Not an accountant so disclaimer applies.

Tools would only be deductible if they were considered oart of your business. If your property investment qualified as a business then you may be able to claim tools. If you are like most people and your property investment is sufficient to be classified as a business then the answer would be no.

Even if you qualifed as a 'property business' there would have to be any apportioning of tool use for private purposes.

HI Ramayne,

Ducksters a numbers look pretty close to the mark so I reckon you could 'run' with those.

As for refinancing and looking at number 2 V paying down overdraft.

I think you have just had a major fright with cashflow and your first post suggests the property is yet to be rented (it should etc etc) under these circumstances I would try and do the refinance thingy + pay down the overdraft. I expect the O/D is at a higher interest rate than a housing loan so this will also save a few bucks.

Then, when the dust settles, you have a tenant paying rent and you know exactly what you have then ask the question once again. You will then be dealing a known quantity.

Hi Matt,

Some comments in direct response to some of your points.

1. The issue of 'how long in this job' is absolutely critical.
I assume you are on the mines somewhere in WA (whereabouts ?) and are currently earning a tidy packet because of this. No point doing all of your planning and spending based on a $140K income if in a few years time you drop down to $65K. All the numbers change and this may have a significant effect on your plans and what you have acquired. If this scenario transpires your plans and reality are poles apart and it probably wont work unless all of your props are paying for themselves.

The next question is what are you trying to achieve? Is it 'wealth' from cashflow or growth. The answer to this will determine which property and where it is.

2. CG highly likely to be very different. Your $500K property will be in a much better location and will outperform the 2 X 250K props. Just check the median price records for Perth suburbs to see which are the better performers.

3. I heard Peter Spann suggest individuals should consider the buy investment properties first and use profits to then buy a home at a later date. Will need a few IPs to do this as median price in Perth in 12 yrs should be above $1m based on previous growth rates. 

Building 4 props and not 2 means greater risk for builder. Seems builder is carrying all the risk here – at minimum they would want/demand a higher purchase price to mitigate the risk they carry.

Builders want full progress payments made during construction (standard practice) so their materials & wages bills are paid on time.

If the form you have signed is the 810 then you are now 'live' – there is no cooling off period in WA.

I am not sure who was advising you on your conditions and what you were signing but good luck getting a pest and building inspection done and reported within 5 days. You will need to be on your bike first thing tomorrow.

You haven't indicated what finance conditions are in place – but it seems when ringing around looking for an inspector you should be making sure you have an efficient solicitor working with you.

Know the legislation as it applies to your state better than the back of your hand.

It is highly likely you may need a license if you are being paid for your endeavours.

Reading your post – it would seems as you have a lot of learning to do. Are you sure this (managing another person's property) is what you really want to do?

Poorly written clauses can cause real issues.

You need to go back and read, word by word what the 'inspection' clause says as this seems to be your 'out' – for some reason the vendor hasn't accepted the out you are using.  I suspect the clause wording was clumsy.

Hi Intrigue,

Yep – LVR on the home is 80%. I have ignored any offset as the bank only look at limits when determining levels of security.

In my opinion and in general terms 80% is OK.

If we fast forward and imagine you are able to achieve what you want – buy the $250K property at 95% LVR.

This will significantly change your overall LVR as you have a new asset worth $250K and debts of ~$267K used to provide purchase price ($250K) + purchase ($12.5K) costs + ~LMI ($5K) @ 2% of borrowings.

LVR on the second purchase is ~107%

Now I am not adverse to having a LVR of 107% on a single property as I have done it many times myself. 

But for me the new overall situation gets a little unsteady as you have little wriggle room to move if your world goes pear shaped.

Your overall position now reads as follows:

Total assets = $650K
Total debst = $569K (As follows $320K on home + $249K on new property – additional $18K comes from LOC against your own home so we don't add that twice)
Total LVR = 87.5%

Lots of numbers to explain there – hopefully they are clear enough and can provide some food for thought.

Derek

I went the other way.

Plenty of experience with property and then got my sales ticket.

While it (the ticket) has filled in a couple of blanks I can't say the 'ticket' has added to my expertise as an investor.

Start small grasshopper – if the blocks have now been sub-divided consider sellign one/both blocks off and use the proceeds as the launching pad for your future.

I reckon getting something is better than getting nothing. Sure it's not as good as getting the lot but…………….it beast nothing.

If banks see you as lacking serviceability I would be worred about your ability to accomodate building cost/time blow-outs and slow sales at the end of the project. I have seen too many small developers bite off too much and go belly up.

Slow and steady will get you there.