Forum Replies Created
You can break the lease.
Worst case is you are responsible to pay the rent until a new tenant is found.
The rental manager must make all reasonable effort to advertise for and find a new tenant.
I am sure this would be preferable than a 10%+ rate.
By the time it settles there is another moneth or so gone from your lease [exhappy]
Simon Macks
Residential and Commercial Finance Broker
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0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
No CGT on your PPOR. Unless it was first rented. Or rented for over 6 years at any one stretch. Or if part of it was used to generate income ie renting a granny flat or running a home office that was declared as a income tax deduction.
No minimum time of occupancy either.
You need to do some research with the ATO to confirm this and learn about the tax act in relation to CG.
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Sounds like you haven’t formulated a clear goal and strategy to achieve that goal. You are getting bogged down in details and not considering the big picture.
One option might be to get an approval for the maximum borrowing but just draw enough to finance the next buy. Then when you have determined a following purchase you can draw the remainder.
Depends on your serviceability and whether your income will support that maximum loan.
Determine where you are headed then consult a professional to help you get there.
All the best
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by arrowsmith:DLPP,
A) I would lose the 10k first home owners grant
Tragically common misconception.
Suggest you reread the legislation.
There is a link to your State’s requirments on my website.
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by arrowsmith:Mortgage Hunter,
I am not interested in high risk style investments.
As far as other investment options go I have been looking at some 5 star S&P managed funds which are a blend of property, cash and int securites. Even interest rate securites are attractive right now.
Some of these funds are getting returns approaching 20% (annual) steady over 5 years. Sure you pay tax on the gain but there’s no cost barrier like LMI or stamp duty and you can get on board with as little as 10k.
Ultimately the IDEA of owning a home is attractive. I would conside a minimal loss as acceptable tradeoff for a home that is enjoyable. As far as I can tell right now it doesn’t look like it would be minimal.
The way rates are going some cash investments are looking more positive than property.
I really am a beginnner in all this but have worked in financial services for several years and have an idea about where money can be made.
Do you have any pearls of wisdom?
I also have a reasonable portfoliuo in Shares and Managed Funds. One of my shares, Rinker, just moved from $14.70 to $18.50 today. Pretty happy with that one although it had a previous high of $21+. But I got them for next to nothing so is all a bonus.
I have an article I wrote a while back on comparing managed funds with property. I will email it to you if you like.
I also don’t advocate high risk investing.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
You don’t make it sound attractive at all.
What are forms of investment are you considering?
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
I tried t oanswer your question but I have no idea what it is?
What are you entering info into?
At a guess I imagine that the rent is important…..
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by foundation:Originally posted by TriggerL:Is it too late for us or should we perhaps wait a little longer to see what the market is doing in the new year.
It’s never too late. All markets are ‘mean-reverting’. The Adelaide housing market is currently a long way above its long-term mean valuation by any measure – income/wages / rental yield etc. I believe you have little to lose by waiting, saving, and timing the market. It’s not as hard as some say…
That said, if you do stumble across a quality property for a knock-down price, buying the right house for the right price becomes more important than timing.
F. [cowboy2]
100% agree. There is no rush to invest today. Time spent saving a 20% + deposit will be rewarded with cheaper purchase costs. Unless, of course, a good deal chances by.
Foundation, What are your views on Timing the Market vs Time in the Market?
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by ptn:Thanks guys,
I don’t want to approach an accountant or a lawyer at it will cost me $$$ just to say hello.
Thanks TerryW, you’ve given me a bit more confident in buying the family trust.
Regards
ptnI bet you that a mistake will cost you more.
I think you are focussing on small amounts of money and losing sight of the big picture. If you proceed without getting an accountant to sign off on what you do then you are setting yourself up for a fall. Just from reading your posts I doubt very much that you are your own best advisor.
My Doctor friends have a saying. “Any Doctor who treats himself has a fool for a patient.” and at least they are qualified to give the treatment.
