Forum Replies Created
Hi all! As far as I know there was only 1 suitable tenant who applied and she is the one living in it. I was hoping we could get $220/week, but she was the only one who was interested…for $200/week [blink]
Admittedly, it was only advertised for a week, but I figured it was better to get someone in there to help with the mortgage asap for the sake of an extra $20. The tenant is on benefits with 3 kids, so it works out well that we get paid fortnightly via direct debit from Centerlink.With regards to us being able to carry out property inspections ourselves, I haven’t asked. The property is quite far from where we live which is another reason why I’ve got the PM looking after it, as the PM is only 200m up the road. I know that they accept photos if they are recent. It certainly seems that WA property managers are making a killing compared to other states. It gives me comfort to know that I at least shopped around and compiled a spreadsheet before making a decision.
Quick question: Should rent be increased in line with inflation? Our tenant stated that she could not afford any more than $200/week and I am sure she will be there long-term because the primary school is around the corner and the kids are young. I would like to keep her there if possible because she looks after the place. I’m thinking that Centerlink payments should rise with inflation? I don’t really fancy hiking the rent every 6 months because I am a tenant and would hate that. Is it reasonable to increase the rent after 12 months in line with inflation? I realise this is not related to the topic, thanks for any input.
Hi all! As far as I know there was only 1 suitable tenant who applied and she is the one living in it. I was hoping we could get $220/week, but she was the only one who was interested…for $200/week [blink]
Admittedly, it was only advertised for a week, but I figured it was better to get someone in there to help with the mortgage asap for the sake of an extra $20. The tenant is on benefits with 3 kids, so it works out well that we get paid fortnightly via direct debit from Centerlink.With regards to us being able to carry out property inspections ourselves, I haven’t asked. The property is quite far from where we live which is another reason why I’ve got the PM looking after it, as the PM is only 200m up the road. I know that they accept photos if they are recent. It certainly seems that WA property managers are making a killing compared to other states. It gives me comfort to know that I at least shopped around and compiled a spreadsheet before making a decision.
Quick question: Should rent be increased in line with inflation? Our tenant stated that she could not afford any more than $200/week and I am sure she will be there long-term because the primary school is around the corner and the kids are young. I would like to keep her there if possible because she looks after the place. I’m thinking that Centerlink payments should rise with inflation? I don’t really fancy hiking the rent every 6 months because I am a tenant and would hate that. Is it reasonable to increase the rent after 12 months in line with inflation? I realise this is not related to the topic, thanks for any input.
I was going to get my insurance through Western QBE, but was advised to go through Terry Sheer Insurance Brokers to get it cheaper rather than going to QBE direct. It did work out cheaper for us to do it this way.
Remember to read the fine print and best of luck.
CBA (Mortgage adv pack)). Perhaps that is why he said open it in the P&I then, because it is the only portion not fixed that still has an interest component?
Having used the search function, I can’t find the answer to this one;
I want to open an offset account for our IP. It is a split loan. IO = 350k fixed for 3 yrs, P&I = 62k variable. I phoned up my mortgage broker and he said I need to open the offset account against the P&I portion rather than IO. When I phoned the bank they said they would charge me 2 fees to otherwise open 2 offset accounts for both parts of the loan. I only want one offset account anyway and I just want to know if my mortgage broker gave me the right advice? That way I can go into the bank knowing what I want.
Thanks for your comments
Hi Dee Dee
Have you read Steve’s article on Negative Gearing.
As I see it the best way to approach negative gearing is to pick an area with strong potential growth otherwise you ahve the potential to go seriously backwards.
To my way of thinking, I would much prefer to do the renos and developements that put money in my pocket in a relatively short space of time as opposed to “buying and hoping”.
capial growth is such a nebulous thing, one can never be sure of it. I prefer to have a bit more control over my cash.
Also with the renos and developments I am less likely to be at the mercy of interest rates in the sense that my money is moving around.
Have a look at Steves chapter on Lazy Money in his new book – should be in the shops this week 0-270+ properties in 7 years.
In terms of being new to the property game, thats ok but property or rather any investing and or business venture that we undertake requires a large percentage of “mindset”, ie having enough knowledge and where with all to take calculated risks and of couse by improving our emotional stability in these sorts of situations, lessens the risk or perception of risk anyhow.
This is an ongoing growth process we all need to undertake in order to master ourselves in these sorts of ventures.Hi Sue,
I am hoping that we have picked an area with high growth potential, quietly confident anyway. I would like to branch out a bit with my property investing in the future if it is viable because it is clear that we can’t afford to hold more than 2 more of the above properties before we run out of cash.
Once we have some leverage, I would like to explore my options with some kind of professional. It would probably be a good accountant when I can find one [buz2]. I am not against trying new things once I know we are ‘safer’. At least until then, I can read, research the forum and ask people like your kind self when I’m not sure. I like the idea of reno or develop once we have a bit of equity to back ourselves up.
How is your investing going?Hello again
I would think that you would need council approval for any structural change. Just pose a hypothetical question to them and see what transpires.
