Forum Replies Created
Hi,
I have to agree with Kay’s comments – I’m sure a lot of the investors on this site have grabbed opportunities like this when they’ve found them.
As for sales data – http://www.homepriceguide.com.au gives you this info for a fee and it’s generally 2-3 months slow to be posted, or just use local knowledge starting with neighbours and RE Agents for the latest.
Happy investing!
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Mel
[email protected]Hi,
If you got FHOG with the purchase of your PPOR because you intended it to be your PPOR and it was for a while, then you moved out and rented yourself and converted the PPOR into an IP it is fine as far as I know. You should establish the first PPOR for at least a few months before jumping out though.
Sounds like a good plan given the rent you’ll be receiving vs what you’ll be paying – good luck!
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Mel
[email protected]Very interesting – and very blunt on his thoughts about negative gearing.
I still think Brisbane will continue rising around the 10% pa mark for the next few years, mind you I also agree with his comments about median house price being a false indicator of actual price movements given that FHO’s have dropped from almost 25% of the market 2 years ago to around 13% of the market now, predominantly bottom quartile. Then again, Steve’s bought how many properties ….?!
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Mel
[email protected]Yep, that’s the theory Allan.
Another tip for this process. If you move into the new PPOR when you first buy it and do ANY improvements at all eg paint job, change flooring etc then get it revalued just prior to renting it out as any capital gain you get from the improvements would be CGT free should you chose to sell down the track.
Now I’m not an accountant but I think that if you wish to do renovations after tenants have moved in then you need to wait at least 12 months after it’s been rented out to claim any major work (ie over about $500) as maintenance or replacement. Definitely consult a quantity surveyor and an accountant to get the full story of allowable deductions, tax saving methods etc.
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Mel
[email protected]I don’t know about southern states but in the standard Qld contract the purchaser has about 2 weeks to go unconditional on the loan and up to this date may pull out subject to being unable to get finance or not liking the building and pest inspection reports. If the purchaser pulls out before the contract goes unconditional they get 100% of their deposit back. If the purchase falls over post unconditional but prior to settlement then the parties need to negotiate but yes often the purchaser loses their deposit.
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Mel
[email protected]Hi,
We are able to organise conveyancing and solicitor doc sign-off for Brisbane clients for about $800 provided there’s nothing unusual involved, normal costs are around $950.
Shop around and ask your broker & R/E Agents of anyone they know offering discounts.
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Mel
[email protected]Hi Ghoti – where are you based? I know some good ones in SE Qld.
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Mel
[email protected]Rod I wouldn’t on such a comprehensive and probably professional makeover. Sad truth is there is a lot of ‘cash’ work done so personally wouldn’t put too much store in the receipts off the vendor, even if they were strangely inclined to show them to you – I’d just go straight to a quantity surveyor, they have an excellent and normally up-to-date knowledge of genuine costs. Some vendors have already had depreciation schedules done up as a selling tool too.
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Mel
[email protected]Rugbyfan, sounds like you’ve got the fanclub!
Would also really appreciate a copy if that’s okay – thanks!
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Mel
[email protected]Good start to the research trail – also keep in mind that sellers often only expect 80-90% of their listed price so talk to more agents, put offers out there and I’m sure you’ll jag a few good ones.
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Mel
[email protected]I too have had some long hunts for good regional deals and overall find NAB, CBA and a few mortgage managers we use the best sourcing lends up to 95% in small areas. The PMI and GE postcode lists are never static and often their LVR% lend will depend on the strength of the security and the applicant, rather than the straight postcode.
My tip – get a broker to do the legwork and if they don’t seem keen to, get another broker!
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Mel
[email protected]Peter G,
Any IP you hold for more than 1 year you can get the 50% CGT exemption on – will any of your IP’s fall into this category and hence able to be sold to help you to keep the family home by the time you’ve increased debts for construction projects? [?] One that is currently negatively geared but with good equity would be a good start.
It seems as though you’ve been very active which is great, just make sure you have a good accountant and broker on board looking at all your proposals and current arrangements in detail to keep the strategy prosperous and not overextend.
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Mel
[email protected]Agree with Melbear – what is your true $/wk cash outflow without depreciation? What would you like it to be? Armed with this and a bit of research/assessment to see which ones you can/cannot expect further capital growth or reno opportunities on you’ll know which one(s) to pick to sell off if you want to reduce debts on other IPs to make them cashflow positive.
Whether you need to or not depends on your personal long term goals, desired standard of living, secure income elsewhere etc.
Having a full review of your current loans, especially the older ones, to see whether you can be refinanced to a better arrangement (all LOC’s sounds a bit excessive and prob higher i% than necessary) may save you heaps too.
Happy investing!
