Forum Replies Created
Well Dangermouse, if there is no cutoff for building depreciation in NZ then it’s probably worth getting a report done. Contact a Quantity Surveyor over there and explain the age etc and ask them it’s worth doing one, one of the team you have behind you may be able to recommend one.
Good Luck
PKTerrific! Looking forwrd to it.
PK
Hi Zen,
We have a property in Mandurah, between the estury and river and it has seen good growth.
I tend to think (and I could be wrong, it’s just my opinion) that much of the growth in prices due the railway may have already happened “in expectation” of the railway coming. I think there may be another small spike upwards when the railway actually gets there.
Having said that, there is probably still growth to be had in Mandurah due to it’s location near the coast.
Personally, if I was looking for growth at the moment I’d be looking for an area where some soret of development is still to happen that has only just been announced. The railway was announced years ago now and others have bought in on this basis already. Watch the news for new announcements.
I think all the ideas expressed so far have merit,s o good luck in sifting through and finding what suits you.
Regards
PKAnthony,
Firstly you’re unconventional emplyment doens’t stop you getting fiance nowadays, it just might not be a conventional loan. COnsidering popping this question under the finance heading and you’ll probably find some of the mortgage brokers on this site will then read it and have some ideas for you.
As for your otehr questions, many of them come done to your risk tolerance, or perhpas you ability to take risk.
IF house prices go down and rents reamin the same, then yes there will probably be potential for more +ve cashflow properties. The main thing that you stated though was the IF. If you wait and then they don’t go down, have you then wasted time waiting? There’s a lot of if’s and only you can weigh up what you think will happen against posssible gians or losses if the market does or doens’t go down.
Interst rates are another IF, yes they may go up, on the other hand a lot of banks have recnetly dropped their 5 year fixed rates, does this mean they don’t predict a long term hike in rates? Again it’s IF. I have some of my loans fixed (usually the larger ones that are interest only) to give me the peace of mind of knowing that they can’t go up and I know what I need to pay, however, the smaller ones that are paying themselves down, I haven’t fixed as firstly we know we the rent will still cover the difference if the rates go up and secondly if they went up a long way we could refinance it now as the amount we owe is less and therefore that would bring the repayments back to the level we’re now on. I don’t envisage we;d need to do that, that is jsut our back up plan if it went spiralling beyond our means, but hopefully as we’ve allowed a margin for increases we shouldn’t have this problem.
Interest Only loans – the benfit is that the repayments are less as you are paying interest only and not some of the princilpe as well. The disadvantage is that you aren’t going to own the property that way. However, as we are still paying our own home off, we have osme as interest only so that any extra repayment s are made off our PPOR as the repayment on this isn’t tax deductible. So in short the loan on the IP’s are staying the same but we can claim the whole amount as a deduciton (because the whole amount is interest).
Well, that’s my thoughts on the issues, hope it helps a bit.
Regards
PKWell, redrawing equity would increase your cash going out as the repayments would be higher. If you went this way make sure the income coming in more from the IP’s covers the extra expense that you’ve just made.
I’d probalby use the 40k incme you have coming in, but that’s me.
It really depends upon you comfort level, or your ability to go outside your comfort level, the level of inocme expected form deals etc.
Good Luck and perhaps others can help more.
PK
Like any house, I think you need tiolet people through prior, I cn’at see many would want to fill in an application before seeing what they are buying. I certianly wouldn’t.
You could consider advertising a “Home Open” ie: for an afternoon on a weekend and then going up there yourself to open it for the afternoon.
Regards
PKIt was the API magazine (november’s), page 35.
Secret Harbour and Iluka are beachside.
Landsdale was a new housing estate 10 years ago, now it’s nearly full so shortage of land in the area has pushed up prices for completed homes.
Leda was a state housing area that has had an overhaul.
Not sure about Success.
ALos consider that a block of units will most likely be “Commericial Finance” wheras individual houses or even individual units are “Residential Finance”. As the timeframes for paying off the loans and the interest rates are different, it may change the income you’re expecting.
Regards
JudyI found our houses are rented mainly to families, current tenants have been in one for 2.5 years and the other for 2 years. I expect that with kids in school, neither family wishes to uproot them, so they stay. Also have a two bed unit in a regional city, has much shorter stays ie: 6 months, but it is furnished so expected it to be poeple in transit or ther for work etc.
These are all in WA.
Regards
PKNo experience with serviced apartments, but if you do decide on serviced apartments then check your bank is actually willing to lend money on them, some banks are a bit wary of these.
