Forum Replies Created
O.K. So just get the mail sent there… and invest in a big mail box
Cheers
Just to touch on this topic of 'as soon as practicable' again…
Can someone shed light on how this rule might be applied in the following scenario:
A buyer is looking to move to a different area and finds the ideal PPOR property, though not yet ready to move
The property is purchased now, settles in 1 month
The buyer does not move in until 3 months after settlement, due to work commitments
They remain renting until then — they do not already own a PPOR
The purchased PPOR property sits vacant until then (it is not rented out in the meantime)
The market remains stagnant (no capital growth)
As they have not moved in 'as soon as practicable' are they still eligible for PPOR CGT exemption in the future?
Would it be worth getting a formal re-evaluation at the time they move in order to determine that no capital gains occurred in that 3 month gap between settlement and moving in?
Cheers
Thanks SMSF101,
It already runs as a business, albeit with very, very basic accommodations. An upgrade to accommodation would draw a different clientele. Not sure it would ever be classed a business zone, but zoning is something I would have to check.
Yes, I agree, it will be hard to find a lender.
Thanks for the reply DWolfe,
Agreed — not a hard nosed investment plan — looking more at a lifestyle choice with side income.
Boat access only.
Cheers
LOL. Thanks goes out to the Nicky Lane wannabe.
I would still be interested to hear if anyone has managed to get a loan over the line for a similar property…
Cheers
— A New Sucker
Ah, the voices of reason. Thanks so much for the comments!
Yes, a powerpoint is what the tenant was referring to. It's an old (early 1900's) house, but I haven't spoken with the Sparky as to why it costs so much. The tenant previous to this one did have a powerboard and extension lead, but it stretched right across the hallway. Tripping hazard?
Should have bought under a LLC
Quote:Obviously the trick is if you can get it property managed remotely…Hi sundirtwater,
That is certainly a big part of it. Good property managers that are willing to do the job may be few and far between however. I've included an extract from a Kansas City property manager below about just that. It's interesting to read their take on it. The last paragraph says it all really.
Kyler gets some great low entry price point deals, no contest. But from what I understand he is on the ground in the States, knows the market, and is willing to do the hard yards himself. If you are not prepared to buy to renovate and flip, then you need to consider whether you are willing to property manage yourself, because there is no guarantee you will be able to find someone else who is willing to do it for you.
Lower Priced Rent…What a Pain!
For years I have directed my clients away from housing that would bring lower priced rents. I have maintained that the returns are not worth the added hassles of dealing with the lower income mind set. And boy, was I right!
Go ahead. Let the insults and charges of elitism begin.
About 3 months ago a client of mine purchased a bulk of lower income duplexes here in the Kansas City area and after some thought, and being asked, I decided we would manage them. I’d never had properties in the $450-$500 range before because of the reason I stated above. But I thought we’d give it a go.
Out of the 28 doors we took over 19-20 of them are a royal pain in the rear! Rents cannot be paid on the first. They have to be strung out over the course of the month. Every little thing the tenant perceives as broken (never mind the fact that they’ve apparently lived there for 4 years and they are the one that broke it) illicits a call to the property manager…regardless of time of day. NOTE: I do not answer my phone after hours…I check the message to see if it’s an emergency. Does a broken fridge handle merit a 2:00 am call? I guess when you don’t work and your rent is paid by the Kansas City Housing Authority you can stay up to 2:00 am and bore people with your problems.
Income is income. No matter how much you make you can have savings…or not. It’s your choice. Live on less than you make. How complicated is that? But no. They call me on their smart phones while watching their tv’s with cable packages to explain why they cannot make their rent. Literally, not a day goes by we don’t hear from at least one person out there.
The great thing for me is if I reach my limit I can just terminate the contract and let the owners take care of these investment properties. If you’ve made the mistake of buying a bunch of lower income properties you are the one that is ultimately responsible for them. Think about that.
