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Depends on how good your property manager is. Mine I let them do advertising, reference checks, project management of renovations, chasing rental arrears, repairs, ect. The property manager is a good one as I sacked my last one who wasn't.
Do you want to be an active landlord when you own more than one property?
If I was you I would yet more involved if they fail to do something you want done. This means ringing them and asking for repair , action, ect to be done.
I recently noticed the letter box was stuffed so I asked pm to fix it to a cost of up to $400.
I was thinking of giving my tenant a gift at Christmas time as they have paid on time every month. Do not reward for something that might happen in the future rather reward after good behaviour has occurred.When I was further away I did use a renovation service to fix up the house but now that I am closer I let the PM employ trades people to do the renovation.
Could be a baby possum I have one in my house but haven't been able to catch it. Looks just like a mouse also but tail is longer.
There is also a mention in the August 2008 edition about an investor living in USA having invested in Mildura for the higher rental return yield .
If you are in a hurry to get tenants drop the asking price for the rent by $20 a week from what the market price for the area is due to the short lease condition.
The tax implication of living on the equity is that the interest paid on the increased borrowings is not tax deductible as it is not being used for the purposes of producing income. This was covered in Australian Property Investor Magazine.
Option 1 – If you sell some of the properties with the most equity and cop the CGT tax you can pay down the other loans that are reducing your cashflow. Say you have a house worth $500,000 on a $100,000 loan and you sell it you make $400,000 profit and use the 50% cgt discount for holding the asset for >12 months . So you have $200,000 taxable Capital gain. Your marginal tax rate is probably say worst case 45% so you pay $90,000 in tax. You now have $310,000 to pay down some of your other loans to get them to a positive position.
So you pay tax on the positive income at your marginal tax rate that is probably would be 30%. (you can check the tax rates at (http://www.ato.gov.au/individuals/content.asp?doc=/Content/12333.htm). As an example say you lose $10,000 a year in negative gearing so you can only claim the marginal tax rate of say 30%. So you get your 30% or $3000 but you lose $7000 a year. Now take the scenario of being positive by $10,000 a year. Oh no you have to pay tax so $10,000 * 30% = $3000.
You have a $7000 loss with negative gearing or a $3000 loss with positive gearing. I haven't factored in the land tax you would incur if you own a lot of properties in the one state. When I say own you really only control the properties in a negatively geared situation the bank really owns them you just get to pay the land tax for the properties.
You may have less growth but the point is with negative geared you are solely relying on achieving capital growth where as if you pay down loans you become in a better financial position to be able to purchase future properties and have the passive cash flow to pay for any new loans without hampering your lifestyle.Think about this
How many properties can you own that are positively geared?How many can you afford to own that are negatively geared as you can only negative gear on your taxable income over $34,000 to $80,000 at 30% or $80,000 to $180,000 at 40% and at 45% for over $180,000 ? Don't forget the land tax costs !
What does your council rates notice say your property is worth as they are reviewed every two years just add the land value plus the site improved value. The reason you need a valuation is to work out a new cost base from the moment your house went from PPOR exemption for CGT to non exemption CGT status when you rent out the house. This is so you only pay for the capital gain you made from the moment you rented the house out to when you either sell the house in the future or move back in as PPOR (another valuation needed to cover CGT).
If you have a record of the valuation at this renting out change you can use it later down the track to pay only the CGT tax for the income producing time period.I haven't tried this but some real estate agents offer a free valuation to try and get you to sell your house through them.
Family renters with young child would be renting in a quieter not so busy location.
Getting in and out of property with a car may be a problem.
you could lose part of the front yard if main road is widened in the future.Just remember that there are not enough rental properties to meet the renter demand now. So if the Labor Government fools around with negative gearing the number of rental properties available to rent will decrease and hence the high rents will get even higher. This is what happened last time the government fooled around with negative gearing and investors left the property market in large numbers during the 80's.
The introduced lower tax rates are causing this also to occur as negative gearing is becoming less attractive due to the lower neg gearing income loss tax deduction, property tax and capital gains tax implications.
Ausstudy
If you are planning on getting Aus study you may have it reduced by any negative gearing loss as Centre link regards a loss as income for working out your income level for the Aus study. I invested in a property just before going to university and this was what I encountered with centre link. Also if you sell for a gain in the financial year you were paid Aus study you have to pay some of the Aus Study back as the capital gain is also regarded as income even though a capital loss is not regarded as income loss.
