Forum Replies Created

Viewing 18 posts - 1 through 18 (of 18 total)
  • Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    January 4, 2010 - 1:31 am

    Thanks guys. I've taken that location on board and realise it will hold it back but means it is cheaper to begin with.

    Thanks JacM also for the book link it was good read. Wish I had known this stuff over 10 yrs ago! Oh well better late than never I guess! :-)

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    January 3, 2010 - 12:15 pm

    Hi JacM and others and happy new year!!

    Thanks for the link, I've been MIA on holidays and cooling off extended until 13th January due to Christmas break and have had time to think about it.

    The main difference I see with the other thread is that this apartment can be purchased and rented out without any need for using metro the serviced apartment company. I am in

    I also see the positioning of the property will likely benefit in appreciation and demand with the news of the new barangaroo development nearby: http://www.barangaroo.com/opportunities.cfm

    The biggest concern for me is the strata is $1080 per qtr (incl GST) for the apatrtment and $500 per qtr for the car stacker + about $1200 in council and water rates for the year. So about $7564 per year in just building costs that I cannot tax deduct. does this seem excessive in others opinions?

    I am very curious about how I could possibly setup a business and lease the property to my self or even just lease the car spot to myself? I only work as a full time employee? How can I set up a business in my instance? I do want this property to be my PPOR.

    Can anyone shed any light on how I may be able to deduct the costs?

    I've been seriously pondering this property during my holidays and am now swinging back to buying this property again as I feel developments in the near by areas will help boost the value and increase rental returns in future after  i live in it for a couple of years and the likely rent it out.

    Thanks again in advance and hope you have all enjoyed the Chrissy season :-)

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    January 3, 2010 - 12:12 pm

    How woudl everyone feel about the property being in a serviced apartment block but not having the same restrictions on renting or living in the apartment?

    My main concern is higher strata to maintain the building more so than a regular block. In this case would you still support the idea of the 1 bdrm apartment?

    My thread:
    https://www.propertyinvesting.com/forums/property-investing/help-needed/4330114?&page=1#comment-200366

    I appreciate any advice greatly! I've been pondering this alot during my Christmas break and am now swinging back to buying this property! :-)

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 16, 2009 - 8:22 am

    This is a great blog and he predicts a severe crunch due to too much debt?? definitely worth a read and he updates quite frequently. not sure if it will happen but hemakes some damn good arguments… particularly because of the FHOG etc? I think it will hit home owners more than investors?

    http://www.debtdeflation.com/blogs/2009/11/04/its-the-leverage-stupid/

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 16, 2009 - 8:21 am

    This is a great blog and he predicts a severe crunch due to too much debt?? definitely worth a read and he updates quite frequently:

    http://www.debtdeflation.com/blogs/2009/11/04/its-the-leverage-stupid/

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 16, 2009 - 8:09 am
    devo76 wrote:
    I doubt rates will hit 8.5% and if they do they will not be there for long. Look at the blood on the streets last time and our debt levels have not improved. Im thinking around 7%

    this article indicates rates to hit 8.5% if anything to go by?
    http://www.domain.com.au/Public/Article.aspx?id=1260034324287&index=NationalIndex&headline=Home%20rates%20++39;to%20hit%208.5%++39;

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 16, 2009 - 8:01 am

    p.s. the bank he chose originally was a mistake on his part and he  admitted he knew they normally are quite strict but his contact there had advised this instance woudl be ok but was obviously wrong and apologised. have to wait and see on approval in meantime try and do my calculations. i guess the FHOG and no stamp duty is a slight factor in it too as if I don't buy its a PPOR I won't get the 10.5k + no stamp duty? just to throw that in the mix. anyone have a good spreadsheet template to help do some calculations around investment returns etc? I unfortunately have to study for an exam for work course tomorrow and so can't spend much time on this until Fri at least. thanks again all I really appreciate you inout and advice and I'm learning a lot :-)

    p.s. any good books recommended to read?

