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Where are you located?
Hi DSH… I think just about everyone would do something a little bit different – I purchased a unit as my first property and would have preferred to buy a house (but we’re all richer in hindsight aren’t we!)… generally speaking, I’ve found that when push comes to shove, you have to do something – but keep your head about you.
You’ve raised some interesting points that I talk to people about often which are:
Shares vs Property
Investment vs Lifestyle
Risk vs ReturnThere are no black and white answers to your questions, as everyone should have a unique formula for what works for them – I would suggest you go get some financial advice, but finding someone who is going to have the expertise to discuss all those areas in an unbiased manner is going to be pretty hard. But a few tips:
1. think long term
2. have a back up plan
3. analyse every risk and have a mini plan on how you’re deal with that issue if and when it arrives. Most risks that you worry about can be mitigated with a good plan
4. cash flow is more important than anything
5. knowledge is powerPersonally, I bought a stack of property in the late 90’s and 2000’s and then just one every couple of years since then – it was aggressive and in hindsight, I really had no idea what I was doing in the earlier days. I was lucky, it works & I was investing in a boom market – I would suggest the same in the current market.
Best of luck, happy to chat on the phone if you PM me.
Im not sure if he or his staff cover the area, but you could try getting hold of Rich Harvey from Property Buyers and see if they do – I’ve worked with them and found them reliable.
There used to be a loophole that allowed you to buy an investment property and still claim the FHOG. This was because the FHOG used to state that you have not owned a PPOR before, rather than any property. This was changed a couple of years ago – I’ve included the major criteria below for your reference.
FHOGS is available to people buying or building their first home and who meet the following eligibility criteria:
Each applicant is a natural person and not a company or trust.
At least one applicant is a permanent resident or Australian citizen.
Each applicant must be at least 18 years of age.
All applicants and/or their spouse/de facto have not owned a residential property, jointly, separately or with some other person, in any State or Territory of Australia before 1 July 2000.
All applicants and/or their spouse/de facto have not owned on or after 1 July 2000 a residential property and occupied that property jointly, separately or with some other person in any State or Territory of Australia for a continuous period of at least six months.
Each applicant has entered into a contract for the purchase of a home or signed a contract to build a home on or after 1 July 2000. In the case of an owner-builder, laying of the foundations commenced on or after 1 July 2000.
The total value of the property does not exceed the cap amount.
This is the first time an applicant and/or their spouse/de facto will receive a grant under the First Home Owner Grant Act 2000 in any State or Territory (unless subsequently repaid).
At least one applicant will occupy the home as their principal place of residence for a continuous period of at least six months, commencing within 12 months of settlement or construction of the home.
As always, seek independent and specialist advice before committing to something if you’re not 100% certain.
This is a related party transaction.
A related party includes any member, a relative of any member, a relative of the spouse of any member, and an entity (such as a company or trust) controlled by one or more of the above individuals.
The definition of relative includes a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of that individual or of his or her spouse.
As a result, only 5% of your asset holding in your SMSF can be used for a transaction of this nature.
Additionally, I often see people wanting to make transactions to achieve things other than profit – how is it any different if you buy the property next door that she lives in and rent that out, while she keeps on renting? Is buying a property in your SMSF the right strategy for you in the first place? So many questions that you should be asking before you jump into a transaction like that.
Indeed, interesting reading. Only really skims the surface however. There are so many different factors that lead to a country's general housing price trends that it's near impossible to generalise.
If you're improving the property with capital improvements, then yes – you should be able to claim the items that you purchased as deductible. Keep evidence of your purchase and give these to the qantity surveyor to include when they prepare the depreciation schedule.
You may find it easier to go to the strata company that you would prefer to use and ask them to talk you through the process. They should know the law and the processes back to front, and if they want the business, they will hold your hand through the whole process.
Other than that, you need to find out the rules around your strata plan on how to call a General Meeting, get the item on the agenda and maybe even lobby the other owners with relevant information on what you want to do, why etc.
Hey everyone…
As a financial planner, I get asked a lot of questions about various investments and buying property in America is a topic that I have been asked sufficient times for me to do something about. So, I've spent the past few months researching and finding more about it – I've come across the guys at My USA Property, and while I have not bought from them, nothign stands out as problematic – however since I have not delved into the particulars, I'm not going to comment either way.
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Education is a good thing – but after you've heard what you want, go and do some research and make up your own minds.
