Forum Replies Created
Hello Arope
You are back at the start of your questions I think?"Do you think property valued at $300,000 now would increase more than $45,000 in 5 years time?"
It depends who you ask as shown above, it also depends were you buy.
But yes I think a property could increase in value by that much over that time.
"Is it still worth purchasing a property now?'
If you are buying a good property for reasons that make sense yes, plenty of homes are being bought and sold as we read and write this.
Just a thought but how many liters of fuel (or other commodity) will $45k buy today and how many will it buy in 5 years time?
Nick
Just a quick edit, it was 2,700 dwellings approved but not built. My partner heard the news article better than I did.
NickHello aRope99,
I suspect you will get a few answers to this question so I will travel lightly and make no recommendation.Option 1
Sounds good but I would want be looking for a property that either grew in value, paid good rent (or both) before I was looking for a property that provided good tax deductions. That being said if you can get a property were capital gains are likely that rents well and is new or new near it is a perfect storm and will help with tax minimisation. There is additional stress in being a property investor and you need a buffer particulary with another child coming on.
What are people saying about the Adelaide property market, especially the area you mention? Are many people moving in, is there low rental vacancies and so on …Option 2
My least favorite option due to opportunity risk, if you buy today at today's price in 5 years time the property will be worth more and each dollar paid will be worth less.Option 3
That is how we did it, brought a home, waited and used the equity to buy another in 5 years time. BTW we did not pay off much on the mortgage, see option 2. in 21 years $89k property now worth $450k still owe more than $89k.
So maybe put your savings in an 100% offset account so that comes the time for a slightly better home you have a deposit at hand …Regards
Hello Wren,
Great, I think Darwin will provide capital growth as the current round of projects come to fruition and that the capital growth will run for five years. We have had our time of no gain. Try this link, works better in Firefox http://www.nthomes.com.au/public/nthomes.nsf/Homepage?OpenI know this will sound like hype but with ~34bn worth of project signed off and going there are going to be a lot of new people moving to Darwin soon. See the last page of this government purchasing newsletter from today http://www.icnnt.org.au/media/may%202012.pdf
Certainly a two bedroom unit in Palmerston and area will not be unique, according to the Chief Minister on the radio this week there are perhaps 3,700 dwellings approved for construction across all Darwin region (includes Palmerston) but not commenced due to no bank finance available.
If you can find a decent two bedroom unit in Darwin and Northern suburbs, consider buying it, it is a bargain at $300k
Rental vacancies are very tight, we are cleaning up one of our properties this weekend, and my thought is that the asking rent is going up all the time it is vacant.
Here are some stats for 4 Darwin properties
1) House held 21 years average 8% (original condition), now worth 4 times original purchase price
2) House held 12 years average 11% (renovated), now worth 3 times purchase price
3) Unit held 13 years average 6% (original condition), almost doubled
4) House held 7 years average 9% (original condition), has not doubled yetPre GFC we were seeing 17% a year growth.
Regards
Try entering the name of the town into the search box on the top right and you will find 6 pages on Port Hedland. I suspect a search on Olympic Dam will return a similar quantity of discussions.
Also more specific questions may drag some answers out.
While Gladstone is not a mining town my partner and I have experienced the rapid growth such a situation provides as investors and we think the process has been positive to date.
Regards
NickHello Ravenhard,
"So getting an extension on my PPOR loan and taking $60k, am I still able to claim a tax deduction on the interest seeing as the $60K if going to the IP?"
Yes the new loan split is for investment purposes so the interest is claimed.
"Also I dont understand this "Tap CBA for a loan for future investment properties equal to 25% of the value of the property you want to buy." Could you explain further please?"
Sorry I was not clear, we are talking about the additional $60k available on the PPOR, each property we purchased had 105- 110% debt against it to cover all the costs. This was done just as we are discussing here with the additional loan split from CBA.
So if possible all costs for the investment property come from loans, none out of pocket.Regards
NickHello Ravenhard,
Good question, it is what you want out of the next ten years or so that matter really.
If you are going to be a property investor then get ready for debt. Have a reason for investing in property, see the end game.
