terrific your combined incomes aren't that flash at this stage.
Limited income will mean limited borrowing capacity so if you really want to get into property you may find the size of your deposit to be signifciant. This is not ideal as I would prefer to see someone retain as much of their cash as possible. Having said that all possiblilities need to be considered on their merits.
How long before you finish your apprenticeship? If the time frame is relatively short 'waiting' may be an option.
Determining your borrowing capacity would be a great step – no ppoint making rolls royce plans on a beer budget. At the same time there are advantages to spending a reasonable portion of your borrowing capacity under normal circumstances. Certainly when we work with clients we suggest they determine their borrowing potential when they are committed to some form of property investing as this help makes for more meaningful discussions;
Getting property with the right mix (for you) of growth and cashflow is possible. Might mean a little extra looking and research.
Hope this helps.
Just noticed your second post after I hit publish.
Hi Aj,
I must admit your comment about 'joint names' creating borrowing issues caught me by surprise.
I am not a broker but if you are both working using both incomes will enhance, rather than diminish, your borrowing capacity (unless there is some fancy trick I am not aware of).
Hmmmmm, Where to start?
Need more information. Not that I am advocating you put it all out there. Rather just getting you to think a little more about your situation.
Grand plan stuff.
1. How long is your current residential arrangement going to be suitable?
2. At some stage will you be wanting to buy your own home?
3. Are there significant life changes on the horizon? Change of job? Marriage? Kids?
4. Are you looking to move into the property at some stage in the future?
5. Are you chasing cashflow or growth focussed investment properties?
6. What are your long term property plans?
7. Are your comfotable investing outside your own home town?Important Financial and Tax Stuff
1. Are incomes similar?
2. Is this likely to change?
3. Is there a need to protect your assets?
4. Is tax saving part of your goal?Notwithstanding I don't know the answers to the questions I have posed to you and for what it is worth I would endeavour, in most cicumstances, to use as little of your cash assets as possible. Look at some offset account type structuring to minimise your monthly interest bill while retaining healthy cash reserve levels.
Michael makes an excellent point – research the company not the advertising medium.
You may get some better feedback by identifying the company who is conducting the seminar.
Variable or fixed really comes down to personal financial circumstances.
Is your sister someone who will fret about the direction interest rates may take? Is she someone with minimal spare cash after meeting all of her finaicial and living commitments?
If the answer to either question is yes – a fixed rate may bemost suited.
The key is not to fix for too long – personally I like 3 yrs max fixed rates. Seems to have a nice balance between flexibility and certainty. A key consideration if your sister fixes is that break costs can be very high so only fix after looking at the whole picture and considering a range of factors,