Ah, the ones that got away…
I've advised plenty of people over the years, and I've seen plenty of good deals get away, but two come to mind:
1. I recommended a property I found to a client just outside of Manly, Sydney NSW. The property was a 3br unit, on a hill with views over the surrounding areas. The asking price was circa $260k. The client accepted the offer and was ready to proceed but went to go get some separate advice. They later came back to me after speaking to their accountant saying: "Becuase it's going to be negatively geared, my accountant told me it's a bad idea becuase it will increase my capital gains when I sell it in the future". After making sure he was being serious, and explaining that long term capital gains are in fact a good thing, we parted ways. The value is now a multiple of the original asking price.
2. I found a property in Marickville, Sydney NSW for another client. It was also a unit, 3br, 9km from the City (or there abouts) near the train station etc etc – pretty much the idea inner city deal. Asking price was around $230k, off the plan. My client could see the value in the property and I was finally happy to have found him something good as he had looked at a few ideas previously with me, and a few before he became a client. He was ready to sign and decided to head over and have one more look around, so armed with the plans, he went and stood on the street to get a better feel for the property he was about to purchase. He eventually came back to me saying that he wasn't happy with where one of the walls was going to be built inside the unit and wanted it shifted – obviously on a block of apartments about to be built, a developer isn't going to move a wall for one purchaser. Suffice to say, he didn't go ahead and I passed the property onto another client who has subsequently sold it and make over $200k in profit. I would assume that he is one of those buyers that is never happy – I bumped into him several years after this happened, and he was sitll looking for that ideal property.
The lessons? You can think and think and think and think about it, but if you don't do it, you'll never make money from it.
You can nominate one property as your PPOR for a period of up to 6 years after you move out, even if you are renting it out. You can not, however, have more than one PPOR at at time. The ATO has some very solid material on this on their web site. So, you can claim either A or B as your PPOR, but not both at the same time. So, A would have been your PPOR, then you can select to keep A as your PPOR or have it replaced by B (providing B was in fact your PPOR for a period of time)
As for reporting income from B if it was your PPOR, income that you ear is income, regardless of how you do it from the ATO's perspective – so yes, it is reportable income. On the flip side, you can also claim expenses.
To prove that a property as your PPOR, you have to show that you lived in there and that you took steps that a "reasonable person would take" to make it your PPOR.
Much comes down to how the contract is written. However generally speaking, special conditions are part of the actual contract, so once they sign it, it's all in. However, if the special conditions are separate or require specific signing and it has not been signed, there is potentially scope for the contract itself to be binding, but the special conditions are not.
Your solicitor should be able to give you more thorough advice on this.
You are within your rights to withdraw the property off the market and move into yourselves – providing I have understood what you have written there.
No, they are not your normal services apartments – they are closer to the holiday rental apartments that you find in SE-Qld. Typcially, banks and valuers take a much better view of these as they are pretty much "normal" apartments – however freerenterprise is correct, a valuer might very likely take the value of the furniture package off the purchase price. The size is good as it shows that it's more than just a glorified hotel room.
If you're worried about the finance side, go to your mortgage broker and ask them to confirm with credit if the property you are looking at stacks up.
Congrats on your first post!
I don't personally know the Hurstville area sufficiently enough to give you a yes or no on the property that you are looking but just a few ideas to consider:
1. you can buy either side of the median price in an area and still get excellent growth. The median is just that, the middle – it does not mean it's what gets the most growth however. What it does do is give you both the greatest number of competing properties for sale but also the greatest number of buyers as well.
2. I would go to a bank and get some sort of pre-approval for your property to be doubly sure that you can borrow the funds that you need – you don't want to be in a situation where you can't settle in 2 years – don't forget, buying off the plan gives you an additional level of risk – if you're earning less, if rates go up or if you're not working in 2 years, you may not get a loan. I've seen it happen before!
3. Don't compare prices with other off the plan units – compare it to units that are less than 5 years old and are similar size and location. At the end of the day, your unit will be near identical to one that is 1-5 years older once you've had a tennant or two through it.Best of luck!
I've always found that being straight up with agents works. I've often negotiated set deposit amounts prior to auctions (ie, say $30,000 exactly, regardless of price) and asked for them to seek approval from the vendor.
It's good that you're aware of the issue re bidding too high for your loan approval – the easiest way to get around this is get the property valued prior to auction – ensure that you're using the right valuer and instructing them appropriately. If you can find a valuer that is on a bank's panel, it would be better.Nothing wrong with wanting your cake and eating it too
They seemed to go quiet for a while – I don't come across too many borrowers that fit that category.
Quite seriously, invest an hour or two per day just reading people's various experiences in here, and start asking questions as you start to develop your understanding of things.
I'd love to hear of anything that's going on around Sydney – if not, maybe we could host something?
