Forum Replies Created
Hi, there were some numbers bandied about re Tassie NRAS properties. $280 thousand house rented for $407 pw. Hello, how is that possible? Can someone check the median rents in Hobart and Launceston? It smells like a RORT.
Ten years is a long time. Suppose the govt that guarantees the scheme gets voted out & the next govt says it's not me, it's …, then what?
KY
Hi, why not do both? DIY renos are cheap. I did a paint job & materials including tools cost under 10% of what I was quoted for it.
Curtains cost under $200 and look quite good too. I paid my manager to install clotheslines & did the landscaping myself. Materials cost under $300 per house. I'd preplanted about 400 plants in the year it took for the houses to be built. Very low cost. Grasses [SeaBreeze is fantastic] were divided into about 8-10 clumps and I made holes in plastic bags, filled them with soil & potting mix & put the plants into the plastic bags. In this way, the plants cost about 50 cents, those bought. Many [agapanthus, geranium, some climbers] I just picked on the roadside. Daisies and agave and some succulents grow almost with no effort.
Good luck,
KYHi, depending on your age, you could 'contribute' excess monies into super.
Try not to pay down the investment loan as far as you can but you need to have a lot of willpower to not fritter away money on nonproductive purchases.
A point to note here is even for a novice, you managed to buy something that's giving you such a good yield. You may have the knack of finding the performing properties. So if you can find another one just as good, what's stopping you?
Good luck & congratulations, you've done well.
KY
Hi, you need to work on the viability of what you propose to do first. The trust structure is costly unless you can do much of the accounting. Legal fees etc add to the cost. Probably not worth unless you're looking at a million dollar investment.
Current PPOR – no need to do much except change over to IO loan. Your LVR of 80% is about standard for any loan. As an IP, what kind of yield will you be getting? On costs of around 7%, you need to recover $21000 p.a. rent i.e. $400+ p.w.
Your proposed new PPOR around $550000 less $150000 = $400000 loan. You will need to pay $500-$550 p.w.
The numbers are approximate. But you can get an idea of where you'll be at say in 5 years time.
If you're happy, then easy to go ahead.
Good luck,
KYHi, Of the 3 you mention, O'Sullivans is the one that has gone up very little. Christies Bch is good but prices have moved up to reflect the values. On today's prices, cap gain may be a while yet. Aldinga to me is too high priced, always has been and maybe will be in the future. It's the holiday homes suburb with a lot of new houses that [to me] are ridiculously priced. There was a girl [20s] featured in API 2 years ago who bought a house there for just under 500000. I think she won't get that today, nor the rent that she thought she'd be getting.
Have you looked at the North West? Osborne & Taperoo have new subdivisions selling at around $320-350 thousand. Will be close to neutral gearing. Rent isn't fantastic but steady.
Semaphore is the more desirable but the prices are also 'desirable'.
18 months ago, an old house right opposite the marina at N Haven passed in at 420000.
Last month, an old house [900m2] on Victoria Rd was sold. Asking price $280000 tenanted @$205 pw. The rent is a joke. Should be around $240-250 Reason that house is cheap is the factory across the road.
Birkenhead, Peterhead and Largs are good but there's very little to look at.
Be careful with property selection. Established houses or new ones are best. Old houses on big land are best of all. Don't get sucked into buying apartments at high prices.
Good luck,
KYHi Clint, I'm sorry I expected more. That newsletter says exactly nothing. I'm disappointed.
KY
Hi, if you get expelled, Richard, we'll set up a web site with you as the permanent honarary member or President or CEO or whatever name you choose!
Suehe, please reread Richard's replies & consider whether you want to have the cost of an FA.
Unless you already have smsf, buying the property within the smsf incurs a lot of running costs
With the wrap, what you're doing is 'lending' the money to your daughter to buy the property. The wrap is necessary [you'll have legal costs] so that should your daughter default, you can garnish the property & rent it to someone else.
The 'rent' paid by your daughter is yours to do as you wish but it's added to your personal income. At age 57, your husband still has a few years of 'transition to retirement' by which he can make lump sum contributions or salary sacrifice to 'write off' his earned income.
The only paperwork can be done by your accountant & there's no need for other 'advisors' to charge you fees.
Again, apologies for the longwindedness. We don't wish you to be stung.
All the best,
KYHi, am not sure but can't you claim all 4.5?
Pls check with accountant cos I'm not sure either.
KY
Hi, Richard's assessment is very good. Vendor terms to your daughter is something that will really benefit both of you. It's a strategy that not enough people use because they distrust mixing business and family ties but the financial implications suggest that it is a no brainer.
Start with the end. Suppose your daughter pays $300 p.w. rent.
You withdraw $ to buy the unit/house or whatever. Wrap it so she 'owns' it. She receives $14000 [maybe more]
Thereafter she pays you $300 p.w. [less 4000 p.a. for costs] = $11600
Your husband then 'contributes' $25600 back into the superfund. It costs you about $245000 all in.
Apologies for being a bit 'overbearing' but couldn't help using the numbers. It's something that I suggested to a family member.
KY
hi, different story then.
Option 3 is more viable when you're on 70K p.a.
