Forum Replies Created
Do you think they will travel from the UK to Australia to take the photos ?
You also need to have a cash float in an account to cover periods when you do not have a tenant or to cover urgent repairs that you cannot delay fixing. Another important point is who can afford a $280,000 house. It might be a good idea to start smaller and buy in a rural area and work at getting this house paid off or cash flow positive. The first investment house is the hardest and then once you have it paid down or its value has increased you can use some of the excess cash flow to pay off the next investment property. It takes time to build wealth through property as with negative gearing you are limited by how much you can outlay each week.
allowing $2000 a year in extra expenses
take a 280,000 house as an example on a 20 year loan that is $600 a week in repayment so you have to find about $340 a week
(26500 p/a interest based on 9.47% interest – based on 30% tax rate you get $164 a week back. Using a tax variation form you can reduce $340 a week to $175 a week in outlay.a $140,000 house as an example on a 20 year loan that is $300 a week in repayment so you get at 4% yield about $107 a week in rent so you have to find about $233 a week
(13258 p/a interest based on 9.47% interest – based on 30% tax rate you get $88 a week back. Using a tax variation form you can reduce $233 a week to $144 a week in outlay.a $70,000 house as an example on a 20 year loan that is $150 a week in repayment so you get at 4% yield about $53 a week in rent so you have to find about $137 a week
(6629 p/a interest based on 9.47% interest – based on 30% tax rate you get 50 a week back. Using a tax variation form you can reduce $137 a week to $86 a week in outlay.The first investment house is the hardest and then once you have it paid down or its value has increased you can use some of the excess cash flow to pay off the next investment property. It takes time to build wealth through property .
With negative gearing you are limited by how much you can outlay each week.
With positive gearing you are limited by how much the bank will lend you.
Hi. I am in a similar situation except that I am a house dad with twin daughters and my wife works. With a limited amount of income I have moved into the realm of positive geared property investments. I did have another property that was costing me about $400 a month to keep so when I became a house dad I sold it and used the $40,000 profit to pay down the loan on my other investment property. So now I will have a 100 % fully owned property in two months time. Name a book and I have most likely read it.
books I did like
Unlimited cashflow see http://www.businessmall.com.au/store/viewItem.shop?idProduct=53
From Broke to Millionaire in just 7 Years see http://www.businessmall.com.au/store/viewItem.shop?idProduct=3
How to Build a $10 Million Property Portfolio see http://www.businessmall.com.au/store/viewItem.shop?idProduct=2
It’s Easy To Be A Property Millionaire see http://www.businessmall.com.au/store/viewItem.shop?idProduct=26
Grow Rich with the Property Cycle see http://www.businessmall.com.au/store/viewItem.shop?idProduct=18books for inspiration
Ordinary Millionaires see http://www.businessmall.com.au/store/viewItem.shop?idProduct=143
Building Wealth – Story by Story see http://www.businessmall.com.au/store/viewItem.shop?idProduct=10another book I have read
Anyone can be a millionaire by Sean O'ReillyHaving been stuffed around by prospective employers for the last 4.5 years I have decided to not participate in the current job market and have started up my own business. This allows me to work around my kids rather than having some employer dictating to me when I have to work. As far as having qualifications I have a degree in commerce, a licence to drive an eight tonne truck, Microsoft qualification and am a qualified electronics technician.
What I have found with the current job market that they expect you to have experience but no one wants to train or give a non experienced person a fair go or a start in a new field of employment. So I have fallen back to my previous expertise in information technology which I am also qualified in and that is what I have based my business around.One of my biggest problems has been getting finance once I stopped working and dealing with Centrelink as they deem negative income as positive income when working out your parenting payment and family benefit payments hence this is why I do not do negative gearing anymore.
- I have owned an investment home previously. Can I still be eligible for the grant?
A person is not eligible if they or their spouse (including de facto spouse) has had a relevant interest in any residential property in Australia prior to 1 July 2000, whether they live in it or not.
However, a person may be eligible if they or their spouse (including de facto spouse) has only ever had a relevant interest in any residential property in Australia on or after 1 July 2000 and they have not resided in that property for a continuous period of at least six months.
- Direct quote from
- http://www.osr.nsw.gov.au/benefits/first_home/faqs/fhogs/eligibility/
© State of New South Wales through the Office of State Revenue' on all uses.