Lastly can you explain the benefits of using a standard family trust over using a hybrid discretionary trust? If you cannot then please seek professional advice [blush2]
Simon Macks
Residential and Commercial Finance Broker
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0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
FULLDOC is a normal type of loan where you supply payslips, tax returns or other evidence of your income.
LODOC is a less stringent loan where you certify the amount you earn in a declaration. Some also need an accountants letter to support it. Originally designed for self employed people who’s tax admin isn’t complete. Usually restricted to an 80% LVR.
NODOC loan is a less stringent loan again. Also known as an Asset Lend. You need to certify that you can make the payments and the money is lent against a property. Usually limited to a 70% LVR.
Hope this is useful,
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Paul,
I am a firm believer that often the best deals are in a local market that you know very well.
Qld has been experiencing strong growth, many commentators feel this has ended and that the lag effect will see Qld picking up again after Melb and Sydney do. That is the macro picture.
The micro picture is where most investors do best. By getting very familiar with one area and watching every property hit the market you will soon be able to spot what might be bought well. Many investors believe that buying well is where the most money is made.
Choosing an area based on lower purchase costs is perhaps missing the forest for the trees. Saving 1% will be negligable later down the track.
I’d reconsider your own city again if it were me. Buying somewhere when you are a stranger gives you a decided disadvantage.
Just my opinion. As always make your own decisions [blush2]
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by JohnSmith:Good advice there from Simon
just add the preferred way is to say the money within a mortgage, as it is more tax effective.
Regards
JohnInspired Finance
(02) 9944 7776John,
My preferred way is to save it within an offset account. Should the funds be used for personal expenditure – and lets face it, sometimes good intentions fail when something needs to be paid for, or even used in an emergency for travel, medical expenses or the like.
Should funds be drawn from a mortgage for personal expenses then this % of the mortgage will never be deductible.
this is easily avoided by using an offset account and the tax effect is identical.
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by foundation:“Lastly, I wasn’t prescribing a course of action for the author of the thread. Merely having him think a little bigger than the mentality of paying out a debt completely then buying another property. That action will limit him to 2-4 IPs in his lifetime. Perhaps less.”
One more question I would like you to answer directly. Do you believe that average annual capital gains are going to be higher or lower than headline mortgage interest rates over the coming 10 years? Over the coming 20 years? Over the coming 30 years?
Do you tell your clients this?
F. [cowboy2]
I don’t advise my clients of anything nore do I forecast anything.
My personal experience is that this method has worked for myself and others and I was advising of an alternative to the authors plan.
You seem more capable and informed than I so I will bow out of this discussion now.
Thank you for your ideas.
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by foundation:In 20 years the debt will be negligible.A pretty big assumption there. On what do you base this claim?
18 years ago I bought a property for $52K.I see you’ve answered my question. You’re expecting the past to mirror the future…
Fair enough, so we can expect interest rates over the coming 30 years to mirror interest rates over the past 30 years then? An average of around 10.4%?Imagine if I still owed that much against a property worth $300K+ .If you still owed that much, you would have paid out ~$100,000 in interest on the loan. Subtract 30% from the $300,000 because we are still floating near the top of a 30% overvaluation bubble, leaves $200,000 worth of house with $152k in debt and interest, maybe $8 grand in rates & insurance. Now subtract sales costs…
The picture isn’t as rosy as often painted.
$35k in profit for $160k invested over 18 years is exceedingly poor. Term deposits would yield a far higher return.
Remember, over the long term, interest costs EXCEED capital gains.
Of the two options, choose investment. An average IP only needs to appreciate by ~2%pa to pull a profit, a PPOR needs ~5%.
Cheers, F. [cowboy2]
Wow, I had better go tell my wealthy clients that this method doesn’t actually work.
Thanks for taking a crack at shooting me down in flames.
If history has taught me anything it is that I need to beware people who tell me that “This time it is different.”. Experience tells me that it rarely is.
