Forum Replies Created
Hey Redwing,
I didn’t want to go there. No victory in winning a lost cause.
We were already at the stage of having a swinging dick competition……we weren’t discussing the property anymore, just trying to out argue each other for the sake of it.Dereks’ got a point…I guess the average agent must hate a number crunching property investor…in fact they probably DO see us as time wasters.
Its all in the right brain / left brain thing…In agent school they tell you to “paint a picture” with the words you use ( appeal to the buyers emotions ) whereas as an investor you use the other side of the brain ( analytical, logical ) to crunch the numbers.
SO if you don’t meet up with an agent that can do the same, then probably a defensive reaction, or conflict will be the result.
KP
Had the same problem personally.
Its not the brokers fault….its the banks requirement.Because I am the main breadwinner, but wanted to include the spouse on a property purchase, they were happy to extend the loan to me but the spouse to be party to the property transaction, had to do the guarantor thing ( in case I default, die, etc)
Same thing, had to get a financial planner as well as well as solicitor to explain to her what she was getting involved with.
$330 each !!! what a scam..It was for a subdivide and construct…so they repeated the process when we started the construct phase,( seperate loan) requested proof that she visited the two again and get advise.
Instead, we submitted a stat dec. along with a photocopy of the previous letters from the two experts, saying that she knew what she was entering into as per the previous advise.
The bank accepted this.
KP
Stuart,
There are TWO borkers on this very post who are reputable, both have replied to your question…
Why not try emailing them for a start ???Excellent synopsis Peter,
Straight to the point..and accurate as well.Another point with using depreciation ( non cost tax deduction) is that it erodes the value of you asset base by the amount of the depreciation you have claimed as a tax deduction.
If and when you sell, you will be liable for capital gains on the sale price minus the WRITTEN DOWN VALUE of the asset, not the initial purchase price of the asset.
In effect, you are getting a tax deduction today, and foregoing a profit in the future by paying a greater amount of capital gains tax…when you sell.
KP
Hi Jaffa
I think youd better start up a new thread on “funny agents stories”
See how many you get…Heres one from last week.
Met an agent, hes new in town, looked at a couple of properties, both overpriced. He did the trial close… “so waddya think, you interested in either of them?”
I told them they didn’t stack up as for me an investor…the rent return was not there.He said “whats wrong with the rent return…ALL the properties in this town a positive geared….the rents greater than the interest on the loan so its positive geared”…..HUH ????
Rent vs interest is now the determining factor???
I suggested to him that the more common approach was to use rent return on asking price to determine the YIELD.
But he said he always used rent vs interest cost..and had never heard of my method.I thanked him and left …quickly….
He is trying to resurrect a run down agency..I reckon 6 months max at it will all be over.
KP
The yield probably has more relevance with regard to Commercial property.
In this instance the tenant pays all the outgoings so the yield has a relevance to the asking price or the value of the property.
Usually the rent is capped up by the yield to determine the value of the property.
Example: with an annual rent of $100,000 and a yield of 8% the property is worth $1.25 million.
Divide the rent by the yield to get the value of the property.Therefore yield is critical to determining the value, especially on commercial property.
Usually rents are fixed so you negotiate the price of the property based on what yield you expect.
There is a benchmark yield for the market you are looking at..ie…inner city urban area ( safe, high demand) might yield 7 or 8%
Regional area with low demand or high vacancy might yield 12 or 15%It also goes in cycles depending on how the commercial market is travelling at the time, therefore yields change as the state of the market changes.
There are probably better indicators to use with residential property than stright out “yield” as the yield does not take into account outgoings that the owner pays which can vary considerably from property to property and area to area.
Maybe you need to use gross yield and nett yield with residential property to get a better indicator of the performance of your property..
(whew…where did all that come from ???)
KP
You need to apply for a Credit Providers Licence to do vendor finance in WA.
Check out DOCEP website, all instructions and forms are avail online.KP
Arb,
Get the book…read the book…..
Its a good read regardless of whether there are less +CF properties around.
There is more to the book than simply suggesting you have to buy +CF properties.
Its a good investment for under $20KP
Hi Aus,
Hi Lisa,
Well if the price of yours is a good comparison for this one…then its not too far off..
Asking $440k
Settlement $21k
Subdiv $20k
Strata land cost $240k each
Build $150k each
Misc $20k each
Total per dwelling $410k plus holding costs.Doesn’t work to develop and resell based on your comparative price of $440k, but would work OK if you keep the original front home and just build a new one on the rear ( subdivision costs would be less for a start- no demolition)
What are single building blocks worth in the area ( strata subdivided block or green title full size blocks) If they are less than 240k then this one is to exxy.
