Forum Replies Created
Don't give up !
If you have trouble getting finance you may have to resort to a non conforming home loan
that allows bad credit record holders to borrow money at a dearer interest rate
until you can earn a cleaner credit record.
You may find a mortgage broker could be helpful that has access to non conforming lendersit is a good place to live . I used to live in Timboon . Left 2 years ago for Melbourne.
A gas powered power station was planned and had been mentioned in the news to be built in Mortlake Victoria but it got shelved
. So I would keep in the back of your thoughts whether it is a definite event.I had a similar tenant but they approached the real estate property manager with a payment plan that was written out. The payments were not regular with one month stated as no payment and the next month a double payment. I accepted that the tenants were not getting a regular wage and accepted the written payment plan and the tenants stuck to it exactly as planned.
Do not know what will happen with the tribunal
If you push too hard your tenants might abandon the property and do a runner and you get just the bond money.
Do they pay monthly ?
As a weekly deduction might be easier for them to budget for the rent payment as opposed to a monthly payment.One thing to think about is your travel time. Do you live in Melbourne and have to travel to Camperdown each weekend to do work on the property. Is it just a few simply touch ups that are needed like maybe paint, carpet, ect it sounds like a reasonable proposition.
There is employment also at Colac which is 20 minutes drive up the road from memory.$130 per week = $6760 = 6.4% return on the $105,000
Can you afford an additional $30,000 for renovation works as what happens to beginners is the renovation costs end up more than they budgeted for.
It really depends on how much renovation work is required and if you can afford it or can get away with borrowing it from the bank.
Getting trade people to do the work may be difficult in that location also.You need to look at the likely hood of getting a property for say $130,000 in Camperdown that you could rent out instantly as opposed to this property that might take 3 to 6 months to complete the reno on and what will the interest costs be for holding the property for 3 to 6 months.
see
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=104744872&f=0&p=10&t=res&ty=&fmt=&header=&cc=&c=7705525&s=vic&snf=rbs&tm=1220928551you would be getting a 5% yield if you need to spend $30,000 extra on it.
You may need to pay stamp duty, mortgage insurance and legal fees. This varies from each state. As well as a deposit as the lenders are being more wary with lending money without a deposit.
Do a google search on Stamp Duty {insert State you intend buying in}
eg search term >>>> stamp duty victoria
to get an idea of what you will be taxed by your state government.You may need to pay GST as well if it is a new development.
It really comes down to what is in demand in the area at the end of the day.
Sandy
Hope this view may give you some idea of what to consider.Houses cost more to buy than a unit.
Units.
- If you were trying to get your foot into the property market a unit might be the only thing you can afford.
- Body Corporate to deal with . This may restrict what you can do as far as renovation and also body corp fees and common area repairs to pay.
- Less Land on property. Land goes up in value not the building.
- This may be the preferred option for aging baby boomers with empty nests to move into in the future.
- You need to consider the tenant market of the area is it a family area or a young professional area with no kids or elderly people who may rent a unit. Are units in demand to be rented or is it houses in the suburb.
Houses
- Suit families ( this depends on the tenant market of the area is it a family area or a young professional area with no kids)
- Larger land size – room for capital gain or later sub division potential
- More rent than unit
- No body corporate
Do a search in google for {suburb you are buying in} demographic
To find out who lives there and what the likely rental property is
or ask some local real estate rental property managers what they rent out more. (do not ask real estate agent seller as they may have a vested interest in making the sale)buying a new property or a recently built property. The depreciation is usually 2.5% of the building cost per year .
see
http://www.ato.gov.au/content/downloads/IND00133187n17290608.pdf page 20
before 1979 the depreciation is zeroWhat you have to be aware of is that the depreciation claimed for the building will reduce the cost base by the amount claimed.
in English this increases you capital gain so you pay more capital gains tax if you sell in the future.An investment loan is a different animal to a residental ppor loan. A bank will take into account the rental income you will receive from having an investment property so you can afford the loan much easier than someone with a PPOR that brings in zero income and the home owner is spending a large part of their income on paying the loan off.THis is some times refered to as mortgage stress in the media where a person is paying a larger portion of their wage on laon repayments.
When you ask does anyone benefit from renting as opposed to owning the house it is really a matter of time that makes a big difference. In the long term owning the house pays off as you eventually own it where as if you rent it long term you own nothing.
In the short term rent is usually cheaper than a mortgage payment and can release some cash however rents do go up over time and interest rates on mortgages change also. Also if you pay the rent you do not pay for the maintenance / repairs , council rates, building insurance, water rates part of water bill, ect if it is residential property.Property seeker you might find these posts below useful as well
https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/4322944?highlight=variation%2Cform
https://www.propertyinvesting.com/forums/property-investing/help-needed/4323303?highlight=variation%2Cform
https://www.propertyinvesting.com/forums/property-investing/help-needed/4323635?highlight=variation%2Cform
https://www.propertyinvesting.com/forums/property-investing/general-property/4324168?highlight=variation%2Cform#comment-170824I know someone who had an easement at the back of their property and swapped this easement for the land on the side of their property so they could sub divide the back part of the property. It was a corner block thou.
