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From an investment point of view, rents haven’t kept up with the recent boom in house prices. This means yields are much lower, particularly around cities on the east coast. Some rural areas are still showing yields of more than 10% if you look around.
The last place i bought has a gross yield of 5.5% which ain’t that great, especially since i borrowed $940k and have repayments of $4,750pcm. It’s a block of units and i intend to increase the yield by improving the property and increasing rents in the next 6 months. However the cap gains will be spectacular so that’s my trade off.
I think you’re asking the difference between cashflow +ive and positive gearing.
Negative gearing – expenses exceed income.
Positive gearing – income exceeds expenses.Positive cashflow is the After Tax result of EITHER a -ve or +ve geared investment. Of course a +ve geared investment will ALWAYS have +ve cashflow, but a -ve geared investment may (or may not) have a positive cashflow depending on depreciation.
If anyone can elaborate on this, please do so.
Q
fullout,
quote:
May i know who in this forum is using this accountant now>? Do they understand things about Positive Return Properties and Interest Only Loans. IN other words, are they good in property investment and other things like business, etc?
I may want to go and visit this guy.
Yes, Dale is my accountant and he’s very, very good. In fact he’s often referred to as Australia’s foremost expert on property investing and has worked with members of BRW’s top 200 (Australia’s wealthiest 200 people) as well as Robert Kiyosaki and others. He also writes regular columns in property investing magazines and hasn’t lost a case with the ATO yet.
I know people in NSW and Queensland who fly to Melbourne and use Dale as their accountant – not hard to do these days with e-mail, fax machines etc.He’s located in Colchester Rd, Kilsyth – go to the link willi posted above to find his contact details. He’s obviously very busy and has just put on another new accountant at his firm.
Have a look at his 2 manuals he sells through his website called “Tax Battles” and “Trust Magic” which are both well worth the tax deductible money.No unfortunately we don’t.
When a capital gain event is trigerred, we must pay CGT on the gain.
However there are some instances where CGT can be avoided or minimized such as when selling a small business, or when putting capital gains directly into super in the same financial year as the event.All the usual disclaimers apply and i’d check with your accountant about your particular circumstances.
I think the reason there’s been little discussion of these properties is because most people on this forum are seeking cashflow +ive properties in rural areas – houses that cost $50k in a town of 3,000 people returning gross yields of more than 9%-10%. There’s also a heavy focus on wraps and lease options here.
If you want more info on this market, have a look at a more diverse forum such as Jan Somers at:
http://www.somersoft.com/forums/There’s also a specialised forum of people who drool over highrise apartments at:
http://www.skyscrapercity.com/forumdisplay.php?forumid=65This market has been overheated for several years now, and in my opinion people always pay a premium for brand new apartments OTP.
It’s never been a part of my strategy because of the premium price attached, and i also prefer lowrise walkups that i can add value to (sweat equity).
Shrimp, i think f_j_o is referring to the blue pill… the one that lets you continue living within the matrix – also known as the world… as you know it.
You believe everything around you is real when in fact it’s a simulated world created by creatures of Artificial Intelligence. You are a slave that is being used by creatures of Artificial Intelligence and harnessed for your energy since the sun has been blocked out. Unless you have escaped the matrix and live in Zion, you live in a pod in fields alongside millions of others, blissfully unaware of your true existance.It seems f_j_o has taken the red pill if s/he says “Why oh why didn’t I take the BLUE pill!?” This means f_j_o is down the rabbit hole and free from the matrix but also painfully aware of the fate of mankind.
Let’s just hope that f_j_o can assist the One (Neo) and save us all from A.I.
Amen.Have a look at Singing Pig at:
http://www.singingpig.co.uk/forums/ShowForum.aspx?ForumID=1This is a UK site and it’s well run by Ollie with a lot of active users.
I think you’d get a much better response if you posted your question on Singing Pig which is the UK version of Australia’s Jan Somer’s forum:
http://www.somersoft.com/forums/
Singing Pig:
http://www.singingpig.co.uk/forums/ShowForum.aspx?ForumID=1There are lots of active people on this forum and the guy who set it up (Ollie) is also very active.