Is this place of yours currently +ve cashflow? Using The 11 sec solution it doesn’t look like it based on the info you supplied, it looks more like a Negatively geared property. Unless you have a lot of equity tied up in it.
You talk about keeping this one for retirement etc, is that why you bought this one in the first place?
You also talk about refinancing down the track. How far off is that? Are you preferring to refinance vs sell and have you thought about the reasons for doing either?
How much do you plan on spending on the changes you suggested and what is your “exit” strategy?
Oh by the way where is this property, as that to some extent will dictate the appropriate strategy.
Sorry for all the questions but there are so many gaps in what info you provided, I’m not really sure what you are trying to achieve with this property
Regards
SueHi Sue, thanks for the questions, I’m so happy to answer them because I know you have a little more insight into investing than I do and I appreciate your interest.
The house is -ve cashflow (390k vs 200/week rent). The equity from my mum’s home allowed us to put down a 20% deposit + closing costs. I can only guess when we will be able to refinance, but I am hoping some time in the next 18 months.
Yes, I did buy this one in mind for retirement income. It is in Shoalwater WA (41km from Perth). It is surrounded by 3 beaches, 2 of which are less than 2km, the other 2.5km. The most identifyible town is Rockingham where there is plenty of stuff happening in the area now and soon eg. Train station (3km), Freeway extention (4km), Waterside appartments (2.5km), free bus transit, ?marina (2.5km), upgrading major shopping centre with retail streetscape (2km). We are hoping that these factors will entice tenants away from the city due to better facilities and transit links.
Hopefully we will get good capital growth, but it will be a long time before we see it. This will limit us for a while, but we will try and put as much as possible into an offset account meanwhile until we can purchase again. Although I would love +ve cashflow with good capital gains, I can’t see us getting that in WA unless we reno & sell or develop, but our rent is ridiculously cheap and if we buy near where we live we lose our rental. I am reluctant to purchase a money spinner with poor capital potential because I worry that it will limit our growth. I thought this might be a way to offset our negative cashflow, but still hesitant. I’m in for the long haul, but I don’t fancy dragging any tyres through the mud with me! I guess I’m saying I’m cautious at this stage of my investing career because we are the first in our families to try this as a means for securing our future and I don’t want to stuff it up. Also only on 1 wage as I’m a student.
Back to the reno! I estimated it would cost around 12k without the ensuite, so + 8k = 20k. Therefore, I would make sure I had at least $30k available before I started. Even if the above figures are hypothetical, that would be how I would plan it.
Because we are so negatively geared, my goal was to add value to the property without over capitalising, thus either increasing equity and/or rental income. We can manage the repayments for now, but if I can get us an extra leg up by doing this later, it may make our investment stronger. [blink]
Will have to hunt for the plans among end of year uni papers!
The plan is to keep the place and continue to rent out. Unless it turns out to be a dud, we want to keep it and aquire others to eventually fund our retirement. Would I need council approval for this kind of reno? The council has suggested that they are not reviewing R Codes in the near future, but maybe develop it down the track if things change.Subject to finance too. In WA there is no cooling off period.
Does anyone know if there is a group of investors who get together in Perth? Not regarding hidden agendas, just people into property?
[comp]
Well it just worked out that way because the surroundings have some desirable redeming features which I am confident will increase the property’s value over time and it was reasonably priced. I would have loved something that was the best of both worlds and I look forward to spotting them in the future.
I will outline for you my deal with the property manager inc GST(local);Management fee: 8.8%
Postage & Petties: $6.60/m
Tenant checks: $2.20/person enquiry
Property Inspections: $44.00/quater
Property Condition Report: $110.00 (once only)
Bond Inspection: $55.00
Letting fee: 1 week rent for us, 1 week rent for tenant
Advertising: $17.80 – single line ad, $26.66 ad with photo, $16.50 internet
Title search: $16.50
Roll of photos: $22.00
Digi photos: Free
Court attendance: $77.00 (max)
Annual Summary: $22.00No doubt there will be a few raised eyebrows, but I can honestly say that I REALLY shopped around and compiled a spreadsheet to compare everyones costs. As mentioned, it is not until I have about 3 that I can start negotiating a flat fee that isn’t a complete insult to me. For now however, they are keeping me informed and have sent my first monthly statement with reciepts – how exciting! I’m sure I won’t be such a loser in a few months when the honeymoon is over [hmmm]
Hi Peter,
I sympathise with you in many ways due to some commonalities between us. I’m at Uni in Perth (1.5 yrs to go) and I’m accumulating a HECS debt. I got interested in investing around your age (4 yrs ago) and watched helplessly as the Perth property boom passed us by, saving in vain for a deposit and also trying to pay off $13k in personal debt each pay. We were getting nowhere fast on one income. My husband’s job bought in a rare opportunity to get a deposit, but once we had paid of the $13k, we only had $17,000 left. I felt shattered as I learnt this wasn’t nearly enough to cover closing costs, let alone a deposit.
If you want something bad enough, you have to think outside the box to make it possible and ethical. If the property game seems overwhelming because you keep hitting brick walls, try telling yourself that there is an answer, you just haven’t thought of it yet. I often tell myself this, because it leads to research and investigation, crossing bad ideas off the list and nutting out another way to make your idea work work.
