Forum Replies Created
You mentioned that you will be paying cash so you do not see how it can be negatively geared. And you also mentioned you will be studying next year so you will not have an income.
If you do not have any income you can not negatively gear property. How will you fund the $500 per month shortfall with no income??
I am thinking along the same lines as Ajay7- if you do not know what you are doing then you probably should not be investing in this area before you do more research.
Also I agree with JacM and was thinking the same thing whan I first read your post- the block is already subdivided and the house sounds like it is renovated so you can not add further value so this does not sound like a good investment to me.
Cheers,
LukeI would go for laminate floors in the living areas (maybe tiles in kitchen but laminate floors should be ok) and a cheap carpet in bedrooms. Carpet in living areas I think is a bad idea as it will get stained very quickly- laminate floors are easy to clean and reasonalbly cheap and durable.
Cheers,
LukeTickles,
I think you would be better off buying 3 x $400k properties as IP's as opposed to 1 x $1.2m property. Rental yields on cheaper properties are much better than on expensive properties- you would likely get 4.5% yield on a $400k property but only 3 – 3.5% yield on a $1.2m property.
You could then look again at buying a more expensive PPOR once you have built up equity in your IP's. Make sure you set up your IP loans mas interest only (not principal and interest) and put excess money into an offset account- this is CRITICAL to ensure that you can then use this money for a nice inner west house to live in in 5 years time and still maintain tax deductability on this money.
Cheers,
LukeIf your strategy is cashflow +ve properties then this property is not for you. Even if you pick it up for 200k, if will still be negatively geared to the tune of $400 – $500 per month. Also keep in mind that interest rates will likely rise further so it will cost you even more in the coming months.
I think if you have a strategy, then stck to it.
Cheers,
LukeI believe that if the property you owned previously was an IP you may still be able to claim the FHOG. If it was your PPOR then you will not be able to- check with your solicitor.
Cheers,
Luke.Try RP Data- they have reports you can buy that details all of the sales in a suburb from the last 6 or 12 months.
Also try local real estate agents- if you a genuine buyer they may have a database of recent sales they can provide to you.
Hi,
Before jumping in and buying a property, make sure you think about why you want to invest in property. Is it for capital gains? Is it for cash flow so you do not have to work in the future if you do not want to?
Buying into property just to save tax is not a very good reason to invest in my opinion.
Cheers,
LukeHi Mark,
Remember that commercial properties have higher vacancies than residential properties. If your portfolio consists of a single commercial property, then your are exposed if that property is vacant for a considerable amount of time. Your will lose your entire rental income there will still be a $700k loan to pay. I think it would be better to invest in a couple of smaller properties than 1 big one if you are starting out.
Maybe you could consider getting a 1-2 bedroom apartment for say 400k to start with and taking advantage of the First Home Buyers stamp duty exemption. I am not sure if this will be available on a mixed commercial/residential property and so you may be up for a lot of stamp duty costs with the mixed use option. Also see if your parents could put some money towards the apartment as a short term loan to save LMI.
You could then over a few years aquire a few smaller commercial properties to get up to the $1m portfolio you are after. Remember that 3 x $330k properties are better than 1 x $1m property.
Luke.
Hi All!
I have also been lurking a while without a post so I feel today is a good a day as any to break the ice!!
I think that you should hold all properties. Selling them as you have mentioned will mean that your will be up for both GCT and selling costs. Because the purpose of selling the properties is to pay down non-deductable debt (and be in a better position tax-wise), I do not see the logic of selling and therefore paying tax to achieve this. You will be paying tax either way, so I think you may as well keep them.
Just wondering if all of your properties (including your PPOR) are on a Interest Only loan. This will reduce your mortgage payments and hopefully help with servicability. Even consider having your PPOR as an IO loan and put excess funds into an offset account.
Also, I would definitely not refinance or draw any money from the equity of an IP or PPOR to fund a "want" as this will increase your non-deductable debt- contradicting the reason that you are considering selling them in the first place.
Anyway, that is just my opinion, good luck in what ever you decide!!
Luke.