Taken from this blog
Oh, just briefly… no, the twelve month question wasn't specifically referring to FHOG; just a query as to whether there was a minimum time limit requirement (for CGT purposes) before turning a PPOR into an income producing property.
But thanks for your response — much appreciated.
Thanks so much for the reply Tom,
'You can't claim full PPOR exemption if you use the property to produce income'
…So remaining in the property while renting a portion out changes your exemption? I understand you can rent out a PPOR for up to 6 years, claim deductions for those 6 years and still claim the full PPOR CGT exemption on resale (as long as you moved in as soon as practicable after purchase and moved back in before selling). I didn't realise this benefit would alter if you stayed living in the property.
O.K. let me get my head around this — if you couldn't claim the full exemption because of living there with income producing renters, it seems you would be better moving out and moving back in (up to) 6 years later? This way you could rent out the entire house and receive more rent, claim 100% of the total floor area (rather than say 50%) for tax purposes and also claim the full PPOR exemption.
It just seems counterintuitive to allow full PPOR CGT exemption to someone not living in the property for up to 6 years, and yet proportioning it for someone who never moved out. Just trying to get my head around it… Ouch.
Cheers
Hi waydo77,
I've done a Trans-Tasman reno and although it eventually got over the line, not being on site to do the small stuff and to project manage meant the whole thing did take longer than it should have. It was also my first reno. Now that I have some trusted contacts and some lessons under my belt, the second one will probably seem easy in comparison.
It was cosmetics only — installed carpets, refurbished the bathroom, had a front fence installed. I also had the kitchen moved, so needed plumbing and electrical there.
I did visit first however — a quick two day site trip. I met up with my real estate property manager and a building inspector on site. I took lots of photos and measurements. I then spent two days driving around town talking to people — spoke to the carpet guys, who put me into contact with the builder he himself trusted and used. The builder then organised a plumber and electrician.
If you plan to rent it out, get a property manager on board early — mine offered to go and inspect the property. Get photos and/or video. Get Skype or Facetime — have them call you when they are doing a walk through.
I did consider hiring a man-on-the-ground to project manage just to act as go between and for the run-about jobs. I didn't end up doing it due to budget constraints, but considering the rent that I missed out on because of the time off the market, it would have been an investment. I'm still learning. A local person to be a central point of call would have sped things up.
The key is quality contacts who will point you in the direction of reputable tradies. You may be able to get recommendations from forums like this, but local knowledge is invaluable. I'm not saying that it can't be done without ever visiting, but from my experience a quick site inspection to meet-and-greet and get some locals onside was a great investment; at least for the first reno.
Cheers.
Hi sundirtwater,
I have spent some time in the States, and also Ballarat, Tassie and NZ (the latter being where I own some properties). There is no comparision. I have never come across any areas in the latter three that in any way compared with the crime and issues you can find with in somewhere like, for example, Detroit.
If you can rent your property in a neighbourhood of boarded up houses, and if you can manage to collect the rent, you still run the very real risk of your investment being stripped of all it's copper and fittings, the place being trashed and losing all your rent on maintenance.
This is not to say anything derogatory about Detroit as a whole, but even the residents there agree that, as Nigel said above, the derelict houses in that city are in atrocious neighbourhoods. It's not just petty crime. It's violent crime. The murder of Australian property investor Greg McNicol was a harsh reminder of that fact.
That said, I feel there is opportunity for investors in the US, but 'dodgy' in Australia just isn't the same as 'derelict' in the US.
Cheers
Hi all,
Firstly; fantastic website… an absolute wealth of knowledge, ladies and gents.
I will be looking at an IP loan in the future and have been reading up on the IO/Offset strategy.
My question is how long are interest only loans good for?
My bank/co-op states:
^Interest-only option applies for owner-occupier and investment purposes (no principle repayments) and is available for loan terms 3 to 5 years.
Is this the norm? What happens after the 5 years — does it revert to P&I? Can you refinance as IO every 5 years?
Cheers
