Forum Replies Created
Hello again Brad1m,
In response to your email, I thought I would post my reply to you, so that if anyone disagreed with me, or had a better idea, they could post it here, and perhaps be of some further assistance to you.
You kindly clarified to me, that you are paying rent where you are living now, and that you are looking at building on one of the blocks, move in and then sell it off (thus, being exempt from CGT).
I mentioned that you need to weigh up the cost of building against the CGT if you were to just sell the block (or blocks) now. If you have done your homework, and as you mentioned to me in your email, have sorted out that it is indeed cheaper to go with the build/move in plan, then I can’t see any reason to go against that decision……sounds feasible.
HOWEVER….I also tend to agree with M.A. in that the blocks are not revenue generating, and because you are paying rent in the meantime, to build could be an even more expensive exercise, just to wait and avoid CGT.
Hope I have gotten the picture right (this time!!!) as I know I have not been clear in your dilema all the way through.
Cheers,
JO
Originally posted by Karl and Rita:Hi guys,
just another quick question, would you buy a property unseen?? If so on what conditions would you??
Hi Karl and Rita,
Me personally, no.
But if I had to, I would make sure I had as many photos sent to me as possible (from literally every and any angle, inside out, upside down), plus a copy of the Section 32 (which I would check thoroughly) and any documentation I could get my hands on from the governing council. And in addition, I would get a building inspection done; to provide me with a copy of its current state of condition.
Cheers,
Jo
Originally posted by RussH:Monopoly,
Hello my friend.
You have used a different price to Greg so the calculation can not be the same.
His price was 100 000
so 10 400 divided by 100 000 = 10.4%
Russ.Hi Russ,
Thanks for picking up on it; but I did it deliberately.
If you have a look at Greg’s explanation of how he got the 10.4%, although he is right in this case (because it happens to be 100,000), it looks like you can do this with ANY figure. He says that if you move the decimal place (3 spaces) on the annual rent amount, you will get the percentage yield; which as we all know, is not the case (unless it is, as in this case, 100,000).
That is why I changed the 100,000 to 150,000 to make him see the difference.That is, 10 400 = 10.4% (if you divide by 100,000)
But if it is 10 400 (divided by say 150,000) = 0.0693 X 100 = 6.93 %Do you see the difference? [blink]
I hope I haven’t confused him, you or anyone else.
Please let me know if you aren’t sure what I mean, or if I am mistaken.Nice hearing from you,
Jo
Hey Greg,
Looks like I’m just gonna have to kill ya!!![cigar] No seriously, that’s cool. I don’t mind sharing the spotlight!!!!!
I didn’t realise that you were going to post the NEW TOPIC and mistakenly thought you wanted me to!!!!! Oops sorry [blush2][blush2]….oh well that’s cool………for those who don’t know the formula, they now have it in stereo!!!![lmao][lmao]
PLUS to save some confusion for those poor souls out there who think they are seeing double, I have edited the heading of my new post (so that it doesn’t get mixed up with yours).
Anyways……glad to see you caught on so quickly; it is very easy. I think you may have overlooked one very important step though [worried][worried]
Referring back to the example you used of where the annual rent was 10,400 (to get the 10.4%) don’t forget you MUST divide this 10,400 by the cost price of property, it looks easy to just say 10.4 (moving 3 decimal places) but that is not correct. The decimal places need to be moved after you have DIVIDED the ANNUAL RENT by the COST PRICE, and THEN you can move the decimal places BY 2. Therefore if the cost price here was say 150,000 your theory of moving the decimal 3 spaces wouldn’t work.
Let me show you:
200 x 52 = 10,400
10,400 divided by 150,000
which equals 0.0693 NOW you move the decimal place 2 spaces (to the right) (which is simply multiplying by 100 to give you the percentage)
which would be 6.93%Hope I haven’t confused you.[blink][blink]
All the best,
Jo
SIS,
If the Body corp fees include building insurance, then I assume that that will inturn, cover your public liability. But as Derek said, it pays to ask your Strata Manager, just to be on the safe side.
Jo
Hello again SIS,
Well, as far as I know, and I am only going by previous insurers I have used, public liability is generally covered under “building” insurance. However, this is generally for a limited amount (eg. $2,000,000) and if you want to cover yourself for any further amount, say topping it up to 4m (or whatever) you will need to pay the difference.
As for loss of rental income; that is a different insurance, and as I have never really looked into it for myself (tsk, tsk); don’t really know.
Cheers,
Jo
Sorry SIS,
Please explain…………..landlord insurance????
I plead ignorant here…..are you referring to public liability?????
