Forum Replies Created
Hi
Well I think you have taken the first steps in creating your own financial independence and that is building knowledge through education.
Read the yellowpages and find an accountant and FA who are local to you. Go and interview them for a overview of their services and importantly their fees. Tell them straight up what you are trying to achieve and ask them what their level of knowledge is in relation to PI.
Never lose sight of the fact that whoever you engage, you are paying for their services as provider, therefore you are in a sense the employer and they are the employee (obviously don’t be arrogant on that point). But be assertive without being rude.
Build a relationship with these service providers. Get to know them, test their knowledge in relation to PI and above all continue to build your own knowledge.
Overall, enjoy the experience, you need to be educated in order to evaluate, but importantly understand the advice you have been given. Always remember though at the end of the day, it is your money, your strategy, your wealth, your dreams, and your future that your are developing. Don’t ever let your heart overule your head, the profits will always be there!
Find the right people – professionals who you like and give them a test run. At the end of the day, if you are dis-satisfied, you can always find someone else. Don’t be complacent about your money, time or knowledge.
cheers and happy investing
DNL
[bike2]I agree with all these suggestions. Reduce the size of the debt and enhance the property to attract more rent. It really is that simple.
If this is not immediately achievable, then make sure your are claiming all your allowable deductions. I’ve two IP, one with a Quantity Surveyors report, the other without. We are also about to place our PPOR on the rental market with a Quantity Surveyor undertaking an inspection shortly. Although it costs around $400, it is money well spent to ensure I claim all allowable deductions.
cheers and happy new year
[sunny][jester][guitar][drummer][juggle][smash]Leila thanks for that web site. I’ve been working my way through it.
Happy New Year
[drummer]
I agree with JL, depreciables are the cream in the equation. When evaluating +CF, I always look at rent versus outgoings. If this is positive, it is then a bonus to maximise your tax benefit by claiming the depreciation schedule.
Also, I have found that a Quantity Surveyor [QS] is the way to go. My understanding is that the ATO will only accept a full depreciation schedule from QS. We bought a townhouse in a complex and he claimed all manner of things that were in the common areas, even the swimming pool!!
We are about to put our PPOR on the rental market as well, a QS will calculate the depreciation schedule for us and then we will claim this at the end of the tax year. People talk about CGT and depreciation issues over the long term, my theory: don’t sell – don’t pay CGT.
At the end of the day, if the there is +CF just go for it!
[cap]
Julia – thanks
I was pretty specific with my question to the accountant. I did say it was for our long term property portfolio growth. I think you may be right in that the accountant assumed private super.
Anyway, it is a simple communication issue and in the new year we may establish a family trust to ensure we can move on things when required.
I have started to research trusts, and while it offers similiar tax advantages as for individuals, I think the biggest advantage comes in succession planning. It is enivitable that one day I’ll fall off my perch. By that time, I’ll have either spent the proceeds of my assets or hand them on to children. So long as the tax rules stay the same, I understand the kids won’t get hit with CGT if the asset is in a trust structure.
Anyway, more to investigate, more to learn.
regards
[computer]Canberra is a great place to be and it has often received a bad rap and at times been referred to as a concrete jungle. Nothing could be further from the truth.
I first lived in Canberra in 1981, was back there in ’92 and about to move there again in 2005. Canberra gnerally has a low vacancy, but in the mid 90s it was as high as 6%; if you crunched the numbers you would find it on average to be less than 2%. We have a rental property there, its been positive for a number of years now but its capital growth has gone through the roof after clawing its way back from negative growth around 95-96.
There has always been a high percentage of town houses in Canberra. This swings in cycles, where you at times have an oversupply. Prices are generally slow to achieve capital growth, but with all things property, long term you will gain.
My advice for town houses is to look at complexes that have around 10-12 or so townhouses in them. Look for features such as security aqnd surrounding infrastructure – ie: bus stops, shopping centres.
I am biaised about Canberra property, you can’t lose over the long term, so long as you buy right in the first place
cheers[biggrin]
Obiwan
Thanks. One of the my considerations is to rent premises prior to a purchase. As you say, the reality is the impact on cash flow.
I’d love to get involved with a commercial development one day…but this is a long way off. In fact, I only said to a mate tonight the money is in developing, owning and gaining profits through a mix of sales and continuing rents.
Cheers and thanks for that input.
David.
Greg – thanks.
Any tips or resources I find, I’ll certainly post here. Maybe there should be a commercial forum. The principles are the same, it’s just the tenant is a different entity.
The first thing I have noticed is how the real estate agents don’t consider you as a serious buyer. I realise they need to filter the time wasters, but it is somewhat frustrating when dealing from interstate. The agent on this property has been slow, only picking up a tad when I asked for an inspection by an associate.
I had the same thing when I bought our current home. We were cashed up ready to buy and let the agents know. Of the six or so agents we contacted, only one came back to us. We ended up buying our home on a chance find while looking at another agent’s listing. Once we were in the house we signed within 20 minutes and with an agent we hadn’t contacted previously.
