We’ve run a rooming house for a couple of years as one of our IPs.

We cater mostly to non-students/working singles. Some of these people can’t budget and love that one single payment a week pays for everything – rent and utilities and they only have to pay for their food.

One idea for student accom would be to include cable internet as part of the rental package. This could make your accommodation more desirable and thus cut down on the transient factor. Obviously the closer to the uni/tafe/etc the better.

Regards

Kevman

Just a couple of questions

Would you be renting this out on a room by room basis or a student holding the tenancy agreement? If on a room by room basis you may need to increase the rent to cover utilities.

One option to make it more appealing is to add cable internet to each room. Set it up on a unlimited download plan and include that price in the rent. An IP investor has done that with a similar style house in my area and doesn’t have any shortage of tenants. Students love “free” high speed internet connection.[thumbsupanim]

Gardening costs could also be included into the rent – either you or someone else does it. Students aren’t into gardening much.

One con with student accom is that the end of year break is quite long and many go home. One option for keeping tenants coming back is to offer half rent for that end of year break to save them having to move their stuff back home and then looking for a new place. Another IP investor does that. Better to get 50% of something than 100% of nothing.

Swimming pools are a lot of maintenance and could have some public liability issues eg student party and someone gets drunk and drowns in the pool.

Just some thoughts.

I think one of the problems is the definition of insider trading. It is very hard to prove in the courts and most of it doesn’t even get detected.

When should you be charged with insider trading. I mean are you charged with it if you got a hot tip and invested in a company and lost money?

If someone from inside a company rings a mate that’s a share broker and the broker recommends you buy the shares, you do and make a heap of money could you be charged with insider trading?

I think John T Reed has a touch of jealousy about Kiyosaki’s success. Maybe rather than rip into Kiyosaki he should figure out what Robert did to get his books on the bestseller lists. Robert does say he is a best selling author not best writing author.

We’ve invested in Frankston for a while but +ve cashflow propeties have been hard to find. So have renos.

The last property we bought, in Mar 03, was a 4br concrete ex housing commission home for $165k that we have rented out for $450 per week.

I think in Frankston who your managing agent is important as they can handle problems quickly and also ensure that any bad tenants don’t rent your properties. We have a very low vacancy factor as most tenants, once they settle in, seem to stay for years.

The prices in Frankston seem expensive to us when we started buying houses there we were paying $70k and renting them out for $140+ pw. Nowadays the same houses have been bank valued at $140k.

Actually I checked out the storage company that was advertising in Melbourne mainly as an exercise in analysing a deal.

They are called Strata Storage Investments and their website is http://www.stratastorage.com.au

They have the numbers including for analysing the deal. Interestingly enough the management fees is almost 25% of gross return so the real rate of return is closer to 6% rather than the 8.5% they advertise.

I think private treaty sales are sales that are not listed with an agent ie FSBOs (For Sale By Owner) or individual to trust/company. I got one of those price guide reports and a property we had bought last year was listed in it and we’ve never bought at auction. So some of these reports may contain up to 95% of sales data depending on how many FSBOs you have in your area.

I saw an article by a group that has had a good history of forecasting interest rates and they were forecasting that the rate will be at 10.5% in 4 years.

They were also saying that when rates hit this level there will be blood in the streets for the housing market as people will be selling due to drawing down equity in this low interest rate era to fund doodads.

At the end of the day it is up to you whether you take fixed or variable. You can pay more when fixed but think of it as insurance against rate increases. One thing I notice with mortgage brokers is that they will never guarantee anything in regards to interest rate movements. So if they recommend variable over fixed and you lose out due to an interest rate spike, there is no guarantee provided by them that they recommended the best product. Once they have sold you the loan, that’s the end of it.

I use IO fixed loans because as Robert Kiyosaki says “Don’t Predict”.

Richard

The uncertainty you have as to whether you are moving or not creates some difficulties. There are some options available.

Option 1 Hold both properties in your own/you and wife’s name. The advantage with that is if you sell your principle place of residence (PPOR) its exempt from CGT and the IP is at 50% CGT. This way one property is always free of CGT. If your current house will increase greater than your new house then you can keep that house as your PPOR for 6 years. That way if you move back it is still CGT free.

Option 2. Selling your house to a company will incur Stamp duty and no 50% CGT exemption. Stamp duty is the same for individuals. If you sell your house to the company for an inflated price and it is obvious this will raise the Tax office eyebrows. This is the worst option tax wise where you will pay the most tax.

Option 3. Selling your house to a trust or buying your new house in a trust. You will have to pay stamp duty. The main reason the government and tax office is cracking down on trusts is people moving personally earned income through them and splitting their income. This is a big no-no by the tax office. Also your future plans in regards to IPs aren’t specified so I wouldn’t recommend a trust unless you are going to have 3+ IPs in it.

From what I’ve read in your post I would recommend option 1. I’m interested in why your solicitor would recommend a company or trust for two properties?

Kevman

Paul

I did last years seminar. For $2195 you can take a friend and also it is a tax deduction.

If $1100 is written off in tax then really the seminar only costs $550 per person.

The next deal that I did after the seminar using what I learnt in the seminar I got 14% yield on a property and its not a wrap. The net cash flow $5500 per year. Thats over a 200% cash on cash return for the seminar.

I don’t understand what the scam is here? Can you explain further why if the deposit is transferred to a 3rd party you can’t settle on the property.

Twice now when dealing with distressed vendors we have had to release the deposit early. Once was so their bank would release the mortgage and the other time was so the vendors wife could get an operation. Both properties continued to settlement with no problems and the deposit I presume was given to a 3rd party.