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I was checking my account on the internet today and I noticed that the bank had snuck another increase this week so that makes 3 rises in eight weeks. What bugs me is the increase starts the day the bank sends the letter or dates the letter and I am not officially informed for about a week after the event. I am looking for a better deal.
I hope you have the deposit. I would keep it and start again. Ask your lawyers opinion to give you the options available.
The short answer is yes. I did this myself. Approach your present lender to borrow for the second property, the result is your present property would be security for itself and the second property and the second property would only be the security for the second loan. It will only work if the total equity in both the properties is equal or more than 20% of the total value of the properties. This also give you an idea of how much money you may be able to borrow. If the equity is less than this, then mortgage insurers get involved and they generally are too cautious to approve this. Make sure that you keep the investment loan separate from your own home loan or you will find yourself in a mess with the tax office. Once you have had the property for a few years, then you can re-finance and separate the security on the properties. The main problem with this is that it is a bit difficult to sell the first property while it is still tied with the second property. You will need to see your lender first and if they are not keen maybe go to a mortgage broker.
Put an ad in the paper and see if you can find a tenant with the property as it is. I generally use the internet putting the rate higher than I even expect to get, then I drop it gradually until I find a tenant. The last time I did this I had tenants interested immediately.
Putting ducted gas heating will make the property more attactive for any tenants and you could charge more. You can claim a capital improvement tax deduction for the expense. You will need to do your sums to work out if it worthwhile. Personally I would do a little as possible at first and gradually improve the place over time as money comes available. The reality is there are tenants out there that will rent the place depending on the price.
My first priority would be the bathroom because it can lead to more expensive problems. ( I am fixing some loose tiles in one of properties tomorrow) Also in my experience, tenants will not keep the bathroom clean if it is not in a good state. You may only need to paint the ceiling, door and window frame; fix any loose tiles and I definitely recommend that you give it a really good clean. These are all things you can do yourself at not much expense. If it already has a ceiling fan it is quite cheap to get it changed to a heater tastic although I wouldn't recommend trying it yourself.
I am not sure of your present situation but if you live on a suburban block then maybe you will have the opportunity to build a flat or some sort of extension to your house that would provide a separate space for your mother. $140,000 could build between 50 to 70 sqm extension or flat. In this situation you will not need to charge rent therefore no tax hassles or capital gains complications. The extension/flat would increase the value of you place putting you in a better position to borrow against your property to make another investment in the future. Of course it may complicat your family relationships. All the best to you and your mother.
Vinyl may be all right for a kitchen or maybe an old bathroom. I think polishing the floor boards is a better looking solution and costs about the same or maybe even less. You will need to check the state of the floor under the carpet by pulling up it up at a corner, you will need to fold it back about a meter or so to get a good look. It should be possible to put the carpet back after you have a look. If your house is an old one you may be suprised how good the floor boards they used in the old days. You can also save money be pulling up your old carpet yourself before the new floor is done.
Hi
I had a share of property in Firle near Norwood. It was in a rundown state when we got it, so we polished up the floorboards and painted inside and out. It was a great rental for a while. We eventually sold it and doubled our money after 4 years.
Happy hunting
Hi
I lost all my savings and ended up with heaps of debt when I was conned into purchasing a non existent business when I was 30. I learnt the meaning of due diligence and how to read contracts after that. I had enough money to put a purchase on a house but I thought I buying a business that would make a good return and I would buy later. Enough of that part of the story.
I ended up living back with my Dad. For just over five years I lived on a strict budget, drove old cars and didn’t do much. When I had nearly paid off the debts I recieved a letter offering me a pre-approved credit card and I realised that my credit position had improved. I decided that I wanted my own place so I went around the banks to see if I could get a loan, my Dad helped me out by guaranteeing the loan and using the equity in his place as security. So now I am on the rise again. I used the equity in my place to purchase a nearly positively geared property and I am hoping to make another investment this year.
I still count all my pennies and stick to a budget. You will have to draw up a budget or at least add up all your income and outgoings to show your family the position you are in at the moment and get them involved in some way to get everything under control, ie make it their problem as well.
Hi
I dont know your exact position at the moment but my feeling is that you should consider selling the the negative geared property and putting any capital gains into the the other properties. It may be possible to put enough capital into the break even properties so they are giving a positive return. Whatever is left over could be put in to your own mortgage reducing your non-tax deductible debt. You then have the opportunity to look around for another positively geared property which you could purchase using the equity in your own property or the other properties as security for the new loan. You will have to do the sums or get a financial advisor to do them for you. Depending on the result you may be better off selling the investment properties and being debt free, then use the equity as security on new investments.
Hi. It sounds like you have thought this through a lot. I can see a problem with your plan, in so much as, you will need to find good tradesmen and builders to make the plan work really well. If I was in your situation I would start with one property and keep as much money back for the future. I would then go through the whole cycle of purchase, renovate, sub-divide and sell so that I get practical experience and also build some relationships in the community. When I feel confident enough I would move on to the next one. All the best for your future investments
Hi. I have place in Canberra where I rent the rooms separately. The rooms have beds in them, I have put a few sofas in the living area, a washing machine and fridge. I charge rent and also for the services such as electricity, gas and a phoneline. It has been reasonably successful. I chose students that are not in their first year, I was lucky I could chose this year. At the moment I have an empty room and I am not getting much of a response but I know in January it will get busy again. It also goes a bit crazy in June. One of the universities is opening a new student residence next year so I am not sure how that will affect the market so I will wait before buying another property for this market. The only problem I have is that when I first started it was making a positive return but the government put up the rates and land tax ; now I am on a very fine margin, so the empty room is giving me an negative return at the moment . The effort is greater than renting to a group or family through an agent but the return is 40-50% more.
all the best with your investments. Jamie2006