I went to university and wasted three years as a mature aged student and another three years as no one employed me after I graduated , so I have just finished learning how to drive an 8 tonne truck so I can get employed as a bus driver. You probably are in a better position as far as the market goes to go to university where as I missed out on 30% a year growth in property per year (2001 – 2004) . One thing that was annoying was I couldn't borrow more money as I didn't have a job or income while at university and saw the property rising in value.for $20 bucks a month you could attend the property investor meetings in Sydney
see
https://www.propertyinvesting.com/forums/property-investing/general-property/4325318I attend from time to time a similar meeting in Melbourne.
You will meet people who are investors and see and hear from guest speakers.
http://www.jornada.com.au/ – join up for newsletter – Seminars come up from time to time
(at the moment their focus is on share investment but property investment is also done when the market is right for it)attend
https://www.propertyinvesting.com/forums/property-investing/general-property/4325318http://renos.com.au/news/88/
Queensland based but I think I will eventually go and do one of there workshops when I can afford to in cost and time.What you need to do is work out what strategy you want to do.
Positively geared property or Negatively geared property or a mix of both
If you do not understand the difference you may need to read some more books.As you have a career you would probably go for a buy and hold Strategy with minimum hands on via a property manager.
Probably a place that doesn't need to much work done on it to rent it out.
It is hard to find positive geared properties in the current market.This is more suited to your situation – the Tafe course in Queensland (have not seen a similar course in NSW)
http://www.goldcoast.tafe.qld.gov.au/search/course_finder/coursedetails.php?courseid=2951Featured on Today tonight (Do not know how good the course is)
http://www.thepropertyschool.com.au/
http://au.todaytonight.yahoo.com/article/40585/money/tafe-millionaire-factorySimilar question from the past
https://www.propertyinvesting.com/forums/property-investing/help-needed/4323929Welcome to the forum.
Wealth creation requires you to have a different mind set to most people.
You have a car loan of $20,000
What do you think your car will be worth in 5 years time?
What is the interest rate of your car loan ?If it was say 15% over a five year loan it will cost you approx $8,500 in interest
If you paid an extra $1000 a month you would pay off the loan in 15 months and save $6500 in interest costs.
After the fifteen months you would have an extra $500 a month in cash flow to use for property investment.
Also if you go for a loan for property the existing car loan reduces how much you can borrow from a bank.it is really an eye opener to buy a $35,000 car and see it for sale 6 years later at $12,000 that is a loss of $23,000 plus the interest no the car loan.
It really depends on what you purchase for example a $190,000 house with a $20,000 deposit would be a repayment of $2300 a month (but pay 1150 a fortnight) but you need to factor in extra funds to cover the mortgage insurance and stamp duty costs also. Would be paid off in ten years based on a 10% interest rate. Assuming you are not taking any rental income into account.
The main thing is can you borrow the money with your car loan still outstanding.
A visit to a lending person at your local bank asking them what is the maximum you could borrow ?
Would give you an idea on what you can buy and what deposit you may need and also what extra costs you might incur.(you may also need to factor in the cost of one of your kids starting school in three years time for a school uniform, school fees, books, ect)
Also if you are claiming family benefits from the Family assistance office and you own a negatively geared property you may have the negative income added back to your income to calculate your deemed income levels to work out your family payments or Centrelink parenting payments.
There is a program called Free CD to WAV MP3 WMA AMR AC3 AAC Ripper 2.0 down loadable from
http://www.amlsoft.com/ for FREE that converts CD files into MP3 for an IPOD.They also have a program called Easy Audio Recorder 3.1 that would record from your microphone input or AUX in input of your sound card from a cassette directly into MP3 format which is what you require for the IPOD.
It costs $17 US dollars
So you would feed the speaker output from the cassette into a 3.5 mm stereo jack into a cable and then to a 3.5 mm stereo plug into the AUX in connection of computer.
The danger is if you turn up the volume too much when using the mic input you may over drive the microphone input thus it sounds bad.
Also you may have an impedance mismatch I assume the cassette recorder and computer input would both be 8 ohms impedance.
If one is 16 ohms you may be able to find a device to match the impedance from 8 ohms to 16 ohms but this would be a rare problem.Reservoir as a suburb has a weird shape. When you talk of train station are you referring to reservior train station in zone 1 or regent train station or Keon Park train station in zone 2.
Reservoir has a nice lake called Edwards lake and is useful for getting to the Airport as the Western ring road connects with the Tullamarine Freeway without a toll.
