Forum Replies Created
Are you likely to one day move out of the house? In that case, the more you still owe on it the better when it becomes a rental income source and you can claim the interest owing on it.
I agree with hbbehrendorff above about cars-they are a money hole. Assuming both are not tax deductable, I would suggest pay that loan off in total, then if you came by another windfall put it into a homeloan offset account so that if you ever move out you can still claim the most interest as a deduction because you still owe plenty on the loan itself.
Terryw wrote:Also consider buying property in a fixed unit trust. It is possible to borrow to buy units in the trust and the interest from the loans on the units can be used to offset personal income tax. Later the units can be redeemed by the trust and the trust can become a discretionary trust. It is possible to do this without stamp duty being payable in NSW or other states too. It may also be possible to transfer the units into a SMSF later.But, you may find it very hard to get finance for this sort of structure at the moment.
This is what is meant by a hybrid trust, isn't it? How does the tax office view this type of trust? I have been given a very negative impression of these by my accountant, but a very positive impression of them by some people who presented at a Michael Yardney conference I attended last year. Are they difficult to establish in an ATO-happy way?
onthemoney wrote:During the last 3 years there has been a 26% growth in house prices with an average annual over the last 10 years of 12.8%.Wouldn't this therefore make it a good area to invest in as the numbers stack up very well? great capital growth, good rental yield.
Remembering of course that you are not going to be the one to live there. You will of course have building and landlord insurance as well for the unforeseen crap that might occur.
I've got it now. Koeiyan started a new thread by accident, when trying to post a new response on this thread:
https://www.propertyinvesting.com/forums/property-investing/help-needed/4335694
Mate, to continue the same conversation, enter your message in the box down the bottom under the words "Post new comment". Then it keeps all the entries in the same thread.
koeiyan wrote:alternate uses???thank you
I am guessing on a property investing forum you are referring to alternate uses for property. Eg if you buy a studio in a large building that does not have the projected tenancy and lies vacant for ages, then does the studio have an alternate use-eg as an office/storage facility etc so that you still have a fall-back option.
Suggest you expand your question a bit by adding some more words to make it easier to tell what you are asking.
god_of_money wrote:hi richard i think it is a possibility to get 0.9% disc for >1 million loan with low lvrHi GOM, how low is a "low lvr"?
god_of_money wrote:you still can get NAB choice package for 6.77%. Anyone got better rates. nab can offer 1% below variable rates.I have a 6.87% with NAB Choice package, by negotiating an extra 0.1% off their existing 0.7% discount with choice pak. Have just added another loan at same rate with NAB today but bargaining with them on basis of already having that rate with our other loan with them.
Next loan I will hit them up to drop the whole lot another 0.1% if we borrow lots. Maybe they will come to the party. Worth a try.
Did Steve McKnight buy and hold all those properties? I was under the impression he often bought, altered, sold at profit then used the proceeds to do the same thing with more cash and repeated this a few times.(or a lot of times), which would have bumped up his property count without actually increasing the total owned by as much. Also in his book he stated he went to NZ and put offers on 80 houses in1 day and bought 60 of them, all in the one very high yielding town with low house prices and high rental. That was back in the days of 10+% rental yield.
Why not ask him? Hey Steve McKnight. Are you out there? Could you enlighten us on these questions?
DHCP wrote:Hello Blind67I encourage you get some education first (e.g. attend seminars, read books, get mentoring etc). You need to define EXACTLY what you are trying to achieve. Therefore, you need to have a GOAL and that goal must be precise, measurable and has DEADLINE.
For instance, first define precisely your goal is then work backwards. For example, you buy 10 properites in 10 years; 5 of those are negatively gear then 5 of those are positively geare hence they become self sustaining IPs.
Without a definite GOAL, you are flying like blind (pardon my harsh comment). Once you decide exactly what you need to achieve, get your education and most importantly, your mentor will help you shape your strategies.
Therefore, define your goal, have an education, get a plan and be mentored to guide you and success will be around the corner.
Good luck and all the best.
Cheers, Leo
I like the theory of being mentored, I also like the theory of having a goal, but as you read and educate yourself the goal keeps changing and I don't really know what the goal is, most of the time. Is it really so neccessary?
