Forum Replies Created
Selling the family home is always an attractive option given that its the only capital gain that can’t be taxed.
Often though if you cash in the house you cant afford to buy a home in that area again and end up living in a lesser area.
But maybe you dont like where you live or the house is not right ? Why stay ?
Your other option is to borrow againts your equity.MJK
Speak to your mortgage people about the,
LVR
Interest rate
If they are prepred to fund it.
The lease.
You will discover a lot about commercial from talking to financiers.
The return looks OK. You just have to assess the risk.MJK
DC,
Absolutly correct about registering if you want to claim back purchase price GST.
If the purchase is subject to GST registering is the only way to go.
It is possible to buy property that is not subject to GST though albeit rare.MJK
Darren,
Suburban prices in Melbourne havn’t dropped, only slowed from say 30%pa growth to 5%pa growth. So Brisbane is still well behind, but like I said if you buy now in Brisbane youre far from getting in at the bottom.Since you already have a property I personally would hold it for a year and then sell it if you think its a good idea.
I had a property in Byron bay I bought for 140K, sold it for 210k seven years later, but two years on it would now be worth 350k +. I sold too soon. When a market is moving no amount of tax deduction or intersest saved will be greater than your capital growth.
Some say one of the main reasons investors fail is selling too soon.
This is my opinion. I’m not a financial adviser. you need to be happy with your own descisions.MJK
You may think Brisbane is moving fast but you should have been in Melbourne in the last five years. We all thought the boom had peaked 4 years ago. Brisbane is just catching up.
MJK
I have used a buyers agent sucessfully to buy interstate. I think its near impossible to buy interstate without a local realeastate agent you trust or professional buyer doing the leg work. That is if you’ve got a day job.
MJK
Just to reply to Darren about Brisbane future.
Brisbane is undervalued compared to Sydney and Melbourne due to being stagnant for some time.
Lots of people will find Queensland a more affordable place to live so Brisbane will benifit from interstate migration.
Vacancy rates are low in Brisbane.
And my opinion is that Brisbane is probably about mid cycle( upwards ).
Subdivision rules are alot tougher in Qld so we wont see as much over developement as in Melbourne.
Know I havn’t got a crystal ball but the realestate people I know in Brisbane are pretty excited.
Be carefull though because you cant get in at the bottom anymore.MJK
If your “commercial property” income does not excede 52k gross per year you dont need to register for GST. Speak to an accountant.
Commercial investing requires significant research .
Yes the cash flow can be good but I think 11 sec rule may not apply.
Also commercial interest rates are typicaly higher.
In my opinion it is good to have a commecial property in the portfollio.MJK
I agree with the Jason. Selling in queensland is a big mistake. Especially outer Brisbane as it is just starting to take off. Refinancing is a good idea so that your borrowings are on the investment not the home but I’m not entirely sure it is leagal from a tax point of veiw to increase the loan on a preowned propety. Maybe a tax guru could answer this one.
MJK
Maximus
Once youve set up your passive income stay at work another year or two and buy several more properties then leave work. Once youve got the loan its yours. What do you think ?
Also its areally good point about having a good relationship with your banker/broker. Buy the time someone has achieved passive income through property they should have a good relationship with at least one banker/broker.MJK
Chrissy,
I don’t kmow of any web site but BC fees are just another cost like rates, agent & insurance fees.
They are tax deductable. They are levied annually in installments.MJK
Crashy,
Whilst I agree its very much a case off “when” its just as much a case of “where” when it comes to property. Its also just as much a case of planning, diversification & foresight.
95% action 5% luck.MJK
By diversification you can have both cash flow and capital growth in the one portfolio, but I’m preaching to the converted I’m sure.
My belief is it is a flawed stragegy to focus on cash flow alone.And visa versa. It may be worth stating that buying quality property is the best way to get capital growth rather than hoping regional areas are going to achieve significant capital growth it again or over the long term.I could be wrong?MJK
Having a clear plan is really important.
You do need to set a figure that your chasing. The point is it can be achieved in many ways.
Say for example you want a passive income of say 60K. You may achiieve it by;Paying off a 600K comercial property returning 10%
How do you pay it off? With income generated and capital gains from other properties.Pay of 850k worth of residential property earning 7% in the same way.
Owning the motgages on 3,000,000 worth of positive cash flow property that retuns a net profit of 2%.
Any combination of the above.
Note I have been very simplistic…
Banks require more than just equity. They are also looking for income when they approve loans. So you can only borrow, if you leave your job, if you can show another income.
Again simplistic.
I’m very interested in others ideas re strategies.MJK
By the way, Beancounter, you will find 6.5% very difficult to get as an interest rate for commercial. More typically you would expect 7.5%
MJK
Some good points there. For capital growth investors, always having some equity that can be accessed by selling a property is a good fall back. In other words only having borrowings equal say 70% of equity. People that borrow against all their equity perhaps run a greater risk as the sell option is not one they can utilise.
Also having some undrawn funds to cover an extended vacancy is a good idea.
We will all have to keep an eye on rates and lock in if they move too high, but they say more often than not it is the borrower that loses, not the bank, when people fix rates.MJK
Another huge factor leading to rental demand is the devorcie market. They say 50% of marriages go bust and all of a sudden two homes are required not one.
MJK
Veiw is everything in the apartment market.
MJK
I’d like to sow some more seeds but can’t find a feild I’m happy with at the moment.
MJK
Hopefully those who have had some gains are not over ripening.
MJK