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Mel
[email protected]No the bank cannot automatically claim cross-collateralisation but if servicing is tight it’s better to go to a separate bank as Bank B will take the existing debts to Bank A at face value whereas if loan 2 is with Bank A they will probably apply an interest rate safety margin on both loans even though they aren’t cross-collaterised and reduce your servicing capacity.
If servicing isn’t an issue it may be worthwhile staying with Bank A and getting a professional pack discount based on total loans with bank although some have restricted this to a ‘per loan’ basis.
I’d get your current bank to do up the figures to stay, then take them to a broker and see if they can better it elsewhere.
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Mel
[email protected]Talk to your local council, but quite acceptable in a lot of large min. lot size areas, just may not be able to strata title & sell separately – if you are all the better!
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Mel
[email protected]Every bank’s different and it’s not clear cut. Taking the St George example: they will look at bedsits/studios >25sqm for PPOR at 80% LVR or >45sqm for I/P for 80%. Serviced apartments are different and they’ll only lend for >50sqm at 70%LVR or <50sqm at 50% LVR.
At 20sqm I think you’re a bit hamstrung to be honest, that’s a box!
The suburban unit wouldn’t be the one in Newfarm advertised last weekend by any chance? If it’s a studio apartment for PPOR in an area like Newfarm where there is pretty strong demand for 1brm units I think you’ll have more luck with the lenders as per example above.
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Mel
[email protected]If there’s nothing obvious like ‘subject to finance’ which they can never prove/disprove and is an automatic out for you, then I back xyzzy’s suggestion and get a copy of the contract to a lawyer asap.
If you’ve gone unconditional on the contract and cannot get out, but then don’t proceed with the purchase, you stand to lose all of the deposit you have put down. You will need to weigh up whether crashing out and losing those funds is still the best long term option – and the answer on a large neg-geared investment may well be yes.
Good luck!
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Mel
[email protected]Hi Blowie,
If these are the apartments I’ve seen advertised recently then the reason they get such high rent is that they are serviced apartments, ie available for o/night rental through onsite hotel-style management team, and yes as Chris points out, probably below the standard limit of 50 m2 in livable area (not balconies or storage areas). If it is some lenders will require a larger deposit from you or simply not want to lend to you at all.
Living in a serviced apartment building is relatively hassle free, just a bit noisy and as you say fairly high body corp fees.
The pitfalls with renting out serviced apartments can include:
1. Having to replace all fixtures and fittings (incl carpet etc) every five years at your cost
2. Locked into management contract where you may not get an even share of clients because a) your furniture is more out of date, b) your unit is in the noisy/cold/viewless side of the building (which will possibly be the difference between the $90K and $125K apartments) and c) because a dispute happens eg over who picks up a maintenance bill for a trashed room, fees in arrears etc and the management team blackball your room and there’s nothing you can do.If it is either below 50m2 or in a serviced apartment building I would ask the vendor for proof of income on the actual unit you are looking at, not the building average stats. Plus given I’m a broker and hence shamelessly biased, if you think the numbers stack up and want to proceed contact either myself or another local broker to seek out your best loan options. These are considered marginal securities by a lot of lenders and you are going to find it much harder to find the best deal on your own.
On the flip side I’ve met people who make really good money from these units, so don’t be too discouraged, you have a great attitude and I’m sure you’ll do well. I’ve also seen some one brm units around the 5km and $100K mark which aren’t in serviced apartments – again be wary of the size but probably a lot less issues than the serviced apartments.
Happy investing!
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Mel
[email protected]Hi Logues,
I too am not a financial advisor but if it was a family member of mine and they knew very little about investing I’d suggest that they get rid of all short term personal debt and see an accountant and get their cash into a flexible cash management trust like ING earning about 4.75%, then depending on their overall position (ie 100% of super in shares or combo shares/prop, intention to take lump or pension etc), start educating themselves thoroughly on property with a plan to invest with no more than 20-25% of their equity per POSITIVE cash flow deal, preferably at <80%LVR lend if possible. If shares are their preference, no more than 10% of their equity per share seems to be the risk guideline.
I wouldn’t recommend commercial property to a beginner, and don’t even need to go into the perils of investing in negative cash flow property unless they have a really high disposable income and can convert it into positive cash flow in under 5 years ignoring any potential capital gains.
My two cents [
] – hope it goes well for them and remember: fools and their money are soon parted. So keep clear of the risky stuff, play with investment income in that arena not equity.[
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Mel
[email protected]Clayfield, Brisbane in a brick terrace house in Queenslander homestead heartland, couldn’t quite afford one, one day …!!
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Mel
[email protected]
]
] – hope it goes well for them and remember: fools and their money are soon parted. So keep clear of the risky stuff, play with investment income in that arena not equity.