Being in Europe, i’m sure the advice you receive here will be much better.I recently returned from Europe (Turkey, Greece, Austria, Czech Republic, Slovakia, Italy, Spain, Holland, France, Germany, Portugal) after travelling through for 6 months and sussed out the real estate where i could.
A lot of the Poms are investing in Eastern Europe (mostly places like Prague and Bratislava) because of the cheaper cost of living and the proximity to their own country.
Flights in Europe are very cheap (it’s like catching a bus) and you can get flights around Europe from 10 Euro with airlines like Ryan Air and Easy Jet.
There’s also a lot of speculation with investing in EE as a lot of these countries are being considered for membership to the European Union.
It’s likely that Czech Republic and Poland (amongst others) will become members when the next intake is held in 2004.
This is putting pressure on property prices because the Euro is so strong compared to the current local currency.
Turkey is also receiving a lot of support from the English who are buying property on the south west coast. Inflation in Turkey has come down a lot and is now about 60%-80% (still huge by our standards!). The Lira is unstable and Turkey desperately wants to be considered part of Europe even though a lot of people say it’s the Middle East. In fact Istanbul is the only city in the world on 2 continents (Europe & Asia) divided by the Bosphorous.Sorry i rambled on here… got carried away.
Check out Singing Pig and have a look.I sold an IP about 2 months ago and will settle at the end of June. I made a decent cap gain of about $90k and was thinking about prepaying my interest bill in advance for FY 2003-2004.
I’ve decided against it because i see it as an endless cycle. If i prepay a year in advance, i’ll have nothing to claim for the following year… unless i do the same thing again.
Of course the banks love it if you do this, and the CBA will also discount the rate by .15% on fixed rates.
It seems like a continuous cycle, and something that would hurt for the year when you catch up and pay normally.
As Leigh says, i can think of better things to do with the $20k than get a bigger tax return back for one year, and then having less deductions the following year.Implementor – uhmm, no it’s not.
You must have me mistaken for that Chinese guy that studied medicine and does massage.
Hi Implementor, well done on your lease. It must be great to have 3 years at a higher rent than your agent thought he could get.
I’d do the same if i had the time, but i’d rather pay my 4% commission and save my precious time for better things.
I agree that most PM’s are pretty slack, but most will try and do the right thing if they’re in it for the money (which they are). You have to remember the value of an agency as a business is based on it’s rent roll, plus the higher the rent, the greater their commission.
Hi Implementor,
Welcome to the forum.
I hope you don’t mind, but it’d be great if you could tell us how the “bootcamp” went.I’m curious as to how HK runs his workshops and if you thought it was good value considering you could have used that money as a deposit on a property.
A few questions if you don’t mind answering them:
1) What was the damage to the bank account?
2) Does HK actually run it himself, or does he have people doing it for him?
3) Is there any mention of him being investigated by ASIC for ripping off a lot of people and selling over-priced property?
4) Does HK still talk about a strategy buying off the plan and reselling for profit? If so, i would have thought this would be hard to do in the current market.
Thanks for sharing. [
]Q
Investor, it’s called the Caps Lock. [
]I have to agree with Mitch and think 4-8 weeks is way too long to have something vacant.
If you can’t get a tenant within 2 weeks, you need to get realistic about your rent and meet the market.
As AD also pointed out, you should try and add value to the property with strategies such as 1-2 weeks free rent, or include a DVD player, Sony Playstation, Video rental vouchers, TV etc.
As they say, 80% of something is better than 100% of nothing.
I’d also be inclined to get a new property manager if my property was vacant for this long.
The longest vacancy i’ve had with 4 IP’s over 13 years is only 1 week.That’s why it’s important to buy quality property that you would live in yourself, and that is close to amenities and infrastructure including public transport, shops, schools etc.
The cost of long vacancies is the price you pay when you buy crappy properties in hick towns.
TerryW is right about paying GST and S/D.
The deposit will also go into a trust account held by the agent.But in Victoria you can access the deposit before settlement if you sign a Section 27 form with your conveyancer.
A copy will be given to the agent when you sell, and you can get the 10% deposit after 28 days.
A similar thread is posted on Jan Somer’s forum.