Our properties are with us for life, they will provide an income stream as we wind down our working life.
The hands free path as it were."But having a think about it I am not totally convinced we can afford it"
In my opinion on the numbers you have written here you can afford it.
Is the property new or near new and thus providing a strong depreciation?"how we should go about getting finance"
I recommend a broker who owns investment property (but then I would)
You may want to consider using a second lender.
If not then no cross collateral."what are the tax implications"
You will have some tax deductions available to you as you are now a property investor, these are listed elsewhere, but I like new or near new for investors who have good income and want a hands free ride for a while. (I spent today trying to find a leaking water main in the tree roots).
There will be advice that you should buy in your name based on the income differential, but things change over time and sometimes both having skin in the game is good.Where to buy?
Well I like Darwin, but that could be because i am living there. It is nice to be able to see the property the first time round, but you want a good renter in location and dollar value. Capital gains history may be guide to capital gains future. No 'lemons'.
We have properties that have been GFC'd below purchase price and we have properties that have held and risen, look for that.I would only pay LMI if I had to, anyway to avoid is great. Tap CBA for a loan for future investment properties equal to 25% of the value of the property you want to buy. Don't draw it down until you need it. If you home values at $700k there is $60k spare there by my calc.
As a property investor I don't see the value in paying off my home loan until I have my fleet up and running (this is called opportunity risk), flip side to that is the home loan is the only non deductible debt you have so many will advise that you chew away at it.
Good luck
NickDarwin, unit costs $540k rents for $750 p/w with furniture pack.
Regards
NickI use Lowrys in Winnellie. But I prepare all my reports before I visit them.
NickNumerous credit inquiries can be an issue.
There are lenders or will take this into account and lenders who will overlook.
Sometimes you will see the term credit scoring, loans can get thrown out before they get to a human.That is part of how we mortgage brokers can make a living, we should be able to advise you on your options in placing a loan application wisely.
Nothing is certain these days on a loan application I am sorry to say, but brokers are finding it slightly easier to estimate success or fail.
My advice is do a pre-approval, it is likely one extra inquiry will not break the show.
The way to think about a loan application (IMO) is:
1) Can I pay? Deposit, equity, repayments after all my other expenses.
2) What debts do I have?
3) How well have I paid those debts (any defaults)?
4) How long have I had my job or similar industry?
Same for partner if two of you, but if one is strong they can cover the other.
5) Is the property worth what I am paying for it? valuations are tough.
6) If relying on income from the property is the rent good and reliable?
Other matters taken into account
Multiple credit applications – can I account for each credit application?
How long have you lived where you lived?Regards
NickToo tough the way you have described it. <moderator: delete advertising>
But here is how I do a roughieAll investment related losses Say $1,000
All income PAYG $1,000
Investment $2,000Total Income $3,000
Income less Losses = $3,000 – $1,000
Real income $2,000
Tax already paid $100
Tax on real income $80
Tax refund $20
Regards
NickIf all the other parts of your loan application represent a 'good deal' for the lender then it can come down to continuous employment type. In a previous existance I was an IT contractor who worked stratight through multiple jobs and configurations but allways long stints and same industry, loans would come through.
My partner is now temp, part time but same industry for 25 years and 100% of income was acceptable.To the best of my knowledge the agent has to put any reasonable offer to the vendor.
We have stood accross the back garden and traded bids with the agent and vendor so it certainly does happen without any documentation.
Would you offer a higher number to try and find the vendors interest point?[/quote] It depends what country you are talking about, if Australia then Darwin is about to boom and will provide great capital growth even in the next 2 years http://www.importantstuffyouneedtoknow.com [/quote]
Here are some notes on Darwin:A few thoughts on Darwin 2012.
I think most Darwin watchers would be calling the bottom of the market.
It is feasible to predict an increase in land values as we go through what ever land has been ear marked for development before developers can get more ready.
I will look for the statistic but there are a known number of blocks for sale in Darwin and it would seem that $227k is the floor.