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 16, 2009 - 7:56 am

    hey doesn't mattnz make a good point? i'm getting a property in an area at a discount and am saving in that regard. I honestly think that the vendor may be underselling himself a little as it was purely an investment property for him previously. I feel i can get better appreciation selling it as a ppurely residential unit in future. I am waiting on approval from a mortgage broker and so will know later this week while I'm thinking about it and that may ultimately decide my decision for me or allow me to purchase if I so wish.

    In theory, if more properties sold in this block an dit became purely residential then I could get greater appreciation. ofcourse that's not something to depend on but may change the dynamics.

    I'm wondering why so many people have invested in this block as it is if it such a bad buy? have they been conned or made bad investment decisions or is it simply a good tax right-off for them in negative gearing etc? am i missing something about why they have been bought?

    And thankyou JacM, you are right I think emotions do take over and I must admit I still have them as I REALLY want a place to live I'm struggling to get past them as I have been looking for over 12 months and have missed out on places and finally founnd something within my budget and fits my lifestyle perfect and other advantages like few mins to work, entertainment etc so no more train rides etc… I don't think I can honestly find the same type of place for under the $420-450k mark and so wondering if mattnz's comments hold true in anyone elses eyes?

    sorry to harp on, but its the biggest investment decision of my life and I'm on the verge of making it and still have the chance to go one way or the other… for best or worst?

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 15, 2009 - 6:35 am

    thanks all!! I guess its everyone's dream to own a place and i'm just trying to live that dream like every Joe average, but yes your right it doesn't have to be my PPOR as you say. I will have a long hard think over next few days. FYI it's 49 sqm as you mentioned so is on the borderline of the smaller apartments.

    I have much to dwell on now…. and need to ignore everyone else like family, friends, colelagues etc pushing me in a potentially illogical direction!!

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 15, 2009 - 6:28 am

    ok well good point . well I get FHOG and no stamp duty as bonus… I have about $100k to invest so could look at something cheaper in the suburbs instead that will appreciate instead, but would have to live in it for 6 months to get the grant which I probably won't want to do…

    I'll have wasted about $1.5k on this property with strata checks, 0.25% deposit etc so I guess I need to make a call now. It seems a bit against instinct to rent rather than buy but in an ideal world, I guess I should keep emotions out of it and think of it as a business decisions I guess??? :-(

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 15, 2009 - 6:16 am

    One can only guess ofcourse and hope for a time machine but this may help with predictions as of today, that will obviously change as time goes on:
    http://www.domain.com.au/Public/Article.aspx?id=1260034324287&index=NationalIndex&headline=Home_rates_++39;to_hit_8.5%++39;

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 15, 2009 - 6:12 am

    it will cost about the same to rent a property like this as it will for repaying a mortgage to own this property, so I won't have any money to reinvest elsewhere if I live there…

    so I only see 2 logical options:
    1. rent and do no investing and have nothing after a few yrs
    2. buy and at least have some profit from a sale or property I can keep or rent out? and yes I know that is taking into account all the other comments..

    or I guess
    3. look for another property that may appreciate, but may cost more and mean I have less money but may be worth more in the future if I can find such a place? not sure if If I can

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 15, 2009 - 5:42 am

    does everyone agree small apartments should double every 10 yrs. this is a 1bdrm inner city apartment and I don't know if that rule stands for smaller apartments? 2+ maybe more so? guess that's a whole otehr debate about size of apartmenst to buy. at the end of the day its for  a place to live rather than investment so I think i'm happy with my decision pending bank approval..

    thjanks all for your very valuable input!! I hope this helps other people too :-)

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 15, 2009 - 2:24 am

    Hi JacM thankyou and very valid point. It is a concern…. But weighing up the investment return I could make close to $20k/yr return based on current rents (excluding strata/rates etc) as an investment and so is always an option in that regard and could honestly see myself keeping this property long terms simply for the location.

