[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 27, 2007 - 10:45 am

Hello BuDoKeN

I am not an accountant and suggest that you ask your accountant this question before you do anything else, specially about the deductibility of the interest you pay on this loan against your Australian income.

As a non expert I think there is no problem with transferring a large amount to Australia as you will be able, if necessary, to show that the source of the funds is a loan and not "black money". I also think that the interest will be tax deductible if it is used for an investment but as I said, go ask your accountant.

The first thought that came to my mind was that you may be saving interest but that you are exposing yourself to currency exchange rate differences which, over a period of years, may become much more substantial than the difference in interest rates. Of cause you can also win on the currency exchange differences if the Oz dollar strengthens against whichever currency you're  borrowing. Have you added this risk to your calculations?

Cheers
Elka
  

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 27, 2007 - 1:29 am

Hello Dave

I would certainly be interested to hear more. Are you building yourself or have you got a builder doing it for you.
If you were willing it would be nice to be given some costs and what you are aiming for. 

Cheers

Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 26, 2007 - 12:21 pm

Just to stress what has been posted above, the reason why the vendor is selling and their needs are often the deciding factor as to what you will need to offer.

A few years ago I had just bought the front unit of 2 on a block at auction and had just settled when I heard from the back owner that they were also selling. Unfortunately they had just given it to the agent who had sold me the front unit and it was going to auction too. I was very keen to own the back unit as well, for obvious reasons, but was not keen to have to go to auction. I asked the owner if she would name a price she would take before auction.
 
She did. It was not unreasonable and I think it was very close to what I would have had to pay at auction assuming there was no over keen other buyer.. the unit is a bit bigger, better layout and with more land. 

The reason she was selling was that her husband had Alzheimer's and they were moving to Qld to be near their only daughter so she could help with his care. For this reason she wanted to go as quickly as possible but was definitely not looking forward to having people wandering through her place for inspections.

Armed with this info I offered $20K less, no conditions and settlement 30 days or a time to suite her as soon as my solicitor and bank were ready. I also pointed out that she would be saving all the advertising costs. She took it. For her, the certain, quick sale plus the fact that she would not have people traipsing through her house was worth the 20K. 

I was lucky as I had had access to the owner.  I think with the agent it would have been more difficult as they had me over a barrel …. if I wanted the unit.

Cheers
Elka   

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 25, 2007 - 12:05 am

Hello Flic

Congratulations.  
That was quick but with the great job you all did certainly no surprise.
Looking forward to hearing the details after the contract is signed.

Cheers
Elka 

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 22, 2007 - 12:04 pm

Hello h2h73

Just to help with questions like yours adambc started a thread on just this topic. Here is a link to it.

https://www.propertyinvesting.com/forums/property-investing/help-needed/22508

happy reading
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 22, 2007 - 10:51 am

WOW. What a wealth of stuff out there that I didn't know about..
 
As you may have guessed I am an Excel dummy but am trying to remedy that.

Thank you Terry

Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 22, 2007 - 10:25 am

Got it. Thank you both.

Cheers 
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 21, 2007 - 3:26 pm

Congratulations on having reached the most exciting part on time  and within budget.
The need for a second inspection certainly sounds very promising. Terrific.

Can we have some bathroom photos please before you sell.
Also a small summary of what you did in the bathroom would be great now that you have all that free time on your hands.

Am I right in assuming that a sale by negotiation is the same as a private sale but with a "sell by" date?
 
Best of luck
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 21, 2007 - 1:06 am

No. Australia has no tax on gifts of money, thank goodness.

If part of your deposit will be from a gift your lender will probably require a stat dec  signed by whoever made you the gift declaring the money as a gift.

Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 20, 2007 - 10:01 am

Just had a look at the photo tour on the open2 view site. Great photos.
Is there a reason as to why there are none of the bathroom?

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 18, 2007 - 11:03 pm

Unless you're planning to manage the property yourself you forgot agents letting fee and commission which is about 3% and 7 % in Melbourne. I know it differs in different places. 

Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 18, 2007 - 1:38 pm

Did you lay the floating floor boards over the tiles in the kitchen etc. or did you have to remove them all first?

Getting rid of those tiles has upgraded the place no end IMO though they did suite the blue window frame and skirting boards.

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 18, 2007 - 1:28 pm

Looking really great. The last owners will be kicking themselves for selling.

Would you mind telling me what lazer light sheets are as opposed to what was on the roof of the deck before? Sorry for the stupid question but I am overseas and can't pop down to Bunnings to ask them.

