I’ve been looking around for a house in Woden/Weston, Fadden areas in the last few weeks. I’m really shocked! They are all unbelievably expensive. The prices are inflated especially those in the low end. I have a feeling that investors jumping in to buy properties just in any condition in a hope that they can renovate and sell at a higher price few months later one. I’m not sure about this. They make it hard for 1st home buyers.

Cheers

Huey

*** For WOMEN to read only ***

+++ Cut by the Board of Censors +++ []

Hmm, you may be not older than me and you order me just like my dad! [] Since we crossed the Pacific ocean in the opposite directions in that faithful year I think we are related in some way so I forgive & forget.

I was named after the famous river in a town where I was born and it sounds a bit like Huey. Can you guess where it is? and will you help me to build an ophanage there when I have a chance to do so in a few years time? [] It’s my childhood dream. My family put in & raised money to rebuild a 2 classroom school in my father’s vilage a couple of years ago. I went to pre-school there. We also tried to open a medical center in the vilage but couldn’t get a permission. Will write to you more later.

[|)]

Huey

Hi Josh,

In general, to be able to do this, you need :

– a deposit of 20% in cash or equity from your other property and
– enough income to service your loan.

We borrowed 105% to buy our last IP with 99% in my hubby’s name. We had money for its deposit but chose to use this money to pay off another IP in my name. The reason is my husband income is in the top tax bracket so he can claim more back in tax.

There is nothing wrong in doing so, just make sure you can service that loan.

Regards

Huey

–

Thanks for your warnings Bill. I’m about 20 years older than Phil so I’m safe but if I were Paul I would feel threatened! [] Huey

Hi Falcon,

1. You can get 6.25% if you put your savings in a mortgage offset account (tax free if it’s on your PPOR).

2. You can get 4.75% from ING bank but interest will be taxed.

In both cases your money will be available at call.

Regards

Huey

Hi Alf

You wrote that you have done your sum. I assume it involves : calculate your capital gain, take away agent/solicitor .. fees, take away the depreciation allowances you have been claiming so far. Add this amount to your taxable income. From here you would know how much capital gain tax you have to pay and how much Net gain you have made for this property. I notice that in general the value of Serviced properties (or in the same complex with the serviced IPs) hasn¡¦t been increased as much as the others so I assume it won¡¦t come down as much when interest rate increases. It¡¦s not too bad that your IP value has been increased by 35% in 2.5 years.

Assuming the current market value of your IP is approx. 300K, -10K (Agent fee), -1.5K (Solicitor/bank fees), -20K (CGT) : You have 268.5K to buy a new IP.

Assuming you buy a similar property in a year time when the price has dropped by 20% from 300K = 240K, +8k (stamp duty), +2K (solicitor/bank fees). You need 250K !!! „³ You gain 18.5K : not much of a gain, why sale?

It¡¦s just another way to look at. I hope my maths is still ok.

Regards

Huey

Hi Peace,

I think other costs can be:

1. Refurbishing. It can be very costly.

2. Increase in management fees.

3. Cost of some unexpected major repairs.

It’s harder to sell as well.

Cheers

Huey

Hi Fields,

You wrote “At the moment, +ive cashflow houses are not the place to go …. Think capital…its been my ultimate success”. I think -ive cashflow IPs are worse off at the moment. I have one and just thinking of 2% increase in interest rate has made me worried. It means $9000/yr more we have to pay to the bank on $450,000 loan.

I agree with you that rentals in some innert city areas are declining because of over-supply. Ours is coming down from an estimate of $420/wk to $390 & now $380. We’ve made a reasonable good capital gain for it but we also have to add back any money we’ve claimed for depreciations to the capital gain for tax purposes when we sell the IP as well.

Anyway, thanks for the warning.

Regards

Huey

Hi Andy, Phil, Mel, Shaun, Kristi & Paul,

It’s good to see you all.

Regards

Huey