The Office of State Revenue encourages the availability, dissemination and exchange of public information. You may copy, distribute, display, download and otherwise freely deal with the material for any purpose, on the condition that you include the copyright notice
I can't get the FHOG so I will be unable to increase the price by $14000 dollars and will be chilling out..
Welcome to the forum Rob.
This months Property Investor Magazine (October 2008) has a couple of case studies of investors who have purchased investment properties while they were renting. It could be a worthwhile read.
If you buy an investment property you have the choice of where it will be like Rural or Outer suburb where it is cheaper to buy
Where as if you buy your own house you are going to have to buy a house closer to your employment and at a higher cost.If you buy your own home you can't claim a deduction for the interest costs of the loan, repairs, rates, insurance..
Only you can decide, however you may find reading the articles I mentioned in API helpful for your situation.
Some people on this forum live in the PPOR house and after the required time needed to qualify for the home buyers grant they move out and rent out the house.
see this post
https://www.propertyinvesting.com/forums/property-investing/help-needed/4325638?highlight=FHOGNepash,
Welcome to the forum,
Unfortunately, if you already own a house then you are not a first home owner.
I am assuming that the new FHOG will have a similar requirement to the old FHOG in that you have to be a first home buyer and not previously owned property including investment properties.give90 wrote:doesn't the money that you input from your pocket get carried over as a loss against the profit?No! , If you claim the expenses each year against your rental income or wage income you have got your tax deduction already !
If you then try and claim the expenses as a CGT loss or to increase the cost base and against income each year , this is referred to as double dipping on deductions and isn't claimable by the ATO as you can only claim deduction once.
Re-finance usually refers to going to another bank and shifting your mortgage from your old lender to a new lender.
Taking out an equity loan or line of credit loan against 80% of the value of your home is probably what I think you meant to ask.
80% if usually the max amount you can borrow in this fashion.Now it really depends on what the purpose of the new amount of the loan is being used for.
If you are using it for a deposit on another investment or for buying another investment that is income producing you can claim the interest,
however if it is living expenses , building a new pool in your main residence or buying a car, tv, ect. for a private purpose it is not claimable.80% of valuation = (Value of house * 80%) – existing loan amount
It would be a good idea to see how much you can borrow from the bank first before committing to another investment.
I own a pre fab house ex housing commission and it holds up well in value with the other houses in the suburb that are not prefab.
What I have found is that the steel frame and solid concrete walls makes the house extremely tenant damage proof.
In the case of a fire there is no wood in the roof or in the walls to catch fire or be eaten by termites.
It has a fake brick veneer exterior on the concrete walls.
Your loan repayment expenses you can claim only the interest payment.
You haven't mentioned depreciation claim for the renovations. Get a quantity surveyor to survey the property to work out what you can claim as depreciation. Repair done during the income earning phase can also be claimed unless it is an improvement and then depreciation is used.
if property is owned jointly by two people then the 100k gain is 50k each . If the 50% rule still exists in 10 years time then $25k
Now depends on your marginal tax rate if it was 30% each then 25k * .30 =7500
if owned by one person 100k gain is 50k if the 50% rule still exists in 10 years time then $50k
Now it really depends on your marginal tax rate in ten years time say if it was 30% each then 50k * .30 =$ 15,000I agree with you that negative gearing is a bit of a dud but imagine you pay more than the interest payment over ten years.
lets say you pay $428 per week on a twenty year loan at 9.47% p/a interest rate you end up after 10 years with a loan of
$150,000 .
Now imagine you pay 520 per week on a twenty year loan at 9.47% p/a interest rate you end up after 10 years with a loan of
$66,000
Now over ten years do you think the rent is going to remain the same ?
$184 * 52 = $9500 a year minus say $2000 for repairs and costs
leaves 7500 a year. Now based on a 10% p/a interest rate once your loan gets down to 75,000 you are no longer supporting the loan the rental income is paying down the interest cost. remember this is if the rent remains the same and doesn't rise.This is what I have been doing for the last 15 years and in two months I will have my first investment house paid off completely.
Based on 80% LVR I could borrow $800,000 for my next investment property and the rental income from the first property will help pay for the second property.
A negative gearing strategy works well if you can borrow and experience a boom property growth like in 2000 – 2003 where properties grew between 10% to 20% p/a depending on what area you purchased in.
I have experienced years where the growth was stagnant but with the boom growth my property has grown by 7% p/a averaged over 15 years.
