Forum Replies Created
Hi Wayne and Therese,
You need a good financial advisor, and as I run a full service finance company, I can speak with some personal experience and honest and obvious bias.
We see hundreds of clients a year, and I would say, as a guide, I wouldn’t bother with an SMSF unless you have $200k in your super account. The value of the property you can buy is really inhibited with a balance that is less than $200k, because unless you setup the SMSF yourself and you have the patience and experience to do this, it simply won’t be worth it financially to pay the pros to do it. You need to do tax returns, and ensure your SMSF is compliant every year, it’s a pain in the backside. I had a client recently that decided they would setup their own SMSF, they didnt want to pay for the services. 9 months later I found out that they missed their ASIC payment, their SMSF is no longer compliant and the first penalty fees start at $87, then the reminder is approx. $297. I was devastated to hear this, because I appreciate that this is something you can and many do, which is DIY SMFS – but you have to be all over the process and if you mess it up, it can be costly. This is why only 27% of Australians have an SMSF – but you get to have greater control over your future worth…and I love property, so that’s why I did it.
Joint household income is also a factor and if you can, salary sacrifice additional contributions, so you can try and make the $27,500 max voluntary super contributions each year. And if you haven’t been making the max contributions over the last 5 years, the ATO allows you to top up your super to get the balance up with a retrospective contribution(s). If you get an annual bonus, that is a good way to drop some of that into Super.
This is not tax advice, but any good accountant can talk you through these options, or check the ATO website, it’s all on there. It’s just a tip.
Happy to point you in the right direction, or connect you with one of my Snr Financial Planners, no obligation free discussion can’t hurt.
Cheers, [email protected]
Hi Eliana,
There are a lot of variables to consider here, and I agree with Benny that a Real Estate Agent has a vested interest in selling you a property in an area that they are listing. So that advice will be heavily biased.
It sounds like you are looking to buy an existing property, as opposed to buying off the plan. Both options present different pros and cons, which I won’t go into great depth, except to say…for your first IP it takes courage, but like any investment there is a calculated risk and I am 100% convinced you can still get some great properties with solid capital growth in QLD, SA and WA primarily for a low buy-in. (I say low, as in based on your startup budget, I would go for a townhouse or freestanding home, rather than apartment or flat). More bedrooms are better, is also a rule I go by. On my last property, I converted a study into an extra room by building in a $2500 wardrobe and that added an extra $50k-$100k to the sale price. My wife and I like doing home renovations, so if this is not for you, you just need to budget for renovations if you are looking for better rental returns and more immediate capital growth.
The right strategy for you is based on personal factors, location, appetite for risk, financial situation and lifestyle needs, etc.
Disclaimer: I know personally the guys at One Haven. So, I recently purchased off the plan through them, a property in South Australia for $665k. (3 bedroom free-standing home with double garage and a small back-yard (1 of 4 properties in the development). Couldn’t be happier with the process or the expertise and experience. Do your research if looking to get a buyers advocate to find you a property, there are some charlatans out there…but the benefit of OTP (Off the Plan) for me was that there was no upfront fees, as the Developer pays the Buyers Advocate for selling their stock. Which is how they make their money. Plus, you get the 7 year builders warranty on the new build (assuming the builder and developer are reputable).
Check the builder, credibility and liquidity, again, an easy Google search will tell you if there are court cases pending for a dodgy builder, its public record. Builders have been going bust in droves over the last 24 months, so their cash flow is the first thing to check.
In addition, make sure you get a good broker to get you the max borrowing capacity and even go so far as getting a pre-approval, so you know you can shop with a level of confidence.
If you are in Perth, I am sure you will be able to get some good free market data on suburbs in your immediate area via Google search, or go through an expert as they have all the RP Data, Corelogic Data and experience to look for other macro-economic and micro-economic factors in the areas you may not have considered. Again, education is key and you are starting in the right place. The first question is budget and if you don’t care which state or suburb you buy in, then leave it to the experts. Happy to make a connection for you if you need a broker or property advice to weigh up your options.
All the best and good on you for taking the first step and doing your research. There are some great tips on these forums.
Cheers, [email protected]
Couldn’t agree more “Cash is still King.” Think of the trades, extra work that is done using cash, the saving that are made and the benefits you mentioned for making small donations to those in need. Not to mention all the small surcharges that the providers and banks are making on ridiculous small transactions. Buy a coffee, pay 1.4% surcharge, it all adds up, and some places give you no option, they stopped taking cash due to COVID and now have not reintroduced it. I am confident that some of these charges or “surcharges” are also open to the retailer to add on at their discretion and then claim it is the provider that charges them. When in fact it is not the case, it’s just a disguised mark-up.
Hi Wayne,
Sound advice there from Benny, it is good to source separate lenders, when mixing up your loans across PPOR and IP purchases. Diversify and minimise your risk where you can. I’m currently going through an equity draw down on an IP, and have been to a number of lenders and different loan structures to get it right. The figures I am getting based on differenet lenders and valuations varies wildly, (well, for my property it has been the case) so it’s good to shop around and make your brokers do the heavy lifting. Dont let them be lazy and push you into an easy deal, ask a lot of questions.
As mentioned ineterest only, and variable may be the best type of loan for what you need, but again, have a chat to a senior broker. Happy to point you in the right direction, for a no obligation discussion. Disclaimer is, I am the General Manager of a finance company and we have 4 senior brokers, that I could recommend. We have access to over 50+ lenders so I am sure we can find a lender which will suit your personal financial situation.
Either way, some great tips on this forum and happy for you to reach out to me directly if you like. All the best, and good on you for taking action!
Cheers, [email protected]
