Forum Replies Created
- Paullie wrote:You would need
50k for deposit
15k for costs
5-20k for small reno80k cash would be about right.
Must have posted at the same time!
I would allow an additional $3250 for holding costs (based on a 2 month reno, plus one month to have the place rented out at the end of it, and a $200 000 loan at 6.5% interest) and an additional $10 000 cash buffer in case of difficulties with the reno.
Cheers,
LukeI would think that if you wanted to borrow 80% of the value, then you would need:
20% Deposit- $50 000
Stamp Duty- $7000 approx (depending on your state, you would need to check this)
Conveyancing, Pest and Building Inspection etc- $1000 – $2000
Renovation- It depends on what you want to do, and how much work you would do yourself. Could be as low as $5000 but as much as $30 000 – $40 000 or even more.So Adding all that up, you would need somewhere between $63 000 and $100 000 (or maybe more), depending on the amount of renovating you are planning on doing. You would also have to factor in holding costs as you would not be getting any rental income when you are renovating, as well as having a safety buffer as well in case anything goes wrong or you have cost blowouts.
Of course you could always buy the house with a lower deposit (say 10% deposit, it might be hard to get 95% LVR finance as it sounds like it is in a rural area).
Cheers,
LukeI would suggest that if you have no experience with structural renovations or domestic construction, then renovating a fire damaged property maight be a bit ambitious. Even if you get a builder to do the work for you, how do you know that they are doing it right? Or that you are getting a reasonable quote? I don't know the guy but from what I have read and seen on youtube, Nathan Birch makes money because he pays guys an hourly rate and makes sure they are working all the time and not taking the piss by slacking off or by charging a fixed fee (which always have some 'fat' in them!!). And I imagine he also knows what he is doing when it comes to structural renovations so he knows what the builder will need to do before he gets them in to have a look.
A fire damaged house might be ok structurally and just need new plasterboard, or it might need to be demolished and built from scratch. If you don't know what you are looking at or looking for, I can't see how you can make it work.
Just my opinion though.
Cheers,
LukeI have called mine 100A, keeping the front house as 100. Seems to work ok, no confusion from anyone.
Cheers,
LukeCorrect me if I am wrong- I don't think you can technically claim the any expenses incurred in getting a newly purchased property ready for rental. So if you purchased a property, then did maintenance (i.e. painting, fixing gutters etc) prior to having it available for lease, then these expenses would be added to teh cost base and not able to be claimed as a mainenance deduction for that finaincial year??
And I think any costs associated with a renovation (such as fuel, km's travelled in your car) might not be able to be claimed as a maintenance deduction because a renovation might be capital expendidture (if you are putting in kitchens, renovating bathrooms etc). Wouldnt these costs be added to the cost base of the renovation and depreciated over the effective life of the renovation? Having said that, I try to get those costs classified as a maintenance item so I can claim them straight away.
Cheers,
Lukeyabster71 wrote:Vs – it usually means that they are proposing to change the zoning from the existing zoning of R20 to R30. That is, you are then able to potentially build more houses per hectare. Best way to find out is to check out the website for the local shire (think it may be in Shire of Gosnells?) to see their local planning drafts. To fully cover yourself you probably should write to them requesting written confirmation of their plans.Hope this helps.
Sounds like a marketing ploy by a RE agent to me, with no guarantee that the zone change will ever occur. And I would be very surprised if a council would put it in writing that they are considering a zoning change due to legal and liability reasons!!
Cheers,
LukeIs there any reason why you wouldn't purchase it in a discretionary trust?
masky005 wrote:As Jamie M said its up to youWe currently have our mortgage set up (PPOR) with a 100% offset interest only set up. We put all our funds into the offset and then build it up so we can avoid Mortgage insurance eg 20% deposit plus funds to cover purchasing/renovation costs. Then we take it out- usually just write a cheque and then purchase an investment property. We pick cash neutral properties (usually ones we renovate and then rent out at a better price) so we don't reduce our ability to add extra payments/ and do it all again. We are currently on the look out for our next purchase in early 2012. We also will use our PPOR as an investment property in the future, and that is also why we pay interest only.
You need to work out what you are comfortable with. Also do your research you may want to invest in your state first- in areas you know well.
Hi Masky- I think you need to talk to a good mortgage broker like JamieM or Richard Taylor (qld007). There is a much better way of doing what you are doing- instead of redrawing the money from your offset account you can pay it into your PPOR loan, create a split loan and then redraw the money to use as a deposit. The debt will then be tax deductible as it is used for investment purposes. If you do this a few times, you can recycle your PPOR debt and it will all become tax deductible which will save you a bomb.