What is wrong with buying some property with as close to CF+ as you can (so it doesn't hurt you to keep it) and then just hold it for a lot of years? Why will I not make money on that? Historical numbers suggest that should work.
Does one really need such a well defined goal? Or a deadline?
I often read that best thing you can do is start. So I started. Since starting, my goals have changed. Should I not have started? Should I have read and educated etc etc until I had ultra-clearly defined goals? ( I think not, because here we are a year after starting to educate myself with several IPs and no clear goal. A bit of a goal, but nothing too concrete (beyond let's borrow as much as we can and buy as many as we can so we can make as much as we can in the long term) Had I waited for the goals to crystalise I would be stuck still figuring that bit out)
The other issue is mentors. Where does one find these elusive gems? I would like one too.
(BTW Leo, not criticising, just being devil's advocate with genuine questions)
If you have a house worth $600k paid off then you could obtain an 80% LOC loan secured by your house (ie $480k) which you can then use as deposits for your investment properties. The bank will loan at least 80% of their value, so working on the principle that the LOC loan covers 20% plus approx 5% purchase costs, you could go out and buy up to $1.9Mill worth of property. Not saying you should, but you could.
If they are neutrally geared they cost you very little out of pocket to maintain all that huge mortgage due to all the new rents you are getting. Over time, values increase, and it is all a gain using the bank's money. Agree with JacM totally though that without capital gain as well the gain is going to be offset by increased tax if you earn as much as you do and it is positively geared.
My suggestion is read read read.
Recommend Aust Property Magazine
recommend Steve Knight's book "From 0-130 properties in 3.5 years"- v good overview of benefits of +ve gearing
recommend Michael Yarneys "how to grow a multi-million dollar portfolia-in your spare time" for benefits of capital gain as your main aim
recommend Margaret Lomas' book "20 Must ask questions for property investors.good luck.
I was you 12 months ago.
I have a large ring binder for each IP ($1.70 at Big W), then some coloured divders within that.
Back compartment is purchase documents
Next one is loan set-up documents.
next one is ongoing bank statements
next one is management agreement and management statements/correspondence and also the quantity surveyor's tax depreciation schedule
next one is rates/insurance/valuer general statements etc
last one at the front is anything else, including of interest, eg a newspaper clipping about the area, etctax is fairly easy. Because GST is not an issue with residential IP's, (Therefore no BAS crap every 3 months) then I give the accountant the management statement (end of financial year), the total interest for the year (also stated on that final June statement), the rates/ins I have paid myself and he already has the quantity survey.
As my accountant said, if it is in a ring binder, when you drop it you don't end up with 52 card pickup .
I also do a list of in/out at the end of the Fin Year to cut time for the accountatnt, but he is so quick I think it mainly makes me feel better.
coalstar wrote:Blackwater has been going gangbusters recently, theres literally nothing available for rent during the past 2 months.
The next Moranbah for sure, especailly with the expansion of the CSG industry. Bow energy is building a power station there which will push rents and prcies even higher!Do you people think Moranbah still has more growth in it? It is already up there.
Terryw wrote:Well, actually it depends on the type of trust. I had assumed it was discretionary.But if you are using a unit trust it may be possible to claim a deduction, in personal income, for a loan used to buy units.
It is a discretionary family trust
Terryw wrote:Long answer is YES.2. The trust can claim a deduction for the interest.
As in the trust can claim a deduction , but I cannot (which was my question).
(By the way thanks for your help and advice again.)
Terryw wrote:Just think it thru clearly step by step.Firstly you and the trust are separate people for tax purposes, say you = A, trust = B
Now if A borrows money and gifts it to B. There interest would not be deductible for A as you cannot claim interest on a gift.
If A borrows and then lends to B. A will be charged interest by the bank. If A then charges B interest at the same rate, or higher, then A should be able to claim the interest charged by his bank. But A will be receiving interest as income from B. So the net affect is A is charged the same as he receives, so no tax. B is paying interest to A on a loan, so B gets to claim this as a deduction, depending on the purpose of the borrowings.
If A were to on lend the money to B with no interest being charged to B, then A could not claim any interest as there is no commercial reason to make a loss like this.