You didn’t factor in any taxation deductions when attempting to destroy my reasoning. You add those in, plus a depreciation allowance (which can be sizeable in a modern property) and your reasoning is flawed.
Lastly, I wasn’t prescribing a course of action for the author of the thread. Merely having him think a little bigger than the mentality of paying out a debt completely then buying another property. That action will limit him to 2-4 IPs in his lifetime. Perhaps less.
Fortunately hegets to choose his own actions. Hopefully he understands the mechanics of what is possible after this. If he is better informed and makes the same choice then good for him, better than making it naively.
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Either can work mate.
Where I think you have made a huge error is your idea to focus on paying it off then buying the next one.
Try this idea – it works for most folks.
Pay nothing down on the property – just meet the interest payments. If it a PPOR then save another deposit in an offset account. If not then save it in an INGDirect account or similar.
Once you have saved another deposit then buy another property.
At this stage you will have extra equity in the first property from capital growth – market willing. Use this with your savings to buy the third one faster.
For the fourth you can harvest more equity from the first three places. Soon the growth will outstrip your saving ability..
So my basic premise is that you pay nothing off…. Sounds crazy right?
In 20 years the debt will be negligible. 18 years ago I bought a property for $52K. Imagine if I still owed that much against a property worth $300K+ .
When you retire you can probably sell one place and pay off all the debt …..
You need to read some more and speak to other investors mate. You have the right intentions but you are yet to truly see how powerful this strategy can be if done right. No offence intended[blush2]
All the best
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
If you want to build wealth then use whatever time you have.
it is also considered by many to be a buyers market right now.
Do you own a home already? That might be your first step.
Many starting investors find that their partner is less enthusiastic. Usually they come around after reading and checking out properties.
You should meet with other investors and hear their stories. Where do you live? I may be able to suggest a group.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by Bo_D_:I never knew you could/ thought of depreciating books etc when you eventually got the investment property mortgage hunter. Do you know this for sure?
When I was an Army Officer I depreciated a large library of Military History books that I needed for my continuing education. This was a few years back now.
Unless something has changed recently it shouldn’t be a problem.
But if you own IPs then I reckon you would be better off claiming the full price in the year of purchase rather than depreciating them over time.
Simon Macks
Residential and Commercial Finance Broker
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0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by Spanky:Ah ha!
Thanks for that, just wasn’t sure whether it was worth holding off, or if it wouldn’t matter if I fixed up the few odds and ends now.As for another idea of mine, what are the tax implications for significant cosmetic improvements? Currently, all the walls are exposed brick and I think a significant amount of value could be added if this was changed with some plasterboard. If I did this betweeen tenants, say, in 12 months time, could it be deductible, or am I better off starting the job ASAP before any price increases in materials?
Thanks again!!! This site rocks!
Age doesn’t negate effort – you can never be too young or too old.
Nope. Sounds like a capital improvement not a repair. Remember a repair brings it back to the condition it was when first purchased/rented.
So this is capital in nature. But all is not lost.
You can use the cost to offset any capital gain you make when selling. In addition you should be able to depreciate this cost each year.
but the question is: “will this work get more rent?” If not then dont do it. If it adds value then do it only when you need to access that value – ie when selling or when getting it valued for a loan.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
I know of no investors who use a company structure – and I know some pretty savvy property investors.
Other than your own name I find the next most common structure to be the HDT.
You need to speak to a specialised accountant. there are two I recommend regularly.
All the best
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by celeste:Hi Zaman
I pretty sure you can list it as education on your return, I have, lodged my return, the accountant did not say no, they all went thru.
Celeste!!!!!
Of course it went through. Everything you claim automatically goes through. It is later that you get into strife if you get audited! Luckily this is not a large amount so you shouldn’t get into trouble.
Why do you pay an accountant and then not take his/her advice?
Your accountant was correct. You have to be making an income from that area to claim education in that area.
The answer is no – but you can keep all your books and when you do get a property you can depreciate your “library”.
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
