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Jamie Moore
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June 28, 2011 - 11:40 am
Catalyst wrote:
It is a good idea to get insurance (on a house) in case the owner doesn't have any. If they don't and something happens before settlement you can approach your insurer. Not sure about claiming (I assume so) but you are worrying about less than $20. Your accountant will let you know.
Agree with Catalyst. It's a huge peace of mind for such a minor cost. I wouldn't rely on any other insurances from any other parties (vendor or REA) being in place.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 28, 2011 - 11:34 am
Some people do make it work but it's certainly not an easy feat (not as easy as the home reno shows will have you believe).
As mentioned above, it can be dependent on the location and the demands of the demographic within that particular location. It also helps if the market is rising – at the moment, most markets are stagnant or going backwards.
Another important thing to remember is that you're liable for full CGT on any sale within 12 months (you get a 50% concession after 12 months).
At the end of the day, if you've got the will you can make anything happen.
Best of luck.
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 28, 2011 - 11:26 am
lifestylez wrote:
Hi ATurner,
I agree with JamieM you should not be buying property to reduce your tax bill. Negative gearing only helps to lessen the cash LOSS that you make. If you buy a property and it costs you $100 a week to hold, that is a loss, negative cashflow. You would only accept this loss if the future capital gains for the property outweighed this!
Then with the benefit of deducting your loss, you may only be paying $60-$70/week to hold instead of $100…but it's still a loss!
You should always try to get neutral or positive cash flow from your property, but don't do it at the sacrifice of buying in an area that has short and long term capital gain potential.
Also, instead of doing more reading, I would recommend that you take the plunge and go for it sooner rather than later.
As you may or may not have heard before, Australia is not one property market, it is made up of many smaller markets. For example, last year when Sydney was doing well, Brisbane was falling and Melbourne was booming. There is normally somewhere in the country that has brighter short term prospects.
I think for your first property, look at the lower price range (eg. 250k to 400k), an area that will be in demand in the future and concentrate on minimising risk. You're first property you want to be safe so that you've got a solid foundation to build on. I would avoid commercial property for your first property unless you know someone with alot of experience in that area (the banks require a higher LVR and you can experience extended periods of vacancy – no rental income).
If you want to research where to buy, try Terry Ryder's "ryder report" which gives you good recommendations about up and coming areas and why they should experience growth in the near future. It's only about $90 to get the top 10 suburbs for a particular state.
One last thing to consider is that if your first property is soley for investment purposes, you will not quality for the FHOG and therefore miss out on free government money. However, if you are willing/able to live in the property for the first 6 months, then you can claim it.
Hope this helps!
Darren.
Excellent advice….. and not because you agreed with me
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 28, 2011 - 11:19 am
Would be nice though
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 28, 2011 - 11:18 am
luke86 wrote:
You could always set up an LOC secured against your existing home to fund the deposit for your new home. The LOC would then be paid back when you sell your current home, which could be after settlement happens on your new home.
Of course you need to be able to service both the loans at the same time. And you also run the risk of not being able to sell your current home for a price you are hoping for.
Cheer,s
Luke
Excellent point. If your borrowing capacity allows this – it can be a great option.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 27, 2011 - 10:22 am
duckster wrote:
Do you allow pets in the property good rent marketing point maybe you let dogs in back yard
My tenant has a dog and I do not think they will be moving too soon as they know I know about the dog in the backyard as I found out about the dog when I got the fences replaced. They also know I do not mind the dog in the backyard .
You sometimes have to think like a tenant
Good point. Allowing pets may increase the demand. Properties that allow pets are few and far between – if you’re agreeable to this approach, it could help you fill the property. You might also land longer-term tenants.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 27, 2011 - 10:16 am
nguli wrote:
Well I will be steering well away from these guys then. Thanks for the heads up.
Nathan
Ditto
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 27, 2011 - 10:11 am
Good advice above.
Not sure if it helps but we were looking into purchasing some flooring from these guys as well – http://www.onlinecarpet.com.au/ Their prices seemed reasonable.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 26, 2011 - 9:30 am
For anyone interested, Terry Ryder (and some REA) talking about the Hunter Valley – http://www.hotspotting.com.au/media/audio/Phil-Lawlor-LJH-Muswellbrook.mp3
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 26, 2011 - 9:18 am
SandraL wrote:
The best time to have a valuation done (subject to all the comments above and the banks willingness to do it), is when your property is looking it's best, which is right after the reno. So make sure you have completely finished the renovation (and don't have little bits here and there still to be done) and cleared out all the rubbish, tools, etc from the reno. There is no point in waiting a few months and having tenants move in and then be dependent on how their furniture and cleanliness makes the property look.
Yep, totally agree. I know valuers are supposed to look past the contents, etc but a nicely presented house is (in my experience) going to attract a higher valuation then one that’s cluttered and messy.
It’s an important point to consider when tapping into equity – particularly if you don’t have a whole lot of it to access.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 26, 2011 - 7:42 am
WomeninPropMelb wrote:
Bluegrass and Jamie M- I see a lot of different strategies for investing in property- some people do it for negative gear and some for returns.
I don’t have a problem with negative gearing (most of my IPs are negative). However, I still standby the notion that taxation benefits shouldn’t be the “primary” reason for investing in residential property. I’m happy to be corrected.
WomeninPropMelb wrote:
It is best that someone do what is right for them- not because you have a bias due to the product you sell. IN this case, the young man has a a lot of income and a lot of tax probably as a result.
