Forum Replies Created
- Henry Adams wrote:Oh well, there goes $880 down the drain…
Hi Henry,
Sounds like you have elected to opt out of this investment property – now I can sleep at night. Just be ready for the follow-up phone calls and stick to your guns.
Put the $880 down to learning expenses (not tax deductible by the way
) and move on.Hi Henry,
I'll ask!
Why are you so committed to this property, which you haven't seen?
In this thread https://www.propertyinvesting.com/forums/property-investing/help-needed/4331128 others raised concerns about the purchase price and in this thread Terry and I (and others) have raised issues that woudl give me cause for consternation if I was in your shoes.
Is it the $880 that is keeping you 'in' or have you signed a contract and the cooling off period has expired?
Sorry to be abrupt – but that is my nature – but I figured someone needed to ask the question.
Hi Henry,
It is starting to make more sense now.
So the $79K will be borrowed money (redraw or line of credit). Is this correct?
If so, do you know if the interest costs on $79K has been factored into any cashflow projections?
$79K @ 7% has an annual interest bill of around $5500 or an extra $105/week.
Hi Henry,
Like Terry I am confused – one of your earlier posts indciated this loan was to be 95% and yet the numbers above show your cash despoit being $79K.
Where is the cash coming from? Another LOC on your other property or real cash?
As Terry said you are better off retaining your cash (if it is real cash) and placing it in an offset account. At this stage of the property cycle it is important to retain some reserves in case things go awry.
Happy to chat through this whole scenario with you if you like (guaranteeed no strings attached) – drop me a PM and I'll send you my mobile no.
Derek
Hi Henry,
Do you know what your overall LVR will be after both properties have been purchased (assuming you go through with things)?
Reason I ask is that I am not sure a high LVR across a whole portfolio is a wise strategy at the moment. N.B. I have no problem with maximising LVRs on individual purchases but across the whole portfolio doesn't give you much wriggle room if things go awry.
Been a while since I looked at the Coomera market but the Goldcoast and surrounds has struggled. a fair bit in recent months and any decline in values exposes you to additional risk.
As a matter of interest which state do you live in? Just curious that's all.
Hi Henry,
Thanks for that additional information.
Looks like some of those services are listed to 'pad out' the fee.
A typical contract, which is drawn up by the vendor will include a detailed inclusions list and plans. If this is a house and land package you will be supplied with detailed drawings and details at time of signing.
Bank and solicitor liaison is relatively simple – not an onerous task really. You may find there is a fee payable to the solicitor on top of the fees payable to JDL. Check this out.
When they right a loan all good brokers understand they will need to liaise between the bank and client. This service is par for course and not unusual.
Do you know what the proposed loan structure is? Like Terry, I recommend you get an independent broker to look at the proposed loan structure to make sure it suits you. There are countless threads in the finance forum which explain, in part, what a good loan structure could look like. Suggest you look for this too.
As an investor it is important you really know what is happening here.
See how you go.
Hi Henry,
Is JDL (or a subsidary company) operating as a broker in this transaction too
If so looks like a pretty good deal for JDL.
Joining fee + finders fee + brokers fee for refinance + fee for new loan and maybe a marketing fee from vendor.
Does that sound right Henry?
.Li,
Take up Terry's offer. He will tell you as it is without any false hopes or misleading promises. Terry will also give you some balanced and legal opinion which you can use to work though the matters at hand.
This may seem a strange comment but here goes.
While you may feel wronged and hard done by at the moment because of the changes etc to the plan you also need to consider the emotional and financial costs involved in pursuing this matter to resolution. The builder/developer's pockets are much deeper than yours and they can throw everything, including the kitchen sink at you for delayed settlement.
Sometimes the 'cost' of winning, or simply trying to win is so expensive it is not worth it.
Utlimately the contract and annexures etc will determine whether or not the builder has complied with the contract. This is where the fineprint is so critical.
Be annoyed but don't let this annoyance become an anger that undermines you and your journey.
Hi Li,
OTP contracts often have a little clause which allows for 'minor' adjustments to plans, rooms sizes etc often also with other weasle clauses in the vendor's favour.
The fine print will determine what is reasonable and what is not.
Was the solicitor recommended by the vendor or are they your choice? This may have some bearing on the level of 'enthusiasm' shown by the solicitor.
Either way I would send your solicitor an email (written proof) outlining your concerns and requesting they take proper action as your representative.
You have a couple of options – give up or have a crack.
Understand though that if you are going to have a crack you'll face a few issues:
Finance – will prove a hurdle but a conversation with a good broker with extensive contacts would be advisable.
Time – given you are 62 you'll need to understand the risks of are somewhat exacerbated and your risk tolerance profile will need to consider this.
Strategy (1)- as time is an issue I suspect any investments you make should be more cashflow focussed rather than growth focussed.
Strategy (2) – You are probably on a low taxable income at the moment. For this reason negative gearing is not really an option.
Other points – return to work may be required to help imporve initial borrowing potential.Bill Smith wrote:Alpha is approximately 1.5 hours west of Emerald. In the last floods most of this town went under water so it is an area to be careful about. There are some high spots in the area and values have rocketed since the mine announcement. Caould I suggest you visit the areaSpeculators?
Hi Bel,
Best bet is to contact the Bunbury Council.
They will have all of the information as it relates to Bunbury and their various suburbs and areas in Bunbury and greater Bunbury.
Hi Terry,
Certainly looks like two fees. One to join and another to find a property.
Cannot see how either fee is deductible – capital cost maybe.
Reminds me of an experience I had many, many years ago (when I was but a babe in the woods) when we paid a fee to join something. Not wanting to 'waste our joining fee' we then felt compelled to continue with the company to whom we paid the joining fee. It was almost like 'upselling'
Needless to say we put that joining fee down as learning experience and moved on. As some would say it was a costly investment in education.
I understand there are a lot of first home owners in the area. Generally speaking these areas suffer first when the economy tightens and/or interest rates rise.
HI abcd,
Have sent PM.
Portfolio PI wrote:If it is tax deductible then you will get back your tax rate on that amount. so if its $8700, and you are paying 37% tax, you will receive 37% back at the end of the financial year if it is a tax deduction.Cannot see how the fee is deductible – at best may be able to be used to offset future capital gains.
Hi Henry,
On limited information supplied some of the following may not be relevant.
Coomera is one of those new release suburbs (has been for a while) and with more land to come.
AT best I would imagine rent return would be around 5% so you are out of pocket for rates, insurance, body corporate (if relevant) and the net differential between rent and interest rates.
For newer properties depreciation is often used, particularly in the early days, to help offset some of the shortfall between inflows and outgoings. You also need to bear in mind that depreciation only reduces your taxable income by the stated amount.
It is not a rebate – for example if your on the highest possible tax bracket your taxable income reduces by let's say $10K in which case you manage to save yourself about $4700 in income tax. The remaining $5300 comes from your pocket. If your taxable income is below the top bracket the amount of tax saved reduces in accordance with our income tax scales.
The only way you will get your money back is through capital growth, when that arrives.
Know what you are saying – just doing some feasibilitty on a WA mining town for investors with ~17% return. Making sure the fundamentals are all right first.
So far looking good.
Don't know Middlemount so take what I say with a grain of salt.
Seems a little small for me (N.B. Using Wikipedia figures – so disclaimer applies).
Would also need to check banks willingness to lend in Middlemount. Some banks have aversions to certain postcodes.
Nothing else to add – sorry.
Not sure if it really fits in this topic but Christopher Joye recently released this discussion paper discussing 'affordability' which, to me, underpins any bubble debate.
) and move on.