Depending on where you're, there are always opportunities. I thought that house prices can't go up any more than they've already done but just last weekend, I went to an open inspection. Big old house needing update sitting on a 1200m2 block. Based on the price quoted by the agent, there's a fair amount of equity once the subdivision is done. Of course, that's based on today's prices & rents. If those go backwards, then the +ve cf & equity would evaporate.
Just goes to show that risk starts on the day we buy but if it's calculated, it shouldn't cause too much concern.
You're well placed to start your investment journey. Good luck,
KYHi, we're usually very hopeful when we start out. There're serious objections to the 'plans' above.
1) no problem except that you no longer have the use of the 30000. Offset is the best way.
2)Negative gearing at best.
3)You'll get into serious trouble. Even if the 300000 includes closing costs, you're looking at $60000 max 'profit' of which you spend 15 thousand on reno 10000 sale costs, 10 thousand holding costs. There's 25 thousand profit in your scenario. The downside is that it's quite hard to find such a property.
Can you re examine the mindset of you can meet your living costs with the 30thousand you currently have? Traditionally, the yield of 5% means you get 1500 a year from that.
Maybe others can give you better advice but looks like earned income is necessary.
KY
Hi, different states levy different rates of land tax, NT is the one with no land tax. Queensland land tax is among the lowest. Tasmania has a very low threshold i.e. you pay tax on a very cheap block.
One year I paid close to 7 thousand in land tax. As the tax is progressive, the more property you own, the higher the rate.
You can 'avoid' the threshold by owning properties in trusts but you will have problems with borrowing. And the audit and accounting fees make it not very worthwhile.
I reduced my land tax liability by transferring a commercial property into smsf but that comes with its own accounting headache. It's worthwhile only if the tax reductions are attractive enough.
Hope this info is of help to you,
KYHi, if you think land tax in Queensland is bad, come to SA or go to Victoria or NSW
KY
Hi, can you not sign a contract for H&L package from your girlfriend? Then you'll get the FHOG which is at least 24 thousand in most states.
You can time your marriage after the construction is completed.
Think of it this way: if it costs $200000 to build, you get 12% discount, immediate equity.
KY
Hi, I did pool fencing for the front house & in black. The fence man was a bit dubious at 1st but when he saw the finished item, even he was surprised how good it looked. And there's hardly any difference when I ended up with the cheapest [they were the only ones available immediately] so no need to go for the more expensive designs either.
I 'happened' to notice a banner advertising fencing and took a price list from them [this was in Adelaide] and those prices were cheaper than the list the contractor had [he was going to get them from the manufacturer!]
KY
Hi, I'd told my story a couple of times already.
I'd never x-collaterize if I had a choice. The best case scenario is a lender to an IP, I think. But in many cases, just as in mine, loans are far easier if I x-collaterize. IP 1, I had no income therefore no choice, just took whatever I could find, which was a private loan 67% LVR 2% above std home loans and 2 years to repay.
IPs 3 & 4, I'd refinanced to 30 year loans good IO loans standalone but one lender.
By year 3, the lender upgraded me to 75% LVR without me having to apply for it and I had enough money to pay for the commercial property at a time when no one wanted a suburban strip shopping complex.
CBA was happy to give me a construction loan if I x-collaterized but untangling the loans was a costly affair & I used some choice words so I no longer have loans with CBA. They did offer to increase my credit card limit!
So, don't x-collaterize, but if it's the simplest way, then it doesn't really make a lot of difference.
BTW, I started the acquisition phase very late so had a lot more equity. don't envy the old farts, we'd rather be like the young guns with no equity but started young.
good luck,
KYHi, why Mawson Lakes in particular?
For comparison: 48 Melton St Blackwood [$355-385000]
12 Hogarth St Panorama [$395-415000 price has come down] might have sold thoughMelton St I think was used by single person thus need to make 2 more BR easily done
Hogarth St is 2 storey [very hard to build same house for less than 400000] split level 70s solid engineering unlike the current prefab kind of building.
One on Greenhill Rd sold for low 500s after the price dropped 60000. Hazelwood Park, good value.
Look some more and maybe you might find more like those.
KY
Hi, I used my PPOR equity [paid cash when I bought it] to buy a 2nd, 3rd, 4th, 5th, 6th and 7th and 8th and 9th property. 5th and
6th are commercial and 7th and 9th are devt properties. 8th was PPOR 2 and supposed to be a devt but it was too hard and I sold.I'd always X collaterised because I'm in the category of 'hard to get funding' Whenever someone said they'll give me a loan, I always said 'Where do I sign?'
Be careful though if you're buying your 1st IP now. Many areas have peaked and prices may stagnate or even go backwards.
Good luck,
KYHi Spudway, congratulations. Didn't post before cos I didn't want to add to the confusion. I'd dig up Crashy's previous posts if I were you & you can see whether he's been at all positive at most times.
Good luck going forward & hold that pride high. You're doing far better than lots of people.
KY
Hi, Richard Taylor has hit the nail on the head as usual. $250 pw won't be enough to get you there.
The alternative may be rent to own. This has a big advantage if you're eligible for housing rebates. Eg in SA, rent subsidies can be up to 50%
Good luck,
KY
