Forum Replies Created
Hi Leebee1,
Others may disagree but I say – don’t buy in towns less than about 30,000.
There have been too many meatworks closures, mine shutdowns, rural downturns and there is the everpresent pop drift to the big cities in the past. These things are ongoing and usually unpredictable. Most smaller places rely on 1-3 industries.
If you do manage to get a CF+ place in a town somewhere – what do you gain?Maybe $30 week in your pocket. That is gone if the hotwater system blows up.
Then you have the cap gains issue. Yes you can gett CG but the market is more predictable and “smoothed out” in a larger centre.
Finding a buyer can be time consuming unless a boom is in progress.
I suggest finding a city property with a problem you can fix, or a snmall development opportunity if that is your bent.My opini0n only – I am not a proffessional – I know nothing etc etc.[eh][biggrin]
Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
Interesting one Basil,
Sounds cliched but I think there will always be people who feel ok doing a dodgy deal and there will be others who are far too generous in their dealings.
I suppose most of us fit in between these two extremes.I like to leave “something” in a deal for the other party, how much is ultimately determined by THEM.
After all is said and done, it is UP TO THEM whether they accept my offer. As long there is nothing unethical about my offer, I am pretty well happy to let THEM decide whether it is what they want.
If it is too low they can reject it.
Market value , supply and demand etc etc.I try to be “fair” in my dealings.
Is this what you mean when you say you want everyone to be a winner? [biggrin]Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
Thank you for your comprehensive answer DEREK.
I employ myself thru a co structure so my interest is evident.
I am ringing my accountant.[biggrin]Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
I suggest you draw up your own plans to suit the block, and then see nice draughtsman to draw it for you. They should know all the council requirements for building. Naturally you need to see the town planner prior tothis, to find out setbacks, carparks etc etc.
Yes it will all cost I am afraid. All except the council town planner.[cowboy2]
Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
I know JUST how you feel ! [blink]
No matter how much you look; the return always falls short of the cost of holding the property! I reckon there are too many investors satisfied with 3-4% gross return.
On the other hand,I suppose if it were close to neutral as we all want, there would be heaps of people looking for them!
I have just bought a house showing 5.1% return but I can and will develop the property to eventually get me maybe 8%.
(See my thread on Adding Value Forum)This is the only way I can see to get ahead of the game. Also quite safe. I am scared of my poor ability with shares – I have a poor record.(I bought Telstra2!!)
Best of luck I can sympathise… [cowboy2]
Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
Thank you all.
Yes DLPP, I think you are right – once the committment is made it is time to MOVE.
Every week I delay is a week later i will have a bit more $$ in my pocket!
I am thinking town planner first then surveyer.
I have never used a development co when I have done this stuff before I always seem to manage to wobble my way thru ok.
Do you think it is a good idea to get a company to manage the whole process for me?[hmmm]Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
SE Qld Sal…….
In my hometown where I know the market -where else???[exhappy]
Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
Thanks ASDF and WORLDCHANGER,
By the way worldchanger, I saw the news last nite and I don’t like the way you are changing the world! At least I know whose fault it is now.[blink][biggrin]
The flats are currently on two titles i.e. 2 lots of 3.
So while rates are about $4k per annum, it is not as bad as if they were strata titled. They are able tobe strata titled easily when req.The return of 6.1 % is nett because the lessee pays all the outgoings i.e. rates,insurance, etc. There are no property managers fees of course.
It adds up to about 10 thousand or so, that I do NOT have to pay that a normal investor would need to pay.
This means that if it was a normal everyday investment prop, I would be getting 7.2% and then paying the outgoings.So it would be 7.2% gross I guess.
This together with deprec benefits ($7k last year) means that it is then pos geared I reckon.So the question is for me; if I can hold 900k worth of property for nothing for 5 years is that a good idea??
My cash contribution would be $180k. So I estimate that if the property increases in value by 25% (5% pa) over the 5 years, I would earn I think around $45k per annum in equity, giving me a return of 25% pa on my money. I think this is pretty good leverage.
My question is I suppose; is it worth the risk that it may go the other way?[crying]
If I am holding the property for nothing, surely I cannot go far wrong.
I would fix the int rate I think just to be safer.By the way it is v well located. I wouldn’t expect anyone on the forum to able to give specific advice re property which is v near to my own house. I will research the likely local market here in great detail.
I am in the v early negotiating part right now so I would appreciate any thoughts.
Thanks for your input so far.
Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
Hi Felipe,
Yes if you make more money you pay more tax – however, you may be able to get a tax deduction via “paper” deductions. i.e. depreciation usually 2.5% on buildings and maybe 25% on furnishings portable.
Very complex area.I am not qualified so do not take this as advice.
You could take this as advice if you wish –
Minimise tax where you can but don’t become too concerned with saving it. Think more about how to increase your income.
After all nobody pays more tax unless they make more money.[fez]Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
Gotta add to this thread again as I am changing cars.
I have sold my 98 SUBARU FORESTER GT. (privately)
Used the cash to buy a 1996 BMW 323i. (small body but 6 cyl )
Drives like a dream.
This is indeed a BOLD experiment for me. So far – great.[biggrin]
Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
Hi HB and DLHadden,
Thanks for your replies; especially yours DL which was info packed .
My home is part of a short term accomm complex and so GSt is collected.(and claimed) see our website.
I have been thinking about the future lately and this is part of the planning.
There would be a good sized CGT bill if we sold the whole thing.
I have just about decided to try to keep the assett and lease it out for someone else to run.Still thinking about it.
Enjoy the fishing HB. Good Luck.[happy3]Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
Yeh HB
Your name reminds me of a type of pencil I would use at school 45 years ago.
Are you thin?You are right – I should have set up my affairs a bit differently.
However on the bright side I am 50 now and intend to keep the assett till I am over 55 at least. This allows me to put an amount equivelent to CGT into super which would help a bit.I reckon I was given poor advice by my accountant and he should be given a severe beating!
He gains more by me owning a company, with higher costs for accountancy each year.My current problem however is how to do the best I can given my current situation. It is far too expensive to unwind everything now.
Any further ideas?[blush2]
Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
I reckon REDWING was trying to assess whether the simplified explanation was going to be understandable to the novice.
YES it is able to be understood I think.
Of course the big problem in trying to explain leverage to the novice is their pre conceived ideas of RISK, INTEREST COSTS, RISK, WHAT THEIR RELLOS WILL THINK< RISK< AND RISK.
Most people are just scared.
I always think it is difficult to do anything worthwhile once you are in the grave. Do it while you can.[fez]Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
YEP,
You guys are right…I rent the home from my own company (half owned with my wife actually)
Need to pay market rent to my own co.
I also draw a small salary from my own company.The best suggestion I have heard so far is to pay o rent and then pay FB tax. Thank you hb.
I would like to reduce the rent however as it s after tax dollars and on top of that my company pays GST on all income.
The company actually takes up 35% of my rented home but I am still paying full market rent on it.
Sorry for the confusion…… Does this make any sense.Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
Thanks HB that sounds like a good idea to me.
TerryW thank you for the offer I might just take you up on it please.
Sounds a little different to what I am doing currently but hey I am willing to change the arrangements if I can get a benefit.[rolleyesanim]At the moment I own nothing.
My company owns all.
Any other ideas anyone??
I am not about to unwind all the ownership arrangements if any of you cheeky people are thinking about advising me to do that!
Thanks againAny other ideas?[party]
Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
Hello swoffer,
Do you reckon there is any upside for cap gain later onj, or are we looking purely at income?
Also, perhaps a check on body corp costs and any other levys?
I take it you mean a lifetime lease for the elderly tennants not your own lifetime.
Might not be a particularly long lease?![confused2]Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
I think this is a good strategy for making good use of your land, providing the demand is there of course.
It is a long journey however.
You need to consult your friendly town planner first, and the great thing is that it will cost you nothing to do this.
Then you have your usual architects/draughtsmaan, suryeyers etc etc etc.
I think development /rezoning is a great way to improve your position while the market is static.[exhappy]Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
My comment might be of lesser value, as I am a lonng way from Perth.
My thoughts are – Is there a really great reason why you would not fully utilise a triplex block?
I bet there is. You have probably identified a demand for houses have you??Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
Hey BDM,
What does “go sick” mean??Does it mean “go mad” ????[confused2]
Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
A lot of sensible people on this forum.
It can be dangerous to follow the herd, especially when the herd is led by a journalist who has as an agenda selling more papers and getting the story written in about 1 hour and getting on to the next story. (that is what they do)I am doing what I think is right for ME at this time. That means I now have LVR of about 43% – this leaves me a good margin if prices fall in the short term.
In addition I have got a loan against equity and put it back into an offset acc.
So I am now prepared for a bargain if I find one later this year or early next year.I would be interested to hear if other forumites reckon I am too cautious – or perhaps too reckless?? [blink]
Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
