gilad,

If you buy and get a stamp duty exemption, there’ll still be associated costs- maybe a few grand (legals and setting up a mortgage) costs. Then you’ll have selling costs- on a 200k property, that might be 6k- with advertising and RE costs… then you’ll have to pay capital gains tax on any profit- based upon your taxable income. As you’re a fairly low income earner, you’ll be based at a lower rate on your profit… but if you wait for a year, you get taxed at half that rate on the profit.

So say you make 20k on a reno, and the reno cost you 5k… you’ll be paying about:

8k costs (selling/ownership costs)
5k reno cost
4k GST on profit… (if sold within a year)
____
17k cost

Making a grand total of you profiting about $3k. That is *if* the property doesn’t lose value in the meantime (in this more volatile market), and the 20k reno profit gets subsumed into a new market value.

Others may have more optimistic views on the numbers, and suggest you’ll make more bucks on the reno.. but really, if you end up with 3k, it’s a pretty labour intensive way to make a very small amount of money.

kay henry

Nope- unless you want to make it a wrap arrangement. It’s still YOUR house, Jumbo- and you’re responsible for it. I mean, you can put anything you like into a contract, but if it’s seen as unconscionable- and asking a tenant to make repairs and pay outgoings would be seen as unconscionable by any court in the land- then your contract can be exited immediately by the lessee/tenant. If it’s under the RTA, then it’s a standard lease, with an option to purchase- that’s the only difference.

kay henry

calvin,

It’s interesting… a house in Margaret River, a lovely place… is median priced at $240k… but the median rent is $166 weekly. God- that’s only around $3% yield- hardly worth it. I mean, I know MR is an up and coming area… but 3% yield? Some country areas have such shoddy yields- I have a similar place- rents are rock bottom – but properties are cheap too- so yield has a better percentage.

Hard to justify negative gearing at that level on newly bought properties, I think.

kay henry

Hey calvin,

tjal was looking for names of suburbs and noone had given him any, so I thought I would name a few places.

Blue ribbon suburbs have neighbouring suburbs, so people can just look at suburbs, and then keep going out a little further until they have properties in their price range. tjal is looking for growth suburbs, or I could have said bunbury and collie.

The article I posted has heaps of names and prices to check out.

kay henry

tjal, here- I’ll name some names for you :o)

These are considered some of the “blue ribbon” suburbs of perth- depends on what you’re looking for, but if it’s location, location…

Claremont, Cottlesloe, Crawley, Nedlands, Dalkeith, Swanbourne, Peppermint Grove, Mosman Park, Mount Claremont, Hawthorne.

Here’s a good article on some prices and locations in perth:

http://www.domain.com.au/public/htmldisplay.aspx?ID=HA5FACT_8&mode=tvfacts

kay henry

Yorker- the WS market is not for me. I don’t think you get the rental % return on a lot of properties in the greater WS area, and I don’t think the properties are cheap enough to justify buying there. As you’d know, there has been phenomenal growth in all areas of sydney, and people have moved further and further out to be able to afford to buy. But you can generally get more rent from an inner-ring 1-bed apartment than you can from a 3-bedroom house an hour out of sydney in the western suburbs.

Proximity and yield are two of the most important factors to me in the sydney market. Then you have some of the other areas of sydney (south-west is a crime haven) and the north-west (bible-belt). Neither of those areas appeal either.

I’m an inner-ring person

kay henry

gilahd,

You had Steve McKnight’s opinion on whether your plans are ethical or not, but still you are asking. Perhaps you want someone to tell you to go for it, so you can feel good about it?

You develop your own sense of ethics in this world. Some people say there is no such thing in property- it’s all about the numbers. It’s up to you- you know the difference between right and wrong, right?

kay henry

Jhighlo,

Never sign a contract without it being checked by your solicitor first. Changes should be made to the contract BEFORE you sign. I realise the difficulties of being overseas and undertaking transactions… but if you now continue with one of the company’s solicitors, you will be writing a thousand more posts on here expressing dissatisfaction- so time to get your own independent lawyer.

I doubt a lawyer will go and measure things up for you- not really in their job description… but yack has a good idea in using the people from archicentre. If you really want to exit this contract, it’s probably the only way- if it measures out wrongly, and a report is written, you can get the company on misleading conduct under the TPA- if not, I think you’re stuck with it.

Pressure to sign a contract before getting legal advice… well, heaps of people just sign a contract without it having been checked first- and ten rely on the cooling-off period to get the contract addressed. Getting an independent solicitor is really a buyer’s responsibility. Unless you can demonstrate how the company actively prevented you from getting legal advice at some point during the transaction, I am not sure you can get out.

Perhaps it is just time to buy and hold this one and wait until demand catches up to supply.

kay henry