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If you are going to find a woman then make sure she is financially literate and not a shopper/consumer .
The other version can be very expensive.
Or, get yourself organised.
I don't understand Wylie;
what is it bait for?
Or is it just a thinly veiled ad for business?
I tried to look up the website and it wouldn't load.You can save on stamp duty by buying "off the plan", but I think there is a point during construction where this ends; you may have passed that point if construction has started. Check with the local council on that.
A word of caution with developers;
The houses are quite often overpriced to begin with so check existing house prices in the immediate area first.
The contracts are worded to suit the developer and there are usually a few clauses where you can be kicked out of the contract if it suits them to hold the property and sell at a higher price if the market booms during construction, and you will be held to the contract if the market slumps during construction and the values drop. They win you lose.
The fixtures and fittings section of the contract can be quite vague; they can substitute the ones mentioned for something else; quite often inferior and cheaper.If it is in a new subdivision many of the properties may be purchased by investors, so you may be surrounded with tenants which is not good if you are looking to find a tenant yourself, or if you are looking to owner/occupy.
You can make money in Aus any time you want.
There are always areas that are about to boom or are booming. You just have to find the areas, and study them to find the bargains, or create one.
You can still claim the trailer on your tax return. Your accountant will probably depreciate it for you.
With the house, the depreciation on the building runs out after 40 years, but you can still depreciate the renos. Try another surveyor in the area, or if you can, ask the previous owner if they have any receipts from the renos. These will be good enough for the accountant.
You can also try googling QS firms in your general area and see if any are willing to travel to your town.
Pretty much all you can do is sell the I.P, put the funds into the new PPoR, then use the equity in the PPoR to buy another I.P.
Here's a question I don't know the answer for;
What is a "STICKY"?If you don't have a copy of your management contract/agreement, then ask the agent to provide with you with one.
On it should be the the time frame for ending the contract, and you will need to do it in writing when you do it. The standard arrangement is for 3 months.
If you never saw one, and didn't sign one then there is no contract and you can send another manager in there today to collect the keys.
With the next manager make it 2 weeks for termination of contract. They won't like it but you're the boss.
I agree with Phil,
if the difference between the repayments is so small, and you can easily handle the repayments, then go for the P&I loan; preferably with a good redraw or offset facility attached.
You can still claim the interest on your tax return, but you are paying down the debt and accelerating your equity for future investing.
The main factor with which loan would be which loan gives you more flexibility for repayments, redraws, offset accounts etc. The right type of loan for further investing is important.
Many I.O loans allow you to still repay some principal at will, and offer great flexibility as well, but maybe at a slightly higher interest rate. This is not necessarily a bad thing as you are planning to reduce the debt anyway, which will decrease interest payments.
If you can pay more deposit and avoid LMI I would do this – it is a waste of money and only protects the Bank – not you.
EQUITY is the portion of the property that you actually own – the difference between what it is worth and what you owe. This will increase when the property goes up in value and/or you pay down some of the debt.
Another term you will come across is the LVR or Loan To Value Ratio. This is the actual percentage of equity you have in a property or properties. It is worked out using this formula:-
Outstanding Loan balance / Property portfolio Value x 100 = LVR %
The lower it is, the healthier (or safer) your financial position is.
Yep;
when tenants sign the lease they should do so knowing all the existing conditions of the house – if it has or has not things like aircon, phone, gas or elec cooking etc.
They cannot then turn around and ask for something that they want , which was not originally supplied, and expect it to be provided at no cost.
The landlord can offer to provide it at an extra cost in the rent of course, or even provide it for free if they are very generous, but they are not obliged to.
Sounds as though your F.A is like so many others (unfortunately) – well versed in shares as a wealth creation vehicle, but not in property.
Many of them make money out of you from their trailing commissions on the shares or Managed Funds, but not out of property advice, so, guess what? no property advice.
That's a good one; "too much property for your age".
I wonder whether they say that to "The Donald"?
On the contrary;
I believe that a good business practice for any business/investment is to pay down debt where possible and increase equity, and to re-invest the profits where possible as well.
Sounds like you've got a couple of nice concessions there as well CJ; good work!
I had a discussion with a friend of mine a couple of years ago about investing in property. He is financially secure, earns good money, low debt etc. This was when the rent returns were a little better in Melb than they are now.
He was scared to pull the trigger. After a few minutes of explaining all the benefits of property he still wasn't convinced. I showed him how relatively easy it was to buy a property that cost virtually nothing per week to own.
Then I used this scenario;
If you save $50 p/ w in a savings account you wouldn't miss it would you? My friend said no; he wouldn't.
I then said that if he was to buy any decent, existing house in any decent suburb in Melb (obviously he would do a bit of research and pick a good one), with proper insurance, rental demand, prospects for cap growth, etc; the worst thing that would happen to him would be it would cost him the same $50 p/w.
This is how you need to look at this. You are, at worst, starting a savings plan, and if done well you could even buy a property that costs you nothing and will make you more wealthy.
Taking the required steps to protect yourself is mandatory, and one that's done there is basically nothing left that can go wrong.
People say "but what about the tenants from hell, or the toilet explodes" etc. These are risks and can be easily managed.
