Forum Replies Created
I agree with abbruzzis' comments above.
I have also attended the seminar – but did not take up their mentoring program as I feel confident enough in my IP purchases.
I also purchased a property with them just over a year ago. Their forecasted growth for the property has not materialised and I do feel slightly disappointed – however, when I view that region the growth it has attained is typical for that kind of property in that region.
As always, you must do your own due diligence.
Okay,
I have had no responses to this post!!!
Am I missing something obvious here or is this something of a legal minefield that no-one wants to comment on?
I went to them for one related matter, and then got a whole heap of marketing talk and discussion about the benefits of joining Destiny.
Overall, the original matter I went to see them about did not get addressed. I felt pretty disappointed with that and haven't been back since.
Yes, I would say the same about Werribee. However, I don't know if you are a first time investor! I was when I bought in Wyndham Vale and was 'gun-shy' in spending too much first up. Hindsight is wonderful however – should have taken the 'risk' and bought closer into the City.
Further on Werribee, it is a relatively old and established area – so when buying an IP you may want to weight up the pros and cons of buying an older home with associated maintenance needs versus a newer home with associated depreciation benefits.
Good Luck.
I settled on a property in the adjacent suburb of Wyndham Vale in Feb 2007. Purchase price was $237K. Current value $323K. As to why this area? – Well it was the very first IP that we brought and the price fitted our budget at the time. However, I also brought in this area as my research showed that i) there was a "right-of-way" set aside for the new regional railway project, ii) there is also land set aside for a new ring road project, iii) infrastructure is overall being expanded (shopping centres, schools, etc) and iv) there is an overall shortage of housing.
Reading some of the other respondents above, I ask my self would I buy in this area again? Probably not as whilst the capital growth has been steady it has has been lower compared to other areas – as in suburbs closer to the capital city. Either way, I am not worried too much as rental return has been okay (5.3%) and I intend to hang onto this for the long term (10+ years).
Renting out has not been a problem. Although when we first brought this IP we could not obtain tenants for the first 3 months and that was a concern. Our approach to correct this was to gradually drop the asking rent until someone took it up. Since then, it has only been unoccupied for 2 days ( this was over a weekend).
Of some minor concern is the fact that there is the intention to release more land in this area which could impact the " supply-and-demand" paradigm with a subseqent impact on prices – perhaps only for a short period (1-2 years).
To answer your question, you can see our experience above. I suggest a core element is to differentaite your rental property from others – for example, mine has air-conditioning whilst those surrounding it do not. For the long term, I beleive it should be okay. If you want more certainty, then I would suggest buying closer to the capital cities – around less than 15 kilometres from the GPO – the closer the better. It is a compromise as such 'closer-in' property will generally have a higher purchase price.
Mike,
Thanks muchly. Very helpful in determining whether to re-finance or not.
Thanks everyone for your comments.
Dear all,
Thanks for your comments.
At the risk of sounding naieve, I was hoping to return the initial deposit on the IP to my owner-occupied home, and get the mortgage payments back down or repeat the process and buy another IP. Another approach perhaps is to re-finance the IP provided there has been sufficient capital growth and use a portion of that growth for the next IP.
At the end of the day, I expect the tax office to look at "what purpose has the money been borrowed for". I will have to work it out from there.
The DHA investment homes are something I have tended to stay away from.
In particular, one of the aspects of these investments is that rent is 'reviewed' annually and (apparently!) will never go down – only up based upon fair market rent.
Sound okay! Right?
However, consider that most of the adjacent properties are also DHA homes – consequently, the rent increase will be based on those properties as well. So, who sets the rental value? – DHA all the way!
I don't believe this is fair.
Hi mrh,
Have you established a PAYG tax variation form for this property?
No one else appears to be mentioning this – but I won't assume you know what it is.
The process around this form is that you fill it out (perhaps with the help of a good accountant!) and put in your outgoings and incomings for the property. This is then forwarded to the vampires (sorry, I mean tax office) and they then forward a letter to your pay office to only tax you at a lower amount.