I think they contacted the water company and worked out a deal.I had a house abandoned and then I had some uninvited visitors who kicked the front door in, so I went to the trouble of installing a 3 points of locking security door rather than a cheap security door. I wasn't sure if the tenant that abandoned the property should have been liable for the clean up and repairs but I fired the property manager 12 months later for failing to renew a lease and never returning my phone calls.
P.S.
Normal doors do not keep motivated people out of houses.
Look how easy the cops kick in doors with ram rods on the T.V shows that are on at the moment.if it is a new building you can claim building write off depreciation but it increases capital gain over time as cost base is decreased by depreciation. I think the figure is 2.5% each year . A quantity surveyor would be helpful in organising a depreciation schedule for your accountant.
Commercial Property has more return on investment but the reason is because of the higher risk. If you lose a tenant it can take some time to get another tenant and if the commercial property had a specific business you may need to find a similar business tenant. I do not invest in commercial or industrial.
API magazine article had that commercial property is not for beginners.Plus side of commercial – no outgoings – tenant pays them
Property value is determined by rent usuallyLess deposits – relies on getting capital growth to overcome interest costs. Plus side more leverage that might capture capital growth when it occurs. (you will need to consult your crystal ball on this one) . Higher wage earner can use tax deduction on negative gearing to get 30% back of negative income = (rent) -(expenses) or more percentage if on a higher tax bracket. More houses may increase repair costs, council rates, insurance, ect.. More properties in same state of AUS will increase land tax obligations.
(you need to keep on working at a JOB to maintain loans and hope you do not have any long periods of vacancies of tenants ). More Capital Gains Tax if you sell.More deposit. – Gives you some breathing space. Lower leverage means you do not get massive capital gain advantages if market values grow. More deposit means you can concentrate on getting house to a cash flow neutral position or slightly cash flow positive by paying more off loan. Once it is in this position you buy next house and get that one into same position and buy again. Advantage less cash flow required by you to just maintain the loan interest payments. As you can pay down the loan over time your borrowing capacity increases for the next loan. (get enough of these set up in positive and you eventually can stop working) (requires more time to make wealth) More of a cash flow strategy
You do not need to sell as property makes money eventually and doesn't cost you to keep hence no capital gains tax.Sharing the other costs like electricity, water, gas, phone bill, food is where arguments may arise as to having another partner over. You have to also take account use of common areas like lounge room , kitchen , bathroom, ect
see for some more ideas to your problem
http://ohmyapt.apartmentratings.com/splitting-rent.html
http://answers.yahoo.com/question/index?qid=20080519185523AAxeWVp
http://answers.yahoo.com/question/index?qid=20080403072901AAZ1ZBu
http://apartments.about.com/b/2006/06/28/splitting-the-rent-among-roommates.htmCan't really give you an great answer as I have not been in this situation but from what my wife has told me from when she was in a similar situation the partner coming over did cause problems with the other flat mates as far as they thought the partner should contribute to the expenses as the partner was over a lot.
What you are probably after is a partnership agreement
http://www.netlawman.com.au/bizdoc/partnership-agreement-australia.php?sc=448&gclid=CPGD9JDvt5UCFQsQagod2HoXRQ
https://www.docdownload.com.au/document/group.psp?group=legal,49717
http://www.lawcentral.com.au/CreateDoc/createlink.asp?DocId=11
http://www.rpemery.com/online/partnership-agreement.html
http://www.sbceastmetro.com/downloads/partnership-agreement.pdfThese sites may be of interest
Your mortgage broker should write extra notes with the application to the lender that explains your situation and employment prospects. For example that you worked in industry xyz for x years in Canada and have recently moved to Australia and have gained work with the same industry as you are a qualified {whatever you are}.
I think one of the problems might be due to aggregators wanting sales super stars rather than customer service people.
I would have made a good Mortgage Broker and actually completed the training but the aggregator
held on to the certificate. After promising that there was no sales quota when I signed up they started pressuring me into building up a client network.
In the end I terminated the contract with my aggregator as they threatened to terminate my contract if I didn't get sales leads so I saw this as too big a business risk.Also one of the problems you may come across is having a potential client poached from you from another bank or their existing bank by offering the same loan at a lower interest rate than you as a mortgage broker can provide.
another way of entry into the field is via http://www.wizard.com.au/homeloans/task.aspx?id=1025
wdemirdonder wrote:So as long as you dont live in the IP, you can use FHOG later on when you choose to purchase PPOR. Is that true ?False
see
3. Are you eligible to receive the grant?
at
http://www.sro.vic.gov.au/sro/SROWebSite.nsf/rebates_fhog.htm#3)
or
see
http://www.firsthome.gov.au/
pick state you live in and select more informationdepends on marginal tax rate of tax payers and costs of investment loan interest, council rates, water rates, insurance cost and rental income achieved.
check http://www.ato.gov.au for tax rate scales.
half negative gearing if joint owned house and calculate for each wage earner the tax deduction.
