Forum Replies Created
Hi Strawberry,
I would counsel you to carefully think through what you are considering doing as trying to reenter the Sydney market after a period of time out bush may be even harder than it currently is.
Just imagine how you would stand if you moved to Thora and for some reason/s did not like it or found it wasn’t what you wanted. Is it possible to try before you buy?
Irrespective I would retain the Richmond property as it something that will largely track the capital city markets of Sydney and Melbourne.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi K and R,
Congrats on the looming arrival. You will find that the little bundle does change things quite significantly (well it did for us) and your priorities change somewhat.
If you plan to remain living where you are there are significant lifestyle advantages to making your place more comfortable. From your comments I get a sense that you would like to spruce the joint up a bit.
If this is your preferred course of action then I would try to get as much done as possible before the bundle arrives. Renovating (even cosmetic jobs) can impose on your living arrangements somewhat.
Above all you will need to budget carefully before embarking on any course of action as the little bundle does increase expenses. Learn to live on one wage for a while to ascertain exactly how the cash is flowing – constructing a budget and living on one can be very different in some instance.
Biting off too much now could be very costly in the long run.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Brett,
I must admit I do not know the answer to your question. I had heard the 40% figure around the traps but this was not from a broker/banker so I would not bank the house on this return either.
For me it seems you have made a business decision to move banks and therefore any LMI refund you get could be considered a bonus. If you want a more definitive answer I recommend you write a letter to the person/bank/broker who set the loan up initially and get a written response from them.
Check with your lender about any costs that may be associated with refinancing a loan within such a short time frame. You will need to read the fine print here.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Originally posted by Nigel Kibel:However why country NSW.
Errrrrr – it is going to be Strawberry’s PPOR.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Originally posted by calvin@thirty4:is that the $168K is for the PPOR, while the $27.5K is a deposit on an IP.
C@34Hi Calvin,
A minor [exhappy] detail overlooked in your original post – I thought the two loans were for investment purposes. I will modify my original comments somewhat.
Retain the $27.5K loan as it is fully deductible – do not pay this out at this stage.
I must admit I am a pay off your home as quickly as possible type person too however I have been rethinking this too. At the moment I am leaning towards I/O with the excess (about $1200 month) being thrown into other investments.
When the time comes to retire flog one IP and pay out this debt. If I make the sale in a low/no income year [exhappy] I will minimise my CGT liabilities.
We currently put all our income (wages and rent) into our offset account which is linked to our home loan and buy as much as possible on credit card (requires discipline) and sweep the cc on the due date. This way we maximise our inroads into the home loan thereby paying it down much quicker.
But as I indicated in an earlier paragraph we are rethinking this and looking at the benefits of I/O on our home loan.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Calvin,
No problem – while I may be making some suggestions to you and they could enhance what you are currently doing it must be said that you have made the most important step of all – bought an investment.
The rest is all ‘small stuff’
Cheers – enjoy the Hedland summer.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Originally posted by calvin@thirty4:I would prefer, for the moment, to pay down the Principle. Depending on how things go, say in the next 12 months, I might very well reconsider as it is a powerful argument you have put forward.
Hi Calvin,
Whack the surplus into an offset account. This means you reduce the monthly interest bill while retaining easy access to the funds should you need them in the future.
If you do want P and I have you considered the $27.5K loan for P and I?
This will pay this bit off faster meaning you can increase your equity levels even quicker and gets rid of a serviceability issue in the future. Offset even better.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Jules,
Big tree = professional tree loppers with their own insurance policy in place.
Too many things can go wrong with large jobs like this.
Some local councils have a tree register and there may be problems simply cutting down a tree. Give them a ring.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Cabo,
As Redwing has said your friend will only make his Victorian property exempt for the period that it is his PPOR and as such the benefits to be gained through this process are negligible.
Given the property has been owned for some period of time your friend may be able to elect to use a more favourable CGT calculation method, combined with a low/no income year, some negatively geared assets and he could reduce tax anyway without the need for a convoluted solution.
Factor in removal costs, selling costs of his WA property, emotional issues resulting from a move of home and so on he may well find himself level pegging with no/minimal advantages to be gained.
If he were moving to Victoria for other reasons then there would be ancillary benefits.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958A correctional facility will also employ a number of warders and will provide flow on economic benefits into the community. Whether or not these are significant is dependent upon the size of the community.