We know what we want….we always have the finance approved prior to negotiating which allows us to sign once we have found the gem!! I suppose this is part of my operating procedure that I like to know that when I am negotiating, I am fully aware of any boundries or contraints.
cheers
David[biggrin]Greg – cheers
Yep – I suppose I had already decided to offer low. I’ve got nothing to lose and it can only work!!
regards and thanks for those other examples.
David
Greg – just another question for you.
You indicate that you offered the asking for your commercial property.
The property I am looking at has been on the market for three months. On initial enquiry, the vendor as agreed to a 90 days settlement – but as yet, I haven’t offered an amount until the initial inspections are done.
My question is: Is it a standard practice to offer full amount for commercial properties?
I would imagine it is just the same as any other transaction, you make an offer and the negotiation begins.
I think I’ll just offer well below asking and see what the reaction is. No better way to learn is there?
cheers[biggrin]
Gentlemen – thanks. I was starting to think it was a daft question.
Firstly Greg – mate, thank you for that insight. We are well position financially to take on board a commercial loan, and in fact, my discussions with the bank have been held, and an amount approved in principle to allow us to enter the negotiation phase.
Robert – cheers…and thanks. Our bank actually suggested using our equity for the deal. That way we save that 1% plus another .5% due to the relationship we have established. I was concerned that they wouldn’t allow the concept to proceed as I did not want to use my own cash to fund the 30%. But this is now not an issue.
Steve – I imagine that you receive compliments and thanks everyday. But let me say your book “0 to 135 properties in 3.5 years” strengthened my resolve.
We were on the cusp of settling a deal to buy another residential property. We did our sums, crunched the numbers and it came out negative – we have always been comfortable with making a loss and gaining some tax relief so the deal was looking so good. Go figure!
Although the deal would take our residential portfolio to near $2m, I still couldn’t see my bank balance growing. Steve, your writings finally convinced me that I just wasn’t prepared to take the loss now to enjoy the gain in 10 or 20 years. My cash flow was about to be stopped dead in the water if we proceeded. Loans were approved, valuations had been paid for and your book was the best $29-95 ever spent. It stopped us from buying.
I had already said to my wife that I was going to try and buy a positively geared property as making money was better than incurring a loss! So while travelling, I bought your book in the airport bookshop, and proceeded to consume it over two days. I came home fired up! Knowing and telling my wife that we would make a huge financial mistake by buying another NG property. We already own three properties – one positive, and another soon to become positive and one negative.
The commercial property is being looked at to accommodate a family member’s business – a cousin who is as close as a brother. We are doing our due diligence right now and I can place that property in a neutral to slightly positive geared situation. Obviously – we then have a vested interested in the business’ well being. I have been mentoring my cousin for two years and also know the full ins and out of his business.
I actually don’t see the aspect of purchase as the risk. It’s a good property, albeit in a commercial complex with a body corporate. My main risk is the business’ on-going profitability and to a degree the hidden politics of the BC. Location wise, the property is in Darwin, but centrally located to the logistics infrastructure of airport, railway and shipping port.
My learning curve has been steep over the past few weeks, but it is exciting and exhilarating.
Our wives are the moderators, our grounded strengths in fact! To improve our due diligence, I also have my most trusted lifelong friend undertaking the initial inspection of the property; SHE is a Senior Project Manager for a commercial property development firm located in the NT and I know we will get matter of fact advice from an impartial, yet experienced professional whom I trust implicitly.
Gents – thanks again. I was wondering why my question was languishing in the e-byss and thought is was all too hard. I will check my other post about family trusts and some accounting advice now.
cheers and enjoy the reason for the season!
sincerely
DavidAll the responses dealing with the practicalities of carpets versus wood are very valid. We all tend to think with our hearts somewhat when it comes to renting out our homes.
Think with your head! What is the cheapest item to install? Versus If parquetry floor is laid, will this attract more rent for the property?
We went through a similiar decision a couple of years ago when wooden floor boards re-surfaced (no pun intended) as the in-thing. Our decision was based on rental return at the end of the day.We went with carpet that was hard wearing and easy to clean.
cheers[biggrin]
Hi Persistence
If you are buying through an agent, you will normally draw the check to their Trust Account. However, the agent should advise these details. I have had instances where I have given the cheque at the time of signing the contract.
With that said, I have also stated how much deposit I will put down and then provide a 24 hour to 48 hour timeframe to supply the cheque.
With regard to the cheque, so long as you don’t breach any corporations law – I have used my company cheque account for the deposit and then reimbursed the account from my own savings. Trust me when I say the agent doesn’t care where the money comes from, so long as they secure the sale.
Remember to do the best thing by yourself! What I mean by this is if you only want to pay a small deposit, do so. Your show of faith is the signing of the contract, the offer of a deposit and at the end of the day, why should you tie up your cash flow in an Agent’s trust account and forgo the interest! I bought a $285K investment property with a $100 down and that was that! You are in control of the situation not the agent!
cheers[biggrin]