Cheers,
LukeJacM wrote:I'm going to throw my 10c worth in here.The thing that goes up in value is the land the dwelling sits on. The building itself depreciates over time. So personally I'd be looking to get a solid dwelling on the largest chunk of land that I could comfortably afford.
A friend of mine recently bought her first home… she started mucking about looking at one bedroom units in unitblock complexes and I managed to convince her that financially, she'd be better off getting a 3 bedroom house and renting two of the rooms out to friends. She'd end up with a bigger house on a bigger bit of land, and while the friends live with her, her costs are lower than they would have been if she'd been by herself in a one bedroom unit. She's since bought herself a 3 bedroom house and has, many times, said she is sooooo glad I talked her into getting a house over a small unit.
Hi JAcM- I have to say that I do not agree with you 100%. Although a house sits on more land than a unit block, the land component of a house is not always more than that of a unit. If you are talking about buying a house close to a CBD, then generally that would be the case. However if you buy a newer house in an outer suburb for say $350k, you probably only have 35-40% of the value as a land component which is lower than many inner city apartments.
Cheers,
LukeHans Bond wrote:I would always go with positive gearing. Remember to invest means to gain something, there is no point in investing if you do not make money.I disagree. Say you have three options:
1. Invest in a CF+v property, and put a $100k deposit on a $300k regional property to return $80 per week in +ve cash flow with a healthy capital growth rate of 5% per annum
2. Invest in a -ve geared property, and put a $100k deposit down on a more expensive (say $600k) high growth property in a capital city which is negatively geared by $1k per month (after tax benefits and all expenses) but has delivers 7% capital growth per annum
3. Put your $100k into a high interest savings account delivering 5% per yearWhich delivers the best return? If you were after cash flow only, you would go for the savings account wouldn't you? And if you were after the highest gross return, you would go for the negatively geared property. Even though you have negative cashflow, you still make a profit (admittedly on paper) of $30k with the -ve geared property and a net profit (including growth) of $19k with the +ve geared property.
Cheers,
LukeI totally 100% disagree. My tenants pay me rent, which consists of actual money. Considering I need actual money to live- to pay bills, to buy food, and to pay mortgages, then this is a necessary relationship. And considering people need a roof over their head, then having a landlord is a necessary relationship.
I don't get what you are trying to say with all of these interdependent relationship posts. But maybe I am just not intelligent enough to understand.
You could use some of the equity you have in your investment property to pay the deposit on the new property. You have an LVR of less than 65%- you owe $270k and it is worth $425k. Is there any reason why your broker hasn't suggested this?
Cheers,
LukeIt depends what your tolerance to risk is. You dont have to have any insurance if you dont want to, except if you have borrowed the money and your bank needs it.
One way of doing it is to argue that the reason you are doing it is to be able to hold on to the properties, and not to save tax. It might be prudent to get a private ruling on it to be sure.
Cheers,
LukeYou would have to pass the Part IV assessment of the ATO anti-avoidence rules. If you were paying as much as you can into your PPOR and using redraw to pay for IP expenses then the tax deductability may be diallowed. It sounds like the same principle as capilising investment property interest while paying down a PPOR loan, which is generally not allowed. By the souds of things the reason why you are doing it is to save tax.
Having said that, I am sure there is a way around it and a good acocuntant would be able to find a way.
Cheers,
LukeTim@Tick wrote:ING can be a little anal at times. However on borrowings of $750k, the potential LMI savings for the customer might be too significant to ignore.
Tim could use his Offset account cash for a deposit (negotiate with real estate agent for <10% deposit), provide a Contract of Sale to ING and all would be good.
Tim McGrath
Tick Mortgage Solutions
[email protected] | (03) 9877-7077I am sure that if Jamie looks over the finance he will recommend you don't use cash as a deposit- Using a line of credit or a split loan to pay the deposit will save you loads in tax benefits.
Cheers,
LukeThanks for the insight Jack. Did you read the ANZ property report as well? That is probably a little less biased/one sided.
Cheers,
LukeRobbie P- I can not think of any case where a vendor would accept $150k when a bank values the place at $200k. Even if they are behind in the repayments, it would just be plain dumb.
Hi Ben- you should be able to get another 0.05% off at least.
Hi Ben,
I think is impossible for anyone to tell you from the information you have given. If the fill is only shallow then it may not be a big deal, but if the fill is deep then you might have a problem. It also depends if it is engineered fill or has just been dumped there, and whether you need to do any excavation to build your townhouses. If the fill is contaminated then you have a problem if you need to take it away, and you might have a problem with contaminated fill even if you don't need to take it away. It also depends what the fill is (clay, sand, silt etc).
In summary- there are so many variables!!!
Cheers,
Luke
