Forum Replies Created
wait until the xmas spending starts.
I'm tipping another rate rise early next year because of it.cu@thetop wrote:Saw a deal fall over last month for a purchase of a property in a SE QLD coastal town. The buyer wanted to buy (850k) and develop (1.6mill) a commercial property – had the tenant lined up and all, but figures came back at 13% and he normally goes for 17% return.Deal finished now looking at another.
With a good tenant and lawyer why would you even look at residential?
Good point; the only drawback I can see with Comm over Res is that the economy dictates the flow of business, and in bad times if you lose a tenant it may be very hard to find another one.
Someone once told me that only Comm properties over $500k are worth the effort as you get bigger and more stable tenants apparently.
The deposit is higher as well being a Comm.Sounds great; well done.
My only concern is the demand for the furnished option after the projects finish.
Where is it?foundation wrote:Hey Masih, the problem with that HIA spin is that, well, it's not actually true.
They have a vested interest in getting a better deal for their members. Scroll 3/4 of the way through the article to find out exactly which (self-serving) barrow they're pushing today.Then do a bit of research. Grab stats from the ABS – specifically, the number of households and the number of dwellings. Overlay these on a chart. Then divide annual population growth by average household size. This gives you an approximation of the number of dwellings that must be built to avoid a housing shortage. Contrast this figure with the current "underlying requirement" figures from the HIA. It’ll open your eyes. I’ve done it and would share it but I reckon sometimes it’s good for people to go through the motions themselves.
I’d love to see the results posted here when you’re done.
Cheers, F. [cowboy2]
Come on F;
only you can be bothered to go to all that trouble with the stats. Put us out of our misery and give us the answer.
In a nutshell, I'm guessing it will be too many houses for the increasing population?Yes, it pays to know more than your accountant in this caper, or at least be on a par with them to keep them on their toes.
Not sure about how far you can go back to claim the deductions (talk to your accountant about this), but if the property was built before Sept 1987 there is no depreciation left on the building. There is on buildings built between 1985 and 1987 (I think), but it is only for 25 years @ 4% per year from completion date. This ran out in 2002 at a guess.
You may still have some depreciation on the fixtures and fittings if there has been a recent reno and you can account for the costs of these.
Getting a Depreciation Schedule may still be worthwhile however, even on an older property such as this. Ring some Quantity Surveyor firms and ask them what they think.
cnnbotha wrote:I am new to property investment and would like to know what the major concerns are for property investors?The numbers, the numbers, the numbers; can it make me a pos cashlow after tax,
decent tenants/property managers,
good cap gain in short/medium term,
to a lesser degree interest rates as the interest is tax deductible, so the impact on you is smaller than owner occupiers.You're 15 and you want to invest in property? Well done! All I was interested in at that age was golf and girls – not in that order.
Keep gathering knowledge and start saving NOW for that first deposit.
There is also the Somersoft forum which is excellent , and for a great laugh there is also the "Global House Price Crash" site.
And, read these books/mags:
Australian Property Investor Magazine, BRW.
All of theses author's books:
Noel Whittaker,
Jan Somers,
Robert Kiyosaki,
Margaret Lomas,
Napoleon Hill,
John Fitzgerald,
John Burley,
Peter Spann,
Dolf De Roos
Terry Ryder.
Neil Jenman
Donald Trump.Also read these books;
"The Millionaire next door"
"The Richest Man in Babylon".
The Warren Buffet way (not property, but still good.This'll keep you going for about a year or so.
Franchising can work well, but it is restrictive for you in many ways; you can't use your own creativity to run the business, a chunk of your turnover and profit goes to the Franchiser. The upside is you have good support and ongoing training etc (hopefully).
You are simply buying a job in many cases, but they give you great knowledge in running a business properly and you can use that for other ventures.
One of my mates now owns 2 Brumby's stores. He worked his arse off for several years in one, doing all the crap shifts etc, then bought the second one and worked harder, but he's laughing now.
Another guy I know started with one small 7-Eleven , and now has a very big one with excellent turnover.
Fish and Chip shops are crap hours and hard work, but usually good profit. If you don't mind the sacrifice then go for it.
