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I think part of the key is what are you including as ongoing costs? The obvious big one is interest on loans but then add rates, water rates, insurances, agents commissions, accountants fees and the variables can be many. Maybe a better question may be what are the profits or losses each year on an investment. Just a thought.
We live in the south-west of Sydney, in the growth corridor known as the Macarthur District. Land prices are now at around $1,000/m2 so as you could imagine, just buying land is a huge expense without the build. The area has an abundance of land at this stage, literally thousands of homes to be built over the next decade or two but the way land is released only ensures it can never meet demand. Developers release land from time to time, about 40 lots per time to the public and each time it is done by ballot. Over the years this method has never been able to satisfy demand which in turn has caused a scarcity mentality amongst prospective purchasers and the continuing increase in land prices. On top of this, more often than not, when land is released for sale it will not be registered meaning building cannot commence for up to 12 months. This is due to Council and their process’. If land could be registered quicker and lots released more often and in greater numbers I’m confident prices would settle and become more affordable but I’m not sure that’s what developers are looking for and Council want their fees also so I don’t see anything changing other than prices continuing to increase.
“After using the BoA secured card for 6 months I got offered an unsecured Capital One Platinum card in the mail. You need to make sure your secured card is reporting to your ITIN credit file.”
Just because you receive an offer for an unsecured credit card doesn’t mean you will get one! We have visa’s, SSN’s and are living in the US but have been rejected at every try after having bank accounts and secured credit cards for over 18 months. They simply keep telling us without permanent residency (we are on E2 visa’s) they cannot lend as they are the rules. We have great relationships, business bankers and managers but their hands are tied and they have tried numerous things for us.
I’ve given it up as a bad joke and have concluded whatever we are doing we need to do with either our own funds or hard money lending. Secured credit cards do get your FICO scores ticking over but our Wells Fargo cards only reported to Experian and not the other 2 credit bureaus so it wasn’t as much help as we thought. The FICO score is only part of the puzzle that is required so don’t think a secured credit card is the answer.
Capital One are very happy to offer you a platinum Card and also more happy to reject you once you apply!
Hi Streamlineinvesting,
It’s a choice no-one can make but you! You need to feel comfortable with your decision but some things to weigh up in your decision would be, how comfortable are you with the thought of having no or part insurance? What if you were to wake one morning back home in Australia to hear hurricanes were battering the Fort Myers area? Would you be okay with that? Remember New Orleans neighbourhoods stood for years before they were washed away!
On the other hand, what does the total insurance do to your returns? Does it take a good cashflow property and bring it back to a simple ordinary or borderline investment? In that case why are you investing in it at all? On a $44k property even a 20% return is only $8.8k and once you take out say 10% management, $1.8k insurance, add in county taxes, etc and you’re down to maybe $5-5.5k profit if you were able to use cash rather than borrowed money from Australia!
As you said, the property has been there for 60 or so years and $1,800 can certainly pay for a good deal of repairs in Florida. Just some thoughts that can hopefully help you in your decision making. Good luck!Hi Moonpie, firstly let me say positive cashflow property has taken us to full time investors in a little over 10 years. We could have transitioned earlier but chose not to. As to books and seminars you can’t go past Steve McKnight’s stuff in Australia and Robert Kyosaki’s Rich Dad, Poor Dad books. You will find plenty of discussions about this topic on the forums so get looking but do yourself a favour and hook into some of Steve’s seminars. You will not find a more honest person in the property investing world than him and that is saying something!
Positive Cashflow investing as opposed to negative gearing is simply a property deal where you make more $ back in rent each month than you pay out and you make a profit vs. negative gearing where you make a loss but get a tax break from the ATO for your losses. With negative gearing you still need to put some of your hard earned income into the deal regularly where positive cashflow deals you don’t and they infact put money into your pocket each month. Yes, you will be taxed on this income but there are different strategies to minimise your tax legally also. Also you will find that negative gearing will eventually cap you out of how much you can borrow where positive cashflow will keep you going as far as borrowing is concerned.Thanks for your input here Derek! Again, I would discuss this with your accountant because our experience is certainly as I have suggested. In the big picture it doesn’t make a huge difference if you have some good CG but if a deal is only marginal it can be money not well spent!
It’s always good to know what implications are in as much as you can when it comes to property investing before you commit your $’s to something.Hi Emma, great advice and some we will certainly put into use! As for aircon. you are correct in presuming Phoenix has them all on the roof.
We’ve used Depreciators in the past and found them great and easy to work with. Be aware that if you do plan to sell properties in the future any depreciation you have claimed will be added to your profit so the ATO give with the one hand and take it back with the other!!! Talk to your accountant about this.
Hi, theft is proving to be an issue. We’re Aussies who have moved here to Phoenix, Arizona and know of 2 break ins of rehabs that were on the market and most of the staging furniture stolen. To date we have been spared of this but it does highlight the need for insurance.
Mick
Hi Tito, I would prefer to PM any more to say about BW. PM if you are okay for that.
It sounds like it’s time for a US visit. Get over there and talk face to face and sort out the mess before it gets even more out of hand. It is so vital you have good contacts on the ground working for you as you can see, it is not so simple and can cost you big bucks.
I do hope you are able to sort out the mess but don’t give up! Be persistent and remind them of the website, emails, phone calls etc you made. This is not all your fault!We’re doing fix and flips in Phoenix but would say it would be near impossible to get a good renter for round $70k in the Scottsdale area or much of Greater Phoenix. The bottom end of the market has risen due to investor and first home buyer demand and it is now extremely challenging to get purchases across the line round that price. Nett returns are round 12% or so for buy and holds.
Hope this helps! We’re moving there in 4 weeks.Definitely go legal as this may be your only hope of recouping your lost monies! It’s vital you have good people on the ground when investing abroad.
Each US State has it’s own individual sales tax added to everything (similar to our GST but added on after the purchase) so I guess they add it to rent also!
Go the big builder. We are just at the end of a project in the same Council area and it has been a bit of a nightmare to say the least. It has taken us 2 years and 2 months so far and we are maybe 1-2 months of finishing. PM me if you would like to discuss it further.
Mick
Tracey,
They give us 70% on the block of units and 80% on all of our other properties. We deal with a Business Banker in Business Banking and she’s great. Threats to walk are always helpful I find!!!
I believe about $33 per sq mt is average.
I’d be very careful with Bankwest as I know of a development that went bad after Bankwest called in the loan for no good reason and have sent the developers to the wall. Latest word is they are not alone and a class action has begun with a Senate Enquiry about to happen over what they have been doing!!! These people are well known to us and the deal was not only sound but not far off completion with a profit of substance.
We have a block of 7 units with ANZ on a residential rate (currently 6.36%). Got it by switching all our properties and loans from Westpac who wouldn’t budge but the normal rule is anything of 4 or more will be classed as commercial whether it’s residential or not. Try using the power of negotiation if you have other investments or home loans and don’t forget to negotiate the rate discount. We get 1% at this stage.
First thing is first, you will need to speak to your accountant for specifics but in reality I doubt you’ll be looking at paying $150k in tax. The way CGT works is that 50% of the CG will be exempt anyway as you’ve held it longer than 12months and the other 50% will simply be added to your income for the financial year it is sold and tax adjusted according to your tax threshold. Any tax losses you’ve had will be saved from the past 3 years if you had any and these will come off the final result of your income + capital gain.
Unless you’ve made a fortune in CG it shouldn’t be that bad and if you have made a fortune in CG be happy and pay some tax! Remember, lots of so called investors are losing money all the time to save tax. If you have to pay some it is only because you’ve made more.
Hope this helps!
