Forum Replies Created
I went to one of their meetings. I was impressed, but their stock list is limited, so unless you’re prepared to take what’s available on their list and forget every other property deal out there ( NOT ME ! ) I think you will pass on it.
They promote their properties as offering high returns, but that only applies to a some of them in reality, after viewing the stock list.
It’s probably better for new investors who need the extra help along the way, thus it serves a purpose I guess.
Yes I realise its costing me about $500 per week in CG forgone ( excluding cash outflows ), for every week I delay my next IP. Assuming a 10% capital growth opportunity is not being taken advantage of by a 260K asset
BC these are the things that concern me. I’m concerned that we may be left with coverage holes in our Landlords Insurance policies, that many of us may not be aware of.
Another example; I have emailed AON Insurance about this and await their response. I presume its plant & equip but not sure if its covered by Landlords Insurance.
Are dishwashers, clothes dryers washing machines, air conditioners etc..
when supplied by the landlord and included as part of a new property purchase, viewed as contents or part of the building ? Thus in the event of fire or damage, would they be covered by Landlords insurance ? Or would you need to take out a separate contents policy to cover these things.cheers.
i played it once. its about general investment rather than property specific. was a bit of fun but did not teach me much about property. its supposed to help you lean to think like the rich, so to speak i.e. invest in income producing assets etc .. to bad if you buy a lemon. hehe.
hmm well the quick simple measure is annual rent / purchase price
but of ocurse you can get more accurate results by then adding cost and tax effects
I have checked my AON policy, and I cannot see that it discusses the issue of covering rent for the period of rebuilding the property in the event of damage from fire or storm etc…
It only appears to make reference to coverage from willfull or accidental damage. This is a concern I do need to clarify with the company, and also with WESTPAC with their policy.
This is how my bank lender worked it out;
How much I can borrow as at 1 August 2003
Assuming Estimated Bank Market Values;
PPOR $250K
IP 1 $280K
IP 2 $240K
Total Assets $770K
80% Asset Value $616K
Loan Debt $554K
Equity $62K representing your 20% holding of the loan.
Borrowing Capacity = 62K*5 = $310K
Thus effectively about $300K plus Stamp Duty and legal and other Acquisition costs.
Well whatever value the banks decides I guess, as they are the ones giving the nod.
Perhaps I could have used more appropriate words, but the bottom line is that even with adeqtate equity, serviceability and other issues, obviously the banks also consider the estimated value of the property in determining the eligability of the loan request.
Kate
I would firstly set up a trust in your name as guarantor. Then you have the option of either buying your own property and renting it to yourself as an IP and claiming interest and expenses as tax deductions and using it to fund other IPs the same way.
Although you may then have to pay capital gains tax if you sell it, If you never sell it you never have to pay it. And if you do sell it in the long term, well it was a delayed cost, which has allowed you increased liquidity in the short term to help fund your IP acquisition plan.
You want the fastest growth plan as you mentioned, so this is the approach I would consider. Who cares that your PPOR is an IP that you will have to pay CG tax, when the extra cash flow through tax effects on it, has allowed you to acquire several more properties sooner and multiply you equity in a growing market.
It’s easy said, but as mentioned circumstance plays a big part in any best laid plan. And finally as this is largely a numbers game, I suggest you do the numbers on several scenarios over say 5 years and see where each one takes you.
Otherwise just rent and invest heavily in IPs and maintain some liquidity. You can use the IPs as security anyway.
cheers
DaveYes Dave I have spoken to Dale before and yes he is very helpful.
cheers.
So you are covered for rent for 52 weeks in the event of ;
1. Accidental Fire ?
2. Deleberate Fire ? NO
3. Act of Nature resulting in Fire ?
that makes some sense, but how do you prove that the proposed property is cash positive ? rent ?
The banks must also look at the assets true market value
Thanks Michael. I think its quite clear now. You learn something every day.
Thankyou all for your contributions.
I think the media is full of mischeif. Mhey talk up then talk down property markets. They make it look easy. Many people get burnt along the way and the smart and experienced and well financed ones cash in. More of the rich getting richer and the poor getting ripped off.
Thanks Harold.
Magnet, I resent your assertions. I’m just asking questions so I know what is legal, so I can steer a clear path and not rip anyone off. I think people like me are trying to gain knowledge by asking questions. I’m afraid I have not studied tax law, but there is nothing wrong with exploring the boundries of legality, so you can stay within them.
If I knew the awnser or didn’t care, I wouldn’t bother asking for advice in the first place would I now ! Doh !
There are plenty of investment and tax practices that can look doggy to some, yet are quite legal.
But as mentioned, I am seeking advice and not judgement or your wayward assertions.
The question has now been adequately answered.
no problem. I tend to stay clear of auctions. I find them too emotionally driven and less rational unless you are extremely disciplined. And as you mentioed the competition can drive prices beyond their true commercial market value in terms of investment returns.
Anna,
What ever you decide to buy, get it valued first by an independant qualified property valuer. It may set you back $400, but it could save you major headaches and worry and money. If they pick up problems that need repair, you may gain greater power in negotiating the purchase price. I expect you will also have piece of mind and fewer sleepless nights.
100K would mean rural or outer suburban I guess. I mean I recently saw some very old flats sell in Brisbane from $140K within 5 Km of the CBD !!! They sold out damn fast !
good luck
Hmm, I think only once. I think your capital gain less 50% would be added to your gross income to derive your total taxable income.
Thus for a gain of $20K, 50% or $10K would be added to your gross income.
Your income tax would then be recalculated, which you would be liable to pay I presume at next tax time ?
But you best wait for other replies to be sure.
cheers
Thanks Stu,
Now re; item 2. I thought I heard that when buying a property, so long as your intention is to rent it out, you could claim expenses before you actually get the tenant. i.e. if you showed proof that you intent the property to be available for rent, such as by placing an add in the paper etc…
That said I do see your point, which I expect is correct.
Now having said that, what if I immediately sought an advanced rental payment of 1 months rent, to secure rights to rent my property on 1 Jan 2004. Thus my asset has produced income. Would that change anything ?
Or say I sought a monthly payment to secure rental rights from 1 Jan 2004. Say $100 per month.
Say now someone became interested and agreed to make these payments in anticipation of securing rental in 2004
Now again my asset is producing income isnt it ? And thus I could then claim any expenses incurred from now to 2004 against that income ?
Thanks
DaveThanks Guys