On the 'quoting of jobs' merry-go-round;
I once rang a sparky to come and do the electrical work for one of our renos. He was a local bloke, and my usual guy was unavailable for a while (too busy as usual he does great work, on time, no complaints, fair rates and I pay him immediately as we should).
The local guy asked what I needed doing, I told him, and over the phone he gave me a flat fee for each type of job he would be doing.
There was no quoting; just a price per item. Take it or leave it. For example; any power point was say $15 (not sure of exact price now). I said; "but what if it is a pri*k of a power point and takes twice as long?"He said; "some are easy, some are hard; they all even out".
I knew my price before the call ended, he told me when he could start, there was no surprises and he did a good job. He did all the power points, wall lights switches, sconces, and a stack of other stuff.
Great stuff.
So, my point here is, maybe look at a flat rate costing on a job, don't negotiate and be honest about the likely start time. This will save you guys many hours of wasted quoting time at potential customer's houses. You may lose a few, but you'll end up with a more productive week I'm guessing as most of the quoting will be on the phone and not in the work van.
bendbanks wrote:True, but by spending sometime on the simple things involved in the management of your property you will find that you are less likely to experience unfortunate incidents.
For instance we attended an eviction for one of our clients the other week. Only to find out the tenant we where evicting was moving down the road (it was a little further than that in reality) to another clients property. When asking that client had they done a search on the tenant (which is recommended for all landlords and property managers to do) they said "NO" even though the service (FastTrack Tenant Search) for that property is free. This simple act prevented the landlord for a possible unfortunate incident and in this case his property manager from being held liable for any damages or money owed.
As Landlords the worst mistake you can make is by simply saying I have the property that's all that's required from my part until something goes wrong.Unless the second owner was self-managing, surely the PM of the second owner would have done a Tenant Search?
Bend is just having a go at some free ads people. No probs with that, but you need to see it for what it is.
I hope he gets some business. Actually; no I don't – if all tenants were good ones, we wouldn't need Bend.
Agents are not gunna let themselves be liable for anything regarding management issues. We the Landlords cop it all unfortunately, but luckily we now have Bend to go in on our behalf and get some cash back; for a fee.
Well done HG.
buy a couple more, then tell us – back scratching and all that.
Just out of interest; what is the population in the town?
The only way to convince your husband, seeing as he is a business man, is to present the idea to him as a business.
This means putting together a business plan, and a presentation of the cashflows, expenses, income, projected profit/loss, cap gain etc.
Things like depreciation and tax deductions should also be in this, as well as manangement fees and so on.
Being scared to borrow is normal; especially if they are worried by not being able to make the repayments.
If you have some knowledge about the numbers involved, and can explain to them what the bottom line to their hip pocket would be in the event of a vacancy, what the management fees are, etc, then this will alleviate their fears to a degree.
Even after you have crossed ever T and dotted every I there is fear, but you still need to act.
I know from our private message that you know about "cashflow positive after tax" properties, so this is probably a good place to start with your Mum and Dad in the explanations.
Terry's advice is great; this is how we've always done it, it's quite easy.
2 things;
1. I did the wealth score and came up with +140 I think, but it didn't factor in rent income, so I wouldn't put too much weight on it. I think you are better off than you realise.
2. The 1-100 in 3.5 years was written a long time ago (early 90's from memory). The target area was Ballarat, where there were loads of sub-$100k properties with work needed, and rent returns of 10% and more. Different world.The good news is that over time rents and vales do go up; it's just a LOT harder to buy "off the shelf" cashflow positive properties these days.
So let me do a quick number crunch for you;
Income:
You: $100,000
Partner: $ 65,000
Rent: $ 31,460
Total Income: $196,460Assets:
PPoR: $ 560,000
IP#1 + 2: $ 615,000
Total Assets: $1,175,000
Liabilities:
Loans: $740,000
Total Liabilities: $740,000Your LVR (Loan to Value Ratio) is a reasonably healthy 62%. (Banks get nervous when you hit 80%). You could actually borrow more to invest again, but you would want to have a very good cashflow (rent, tax deductions and depreciation) to not put too much pressure on yourselves, and without increasing your LVR too much more. keep it within safe levels is my view.