Have a look at it here:http://www.somersoft.com/forums/showthread.php?s=&threadid=8779
It may give you some ideas on what other people are doing about it. Making the transition to a full time investor can be scary and you’ll need to have some tolerance to risk as well as being well informed.
Another good thread is this one by Brenda who explains how she bought 20 IP’s in 5 years:
http://www.somersoft.com/forums/showthread.php?s=&threadid=8756
You’ll find lots of other good posts on this forum, but beware – you may be sitting up all night trawling through the site and filling your head with information!
Some potential tax deductions include:
Sex Toys – Gifts to beneficiaries of a trust.
Alcohol – As gifts given to staff, customers and business associates. At conclusion of seminars with finger food.
Birthday Presents – Under $100 for all employees.
Bonuses – Given to employees for jobs well done
Books – Work related, Investment related, As gifts or rewards to employees of the business, Motivational.
Christmas Hampers – Under $100 each to employees.
Christmas Presents – For all employees at less than $100 each.
Cleaning Products – Used in business premises.
Clothing – Protective in nature, Registered uniforms.
Crockery – Used in Tea Room of business.
Cutlery – Used in Tea Room of business.
Easter Eggs – For reception area or for all employees.
First Aid – For a safe working environment.
Flowers – Used in reception or waiting room of business, as gifts to employees or business associates.
Furniture – Bought for office & under $300 per item.
Gifts – To employees providing under $100 a time and given infrequently, to business associates or customers.
Gift Vouchers – For all employees at under $100 per time, to business associates or customers.
Greeting Cards – Used as marketing tools within business.
Guard Dog – Costs of owning and maintaining guard dog.
Internet Fees – Where the business uses the Internet for research, communication, advertising, or other business purposes.
Laundry – Cleaning and maintenance of work clothing.
Magazines – Professional, business or investment related. Used in reception, tea room or waiting room.
Marketing – Activities that promote the business.
Movie Tickets – As a small bonus or reward for your employees.
Music – Used in office environment, given as gift to employees or business associates. See the $100 rule.
Newspapers – As per magazines.
Photography – Where photos are used to promote the business, where photos are of work performed.
Political Dues – The first $1,500 is a tax deduction.
Radio’s etc – Used to provide music or training at work.
Secretary’s Day Present – For all secretarial and clerical staff.
Security – To protect business assets.
Seminars – Re business or investment, morale or motivation.
Staff Expenses – Required for a safe & harmonious working environment.
Toys – Used in reception or waiting area of the business.
Wages – To children IF they work within the business.
Have a look at Dale’s site at:
http://www.gatherumgoss.com/business.htmHi Joe,
Thanks for the feedback on MY’s course.
Of heard various thingsd about it, so it’s good to hear something direct from an attendee.
Dale Gatherum-Goss is an amazing accountant and very generous with his time. I’ve also got “Tax Battles” and his new one “Trust Magic” which are both very informative. Dale also helps moderate the “Accounting & Tax” section on Jan Somer’s forum at:
http://www.somersoft.com/forums/So if you want some good advice from an accountant, check it out and post away.
So i guess all those that attended Peter Flanagan’s seminar went to the Sunshine Coast for it?
Would anyone mind elaborating on what he actually says about neg gearing being a big mistake and very risky?
Felicity, what will you be practising and repeating to your friends?
Thanks for sharing.
Congrats on your first purchase.
What type of property is it Ricky? Sounds like it’s a townhouse by the size of it and also the B/C you have to pay. Does this get you a pool in the complex as well?Did you also look at houses in the area?
I thought you could probably pick up a house for the same sort of money in this area?Hi all,
Can anyone tell me what date this seminar is being held in Melbourne?Hi Joe, please report back to the forum on what you thought of Michael Yardney’s weekend seminar.
I’d love to do it, but the $3,500 is a bit much for me at the moment.
But if you really recommend it, i may consider going.Cheers,
Q []In Oz, a common clause is “subject to finance” meaning that the purchaser can pull out of the deal if s/he cannot obtain satifactory finance.
It’s usually put in as an exit clause as well.But i don’t think you’re referring to this particular clause?
What country are you from and can you do it there?
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