This is best suited if you are a full-time employee and not a contractor type employee who has part-time or occassional work all over the place.
Anyhow, you have probably performed your annual tax return and received a nice big cheque from the tax office to assist with your losses. In the case of using a PAYG tax variation form, you get this money back each pay-day – so this may help with your cash flow issues on this IP.
Yes, I suggest you do all you can hold this property for the long term. Apart from the PAYG tax variation form, look at eradicating bad-debt or holding off on 'life-style' aspects – but just for a year or two!..
Good luck.
Thanks guys. I've got what I need.
Pat,
My first investment property I have brought is in Wyndham Vale and it has performed to a satisfactory level since its purchase in early 2006. I say this because we have got good tenants who pay on time, look after the place (last two inspections there has not been a carpet hair out of place) and happily absorb the rent increases.
The earlier comments you have had do have some valid aspects. The cost of fuel does look to have some minor impact in the decision making to purchase in this area as there is a lack of public transport. However, there is potential for a new rail link to be established between Sunshine and Werribee with land reserved for this rail link right-of-way. Hopefully, this will also entail the set-up of a nearby train station. This was recently announced (few months ago) in the Rod Eddington report on public transport.
Also, getting from Wyndham Vale to the city can be a pest during peak hour. The road through Werribee gets narrow and congested and acts as a bottleneck. However, there are plans to establish a dual carriageway through Wyndham Vale alongside the right-of-way for the Railway line to join up with the Princes freeway that will by pass the congested sections of Werribee.
As to when this actually occurs, its all up to the State Government. But, a ten year time from would appear be reasonable for this kind of stuff to actually occur.
Finally, Wyndham Vale is typically a low-socio-economic demographic. When the economy goes bad, people tend to move out of the inner-city with higher rents to a lower rent area – or move in with Mum and Dad!
Overall, you've got to do your research and satisfy yourself that it is a worthwhile area to invest in.
In two years, my investment property has grown in value 12% – which isn't much to get excited about but the only constant in change!!! Would I invest there again? Not right now as I looking elsewhere and I don't want to have all my eggs in the one basket. However, the area is a mortgage belt and the potential for our economy to slow may show some bargains as people lose their jobs
Best of luck.
Scott and ummester, thanks very much for your guidance. Most useful.
What will be the impact to individual investors – like me (and you!).
On the surface of it, I probably would have participated in the NRAS as an investor. But, the Government only want to restrict this too larger financial institutions. Why???
As an "individual investor", why should I be excluded from such scheme? From the article extracts on the NRAS, individual investors can participate via accessing one of the major funds. Not sure I want to release "control" to one of the major institutions as I have limited confidence in them to manage my money in my best interests.
Anyhow, does anyone else have any insight or considered opinions as to what the fallout of this sheme may be to individual property intestors? There is always positives and negatives from change, so lets hear from both sides of the fence.
dosq,
My suggestion would be to retain this property.
From the figures you've put forward, this property appears to be positive cash flow – which is a good thing! I would expect you're putting the surplus cash onto the interest only loan as well.
One part I may be ignorant in here is your tax circumstances. But, the positive cash flow you're getting shouldn't be too much of a problem there as its not overly substantial.
Either way, I cannot help but feel that this is 'prime' property in 'prime' location – particularly when you consider the vacancy rates in Melbourne CBD. This might be a different issue if the property was in the outer Melbourne suburbs where vacancy rates still are low but it is difficult to obtain positive cash flow.
I also expect you have a depreciation schedule done on this property! If not, it may prove advantageous to get one as soon as possible. Look up Melbourne based quantity surveyors on the web.
Best of luck.
Just on the $8K potential rebate for renting 20% below market rates, this sounds of interest to me. I have a negatively geared property and should I lower the rent further then I get an $8000 tax deduction. Doesn't sound too bad! I have some excellent tenants in it at the moment – have been in there for 12 months now – and should such a discount apply it would be terrific to have a win-win situation.
I expect the devil is in the detail. This home I'm talking about is only 18 months old so will this be classed as new?. Just have to wait for the detail.