I did purchase another property in Cranbourne , Vic in 2000 for $100,000 and sold it in 2005 for $170,000 that was a 70% increase in 5 years but that was during the boom period. That property is now worth $220,000 to 240,000 that's in 3 years another $50,000 I missed out on because I sold but I knew due to my circumstances and forecasting that I could not afford the $400 a month shortfall , about $15,000 in 3 years due to not having a job.
Country properties will experience less capital growth than city properties but the entry costs are less.I recommend you buy Australian Property investor Magazine.
Property investing is more about building wealth over time rather than selling a property in 10 years time and losing any more capital growth..
it is hard to buy a positive geared property in this market but you can eventually make a property into a positive geared property by paying the loan off.
Depends on if you own other property with equity.
You could then get a deposit bond from a bank based on the fact that you could borrow the deposit amount from existing equity in other property.
You might be living in a house now that has heaps of equity that you are not fully utilising.
It is not usually recommended that you cross secure other property but it might be a way out of your situation..
Or you might be able to get a line of credit set up against the house you live in that has heaps of equity and borrow money for the deposit on the second house.You may be able enquire with the vendor to see if you can get vendor finance for the deposit from the vendor. Usually you offer the full asking price being asked by the vendor for the provision of vendor finance.
Did you have a subject to getting finance clause in the contract because if you can't get finance due to your circumstances you may be able to use the clause to get out of the contract.
452k * 7.76% = $35075 interest p/a
352k * 7.76% = $27315 interest p/a
saving of 7760 paying 5000 to brother save $2760 (this is over one year half the amounts for 6 months).
Now the 5% payment to brother is that going to be claimed as an investment cost with ATO which your brother would have to claim as an income to ATO.
If you have an investment with this mortgage any saving will decrease your expenses and thus increase your investment income.
This will then reduce your negative gearing or increase your investment's taxable income.
Also when you ask how much time will be saved the answer is zero.
Why because you are paying interest only.As an example of how you could save money with p & I loan
Based on a 30 year Pi loan at 7.76% payment date of 10/10/2038 repayment of $3241 a monthnow with a saving of 1380 from brother
Based on a 30 year Pi loan at 7.76% payment date of 10/06/2038 repayment of $3241 a month
4 month saving over thirty years $12720 .
You really only save if you are paying down the principal regularly and getting a compounding effect over a long period of time.Not being a USA investment site I can only suggest what seems to be a common practice in the USA where you offer a Lease to Buy.
You charge more than the normal rent and place the extra collected into an account for the tenant so the tenant can save up a deposit which comes off the purchase price and you give them an option to be able to purchase the property after a number of years renting.If you like risk you can do a Wrap which is more common in the USA if the bank will allow you to do it.
You probably need a valuation once you change the status from PPOR / Main Dwelling to Investment Property if the other new house is going to be exempted from CGT due to now being a main residence exemption.
(There is a way of having it exempted but then the new property will not be exempted as you can't have both and there is a time limit)
Otherwise if you sell the investment house in the future it will be difficult to work out which part is PPOR CGT exempt and which part is capital gains taxable.Some people may not want to give you advice because it is illegal to give specific financial advise under the law
see
http://www.fido.asic.gov.au/asic/asic.nsf/byheadline/06-162+Has+your+financial+adviser+got+a+licence%3F?openDocument
SEE
http://www.interprac.com.au/Operating%20safely%20under%20FSR.pdfMetal roofing is the realm of a licenced plumber
Support beams – If it falls down and kills someone ie tenant or new owner then the coroner will ask who did the work.
If you do the work you have to guarantee the work for a number of years.
If you decide to do it yourself you need to know what the regulations are and whether it needs a professional to do it.
You need a supplementary income form see http://www.ato.gov.au/content/downloads/IND00138946n26770608b.pdf
question 20 then this goes into question 12 section iAny tax paid in new zealand has to be added back to the income so it is the non new zealand taxed rental income
Read http://www.ato.gov.au/large/content.asp?doc=/content/34783.htm&page=3&H3
and it will explain that you have to deduct the expenses directly related to earning the rental income from the rental income to come up with the final rental income.
You can't negative gear a foreign investment against an Australia salary
see http://www.ato.gov.au/individuals/content.asp?doc=/Content/21731.htmHope this helps work out what you need to do.
Florida beautiful one day . Hurricane the next.
