Forum Replies Created
Yeah Jordan
is there anything you can teach us?
Don't pay an agent anything until your house is sold for the price your happy with, make sure your agent is a good negotiator and can get the buyers highest price! BHP.
Do not work with an agent you feel uncomfortable with, and if you feel like something is wrong, then it probably is. Agents are amount the worst sharks out there.
But Joel, how do we know you aren't ripping us off? How can you back your statement up with warm advice and insights, rather than state a fact, that is like talking to the air
Kind regards
That's awesome alpakka good on you, You can always create PG properties as well, by buying under median, something good but a bit different, little fix ups and your on your way, play around with the figures like price, rent, interest rates and costs, to see what you need to create cash flow. Ask your solicitor to do a building cost report so you can max out the depreciation.
You make money when you buy realestate!, run them like a business, the hard work is time consuming research but don't do it all alone, there is good honest help out there, just know your stuff though so you don't get ripped off!
well that's exactly right obviously with your research you have a plan, and that is awesome. I hope you buy high growth property and are able to buy more property, but dont cry when you you get to 3 and the banks say "nup sorry.. no more." I wouldn't rule out that once you have 2 good properties you may decide to find some good PG properties.
But if you go negative make sure you do good research and buy properties that will grow in % quickly like 1-2 years rather than 5 years coz, I would hate to buy property that aint growing in value fast enough and it starts to hold you back.
not all PG properties are too expensive or in low growth areas. That's good advice!
How much are you looking at borrowing to buy your first investment?
Yeah so you have to spend money on building and pest inspections, no it doesn't show to much interest so long as you are vague with the agent, only bid after the reserve is met, and don't over spend. Buying first house though auction is brave, don't get hurt..
Best of luck!
Hi Nicole
why are you looking for a group? How do you think a group will really help you…
That's right banks don't care about you personally, they'll put the rates back up don't worry, they are the masters of money and they know how to get it back, that's their game.
That sounds like every other Aussie battler! a good plan,there is nothing wrong with that, and providing you do get capital growth its a viable option. With 100k I will buy PPOR and 2 PG properties. If I don't have to buy PPOR ill buy 3 PG properties. I say this to say if each grow 4% then that's 10% equity, Having these in different states offers diversification, then if you want to Neg gear so be it.
It's my opinion, of course the numbers have to stack up, calculate risk and there is skill in finding these and I like the challenge, and also having a good team, it's not for everyone.
They don't necessarily have to be cheap properties to be PG either and we are talking houses
I would go google earth, have a look at all the suburbs ideal for your investment, search through the statistics and compare each suburb, also compare demographics to see which suburb has more potential than others. In those suburbs learn the values of properties you are looking for, and buy at a discount.
If the suburb has a rental percentage below 30% that gives you an indication that the suburb may be a good place to buy, small tip but helps..
remember to look for what people in the area want! Schools, shops, transport, hospitals and easy access to main roads or…. is that what they really want? …and that's a good start, no matter what people say, due diligence is still necessary
hope it helps.
Say you earn 50k per year and you wanted to buy blue chip property, and the equity you had in your own home allowed you to buy 2 properties in the city valued at 300k each, which both have negative cash flow of $60 a week, your total dept would be $620 000 a further 20k for set up fee's
This $120 per week negative cash flow is your commitment after you have met all costs and is claimed as your tax break, although you chose a property with on paper deductions, the choice with inner city property is a lower percentage rent return as often the case with higher priced, blue chip property, therefore, she has a real loss of $90 per week and for this you receive a 30% tax break or $30.
If this were the case you would only be able to buy 2 properties and because your repayments are high you cannot afford to throw more money back into your mortgage and if interest go's up it make matters tuffer and if you loose your job your stressing.
If you hold the properties for 15 years your position is as follows
If the property grew by 8% per annum the properties are worth $1 900 000m, at the end of 15 years the dept is still $620 000 asumed you took an interest only loan, your net worth is $1 200 000m and now you would have 2 choices to sell and invest the profits elsewehere or hold and continue to collect the rent income.
Positive Gear
A person earning $50 000 per year wants to invest in property and invests in property that puts money in your pocket each week, so looking into regional areas with good cash flows and every chance of capital growth due to stability of the area.
So you buy a property for say 150 000 with a cash flow of $20 per week, the $20 that you receive is after tax cash flow, rent less costs less the on paper deductions result in a tax break. This tax not only makes up the short fall between income and expenses, it gives you a $20 per week left over. If you are unsure there are sites that teach you the maths to equate positive cash flow properties.
To speed this scenario up and you were to buy a property of the same investment value every six months over 15 years the position is as followed
considering a 5% growth rate per annum even on the properties you acquired only 6 months ago the property is worth $6 800 000m, the total dept considering fee's is $4 650 000 and if you channeled $20 per week back into the dept you would have payed off an extra $235 000 reducing your dept too $4 415 000.
the net value (gross value less dept) of all property held is $2 385 000 thats at a conservative growth rate at 38% less that the negative gear strategy and if you lost your day job you wouldn't be stressing, with this strategy you can factor in vacancy risks and higher interest rates.
you can play with rents and growth rates of both scenarios and positive geared cash flow properties win hands down, there are many positives to the strategy .