If A were to let his property be used as security for B to borrow directly from the bank, then B should be able to borrow 100% and claim the interest, subject to the purpose of the borrowings.
Thanks Terry,
You have presented 4 options:
- A gifts to B. No tax deduction on a gift.
- A loans to B at same interest rate. deduction cancelled out by interest income
- A loans to B at no interest rate. no income, therefore no deduction .
- A lets B use his equity.
So the short answer is no, then?
pluto123 wrote:Hi house call, what state are you in?
As in state of Australia not state of mind
plutoTamworth NSW
With a name like pluto why would you be interested in my state? Why not planet?!?!
naledge wrote:Yeah, I think my commitments will get in the way too. Uni takes a lot of time, so I can't work full-time. Although I could afford mortgage payments, it'll probably take me a while to get all the money I need for the deposit and added costs. Plus I'm planning on investing in a managed fund soon ($1,500) and going on a trip to Vietnam in December ($4,500). So getting the few thousand for the home loan seems a while off. The sad thing is, by the time I'm in a place to save the money, more commitments will come up and it will be pushed back even further. I wish there was a way I could get started and pay the costs off in installments with the mortgage. It seems like I'll never be able to get there. [/quote]
Sometimes it is travel OR save. At 19 commitments are less than if you were in a job with 4week off/year and a family /schools etc etc. and so there is merit it living it up and travelling while you can. The pat answer would be choose between the 2, but like someone said earlier, you are only 19 once. Perhaps save a set amount each month (eg bank transfer straight into an untouchable savings account) so that after 12 months you have saved a decent amount for your deposit.
Also it is never too late. Apart from my PPOR, I started with property investing at 42 (1 year ago) and am not racked with regrets. I travelled all over the globe and worked all over Oz (mostly while married with 2 kids) before settling down when they started school. Never too late, mate.
Incidentally some things, like your travel airfares can be got cheaper with the aussie dollar the way it is, by purchasing the ticket through an overseas website, eg purchase the tickets through UK can be cheaper than getting from Aust websites.-so I have been told). If you save on that, put it away.
Just my 2 bob's worth.
Catalyst wrote:Sounds great to me. All the ripping out is done so you have a blank surface to work with.First thing order the kitchen then get the bathroom plumbed and sheeted. The bathroom seems to always hold up finishing (in my experience) as it takes the most time (plumb, resheet, waterproof, tile, install toilet, shower etc.
You need to make/get an order of works. Nothing worse than having everything finished axcept one thing, then waiting weeks to get that one thing finished.
Where are you located? I'm in Sydney. What stuff do you plan on doing yourself? What tradies do you need?
Hi Catalyst,
There is already a brand new flat packed kitchen sitting in one of the bedrooms! No appliances, though.
My plan of action was going to be plumber to put toilet, bath, vanity and shower plumbing in place, and while he's there do kitchen plumbing, and pipe gas from street for new gas heater I will need to put in to replace old oil heater. Then sheet bathrrom and kitchen, fix up uneven floor cement in bathroom, then tile, toilet, shower, vanity.
I was planning to do most sheeting, tiling, painting, cabinetry, some carpentry (eg putting in a large glass sliding door to replace crappy old wooden back door) floor sanding, all filling and painting, plus some external work, such as painting weatherboards, new colourbond fence along back, slab in garage (OK iron shed with dirt floor). Some of it may be biting off more than I can chew probably, but as I go those bits will become obvious I suppose.
I have written a list of jobs/order/estimated time frames which I hope to stick to, though I need to get an expert to look at it to make suggestions re order/realism etc.
Jamie M wrote:Dolf De Roos has a basic book on easy reno's that add value. I can't remember the name of it though. Bunnings has some nifty DIY factsheets that seem to come in handy for renos. Youtube can be good as well – I learnt how to tile watching a few youtube clips!Youtube is excellent. You're right. I learned how to take apart old sash windows and repair them. Also how to glaze a simple window (plus some hints at the glass shop.)
Jamie M wrote:Hi Housecall
Good story. It's funny how certain events can change things so dramatically! Seems like breaking your toe worked out for the best!
Cheers
Jamie
Yes Nearly gave myself the Username "Fractured Phalanx" but maybe a bit too obtuse.