It's time to act.
First thing; establish your finances and what you can borrow so you can set your purchase price range.
Then, pick an area you want to invest in, then spend about 2 months researching the values so you know which deal is a good one or even just an average one.
Select say, 6 properties as a short list, then revisit them to narrow it down to maybe 3, then put in offers on all 3, based on your research and number crunching.
We can help you with the details along the way as you go on this forum.
The good thing about the Residex reports is they can alert you to possible growth areas that are coming up, and they show you what areas have been doing lately. They are good guidelines to use.
You still need to go out do some research to establish how good the areas are or will be.
It could be worth it if it saves you time by narrowing down your search areas.
It is true that at the moment the affordability for houses/units is very low. But it is not going to get better anytime soon, so you need to disregard the ratios; especially if you are a long-term investor.
The market works in cycles, and low affordability means lots of upward pressure on rents, and fewer buyers. This sounds to me like a good time to buy; especially if there are more interest rate rises predicted.
The best strategy is to find the best deal you can, when you can, hold onto it, and as soon as you can afford it; go again.
Timing the market is for flippers or traders, and the state of the market is critical. These people make cashflow out of doing lots of quick turn over deals, but quite often don't obtain any long-term wealth as they don't retain any of the properties.
Long term wealth is achieved by continually acquiring income producing investments that also continue to increase in value.
I agree with Wylie; you need to buy the best property you can afford at the time you want and/or able to buy. If it happens to be a 1 bed unit for $100k, then so be it.
It's amazing how rich you can become by just continually buying cheaper properties that you can just afford (or just can't) and keeping them.
Incidentally, to answer your question; there was a large leap recently in property prices, which is a large contributing factor to the low affordability right now.
To me, these figures don't work as I don't buy neg geared property. It has to be pos cashflowed and with good prospects for cap growth.
Can you hold a neg geared property easily?
Are there high prospects for cap growth to offset the neg gearing?
Is there a high rent demand in the area to minimise the vacancies; especially since you are taking such a big hit on the wallet in the first place?
Is the building on the property constructed after 1987?The only reason you should buy a neg geared property is to hold it for good cap growth, but this is not guaranteed. An investment of this sort is a gamble. You may own a property that never becomes pos cashflowed.
The 11 second rule that Robster refers to is out of date now and probably impossible to find. There are still houses for $80k to buy, but they may be in rural areas with low cap growth and high maintenance bills. Bit of a trade-off I'm afraid.
If you are going to buy a neg geared property, at least buy one that you can add value to, and/or is built after 1987 so you can maximise the "on-paper" deductions and improve your cashflow.
You can buy a neg geared property that is actually pos cashflowed AFTER TAX – it costs you no money and you pay no tax on the profit.
Nothing new under the sun I'm afraid. Good heads up Courage.
Don't let this nightmare put you off. Unfortunately it's pretty normal.
Use it as a learning experience. You can pick up good bargains at auctions so get back on the horse.
A lot of people are intimidated by auctions and don't realise you can make changers to the terms etc.
To relieve you of any cap gains tax liability you should move in first and live there for awhile (I think 6 months), then you can move out and make it an I.P. You can rent it for up to 6 years without becoming liable for CGT.
If you rent it out straight away I don't think you can enjoy the CGT exempt status – talk to your accountant for a clarification.As for over-capitalising, I would caution you against doing this with any property, as life can get in the way and you may find you might need to access some funds, or sell, in the event of an emergency. The other problem is you may have trouble with finance for other investing if you decide to use some equity for investing later on.
One more thing; even though the tenants are known and trusted, get Landlord's Insurance and make sure there is an official Tenancy Lease in place.
I agree with Blogs on over reaching financially; especially where families are involved. Finding a CFP property is harder at the moment as well.
There are several "non-traditional" loan products around now that lenders and M.B's will get you into without too much of a problem.
Many are designed for people with no or little financials, or people who are borderline for qualifying for traditional loans, or bigger amounts. Add to this Mortgage Insurance and the new loan product can put the recipient in a precarious financial position and should be avoided in my opinion.
Interest on $250k at 8% per year (allowing for fees and another rate rise or two) is approx $384 per week. Most properties of $250k around the traps are going to rent for $250-300 per week if you're lucky. At $300 p/w that's a 6.2% return. I know there are some that are higher, but not all that many.
Allowing for 20% of the rent to be eaten up by holding costs etc per year, which also includes 1 month's vacancy (this is a reasonable estimate for safety), even at $300 p/w the nett rent is around $240 p/w.
Good "on-paper" deductions will close the gap, but not completely I don't think. As you said; you cannot afford a shortfall.
To be really safe, you would want a property that is returning around 9-10% at least, with good on-paper deductions as well to consider a purchase. Highly unlikely, unless you buy in a 2-dog town with no cap growth anytime soon.
If you are really desperate to get into property investing soon, and you want to minimise the risk, consider using your PPoR as your first I.P, and move out to a rental place for yourself. Many people won't do this because of the emotional attachment to their own house, but this strategy can accelerate your financial position and get you into another I.P much sooner and with safety.
It would depend how much rent return your PPoR would provide and whether you can get past the emotional attachment.