Jo
Originally posted by Greg F:I’m impressed with your Rental Yield figures. Thanks to Steve’s book, I know how to work out the CoCR (Cash on Cash Return) but in all my years of property investing, I’ve NEVER learnt how to work out the more “traditional” Rental Yield. Do you mind teaching me:
1. The formula and, if it’s not too much to ask…
2. A couple of worked examples?Hi Greg (it’s nothing impressive)
There are so many ways of doing it (my way; which is probably the longer way) of doing it is as so:
Weekly rent (170 x 52 = 8,840 annual rent) divided by cost base for property (100,000) multiplied by 100 = 8.84%
Using Karl and Rita’s figures:
170 * 52 / 100,000 * 100
8,840 / 100,000 = 0.0884 X 100 = 8.84Another example:
220 p/w X 52 = 11,440 (annual rent) divided by cost price of say 150,000 – hence
11,440 / 150,000 = 0.0762 X 100 = 7.62%Have fun!!!!
Jo
Hi SIS,
I believe so; but I can’t speak for body corp rulings on properties in other states.
My hubby owned a 2 br unit which he recently sold, and that had a body corp, or which building insurance was included into the BC fees.
Jo
Sorry to hear that Hux001,
But unfortunately there is a lot of that going around; that is, properties being “passed in” at auctions.
REAs are advising people to look at private sales in preference to auctions at the moment, because of this very reason. The clearance rate is quite poor in comparison to (as recent as) a few months ago.
Jo
Hi Rob,
Understood; and hopefully we can move on from here.
It would be a real shame to see you not contribute, even with the odd “smart-arsed” comment (myself included) we all stand to learn from and teach each other a great deal. It may get colourful along the way, but if we are all mature about it, any problem should be ironed out fairly quickly.
Glad we’re still friends [inlove]
Jo [biggrin]
Sorry Rusty,
But that sounds RIDICULOUSLY HIGH to me. I really can’t enter into the argument too much otherwise I’ll get shot by some in here….as I have been quoted in saying, if it is more than 5% I walk. I guess it varies from agency to agency, and like everything else is open to negotiation.
Alot of people pay 8% (from what I have read in this forum) and I put it down to different rates which may apply to different states. Not real sure………I am sure the others will clarify.
I do know one thing though, the more properties an agency is given to manage, the greater the discount (percentage) they will consider offering.
Cheers,
JO
Good for you Henry,
And thank goodness you listened to your Dad!!!!
Yes “passion” is important, and not just in investing. When you are passionate about what you are doing, you tend to give it your “all” and that can’t be such a bad thing now can it????
Keep up the good work, [biggrin][biggrin]
JO
Mini,
The bad PMs I referred to were being paid 7% which I did not dispute due to the fact that (a) that was the going rate, and (b) I figured that seeing as my access to the properties was limited to due geographical location, what’s a few extra dollars???
So you see, it was the higher paid PMs that stuck it to me, not the ones paid 5%
And if they don’t do the job, I change PMs regardless of commission. Nevertheless, developing a healthy rapport with the PMs is always worthwhile, which has served me well, and when asking for 5% have rarely been refused.[strum][strum]
Jo
Hi Bronwynd,
Sounds interesting; I can see where there are savings to be made in that you move into them before selling off property (hence saving on CGT; always a good thing to avoid if you can [thumbsupanim]) but isn’t building the home more expensive in the long run, than say buying an established home (maybe doing some reno’s if need be) instead?
I built a couple of times, and man the headaches!!!!! [wacko][upsidedown][tired] Cured me of ever wanting to go down that path for a third time!!!!
Keep up the good work,
Jo
Hi Kay,
Definitely want to buy at least one more this year, but I have to wait till settlement on last one is finalised (otherwise hubby will have a hissie fit poor boy!!!).[ohno2][ohno2]
Cheers,
Jo
Hi Henry,
Still favour property over any other type of investment, only because it has been the most productive for me over the years….that is not to say it is the ONLY way of making money, but it helps.
Currently “window shopping” looking at buying another IP, hopefully in the next few months. However, hubby insists on waiting till the settlement of the last one is finalised (early July). Party pooper!!!! [angry2][angry2]
Cheers,
JO
No officer, I’m not…..
intox….
intoxic….drunk!!!!
[lmao][lmao]
Hi Greg F.,
Thanks for remarking on that 8% agents fees…..damn, I completely glided over that one!!!!That is terrible…..8% !!!!!!![angry2][angry2]
In Victoria they will try and sting you for anything between 6-7%, and I ALWAYS INSIST on 5 (nothing higher or I walk).
Do other people pay 8% too??????[blink][blink]
Interesting point.
Jo
You have to admit though, for someone who worked as an RE, her management portfolio has expanded quite considerably wouldn’t you agree?????????? [lmao]
Jo
