Forum Replies Created
Your choice, depends on your end goals.
PErsonally I would consider selling and then using the cash for deposits on two more places in areas that you feel there is some growth, that way you’d have two appreciating in value over time rather than the one.
PK
I’m wiht Rhys on this one, if you get the pool pay the extra for all the added equipment so that it virtually looks after itself! A friend has a pool setup with all the fruit and they actually enjoy the pool because it’s not hard work.
Have Fun
PKRender paint is marvellous on fibro houses. No where near as expensive as recladding. Dulux and Bristile both have products that look great.
PK
OK, there’s several questions here, I’ll answer the ones i know the answers to and leave the rest for others:
Capital Gains – is only paid on the portion of the time that the home was rented ie: if you owned it for 10 years and rented it for 4, you’d pay gains on 4/10th of the gain made. Now I think (perhpas someone else can clarify this), if you feel the majority of the gain was not duing the rented time, then you can claim the gain that related to that period as long as you can prove that to be the case ie: perhps get a valuation before starting to rent it and if you move back in then get another valuation when you stop renting it.
b) YOu cna only clain the interest part of the repayment and not the whole repayment.
c) Yes, you can claim depreciation, best to get a “Quantity Surveyors” report done prior to renting it as that will speicify the vlaue of things that can be depreciated unless you have original cost for EVERYTHING relating to the house, in whihc case you accountant may be able to do it. I’ve always foudn the quantity surveyors report the best way to go and you can claim the cost of it too.Hope this hleps a bit.
PKWell, I had a case of termite tracks being found that a report didn’t indicate, however no live termites were found (luckily).
However I complained to the agent that had recommended him and suggested they should seriously reconsdier using him. Well, they spoke to him and he refunded my money with an apology. Further i compained to the settlement agent that had told me it was “tough bikkies” and I had to buy the property wheras in actual fact they should ahve recommended I seek legal advice. They also refunded their fee.
So, in short, I was lukcy as there wasn’t termited damage in the house, even though their were tracks underneath it. The damamge was confined to a tree outside.
So in short, the refunded monies paid for a full treatment of the house (just to be on teh safe side).
My advice:
a) Find a good agent and try and use them all the time.
b) See a lawyer about having a termite clause written up that you can use all the time that would suit you and not sue the standard one in the contract.
c) There’s not a lot you can do if the termite inspeciton misses the termites, although I would expect you could take action if there’s a lot of damamge that would obviously have been there (ie: no way it could be new). Could be costly though, but you could always start with talking to your state “Fair Trading” dept.Good Luck
PKWell I hope you were able to copy and paste all of that in and not type it?!
PK
Perhpas you could encourange your solicitor who “missed the problem” to now “sort out the problem”. (Perhpas it could be suggested to them that this should be done free of charge due to the incorrect advice being given in the first place).
PK
Yep, plenty of us here form Perth.
Properties can be found, not easily and depends what you’re looking for. Have you read McKnights second book abook about turing properties in to +ve cashflow rather than buying them that way?
PK
Two car family here (the 3am starting time for hubby is the deciding factor on that!).
I have an 88 Toyota Corolla that runs just fine, even the mechanic says to keep it. The only catch is it’s not no air con. About 320,000km’s on the clock
Hubby has a 90 Suzuki Seirra. Just clocked 300,000km’s. Also running well but also without air con.
Will update one of them soon with part proceeds of one of the IP sales. And it will have air con!
PK
Hi everyone.
Firstly Thanks.
Rhysadams, property B & C were sold (well, have the potentail to sell so I’m working out whether it’s worthwhile to do so).
I thought the calculation was as Monopoly said, however I recently had someone tell me that this wasn’t the case and that the capital gains would be calculated at whatever the rate was that my earnings had been for the year ie: my earnings without the captial gains would be in the 30% bracket so therefore the capital gains would be taxed at that rate.
However, if what Monopoly says (and it’s what I orignally thought) that the capital gain amount is added to the earnings and then the tax rate applied, it then means I’ll be taxed on part at the rate of 42%. If this is the case, I would possibly wait on selling one of them until next year.
Thanks everyone.
PKFriend is there at present. Prices vary a lot, along with type and quality of buildings, some are very old. Then some are new and cheap beacuse they are in a village with one bus a day! So I think you’d need to know the place before buying, ie: take the trip!