Maybe a reasonable buy closer to $400k ??KP
Hi Lisa,
What would the front strata sell for after subdivision, and the same for the new dwelling on the rear strata ?
You’ve done such a development in the area so you would be in the prime position to work out if the end result justifies the effort…
In my opinion in the current market, a lot of this unrealised gain (post subdivision profit) has been priced into the initial asking price, thus making these properties unviable as development prospects.KP
Wez,
For every one person that does attend a seminar, hundreds don’t.
Its simply a matter of people exercising their freedom of choice to attend or not.You could spend the evening at the pub and listen to the the same amount of opinionated dribble voiced as being the truth or fact, and it will cost you 100 bucks by the end of the night. Do you want this regulated and banned as well?
If you were serious in your crusade to save the masses from themselves, then you should spend your time and energy waving placards at the front of these seminars, not “going off” on a forum where you have a limited audience.
Aus,
You haven’t got time to be posting on the forum
GET BACK TO WORK !!KP
Had a jv partner who was using his family trust as his investment vehicle.
His income was apportioned ( by his employer) so that some was going to the trust on a monthly basis.
ANZ local branch were happy with this, on the basis that the income to the trust was regular and proven.
Surely you could show bank statements confirming the trust distribution to yourself ??KP
Also check that there are no easements or restrictive covenants on the block. This should show up on the search of the title deed, and the agent selling should have a copy on file.
Otherwise you can order a copy from the titles office.
Depending on where you are, you may need to confirm the soil conditions (may need a soil certificate)
Where we are there are 5 soil certificate categories and they affect site and building costs from zero to $7000 +Good Luck
KP
No GST payable on established residential property..
Only time it applies is for newly constructed residential, and then it is only due for the first sale of that property. ( ie build and keep and no GST is due)
In this case the vendor is liablefor the GST
Purchaser does not pay GST for residential prop.The advise you may have been given applies to commercial property, which has a number of categories and the GST payable varies from zero to part, to full depending on the circumstances of the sale.
Hope this helps…
KPFair suck of the sav Monopoly.
My IP’s are 15.5 hours drive from where I am.
6 hrs is a walk in the park compared…
And forget about the choice munchies and a cut lunch…more like Red Bull drinks and uppers from the truckstop…
KP
Hi Michael,
Can you elaborate on what you are alluding to ?
(the intimate knowledge on what both parties are currently or have been involved in)I notice they all seem to have ended up in Arizona as neighbours ( Burley, Kyosaki, De roos)
coincidence or not ??I have always thought that these guys seem to promote “7 levels of investors” or “7 steps to wealth” all of which are “secret” whereas in fact the 8 step or level is to write and promote a book, and/or conduct seminars. Thats where the easy and leveraged money is.
It taps into the psyche of the majority of ordinary ppl out there who wish or dream of wealth….KP
Hey you have to look at it in terms of the current market and the vendors position….ie is he motivated to sell ( what is the real reason for selling ), and is it a buyers market where you are looking.
It may be enough for the vendor to know that the property is sold ( certainty )even if he has to wait some time to gett 100% of the sale price.I would first offer the price he wants (135k) and ask for vendor terms for the balance you can’t get finance on.
If this is not acceptable, then you can sweeten the deal by offering a margin above the asking price for the inconvenience of not receiving 100% proceeds at the time of sale.
Same with the interest rate.
Offer bank rates initially for the vendor finance.
You can always negotiate a higher rate to make it more attractive if that is not acceptable.Al you are doing is asking the question. All they can say is “NO”
The key to your success is to find out the vendors motivation for selling
KP
Hi PCB,
Agree that vendor financing is a method which will allow more poeple both aboriginal and non aboriginal to own their own home.I have to ask, how does this relate to the ISX that you are promoting ?
It seems that they are two seperate topics.Email or PM me if you like, as I am in regional WA and am interested in what you are promoting..
Cheers
KPTerry has got a good point.
On the face of it you should not have to pay CGT if you transfer the property into a trustwhile it is your PPOR, but you will pay stamp duty.
If you intend to keep the original(current PPOR) home and rent it out, then it would be wise to pay some money now ( cost of good advice on the use and setup of a trust, setting up cost of the trust, stampduty on the transfer) and have the structure in place for future use.
Alternately, if you leave the PPOR as is ( in your own name I assume) then when and if you sell in the future you will need to apportion CGT due on the basis of the time you used it as a PPOR and the time it was rented out.
Also, unless you are cashed up to do the subdivision and building, then if you borrow against the existing dwelling for the new PPOR, the interest cost will not be deductible…not effective use of debt.KP
