Forum Replies Created
Hi All,
To those who factor utility bills into the rent, firstly how much do you allow and secondly I imagine heaters running in 5 bedrooms cause the bills to blow out. How do you control their use/over use.Tom Ellmer
HiBF
I think you might find you can’t actually claim a tax deduction for the interest until your IP starts to produce income or is available to produce income.
TomLee,
I bought a similar leasehold business several years ago and entered into a commercial lease with the landlord.I owned the furniture and fittings including things like HWS, aircon, carpets. These were part of my business and I was responsible for their upkeep/replacement/repair/depreciation.
I was responsible for all outgoings inc rates/water/all utilities/ interior painting & repairs/pub liability ins.
The landlord was responsible for the exterior painting/repair and the maintenance and repair of the fabric of the building/ins building/land tax
At rent reviews the rent was usually based on a figure of about 8% of valuation.So bsaed on that your 5k looks good, or it may be the property isn’t really worth 500k and the level of rent may just be a sweetener to get you in!
TomHi Foundation,
Given that property generally doubles in price every 7-10 years it looks like your graph only confirms that growth. I certainly wouldn’t class it as extreme growth just the expected growth every property investor’s strategy seems to be based around.
TomHi SIS,
If you are looking for really cheap residential property why not consider Iron Knob, another town abandoned by BHP, about 50km west of Whyalla. Probably no McDonald’s or any bank for that matter, but if you were looking to get away from the 21st century this might be the place to go! Perhaps you could market it as such.
[blink] Only joking but then……
TomI think Mt barker has gone , in terms of finding something easily, there has been an incredible amount of developement over the last few years, but I was looking myself at Murray Brdge seems to be a lot of potential there, relatively cheap prices, less than an hour from town on the freeway,of course you would need to do some reasearch to check out the best part of town etc
TomI’m surprised to hear that you have to be a lic real estate agent – There was an article in the Advertiser 6-8wks ago on this very subject and the understanding I gained was that any one could be one and that aspect of the industry was largely unregulated although the writer had discovered that all the buyer’s agents they were able to contact were also RE agents and they felt this was a weakness in the system in that it appeared any enquiries were referred to that agents current listings.
Maybe you need to dig further – your original source wasn’t a RE agent by any chance?
TomYes I ran one in SA for nearly seven yrs. You would probably need to consider running it yourself or at least doing most of the work yourself to make any real money out of it. There are a lot of regulations that go with running a place with that many residents and you would need to make the local coucil one of your first stops to ask about any outstanding matters they have such as fire regs and compliance. You will then need to work through it and do the sums.
Feel free to e-mail me if you have any specific questions at [email protected]
Regards
TomHi,
I think your theory is good, however have you seen accommodation that would meet your needs for $550 per month ?Your plan seems to hinge on this low rental being available.
Your strategy could be viable, but you need to “do the sums” as they say and include everything agents fees, tax, loan costs,etc.
You don’t say whether your mnthly income is gross or nett- This will obviously have a bearing on your capacity to borrow for #2 #3 …..
It may be beneficial to have a plan B. Say have someone move in with you and share or you move back home for a few yrs and rent your place out .With the level of financial committment you are anticiopating you are not going to have a social life anyway.Turn double garage into two extra bedrooms and let by the room. 6x $80-100 pw should give you enough to be C+.
Yes, be patient get the investments you currently have under control first – the advice offerred by the others seems a good place to start.
There will plenty of opportunities for you once you have consolidated and strengthened your current position.Yes there are heaps of pitfalls in renting property as a boarding house. Utility costs can blow out – I’m not really sure how you can control these costs effectively – If residents pay extra for over use how do you get the extra money from them given that most are on low incomes.
As for 1a 1b considerations I think if you can stay under the radar and away from council interference the happier you will be. Once you slip into 1b catagory you may open a can of worms for yourself regarding fire regs, health regs, building and zoning requirements, insurance catagory.
Sometimes I have been able to work through these , sometimes it gets a bit too hard!