Assume repayments on the Loans at 7.72% – $4,760.66 p/m interest only.
Allow for 20% of the rent to be eaten by holding costs (other than loans). nett rent is $2097.33 p/mWithout adding tax deductions and depreciation (you do have Depreciation Schedules for the I.P's?), your shortfall on the total loan repayments is -$2663.32 p/m.
Based on the "traditional" formula of $35% of gross income for payments towards loans (as set by Banks ; actually, I think it might even have been 30%), you are well within that percentage. 35% would put you at $4,125 p/m repayments.
I don't know what other debts you have such as credit cards and cars etc.
Bottom line though is you want to clear any personal debt and your home loan as fast as you can as this debt is non-tax deductible.
Investment debt is tax deductible, so you would just maintain the minimum repayments on this part of the debt.
You both earn good incomes, and have no kids, so I would go hard for a couple more years on that plan, then you will be in a very good position.This came up on the Somersoft forum last week.
Basically, no-one has ever heard of him, and he claims to be worth millions, and that you can also make millions from his deals.
His name does not appear on any rich lists.
If you are making millions, then you can be sure he is as well; so why does he need you?Keep the antenna well up.
Dazzling wrote:Yep, plenty of examples of +CF props in Perth.We've bought 5 of them in the past 2-1/2 years, but they wouldn't suit you.
They needed lotsa work, were pretty smelly and snarly, and the existing tenants were not nice at all.
Furtherest out was 9km from the CBD. Mostly big land components, mostly big upfront prices, and mostly non-residential, which scares the bejesus out of most people. All the stuff that the textbooks advise you to avoid.
Where exactly ?? Nah, my hunting grounds are fruitful, and I don't wanna share the spoils. That'd be too easy on your part. Where are you searching currently ??
Come on Dazz;
give us few of those secrets! Obviously not location, but processes would be nice.
On the topic of commercial property; what would you recommend as an entry level price point to kick off in that type?
I was told a while ago that you need to start at $500k for it to be really viable?
How say you?jambv wrote:Hi All,
We bought an investment prop in QLD in March this year. The agent we bought it from now manages it. We are from Sydney. They sent us a prop management contract but we never got around to signing it & they never brought it up with us. All of a sudden, they are withholding funds until we sign it. I only discovered this after I called to find out why I hadn't received a deposit as usual. They said they had done an internal audit & discovered they didn't have a signed contract from us in early October. I asked why they couldn't call/email/send a letter requesting a signed contract & they changed the subject several times.I now have a biiter taste in my mouth & want to get rid of this prop manager. I can't understand why I am paying 7% for the priviledge of them withholding payment whenever they darn well feel like it & not bothering to call or email me. I have spoken to them a few times about other small issues & asked them to confirm via email our conversation which they have never done. They still owe me over $300 from the initial rent that they paid to the old owner after I had settled the contract.
/rant offWhat are my legal obligations to this prop manager? How should I proceed in getting rid of them? Should I give them 4 weeks notice & organise a debt collector if they try to keep the outstanding amt? (currently $300 + $650 for 2 weeks rent). All comments welcome!
It seems as though the unsigned Contract slipped through the cracks at their end.
But, you should have signed it and sent it back. Fault apportioned all round I'd say.
If the service since March has been ok, then it may be advisable to just put this down to a gliche in the system and get the Contract signed and move on. As Terry said; the agent's requirements are strict.
We have PM's that sign on our behalf, while another sends us the leases and asks them to be signed in duplicate and send them back. Weird, but anyway…
PM's are not the greatest communicators in the world I've found; tend to ignore you until they need a repair fixed.
See how they go service wise for the rest of the year and re-evaluate if the trend continues.Sorry people; I've done it again.
I said Terry when I meant Richard.
But they sound the same don't they? If you close one ear, whisper and mumble.
bardon wrote:Spudsta, I work in engineering and construction and have had a 100% pay rise since 2003 as has most of my peers, I just gave a guy a 50% pay rise that had been with us 4 months. I am about to move up to senior executive level and expect another significant pay rise to come with the role. So dont forget that some segments are having large pay rises that are actually higher than house price inflation.When can I start?
