Forum Replies Created
Daniel,
you need to see an independent lawyer, pronto!
Q. What suburb did you buy in?
Q. is the land registered and has construction started?
Q. did you buy a house and land with TWO contracts or one? ie separate land contract and separate HIA construction contract.
Also, it doesn't sound like you purchased through a buyers agent, but a property marketer. Did YOU pay them to find the property? if not, they have the vendors/sellers/builders/developers interest at heart, not yours. That's not how buyers agents work.
Happy to help with some further clarification from above
Josh
Hi Siewlin,
as everyone has pointed out already, the properties purpose is for you to live in it until at which point it becomes income producing from an arms length transaction. Therefor you will NOT have any tax deductions until you rent the property out. You cannot rent the property to yourself. Some investors use convoluted trust structures to do this however if you are not self employed or have other income than PAYG i wouldn't bother even exploring this, its not a simple (or always right) path to go down.
if the rents are the same on something you see yourself living in, from a cashflow perspective you could be better off by renting another house and having yours as an IP depending on depreciation etc. There are a number of other factors to consider here also, including CGT etc.
Hi Jamie,
by looking on the councils website you should have access to the town planning code which will guide you when looking to build dual occupancies and multiple dwellings. From here you will know if the project will be code assessable or impact assessable. Code assessable means you shouldn't have a problem as long as the dwelling is designed within the guidelines provided.
Or, you can outsource all of this to a town planner.
The figure used is arbitory, its all a part of the negotiation with the vendor. Somehow you will need to flip the property without settling on it (within a pre-negotiated timeframe usually). It can be done with land, houses, units etc.
I use $2000 – $10,000 deposits for development sites, get the DA through (ranging from $3000 – $15,000) and then on sell to other developers under an option period. This is obviously not a strategy to build a portfolio but builds capital.
Your success is going to be based on the time you have to research and then action, also your ability to research the right deals. Its not the best move for a novice investor but can be done.
Hi Gafeey,
if you plan to pass the property on to your kids then a family trust may assist with this. If you are self employed or have other sources of income outside of PAYG then a trust could minimise your tax if you can put profits into there to soak up the losses and depreciation (if there is any).
As Jamie said, a good accountant will help with this one for you
Hi Brad,
for all of our clients we strongly recommend using a mortgage broker when looking to borrow to invest. More than often a bank lender does not understand investing or understand what you're trying to achieve. Your property investing team must be on the same page as you and get all the numbers!
Sorry for the push Jamie, but Brad, even contact Jamie. Brokers don't need to be in your area to service your needs, technology makes it easy now!
As for being negatively geared, even if you can afford it, why? Theres suburbs which can provide good capital growth and yields.
Hi Ben,
What's your strategy for the property you are considering fixing?
Hi Sam,
holding property in your SMSF is designed to allow an investor diversify their assets for retirement. Putting all of your eggs in one basket defeats this purpose. However, many people still choose to do it. You will need to ensure you have a very thorough understanding of property and your investment strategy.
Also, it will depend on what you plan to contribute to the SMSF from your salary as you may be planning to increase it a bit?
Look for property that is higher yielding in your SMSF as interest rates are higher using a LRBA.
With flipping, you can do it. You are restricted when it comes to borrowing for renovations etc, or even renovating a borrowed asset in some cases. You need to be careful not to change the 'use' of the property. Also, you must purchase a 'single acquirable asset' to meet regulations. You are also limited when it comes redrawing on equity for capital growth, this cant happen.
Hope this helps
Hi Brad,
The available equity can be used as you wish (well, within reason obviously). How much of your equity you use as your deposit is up to you and will depend on your desire to pay LMI (loan mortgage insurance). A 10% deposit towards your new property could be achievable so you may only need $35,000 plus purchasing costs (stamp duty, legal fees, inspections, and LMI). LMI would be high at this LVR.
If you contributed a 20% deposit, $70,000, you avoid LMI however you still have other purchase costs including Stamp duty etc. So you wont have much of your useable equity left.
Your loan ON the investment property would be the purchase price minus your cash contribution from your equity. The remainder of the loan is against your current house. Which Jamie has already outlined above.