PK
Well, that’s a hard one as builders chagne contractors etc frequently, so what was good once, may not be next time.
However, we used Ross Griffen when we built 5 years ago and they were on time, high quality and good tradsmanship ie: when we got a painter in later to paint he commented that it was the best plaster job he’d seen on the walls for a long itme and consequenlty the quote for painitng was less than normal as not as much preparation work was then required.
Like I said things change often and frequently so all I can say is they were wonderful 5 years ago.
Regards
PKI think “good on them”, they took the risk. The risk they have taken is not quite one I’d like to take as it’s too high for me, but then we all have different levels of risk acceptance. They were willing to take that risk and now have the reward for having done so.
I don’t have a problem with relying on the rent for repaymetns as long as you factor in vacancy time. I do have a problem with replying on captial gains in order to pay the mortgage repayments, what happens in a downturn? But they have got further ahead by taking that risk. Good on them, but I’ll keep going my way, I can sleep at ngiht then.
Pk
Could work, but make sure you’ve included all relevant costs ie: buying costs such as stamp duty, subdivision costs, selling costs ie: the agent etc. What about mortgage repayments while holding to do the subdiviosn and while selling.
If after allowing for all the costs you still come out in front then check out the council criteria for subdivision where you are and make sure the house is situated in teh right part of the block to do what you wnat, it’s amazing how many ad’s say “subdivision potential” but when you speak to council the only thing that gives it the potential is teh size of teh block. Ofter there are requirements for the minimum size each subdivided block can be, how much room from the front street to the first house (will a house actually fit once subdivided), some coucils even hav ea “minimum” that the street frontage must be ie: 20m across or soemthing liek that. These things vary depending upon council so check it out in the are you’re thinking of doing this.
Regards
JudyYes the place in Mt Lawley on teh train line is Ross’s Auctions.
There was a thread called “Purchasing Power” or something like that that related to WA. See if you can find that through the search.
Good Luck
PKDo a search on Perth, there was a thread that had a lot of predicitons in it and it had new prediciotns added not that long ago.
It was started by Marisa I think, that might help narrow down the right thread.
Regards
PKWhy not see if the purchser will let you learn along the way, the worst they can sya is NO. If they say yes, then you could learn a lot.
Good luck
PKAnd don’t forget to allow for capital gains to come out of any profit you do make as well
PK.
Hi,
We have renovated acouple and looking at figures only, I’m a bit skepical that this would make money.
Here’s how I see it:
Purchase $165000
Reno $ 40000+ (you need to include power etc)
Purchase Cost $ 6000 (S/D + Conveyancing)
Mortgagae while reno $2000 (2 months mortage during reno, more if doing it yourself as it will most like take longer)
Mortgage while Sell $2000 (2 months mortage while selling)
Sell Costs $7000 (RE fees to sell)Total costs $222,000
You said the average house in the area was selling in the $220’s. You’d need to sell for more thatn that to make money on this deal or you’d need to get the price down a lot more.
This doesn’t allow for things you “find” when you start the reno that you weren’t aware of and there is always something. It’s also being conserative that the reno would be completed in 2 months, and sold within 2 months after that. If you’re going for a higher than average price to cover you’re costs then it most likely won’t sell withiin the short time but may take longer, which means more costs.
Also in the reno cost of $40,000, did that include connection of power, gas and whatever else is there and then the bill for usage of the power, water etc by yourselves or your tradesmen? Was the garden included in the rneo costs, often you need to replace plants or repair retic or you’ll find termites in a tree when you cut it and then need the termite fellow back. There’s hidden costs to what seem simple tasks.
Now that I’ve been all doom and gloom, don’t give up, just make sure you always consider all known costs and then add a percentage for the “unknown” as well.
Good Luck
PKIf IP’s are in both names as joint tenants then be careful as it’s hard to prove arm’s length, at the very least he should keep track of hours spent and then only charge yo for you 50% of the time, still get ABN and put it on tax return as income – I’d seriously talk to an accountant as to whether this shoudl even happen when it’s joint.
If properties are in your name then slightly easier as he’s then doing the work for you without him having a direct interest in the property itself, but I would ahve him get an ABN and claim the income on his tax return etc.
Our accountant is happy that I do the latter but not the first. I’d run it all past an accountant first.
REgards
PK
