Forum Replies Created
Hi rich richie,
I would go with Terry's 3rd option because with a cash settlement they might have a better negotiation power and may be able to buy a property at a discount. The Sydney market is still struggling and there are plenty of discount opportunities. Assuming they are able to buy something at around 15% below valuation (which is achievable), they can then refinance the new property after settlement at 90% LVR (against the valuation, not purchase price). This should make their purchase (almost) no money down.
Hope this helps…good luckthanks Terry
Hi MG,
There are a number of sites that offer annual subscription (e.g http://www.positiverealestate.com.au, http://www.cashflowcapital.com.au, etc). The best thing is for you to do your own search/research.
Alternatively, you can pay me spotters fees and I will send you listings
Hi ao,
I think it depends on the intent of the person giving you advice. If they are trying to sell you something or will receive some financial benefit from the advice then they should be appropriately licensed to provide you the advice. if its just an opinion and not directed towards your specific circumstances then it is different.
Besides, it is totally upto you to do whatever you like with that information. I will however, check with experts before acting on such advice.Come to think of it, most of us participating in these forums are giving our opinions on one thing or the other. This does not make us financial advisors/planners.
hi hgwells,
Its great to hear you found a positive cash flow property. As you said, they are still out there….it requires more research and sometimes bit of creativity to create the positive cash flow.
Once again, congratulations and good luck for the future.
Happy investing!!hi pearl81,
Welcome to the forum.
I had looked at the opportunity sometime last year but dropped the idea due to the following reasons:
* Limited capital growth
* Low LVR (around 65%-70%)
* You cannot add value to the property because you cannot do anything with the investment. The only option is to lease it to the retirment village management
* The gross yield appears good but usually there are a number of expenses (sinking fund, body corporate, management fees, etc) that eats into the yield. The net yields are usually not as good.
Hope this helps.Hi pgebara,
It depends on how much equity you have in the property? You need to consider selling costs and CGT if you were to sell.
What do you intend to do with the cash after you sell? Assuming you will use it for further investing, I don't think you need to sell the property. Maybe look at drawing the equity out from your property and use that for further investing. You now have access to the cash tax-free. This will increase the negative gearing on the current property but if you can invest the equity in investments that return >15-20%, you should be okay.Hi Dan,
There are few things you should do:
1. Change the loan on Property #1 from P&I to IO.
2. Remove the cross-collateralisation on your propert & block of land.Given the loan amount on property #2 is higher than the market value, it might be a good idea to start parking your spare cash in it.
Hi Kurn,
First of all, you should pay off any bad-debts (car loan, credit card, store cards, etc.)
You should consider diversifying between property and share market (may be 2/3, 1/3 split).
With property investment, I think you should look buying more than one property. Use some of your cash for deposit and closing cost and get IO loan for the rest. This gives you some diversification within property market as well (remember, each state in Australia has its own property cycle).
Hope this helpsHi,
I am not 100% sure but I think they are non-conformance loans.Hi Carol,
If you are considering selling your property, you want as many prospective buyers as possible. Having a sign board with some photos makes it more visible to people and therefore creates awareness and demand.Hi Wade,
Couple of options you may want to consider:
Option 1: Get the DA to add value, continue living in it and use the equity to buy an IP#1.
Option 2: Get the DA to add value, convert your PPoR to an IP and start renting, use the equity in the current property to buy IP#2.hi Peter,
First of all, congratulations on having a great cash/equity position.
I agree with the comments above but I think serviceability might become an issue. I don't know how much your wife will earn when she starts the new job but on your income there will be some challenges.
I think you should invest your cash in some good income generating investment and use that to help improve your serviceability and offset some negative gearing. Leaving your cash in the bank for ~6% return is underutilising it.Hi bsgupta
It depends on whether you want the valuation to be done to find out market valuation or valuation for lending purpose.
For market value, have a look at the newspaper to see what similar properties in your area sold for. The Herald Sun has all sales data every week (on Monday or Tuesday). Alternatively, you can contact some property agents and they will do an obligation free market appraisal for your property. Get 2-3 agents and you will have a fairly good idea. You can also purchase reports from residex, rpdata etc that will give you an indication of market value. Personally, I will get couple of property agents to give market value.
Secondly, for lending purpose, the lending institution will organise a valuation from a valuer on their panel. This will cost you around $200-$300. Usually, the valuation for lending purpose is little lower than market valuation.
Hope this helps.Hi Nathan,
As long as your property qualifies the "main residence' test as per ATO, capital gains tax will not apply.Below is an excerpt from ATO website on the concept of "main residence"
The following factors may be relevant in working out whether a dwelling is your main residence:
* the length of time you live there – there is no minimum time a person has to live in a home before it is considered to be their main residence
* whether your family lives there
* whether you have moved your personal belongings into the home
* the address to which your mail is delivered
* your address on the electoral roll
For more information, go to http://www.ato.gov.au/individuals/content.asp?doc=/content/36883.htm
Hope this helps.
* the connection of services (for example, phone, gas or electricity), and
* your intention in occupying the dwelling.Hi cqblove,
Firstly, congratulations on your excellent job.
You should probably start witth high capital growth investments even if they are negatively geared. With your income and big tax bill, couple of negatively geared properties won't hurt (too much). Then to balance the portfolio buy some couple of cash flow positive properties. You should consider diversification as well. Put some money in other asset classes like shares.
The lenders look at equity (deposit) and serviceability for lending. As long as you manage both, the lenders should not put a cap on lending.
Also, a property every quarter is a good acquisition plan. Review your portfolio every year and trade a couple (if required), otherwise hold all your properties.
Good luck!Hi Ming,
It depends on what your plans are – how long can you keep servicing the negatively geared properties? Are you closer to retirement and therefore need some cash flow from the properties?
The other thing is, at 60% LVR, your properties should be getting close to cash flow neutral to positively geared. Make sure your are getting market rent for your existing properties.
Personally, I will go for a cash flow positive property next. This could be a block of units or some property in a growing regional town.
Alternatively, you can look at investing the $60k into high return fund (>20% return) and use the returns to offset the negative cashflow from youe existing portfolio.
Hope this helps.I think Fri 19/10 will be the 21st day. If his solicitor did not request for an extension for finance clause and assuming all other conditions of purchase are met, your contract should be considered unconditional from Sat 20/10.
Hi Ben,
You should do more research on the valuation of the property. Maybe you offered too much. Has the vendor done major capital improvements to the property? Because the valuers have to base their valuation on comparable sales, there may not be anything directly comparable.
Assuming, in your offer to purchase the property you included the clause for independent valuation, you should be able to pull out of the deal. Also, rememner, if the bank valuers are valuing the property $25k below purchase price, thats all they will lend against. This means you have to put lots more in the deal.thanks Marc, for posting stories about such shonksters