One negative impact I can foresee, however, is that lower rent tends to attract "undesirables". Once you place rent up a bit, its amazing just how you trim down from a broad base of applicant to a few quality ones. Of course, you've got to keep perspective in mind – if you make your rent too high then you make your rental IP unattractive. Such undesirables may perceive that you 'owe them something as well' as you get an $8,000.00 tax break.
Apologies to all if I sound cynical on this – its just that bad experiences tend to weight heavy on your mind. Either way, I will be keeping an open mind on this until the detail known.
Hi emilypat,
From your post, I can't help but feel inspired to see someone at your age ready to take a step out of their comfort zone. As I am in my forties I am hoping to retire in my mid-fifties and be financially independant. Starting at your age, the potential exists to be able to retire earlier than forty – and yes, beleive it or not that is still quite young!
As to where to go from here, I would suggest the following guidance:
- Take up a mentoring program. Steve McKnights is probably most suitable. Don't necessarily look to buy property immediately, but spend lots of time with a multitude of people who have already achieved what you want to achieve.
- Spend time with like minded people. The mentoring program mentioned above should supply this. But, don't just do it on-line! Make sure you meet face-to-face and chat with like-minded people. When I first started investing, I had spent a lot of time with such people and, believe it or not, I found I was getting confused as to which way to go. Upon my first purchase, however, I did start to understand a bit more and things became clearer.
- Establish income. You have mentioned that you are looking at starting a business. Sounds like a great initiative. I had my own business for 5 years and found that I did get some rewards. However, back then the banks seemed a little reluctant to loan to small business. Other non-bank lenders can help but usually at higher interest rates. Consequently, I closed down my business and now work for wages. In your case though, if you have a passion to conduct this business and have set this on your path, then go for it! I had started my business at a later age and had two children to consider so for me it was not a great path to go down. At your age, what the heck! My partner works in aged care and a common thought the elderly have as they lie on their death bed is they wish they took more risks (as the rewards either financially or personally will come about and lead to an overall richer and rewarding life). But finally on this point, apart from establishing income its also worthwhile to be able to show a lender savings – especially if its a deposit.
- Learn some patience. Others may feel different on this matter, but my approach with property is to retain it for at least 7-10 years before selling it off – if at all. As a 'rule-of-thumb' – the longer you wait, the better the return with property. As well as this, be cautious about reading too much into what is reported in the media with respect to housing values dropping/lifting, etc. Just rely on cold hard figures from such sources as RP Data, etc. My partner often reacts poorly to such news stories about higher interest rates and falling property values on one of the suburbs we have investment property in – but I'm confident in time this will alter as the technical assessment I have done has served me well on other properties. The only constant we ever get is change!
- The overall learning experience is constant. Just when you think you know enough, something else comes in from left-field that can be very useful. Never get a closed mind – as I did at one stage and missed out on a magnificent deal.
My very best of luck to you in your endeavours.
Glenn1964
To Scott No mates,
Providing a loan is an option.
To tammy,
Thanks for the guidance here.To both,
Overall, I was considering endeavouring to keep her costs low as her income is not great.I'll take your advice on board and discuss further.
Thanks for the feedback.
Tony B,
Well, I am pretty new to property investment – in fact I only purchased my first investment propery in Feb 07. However, it did take me 9 weeks to get to the sale. During that 9 weeks, I had made offers on 5 other properties all with a 24 hour deadline for the vendor to accept or reject my offer – this allowed to move onto the next opportunity.
My recommendation is to make the offer, wait the nominated deadline period and if no acceptance then move on. Of course, this depends upon how much you really want a specific property. I can only suggest you 'monitor' your emotions when buying.
As investors as opposed to owner-occupiers, we don't really 'need' the property as we can move onto the next one.
By the way, just for the record, of the other properties I made offers only one of the vendors (via the agent) pursued me afterwards to see if I was still interested 1 week later!
Good luck to you in your investments.
Terryw,
Yes, if you could please forward those links.
Glenn