What was the cost of all that furniture hire? I must say whoever furnished it did a good job and I think it will help in the sale.

After all that  hard work now I wish you just a little luck with 2 or more motivated buyers.

Cheers  
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

September 16, 2007 - 8:38 pm

Now I'm confused too. What happened to the depreciation deduction?

Using the figures you supplied in your last post my calculations would be  :-

Income from IP:   $20,500

Expenses : $900 + $2,080 + $21,000 +$1,300 =  $25,280

A before tax savings loss of $4,780 .

However the $4,780 loss + $8,000 depreciation gives you a $12,780 deduction against your other income on which you will not need to pay any tax. 

At the highest rate (45% plus 1.5% medicare) this gives you a saving of $5,942 tax leaving you a net profit of $1,162 for the first year.

BTW I 'm not an accountant either. This is just the way I would calculate it given that I don't know your other income.
Please check my maths.

Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

August 31, 2007 - 1:12 pm

It's all looking really great.

Did you remove the railing on the varenda at the front door? I can't see it in the new photos of the front door but can't remember a post were you said that you would do that.

Best wishes

[elkamMember@elkamJoin Date: 2006Post Count: 722]

August 28, 2007 - 8:34 am

Qlds007 wrote:

In saying this remember that LMI incurred for investment purposes is tax deductible.

Very true but unfortunately in your case, since the property you will be buying will be your PPOR, the LMI will not be deductible.

[elkamMember@elkamJoin Date: 2006Post Count: 722]

August 27, 2007 - 9:27 pm

Hello Jenny

May I ask what you are doing with your income?. Are you using it to pay down the home loan on your PPOR?
If so, that's good as this is non deductible debt and you can draw the money out later via the LOC for further investing when you want it. 

If your home is fully paid off then I don't see any reason not to use your excess income to reduce the LOC.

It's just that you say that you have had no debt for 30+ years so I though that maybe you were just saving your income in a savings account which is not the best place for it.  

Just my thoughts 
Elka 

[elkamMember@elkamJoin Date: 2006Post Count: 722]

August 27, 2007 - 12:45 pm

ao wrote:

 I only got 60K cash and don't want to spend all my cash for the down payment but want to enjoy the first home buyer's grant so now i'm in a dilemma. If the selling price on the contract is $535K i'll be able to pay less stamp duty. but the unit is worth at least $565k. If we put the selling price at $565K(the vendor would agree to do that) bank valuation shouldn't be a problem at all and thus i can probably fork out less cash. But again i have to pay more stump duty. Which approach would be in my best interest?

Sounds like a bad idea to me and probably illegal. Anyway, how would you carry it out. It's not like the bank gives you a fist full of dollars and  lets you go to the vendor to pay for the house personally, giving you a chance to keep the change.

A settlement usually involves 2 conveyancers/solicitors and the bank representative who do the exchanging. I don't think all these people are going to lie for you. 

To my way of thinking this would not be in your best interest anyway. 

Since this is going to be your PPOR the interest on the loan is not tax deductible, so you want the loan as small as possible. 
After settlement you can always have the house revalued and organise a LOC for the extra equity. If you use the money in the LOC for investing then it becomes tax deductible debt. If you want to use some of the money for private expenses make sure you organise a LOC with a split so as to keep these separate from your investing expenses.

It seems that even using your $60K and the real price you will be up for LMI which to my way of thinking is a waste of money.  I am no expert in this area but understand from reading posts on this forum that it is possible to get some of this back if your LVR drops to 80% ? within a certain period of time.

I don't know if this is possible with all lenders but I would be looking at a lender who does offer this and is also willing to do another valuation within say 3 months.

Just my opinion
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

August 26, 2007 - 1:00 pm

CPI is consumer price index.

Tysonboss1 was saying that he annually increases the rent by the CPI plus  1.5%.

Here is a link to look at what the CPI index is made up of.

http://www.abs.gov.au/ausstats/[email protected]/mf/6401.0/ 

Cheers
Elka

[elkamMember@elkamJoin Date: 2006Post Count: 722]

August 21, 2007 - 10:10 am

Hello John

I have sent you a PM.

Would you consider starting a thread called something like DD in Holland or post your DD efforts/progress on this thread much in the same way as Jase and Flic are documenting their first reno project?. It would not only be a good record for you and a great read for us but you might even get some good suggestions and advice from the experienced investors here.

Cheers
Elka