In relation to your growth strategy, if that is your goal to accumulate multiple properties you will need to create a very good property investment plan and work out where your strengths and weaknesses are. I would not be recommending you purchase negatively geared property if you want to grow a portfolio. If you want to own 5 properties in the next few years lets say, could you afford for each one to be costing you $5000 per year to hold? This would be putting you out of pocket by $25,000 per year. Sure, hopefully capital growth will recoup this back for you, however you need to be able to hold your assets to allow capital growth to work.
Hope this helps
Hi Brad,
Jamie has the equity scenario down pat for you, so I would like to comment on your strategy.
1. Interest: Your calculation seems a little high, you could would not be paying that much. However allowances/considerations for increases is advised as rates are quite low at the moment.
2. Return: Your gross return is not even 4.5%. that is very low and could severely retard you should you wish to build a portfolio in time. Many investors only buy 1 investment property, this is quite often due to getting into bad negative gearing situations.
3. Capital Growth: Without knowing the area, I would strongly suggest that you do some very thorough research into the area to ensure that very good capital growth will occur both in the short and medium term due to your cash flow.
What are you trying to get out of investing in property? ie your ultimate goal etc?
Josh
The body corporate should be set up which essentially takes care of most of your insurance. You will need to look after contents insurance and landlord insurance if it is to be an investment property.
you will need to assess the Body Corporate fees and the sinking fund.
Hi Chris,
it would be worth conducting a risk analysis for yourself first. This will allow you to identify what you perceive as high risk and allow you to stay away from those strategies to start with. Secondly, identifying an investing strategy to assist in buying structures to allow for asset protection and also future tax minimisation.
You have great cash assets which allows you to do a lot, maybe look at buying assets that will also create some equity in the very short term which can increase your yield dramatically and help you achieve your goal. Also, your goal is easily achievable. You could no doubt do a lot better than that.
Josh
Hi Shab,
More to the point, what does your research show on Calliope? Never allow any property company to give you the research. Successful investors conduct their own research with their own methods.
Calliope is west of Gladstone. Gladstone is taking a battering at the moment and more land will be put on the market at some of the cheapest rates in years, so I would reccomend you look into Calliope yourself very hard.
The construction of new houses is not really an indication of a booming property market, it is more an indication to the success of property marketers.
Terry is right, anyone can ask for payment.
In this instance I would be saying bad luck, you paid them to get it right, maybe it can be reimbursed from the legal fees you paid for not performing.
Hi,
1. For Investment Purposes:
Your next move will really depend on the research you have done on the area and the property. No doubt you believe the area and property will provide a good return and or capital growth, otherwise you wouldn't be buying it. if this is the case you could get the repairs quoted and negotiate the amount by the quote if the owner is willing. Most period homes will have some repairs that need to be done either immediately or in the future.
2. For your principle place of residence:
If you love the home, emotions may be strong and the same actions could be taken as above.
Failing the above outcome is acceptable, you could walk away from the contract due to unsatisfactory B&P report (assuming you can still). The issues however do not sound small, sagging ceiling etc is not a minor issue albeit 15mm.
Good luck!
Nathan,
it was done a lot in the mining towns where this difference was huge, buyers can see through it pretty easily by analysing the current rentals on the market and comparing them to what the property is receiving. if theres a difference, they will factor that in to their negotiations.
Often the psychology can work better in the opposite. If the buyer thinks they can increase the rent by a few percent, they will be more likely to feel they are getting a good deal. Thats been my experience
Daniel,
your solicitor will be the best for this. Sometimes a breach of contract can be found on very minor technicalities when issuing the contract for example. However 18 months later it can be hard.
OTP contracts are generally executed fairly well as developers dont want buyers to be able to change their mind half way through. the sunset clause applies for both parties. If they have gone past the date then could have an out fairly easily
Good luck
You may not be able to get freehold as there is a joining wall. It will be best to talk to a local town planner. If you need one PM me for the brisbane area.
If you can exit from the body corp management agreement that may be in place since it was only set up about a year ago you could use the two lot scheme that came into effect in QLD a year or so ago. this allows for duplexes like yours with no common area to be managed individually by the owner.
Josh
Hi Se7en,
Just being a sceptic for a moment, if you have had several valuations and are in the middle of the building process yourselves which ensures bottom dollar build rates and the val is still $44k short, is it the best investment? maybe the land could be sold and your friend could research better areas to invest?
Out of interest what are you building? house, duplex etc?