Our solution presented itself in the form of my mum offering to put up equity in her home as security for 20% deposit + closing costs. This allowed us to use the money we had saved to do a cosmetic reno on the house we bought (in Shoalwater, WA) before we rented it out at $20/week extra and now have a slush fund for any maintenance required. I am not advocating that this is a solution for everyone because it is a significant risk for the person putting up the equity if the mortgagees default on their payments – the person lending equity becomes liable and the bank can sell that person’s house to recover the debt. It was a viable solution for us because my mum and I have a long history of helping each other out financially and each debt had been honered in a timely manner. As soon as is humanly possible, I will refinance and release her from the deal.
I also had a look at Bunbury the other day and I agree that it is quite reasonable for someone in your position. These houses would also be quite cheap to rent eg fibro and I would suggest living with mates in a houseshare in one of these – you could organise it, then advertise to niche market too like students and charge more for board.
Don’t get agro at the boomers, they don’t owe us a thing. The only reason they really piss you off is because you percieve them as having what you want, getting in before the booms, cashed up, big portfolios at the expense of your coming of age 21st key. We’ve got heaps of access to information that they didn’t; the net, forums, books, DVDs, e-newsletters etc. There is a wealth of information out there for you to source, create a plan and achieve. This forum is particularly cool. I have a word document that I copy and paste info from this forum on to called “property research”. It helps if you can see what you’re learning cos you forget along the way.
Good luck and don’t lose sight of the big picture, think outside the box and remember you are only young = heaps of time to get it right and heaps of time to acquire knowledge. If you get it right, your kids won’t have to suffer the same anxiety your feeling cos you can pass on the knowledge for financial independance.
Regards,
DeeWhat’s a tax variation form?
Fantastic! Good luck with your new baby
Hi again Celeste,
I have a feeling you are looking at the area which I just bought a house in. If so then the land area being developed is approx 1km squared of the total suburb which is about 3km squared and is southern coastal.
Plans approved for various beachside residential in progress, new free bus link to connect ammenities (like shopping center), sports facilites, lifestyle retirement villas, marina on the cards etc.If it’s the same place, hope this info helps.
Hi Celeste,
I just did the same thing, purchased an old house on a big block that is flanked by a 45 degrees of a new housing estate (with man made lake). I’m really curiouse to see what flow on effect this will have on existing prices. We bought a few months ago and there is another house 2 doors down (same as ours) on the market on the market for an extra $25k. Sorry I’m not much help. Looking forward to hearing from the others [headphone]What happens when you hedge your bets and aim for 10? Could you still hold them all and comfortably retire?
Foundation: could you give us a “rough” idea of how you do finance day to day living without a credit card? I am a new investor and have always previously relied on them for everything, then religiously paid off the entire balance each month to avoid bank fees. Is it better to use ATM/cash for everyday stuff, wack the mortgage payment in (1st priority – DD) and disperse remainder into Bills acc, savings/offset, saving acc?I used the latter [fear]
I just used one in Perth to buy our first (and only) investment property. They charge 2%. You need to have pre-approval for finance before they will deal with you. Once you have that, they couldn’t be nicer.
Unfortunately once the wheels are set in motion, it can feel like waiting for a bus. Feeling anxious, I would email my buyer agent ‘potential’ deals I spotted on realestate.com.au and he would email me back reasons why it was crap with 3 comparable properties as a rationale. I chose to have a meeting with them before I went ahead, which was fantastic because the director used a whiteboard to outline a strategy and made me feel like my dreams could come true – which I feel like they have even though it is early days. My buyer agent loved the negotiating with the REA part the best, so I knew I was in safe hands and I got a good deal.
I would recommend this awesome gang to anyone interested in using a buyer agent; friendly, professional, flexible and 100% approachable.
Don’t know what PMing is, but if you do that I can give you their website details. Good luck, whatever you decide.We just did first reno on first IP in 5 weeks. Took 2 people being there around 4/7 days. It’s a 3×1 on full block, about 35+ yrs.
If any of the walls are painted a dark or bold colour, use a cheap white undercoat to slap over the top before you use the colour you want. We did that and it meant only 2 coats on most walls.
If you have an especially dark space (like a hallway) use a lighter shade of the overall colour scheme.
We were so tempted to rip out the kitchen (panelled cheap arse wood) and bathroom cabinet, but I’m so glad we didn’t now. Just sand back, paint and use nice new handles – saves you thousands.
Tile paint is incredible stuff. If they are in good condition, save yourself the hassle of redoing.
You can use steel wool to get paint or flecking varnish off skirting (use a wet scourer in bad spots first), then a varnish in the wood tint and it creates an sharp, clean contrast to flooring and fresh painted walls.
If you’re painting over exposed brick inside, fill in any big holes first. We didn’t do that and it looks tacky.
Our whole reno cost about $4000 (inc petrol) and was mostly cosmetic. I’d say set up a rough budget, then add about another $2k for example.