Good Luck
PKYur choice, but…..
Look at the returns you’d get from both and see which works best, also what is the market in the area, do people predominantly wanted funished or unfurnished? Also, what are vacancy rates like ie: from our experience, we have one furnished unit and it ususally rents for shorter terms than the unfinished ones. It’s usually only empty for one or two weeks in between but we feel more comfortable with our other proerties as generally speaking the tennants do stay longer which gives us a more reliable income.
Good Luck
PkI didn’t get a newsletter this month either and I’m WA too.
PK
Perhaps you can order them here, click on the Online shop on the menu on the left hand side.
Contact an accountant or the Tax Dept. I think you’ll be OK to claim it as a PPOR, but best to make sure.
Agree, do read it. While most of us would probably not achieve that level of properties, it is very worthwhile. We were stuck at two IP’s prior to reading the book, now have 4 and looking for number 5. So the principles in the book do work, but it’s not easy, don’t expect it to be a “get rick quick” thing. It can achieve the goals though with some hard work in the short term that will help set you up for the long term. Well worth while.
PK
Negatively is probably thier own fear and they will probably be the first to say ‘I told you so” if you fail. And if you succeed, it’ll be luck, it’ll be comments like, “Oh aren’t y you lucky that you bought at the right time” or “Aren’t you lucky that interest rates were favourable for you” etc etc. Gosh, it couldn’t be thorugh you willing to work hard and being willing to take the risk, even if it’s a minimal risk because you did the due diligence first.
Ah, yes, I’ve heard it too. I believe that most people that “make it” have been able follow through with their plan despite the opposition to it.
Good Luck
PKWell, we manage one ourslef and the others are through agents and find both are the same amount of work.
We find we often have to keep on the PM’s back about things they should be doing. So it doens’t always save time. The benefit though is advising that rent is going up, I find it easier for osmeone else to tell them, although having to remind the PM 3 or 4 times to do it is annoying, at least if I’d done it it would have been done first time.
I don’t know how many properties you have but if more thatn one, why not just try managing one first. We don’t direct debit out tenant, we have then direct deposit. So far he has never missed a payment and direct depositing doesn’t cost a cent. If they don’t put it in then you have the legal timeframes to wwait anyway for you can issue a brech for rent. Gives you time to sort the paperwork yourself and you can buy these forms form the newsagent as well.
I’d say Try one and see how that goes first, befor eyou do the whole lot.
Regards
PKIn Perth itself, doubtful unless you can add value to a property you purchase that will increase the rent.
Start looking country and you’ll have more louck but do check the towns you look in, that they are stable ie: due diligence.
Good Luck.
PKSIS,
I think it adds up to a free house as she was paying $120pw in rent whihc was due to go up and now she’ll be paying $125pw in mortgage and expenses, therefore the cost is relativley the same but she’ll own it instead of it being dead money.
Regards
PKDomo,
Perhaps you also need to consider the future and just the NOW. How soon do you wish to stop working or perhaps you don’t wish to stop working. In this case negative gearing would probably work best as you have the ongoing deductions that are offset against your wage and allow you to have more income now. If you plan on working for 10 or more years then they’d most likely be another property cycle for you to make gains etc.
However, if you plan to retire in a year or two or even five, then you won’t have an income to offset the negative geared properties off against. Further you’d most likely need to sell one or more of your negatively geared properties to either pay off the other to then give you an income stream or to live off the captial gain. When that runs out you then need to sell off another, how long would the money you have to live off last? Where as if you have +ve cashflow, you don’t need to sell them off as they are providing an income stream without doing so.
Having said all of this we currently have a portfolio of 4 IP’s that are “offset geared”. However, future ones will be +ve geared as we want to live off that income. At this point in time we won’t sell the -ve geared one as it is providing us with the equity to purchase the +ve geared ones. Once we have enough +ve geared ones, then that won’t be necessary anymore.
Here’s something else to consider: one of our IP’s is +ve cashflow but -ve geared. This has occurred as the rent is higher than all the expenses, therefore +ve cashflow, however the on paper deductions make the expenses higher so from a tax perspective we get a tax return on the house. This house is the best of both worlds, but haven’t found another one like it yet.
Lastly, if you are paying tax it means you are making money. Also most tax agents are there for tax purposes and -ve gearing is mainly what is taught at uni. Not saying it’s wrong or right, just that you need to find the formula that works best for you. I believe there’s a place for both but it depends on individual circumstances.
Good Luck
PK