Not quite sure what was being sold here.
WomeninPropMelb wrote:
Negative gearing should be a serious option for this young man- but it ALL should be viewed in light of WHAT IS RIGHT FOR HIM.
Xdrew, I see nothing wrong with loose women and fast cars!!
Again, there’s nothing wrong with negatively geared properties. However, just because the original poster is a high income earner doesn’t necessarily mean he should go out and spend all of his disposable income on holding properties that are costing him a fortune to hold just so he can reduce his tax bill.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 25, 2011 - 10:51 pm
What are the description and images like on realestate.com? Also, there should be a little box that tracks the number of visitors to the link as well – that will give you an idea of how much interest the advertisement is attracting.
Perhaps call some other PMs in the area and ask them what their current demand is like.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 25, 2011 - 10:47 pm
Hi Jodie
I’m not sure of second hand but my brother-in-law owns and operates an online custom flatpack kitchen business. My understanding is that you either provide your measurements online or over the phone, they make the cuts in the workshop and then send to you with detailed instructions on how to put together. His website is http://www.customflatpack.com.au/
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 25, 2011 - 10:43 pm
I never put too much thought into the residex growth indicators. The reports are excellent for their comparable sales data – to have a quick snapshot of sales of similar properties within the area is excellent for due diligence and negotiating.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 25, 2011 - 10:40 pm
Hi Natasha
It sounds bias but a decent investment orientated broker should be your first step. They can advise on your current borrowing capacity, finance structure and answer your IP related questions. Preferably you would want to go with someone who is an investor themselves and understands what you’re trying to achieve.
I don’t personally know any in Perth that I could recommend.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 25, 2011 - 10:33 pm
walshy wrote:
HI Jamie
The group gets an upfront fee from me and the lender that's given conditional approval is the ANZ and is the same package that I am on with my home loan – except 0.3 % better rate! They do get a commission from the bank which looks to be same as previous mortgage broker got.
The renos have a max budget allowed of $38,500 and itemised bills etc get forwarded to me and any balances left over go back into my account. The work is new paint, window treatments, floors, bathroom and kitchen and maybe a little landscaping – work only done if needed! They say they are adding about $40K to the value through what they do.
I won't make any final decision until I have read the property condition report and pest inspection report.
Cheers
Liz
Hi Liz
Great, at least the payments are transparent – so that’s a good start.
To be honest, and this in only my opinion, $40k to renovate a $180k property within that particular area seems like overkill. We carried out similar work (not including the bathroom) for $7k recently on a house in Canberra – admittedly we carried out most of the work ourselves which would have significantly reduced labor costs.
Look at the opportunity costs of spending that $40k on renos. It could potentially be used towards another IP (or maybe even two within the same area).
I’d also ask the group if they’re getting paid anything from those carrying out the renovations.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 25, 2011 - 9:09 am
Jason700 wrote:
However, I'd like to point out one majour problem and that is…
If you are looking to rent it out immediately then it may take you some time trying to find the suitable tenants. Time = money.
This hasn’t been my experience. Since self managing, we’ve never had a property vacant – one tenant leaves, another arrives. This wasn’t the case when using PM’s – one property sat vacant for two weeks (the same property that we receive a number of applications for each time it becomes available).
Self managing isn’t for everyone, but it works for us.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 25, 2011 - 8:04 am
Bluegrass wrote:
Jamie M
What is the main reason then!
Bluegrass
For me – it’s the long-term capital growth and the ability to add value to the asset. The tax benefits are just a bonus.
Investing in property purely for taxation benefits is flawed – because reducing your taxable income requires you to make a loss.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 25, 2011 - 2:51 am
Hi aturner
Welcome to the forum.
You’re in an excellent position to start investing. A high income with relatively few expenses.
Firstly, I wouldn’t base your investing decisions primarily on the taxation benefits available. The tax benefits linked to residential property should be seen as a bonus (not the main reason).
The best advice I can give is to continue reading widely, forums like this are an excellent free resource. Also surround yourself with a team of professional that understand property investing.
This is going to sound bias coming from a mortgage broker but question your business bankers understanding of investment structures as well. Far too often, we have clients that come to us to fix issues that banks have created. The most common is when the lender cross collaterises their properties – which can be an expensive lesson for the unsuspecting customer.
All the best.
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Jamie Moore
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June 25, 2011 - 2:41 am
wade anthony wrote:
Hi guys n gals
I am in the process of purchasing my new ppor, I want to change the existing ppor to ip. I have used the equity in the first ppor to lever me into the next ppor and just need some guidance with the best way of being able to claim as much as I can.
Convert the loan to interest only. You will be able to claim the portion of the loan that’s securing the investment. Ideally, this loan should have been set up as two splits. Split 1: investment loan; split 2: PPOR deposit/purchasing costs loan. This way, you can easily identify which loan is deductible and which isn’t.
wade anthony wrote:
– Because it was a ppor is there a certain time frame that it has to be an ip before being able to depreciate, claim on interest etc.
You can start claiming the day it becomes an IP.
wade anthony wrote:
The loan will be cross collateralized (know it's not the best way but will look into that down the track)
I’d strongly recommend that you untangle if purchasing more properties in the future.
wade anthony wrote:
In 6 months I'm looking to set a company for my ip's, is it difficult to change the ownership from my nome to a companies?
thanks in advance for the comments
For what reason? There are significant costs involved – such as CGT on the sale and stamp duty on the purchase by the new entity.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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