    If a property doesn't appreciate like the rest of the market then I am silly for buying it? The other option is I rent and pay close to the same as this yet end up with no assets to sell at the end of it? Not sure if I'm running a big risk but coudl see myself just keeping it for teh long term even if I do buy a bigger place later on?

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 15, 2009 - 1:05 am

    Thanks George99 (and others!)
    Yes agreed that's how I have been thinking about it. Strata is expensive as expected for its location and probably a bit more than other places as they keep it better maintained than a normal block for appearance sake for customers of the serviced apartments. I have had a strata check done and it all appears in order.

    It's just such a big decision buying my first home that I guess I have the inevitable worry of a property type I'm not experienced with on top of the usual anxiety (and excitement) of getting a mortgage, new place etc.

    At the end of the day if it feels right I think I'm doing the right thing. I may rent it out later but I can do it myself and not be locked into the the building management adn the returns they promise so it is essentially like a normal unit property in my eyes? I just hope I'm not blinded y something I can't see…

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 14, 2009 - 11:20 pm

    I just found out 12 are owner occupied and 30 are in the pool of serviced so probably makes it less likely for conversion. Ideally I would pay someone for advise if required who may be an expert in this area before committing if anyone can help? Thanks.

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 14, 2009 - 11:09 pm

    Also, could anyone recommend someone who may be experienced with this type of property and offer advice on this specific block and investigate number of owner occupiers etc and chance of conversion?  I am looking to finalise within the week so would like to investigate before I give a 10% deposit. I have given my 0.25% deposit with cooling off period etc but its a small (but painful) write off to make if this really is such a bad investment.

    I can live in this apartment like any other block and rent it out myself so I think the stigma of serviced apartments is hurting teh building but may not necessarily ring true? it meets all these criteria for high lending from here:
    http://www.homeloanexperts.com.au/property-types/serviced-apartments/

    "As a general rule if the following conditions are met then the apartment can be treated like a normal apartment:

    • You can remove the apartment from the management agreement within 3 months.
    • You can occupy the unit as your home if you choose to do so.
    • You can sell the unit as a normal apartment without the management agreement.

    In these cases you can sometimes borrow 80% to 95% of the value of the apartment.

    Unfortunately this is not the case for most serviced apartments. Many lenders have the following conditions just to lend 80% of the property value!

    • Permanent occupancy of the property must be permitted (i.e. there are no restrictions on permanent occupancy of the property under the management agreement or under local zoning restrictions.
    • An “Alternative Use” valuation (i.e. a valuation undertaken on the basis that the unit is not a serviced apartment) provides support and is to exclude the value of furniture, fittings and equipment.
    • The property is not a hotel/motel type of apartment.
    • The property can be removed from the letting pool (where applicable) within a maximum term of six months from the giving of such release notice. Where this involves the payment of a fee or penalty in any form, the fee/penalty is to be deducted from the valuation.
    • Rental income utilised as the basis for servicing/repayment calculations reflects that considered achievable in the ‘Alternative Use’ valuation.

    These rules do not apply for every lender, each lender has their own specific guidelines."

    If the above is the case are the banks just being over-strict?

    Profile photo of new_startnew_start
    Member
    @new_start
    Join Date: 2009
    Post Count: 19
    December 14, 2009 - 11:03 pm

    Thanks for advice. I totally agree that the capital return is a  worry. I really like this apartment and is perfect for me. I can live in it purely as a tenant and is ideal for me and is one of the first places I have seen in along time looking that "feels right" and is within my price range. Only about 20 of the 42 apartments is apparently serviced and the rest are either owner occupied or tenanted by the owners not as serviced.

    This essentially means half the block is not serviced. In theory the block could beconverted to residential if enough owners wanted and prices could rise? How could I find out how likely that is to potentially happen in the future? If it did convert to apartment ion future would it be likely to be more worth buying?

Viewing 18 posts - 1 through 18 (of 18 total)