From reservoir station it takes about 45 minutes to get into the city
Also there is a tram from spring st West Preston
Major shopping centre is Northland
Close to Latrobe University in Plenty Road
Use to live there 10 years agoWhat you also need to factor in is what the property could achieve in capital growth in the future as at the moment you have lost $30,000 in capital value over five years. This may be handy if you want to claim a capital loss against another capital gain you may have made in your tax return if you did sell it.
It is important to factor in the cash flow
Interest on 450,000 loan per year = $42480 divide by 52 for weekly figure = $816 (you did not give interest cost so this is guess)
So your tax rate most likely is 30%
So taking $275 rent minus 816 minus 40 for expenses is -581 a week
Income loss of $581 *.70 = -$406 (This is what you would be paying per week after tax refund of $174 per week
So from a cash flow view point ROI = -$406*52 / 450,000 *100
ROI = – 4.7% (Notice the negative figure) This doesn't take into account the $30,000 capital loss incurred
Ideally you may want to try and reduce the loan over time so that your ROI can become positive. As it is hard to purchase a property in the current property market that will create a positive cash flow from day one.When the ROI = + value it is known as positive cash flow.
When a property is negative cash flow most investors are hoping that the capital value increases more than the negative cash flow taking also into account the capital gains tax implications if they sell the property.
As an exercise lets factor in the $30,000 loss over five years as say a $6000 a year capital lossSo ROI for last five years is
Interest on 450,000 loan per year = $42480 divide by 52 for weekly figure = $816 (you did not give interest cost so this is guess)
So your tax rate most likely is 30%
So taking $275 rent minus 816 minus 40 for expenses minus 115 for capital loss is -696 a week
Income loss of $581 *.70 = -$406 (This is what you would be paying per week after tax refund of $174 per week
So from a cash flow / capital loss view point ROI = -$406+115 *52 / 450,000 (you can't claim capital loss against wage income)
ROI = – 521 /450000 * 100
ROI = – 6% (Notice the negative figure) This takes into account the $6,000 capital loss incurred per year
Is it worth holding ?
Depends on if you keep losing $6000 a year in capital gain (hard to predict , the market could change over long term)
Depends on if you intend to pay off the loan thus changing the cash flow over the long termI can't give you advise on whether to keep it or sell it as that is giving financial advice which I can't give you as I am not a licensed financial planner.
The banks will look at what you earn from a wage, you may be able to project what the likely rent from your prospective property will be after you purchase it and rent it out. It would also be good to show the expenses likely to be incurred like Council Rates, Insurance, Water rates and property manager fees or provide a guess of between $2000 – $2500.
Some banks will factor in rental income to work out what you can borrow, some may even take family payments from Centrelink into account also.
Also banks look at equity so a list of your asset values like a rates notice and debt like the lastest mortgage statement for your PPOR and evidence of your wage like a payment summary (use to be called a group certificate) or recent wage slips would be useful for the bank.
Make an appointment with the banks lending manager and explain that you would like to find out how much you could borrow to purchase a future investment property.have a look at a line of credit loan against the first property to fund deposit for next property with a different bank loan
This makes sure that security is not tied together — avoid it – known as colaterisation across two properties so you lose both houses if things go wrong.You really need a have a joint agreement through a solicitor to cover every situation and set up a trust account.
Then you need to save the money to build up the collateral. Probably then buy a property through the trust or as tenants in common.
You may need to look at a hybrid unit trust so that if someone pulls out you just pay them out by buying their units in the trust.
this may help
http://www.businessmall.com.au/store/viewItem.shop?idProduct=110 Article on joint venturesI haven't done this type of thing but read a lot !
ItalianDragon wrote:An example were the nuclear tests of the 1960s in Maralinga (SA) by the British, where the radioactive clouds reached Sydney.
Correction
The Tests that reached Sydney were in fact on an island off the coast of Western Australia on the other side of Australia and the radiation was only discovered by a person in Sydney testing a Gieger counter that was detecting radioactive rain.
The S.A tests drifted across farmlands towards Victoria and only polluted the grass that cows eat to produce the radioactive milk that was being given to school children as part of a program to promote healthier children through drinking milk.
Getting back to the topic. It seems crazy to me to have all the single occupant cars travelling to the same point at the same time and it would make more sense to build another city closer to the new suburbs that have no public transport. It seems to work this way in Simcity.