I remember a while back the newer blocks were significantly cheaper than blocks over the road as the old blocks had sold for a premium due to limited supply and the new blocks had no buyers due to GFC.
So those with land ready can be expected to pressure prices, perhaps it will take 12 months.
So what is available:
• Units in Darwin, expensive units were/are being sold cheap, mid range units are starting to achieve high rents, anything with guaranteed view would be my call.
• Units in Palmerston, the cost of building them is high, so buyer pays a premium and they will not be rare, but over time they bring tax benefits and a ready stream of renters.
• Second hand stock across all Darwin, limited tax minimisation benefits, strong renter demand. I would buy an elevated situated at the front or back of a 1,000sqm block if I was a mini developer based on the granny flat change that is coming http://www.abc.net.au/news/2012-03-0…blocks/3862312. Our Karama property valued at $420k the other day, we had thought $450k, but when I looked there were at least 3 sales since Christmas for $430k so bargains have been going through.
• Block and Build – cheap but comes with some stress option
• Purchase from developer – pay a premium but hands free.
Cheers
Nickthickknees wrote:Yesterday we put an offer in on another prominent property supply company, the finders fee being $9,900 inc GST which seems a lot to me on a 332K trade but we are assuming we can do it with some confidence over distance. Last time we tried them it was one of a set of flats and all the flats had to change hands on the same day, hopeless!I thought I would give you an update, very disappointed, the vendor would not sign the contract over 6 weeks, we ended up visiting the property around 1 October as we were in the area for another matter. There was still a for sale sign on the property although it had been under offer by us for 7 weeks.
The information were given was in direct contravention to what we saw with our own eyes. And as far as I can see they were again trying to get all the units to change hands on one day, but not telling us that. When we spat the dummy and cancelled out everything changed contracts are ready, tennant is in place, better rent and so on.
The challenge of buying over distance, we went to the next town and made an offer, I'll come back to you in a while and let you know if we can get this one over the line.
Regards
ThickkneesWell Crashy,
Please don't feel that your opinion is worth any less than anyone elses. But the lose a few million over a few years is off topic for this topic. I believe there is a correct place for the "end of the world is nigh" comments is available under recent topics.As to the it's not about the numbers discussion, I think there is merit in how you travel point of view. Some people are very switched on, creating advantage in many ways, for example, they can operate in the areas they invest in, some of us can prepare for our retirement with a less hands on approach.
Thickknees
Hello Bacon,
B
But you neglected to expose yourself?
Regards
ThickkneesI have never purchased through the investors club although early today I sent our current house requirements through to my local club support member. If we buy one through them I'll let you know how it goes.
The last time I asked for a property through them the advice was we were spending too little. As we did not have any more to spend that advice really wasn't that helpful. So on our way home from holidays we visited Townsville, looked at the 20 or so properties in our price range over the week. Culled out the suburbs that were just to far out, the houses that were just to weird, (gently collapsing north Queensland property, nothing quite like it). Then we followed the tribe around who where just ahead of us in the same price range, until we were the first to find the real estate agent on the day and make the offer. Job done.
Over the last few weeks we have been trolling the usual suspects who present a property via the internet that should come over the line for the average Joe investor. It seems to me that apart from the Jenman "all salesman are evil" angle there are shades of grey. Property investment for my wife and I is all about purchasing over distance. We live in the Northern Territory, so we don't often get to see the properties we buy. Remember early Jan Somers, average house, average street? So as a distance purchaser we look for what might trade again in a reasonable time frame should we need to liquidate. More likely we will eventually look for the growth to support another purchase.
Yesterday we put an offer in on another prominent property supply company, the finders fee being $9,900 inc GST which seems a lot to me on a 332K trade but we are assuming we can do it with some confidence over distance. Last time we tried them it was one of a set of flats and all the flats had to change hands on the same day, hopeless!
So I guess my point is that just like buying any thing else of high value (shares, indigenous art spring to mind), there are plenty of people who are cash rich, time poor, willing to leap in but also willing to pay someone else to do the legwork. Is any company that forms to take advantage of that necessarily evil?
Not wanting to start a flame war
Regards
Thickknees