Valuer Generals Office, for Queensland it's Department of Environment and Resource Management, NSW is Land and Property Management Authority, Victoria is Department of Sustainability and Environment, WA is Department of Commerce.
There is a site called Your Investment Property, on it has Auction buying tips, things to look for, the ins and outs of tips you need to know that will help you at Auction.
Also Due Diligence needs to be done to know exactly what your buying and if in fact it will make you money, don't go by hope or feelings, go by maths and facts, compare housing prices before and after renovations.
Sorry I forgot to add, what's the angle on your post FredG do you use this structure to pay for your investments? Did you buy an established business or did you start your own business?
Is your structure set up in the best way possible to support your property portfolio?
G'day FredG
Interesting thought, a financial advisor suggested the same idea with negative gear and tax logic however, I would only invest in negative cash flow if I was certain in the near future I would gain capital but, then I would want to collect profit and buy at least 2 positive/neutral cash flow investments from the gain, I will try to avoid negative because I'm looking for cash flow, if I was to buy a house for 250k and it was to grow by 7% that would be a deposit for the next one and they look after themselves. repeating this over a period of 10 years can create financial independence and if I was to lose my day job I wouldn't be stressing.
I can't come to terms with something costing me money in hope of capital gain yet. Because I like cash flow first then, create the way for capital gain, that's the way investing is sitting with me at the moment,
buying a business to create extra cash flow is a great idea, but banks will only lend you up to 70% and some businesses are expensive, also
i don't think banks lend based on good will. Also business takes up more of your precious time, responsibility and risk so depending on the pay off and quality of life would base the decision not to mention the maths.
However being time rich there are many positives and how awesome it would be if you could turn this into a reality, and I will definitely keep an eye open for a good opportunity because one day there could be the possibility when I'm property savvy.
Thanks for the thought FredG
Thats right
Depends on your motives, If its about money i wouldn't get family involved, If its about helping them, invest in teaching your siblings knowledge to able them to make their own decisions how to become wealthy.
Maybe when you's have become wealthy and experienced you's could possibly develop property? mixing business with family can get not pretty, I'd hate to that especially over money.
Think wisely… my 2 cents : )
No worries
Also is it true that an offset account works effectively well when enough money is in the account earning you interest to be saving you interest?
Hi There
Whats the difference with between an offset Account and Line of Credit?
Also Thorpef1 dont get caught out and get a Redraw account
100% offset accounts are the most attractive offset option. These accounts earn you interest equal to the interest you’re paying on your home loan. The interest that you’re earning on your savings is offset against the interest you’re paying on your loan. Many loan products offer access to your funds via a Visa card which can be used to pay bills, while your funds remain untouched in your account earning interest
Redraw facilities enable you to deposit any spare income you have directly into your home loan account. You can then redraw from the loan any funds that are in excess of your regular repayments. In terms of interest savings, a redraw facility has much the same effect as a 100% offset account.
If a 100% offset account and a redraw facility have the same outcome in terms of savings, what are the advantages of one over the other? Because offset accounts are essentially savings accounts and operate as such, you‘ll have easy access to your funds. Most come with an ATM, EFTPOS and cheque access, some offer phone banking and some even have a credit card.
Transaction fees may be charged in the same manner as a standard savings account, but most lenders will waive transaction charges on offset accounts altogether. Ideally, you can arrange to have all of your salary paid directly into the offset account. This ensures that any income not spent is being used to reduce the balance of your loan. While receiving the interest savings you have peace of mind in knowing that you can access your funds at any time.
Some institutions will limit you to as few as two redraws per year. Others will charge you up to $50 per withdrawal. Look for a redraw facility that provides you with maximum flexibility at minimum cost.
Be sure to find out exactly how the loan’s redraw facility operates before you sign up, because they’re not all the same. A 100% offset account will be a more attractive option than a restrictive or expensive redraw facility if you’re intending to use the account for day-to-day transactions.
Hello zorrohd
I know I am very greatful for the generous people on this site who have taken the time to share their thoughts.
Good guess you got me, 28 no kids living with family, at the moment because of some things I'm in a position to save, I can't buy because I'm unstable, I've just had an operation, I haven't worked since December, I just got a job fixing buses the other day, I don't get my licence back until July, then I'm off to Darwin but hopefully Queensland, taken off in my troops and caravan hunting more work, I'm in sydney ATM but I want to move and live in Queensland far north so… and not exactly sure what I'm gonna do, I have boat, cars, drums, and a whopper ducati all stored that I've worked hard for and I miss my lifestyle. So when I'm ready I may now buy a PPOR.
Gathering what I've learnt, by buying at a discount, and a house that I can do minor cosmetics, with the correct financing structure I'm hopping i can gain equity strait of the mark and buy an investment property. The max I'm going to spend on the PPOR is 350k with 15% deposit, so far mortgage have advise I take an interest only loan with an offset account.
Congradulations on your investments, glad to hear you have found a PG property I hope they secure your future. But what bargin in Victoria hey good on you, Great team on board here, I can't wait to have them apart of my team
Jared
Hi Kingyj
In my opinion, I like Mackay over the long period should serve you well, It does seem like a stable area and there are future prospects in the mining industry.