We live in a 30000 city with correctional facility and there are some econmic benefits to the local community – however there is no evidence to say that the facilty has had a negative or positive effect on the local property market as it is relatively insignificant in the grand scheme of things.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi KB,
For me I would suggets that you start with something a little more standard as your entry into the housing market. This will give you a great opportunity to learn some of the ins and outs of property investment in the beginning. Issues such as tax, finance, structuring, property management, insurance, and so on are all learning experiences in themselves.
Developing is a niche strategy that has a number of other ins and outs to be learned along the way.
Like everything it has its own benefits but also its own unique pitfalls. Sure the ‘profits’ are attractive but many a would be developer has gone belly up due to a raft of reasons, largely due to inexperience.
Developing is a huge first step to take. But then others may well disagree.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Jules,
Provided you meet the PPOR residential requirement then you are able to rent out a room or part of the property.
Check out http://www.firsthome.gov.au/ and then go to the bottom of the page and bring up the relevant state authority. This question is one of FAQ under residency.
Any rental earned under this arrangement should be declared as income in your tax return. The flip side of this is that you are then able to claim apportioned costs too eg rates, insurance, repairs, depreciation and so on.
The apportioning is usually done on a sq m used basis. I suggest you search the ATO website for further clarification on this aspect of your tax return.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958I am making $1200/month payments on the P/I loan on a fortnightly basis to get ahead faster! This way, the estimated pay-out time for the P/I loan is 18 years. [thumbsup2]Hi Calvin,
I appreciate that investment beliefs etc are different but have you considered the possibility of I/O loans instead of your existing arrangement.
Using 7% interest rate and converting your $168K loan repayments to I/O will reduce your repayments to $980/month. This then leaves you with an additional $220/month towards other investments.
This $220/month will enable you to hold another property in most instances – even a NG one at that.
The long term effect is significant.
Assume the property was bought for $200K and it doubles twice in 18 years (keeping it simple)
This means you have an asset base of $800K. Ie $200K + $200K + $400K = $800K – nil debt = net $800K
If on the other hand you used these additional funds to hold another property and you purchased property to the same value.
Using the same doubling twice example you will end up with a net equity position of $400K + $400K + $800K = $1.6m – $400K debt = net $1.2m.
The power of compounding growth and a larger asset base extends the ‘gap’ even further. Certainly food for thought.
As an aside you can always make your loan interest only but, if you prefer, make P and I payments. This gives you a little breathing space should you need it.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958This post has been moved to the following thread
https://www.propertyinvesting.com/forum/topic/21460.html
to keep conversations orderly.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi Ffiona,
If you included (did you?) the satisfactory building inspection report clause in the contract of sale then I would action this for your own peace of mind. If you have not included this clause then I suspect you will have great difficulty ‘getting out’
Either way I wonder whether this property is suitable for you given the distance you live from the property.
Just my thoughts.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hi sk8r
You may have already come across this link, but just in case you haven’t. Try
https://www.propertyinvesting.com/strategies/lease-options.html
or
http://www.financiallyfree.com.au/leaseoption.htm
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Originally posted by Qlds007:We closed a dead for a client on Friday
Hmmmm – nice typo Richard[biggrin]
Writing these deals all of the time is not good for repeat business. I also suppose word of mouth advertising opportunities are limited with these deals. [bigeyes]
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Hehehehe
The poor POMS.
https://www.propertyinvesting.com/forum/topic/21339.html
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958South Coast – it’s now raining.
We went to the hills fires last year too.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958Originally posted by calvin@thirty4:What are you all doing for BFS?
Hi Calvin,
I have dusted off the protective clothing, issued over 100 burning permits, checked over the fire vehicles, conducted some education visits for local residents, attended countless preparation meetings and training sessions as part of my role as Fire Control Officer for the local Bushfire Brigade (and they say we are volunteers).
Despite the wetish year and the mild weather this season is just like any other with the bush still burning as well as it always has done. As an individual you should do everything possible to prepare for the ‘day’ because one day it will happen despite what the history of the area says. When the manure hits the fan there will not be a vehicle available for every house and preparatin by residents increases the likelihood of your proeprty being saved.
By the way we are currently on stand by for a bushfire in the local area which has started in scrubland just north of here despite it only being 22C.
I am hoping that Xmas/New Year period is relatively quiet and that I can enjoy some time with family who are down at the time.
Derek
derekjones1@bigpond.com
http://www.pis.theinvestorsclub.com.au
0409 882 958
