I have noticed that Arty has been ominously quiet today……….[]

Tara,

Be carefull of partnership arrangements. It is better to partner with someone you trust(good friend). Legally you are tied to this person and your personal assets are unprotected.

It would be better for you to have some structure in place before entering into any agreements. Best to see your accountant and/or solicitor.

Good luck.
Milkman

Yestoo,

As Betty says it all depends on what the market will bear. The tenant is extremely important to you as they are your income. If you raise the rent and they leave, your exposure is greater.

You would probably try to hold the rent as long as possible, if it becomes unbearable either sell…..or do some minor improvements to the house in order to better justify an increase. Always create a WIN/WIN situation, your tenant wins by enjoying the new improvements and you win by covering your interest rate increase.

You will have to do the numbers but this can be a viable option.

Good Luck.

Milkman

Bear,

Your accountant is better at providing the answers about asset protection but it involves setting up trusts and companies so that there is limited/No liability and exposure. Can be expensive to set-up but this should be weighed up against the risks involved.

There is also clauses in loan contracts referring to “ALL Moneys”. This means that the bank can attack any asset you hold in the same name as the loan contract. A mortgage broker or solicitor can explain this better than me. There have been instances where this clause can be removed in a loan contract, the Bank may have to re-think their exposure but I have heard of some successes.

I am currently looking at “Asset Protection” and tax benefits before I start my purchasing splurge.[]

Regards,

Milkman.

Judith,

You only “Make Money” on a Capital Growth Property when you sell it, you can’t use the money until that happens. Also you have to consider the large Capital Gains tax grab and other fees when you try to sell it. You also have to pick your time to buy and sell.

I was wholly “SOLD” on -ve gearing a month ago, but I realise now that there are other options.

I think that the best solution is a combination of both. It really depends on how much disposable income I have to pay a loan (+ tax relief) in the hope that my profit will come by way of a capital gain.

Each to there own, and as long as people keep posting their own experiences I will continue to learn….

“Gee I wish I had’ve bought that property in Essendon 15 years ago”……..

Regards,

Milkman.

TeacherK6,

I wouldn’t think that if they were ethical that they could charge you that fee…..

I would be trying to stress to them that you will be purchasing additional properties and if they would like to continue this alliance then the fee should be waived.

I don’t think any of us would mind paying a finders fee if you know they did a fair days work for it…….but to just charge it because they can…….to me is unethical.

Congratulations on your purchase and good luck with your furture purchases.[]

Regards,

Milkman

Urgeman,

You are right about the FHOG, it can’t be used for investment properties, can only be used for Owner Occupier.

Your strategy is similar to Steve McKnight where he rented whilst building his own IP portfolio. I suppose that this ensures that he is using his available cash reserves to buy and concentrate on IP’s rather than sinking his money into his own house. Renting is certainly cheaper than paying a mortgage (depends on size of mortgage).

I am in a similar boat as you, I am trying to purchase my first IP, I currently own my own house so I suppose I am in a good position, but it is still scary (especially with 2 youngsters).

Good luck and if you haven’t read Steve’s book I would recommend it for some inspiration.

Milkman

I agree with Arty.

The spotter wouldn’t be setting up the deal, only passing on information that is in the public arena anyway. That is where there involvement stops.

It may be different if you set-up a company name and have an ABN to accept payment for the fees.

It would be good to have someone provide some legal advice as I think a lot of the members of the forum may use this to generate more income.

Milkman.

Arty,

Thanks……..and the cost would probably be tax deductable too….[]

It wouldn’t hurt to have the “Off-the-plan” property inspected prior to settlement as long as there is a clause in the contract that if things were not built as planned you have some recourse. I don’t have any experience with these but if you cant afford the cost then the peace of mind might be worth it.

I would always aim to get a building inspection done before making an offer. You would really have to decide whether the repairs are worth it and whether it makes the property attractive at all! The price of $200(approx) is well worth it.

If the vendor or agent does not agree to an inspection or tries to talk you out of it then they may know something that you are about to find out.

Good luck.