Hi,
I believe the over 55’s units are good low cost entry into investing or a great general cash + investment, which supports debt servicing as ones portfolio grows.
One key item is the Manager – what is their tenant turnover like – if the tenants are not happy they will move on like any property. See what seniors competition is within a 5 or 10 km radius. These units are for low/mid income/pensioners so high cost/middle class plus communities are not really competition. Must also have within 2 km or so a doctor, hairdresser, supermarket, etc. A milk bar, newsagent and bustrain within very easy walking distance.
Your capital gain will be moderate and should be just ahead of inflation.
The cash flow must be positive, all body corp & agreement costs clear, etc.
The Management agreement must have a termination clause so can get rid of Mgr and also same for bidy corp Mgr if they don’t perform. They usually have 10 – 20 yr license/management agreements or ownership.
I can help with the numbers if you wish. I am currently involved in the development of a similar community, have bought same also.
e mail me on [email protected] if you want specific info. I don’t get on forum very often so may not be able to contribute in near future.
Regards,

Steven B

http://www.homesteadlife.com.au

Hi Sanjiv,
Your strategy sounds good. I think the Dandenong area has been a little under priced in general the last few years, not too much though. I was looking in Eummemerang ( or however you spell it) not too long ago.
I think you need a property of reasonably good standard, close to public transport, etc in this area.
I agree that the standard of tennant may be an issue also.
best of luck

Steve B

http://www.homesteadlife.com.au

Have 14 props (ex residence) with current LVR of about 60% – plenty of equity left. Cost about 7K pa to own before tax – positive after tax. 1st one approx 10yrs ago, next couple over a few years, then got into it. Could have done a lot faster but was very conservative back then.
Target positive geared when possible, but always cash positive after tax. Always borrow atleast 100% of purchase price.
Few off the plans on the go – for cash flow not capital growth, and some development.
Looking to bust the rat race 2010.
Get into it – look for properties and opportunities maybe little different for +cf these days.
Good luck – the first 2 or 3 are the hardest.
Ronny

Hi katfrat,
ask for referee’s, ask for randam selected with names starting with a particular letter so hard for them to specifically select. They may not give to you due to privacy issues, but say you just want name & phone number.
I have found PM with larger rent rolls with multiple staff in dept do a better job and larger franchised agencies also, as they can get support if need be.

good luck
ronnie

Your expenses are deductable anyway. Sounds like what your asking is, for example, can I have a vehicle as tool of trade, claim full cost/expense, etc aginst income of work done on your own property.
Theoretically you could do this but with little advantage or significant increased risk of claiming unjustifyable expenses – could be dangerous.
I am far from an advisor in such matters, and only my opinion and what I have learnt, however you could operate in one business/tax entity and have properties in another, but the net result could probably be the same with more complex affairs. It could also depend on what else you do for income, other entities you may have or operate.
This ones for the experts, and dependant on your own situation.
Remember, you can minimize tax, but is not cricket to avoid tax. The key I suppose is to learn or be advised within the rules.
Good luck.

I am told and hear that lenders don’t like less than 50m2 but I have not had a problem, using equity though – so I suppose any more than 80% LVR might be a problem without other equity or the balance in cash. Your student accom deal seems too good to be tru.

I reckon half of you are bored

Hi,
you have a few goals. list them and prioritize. get some professional advise on best how to achive the goals and maximise use of cash. In regard to purchasing an IP – do from a pure business/return perspective and a distance away from you, so you don’t spend half your time looking at it – the novelty wears off over time anyway, especially as your portfolio grows. Make an informed & researched decision and get on with it.
All the best
Steve B

Hi Clones,
I am far from an expert in all markets, however with a little equity you can purchase a cash positive property with someone elses money, cash on cash return can be huge. Also can use equity and gear on trading markets but probably not more than 50 or 60% – cash on cash return much lower. A company can go bust and dissapear up its proverbial, property may stagnate, even reduce in value a few % but over time is possibly more stable. remember – cash on cash return.
Steve B

Hi Beegee,
why not do both. Get cash+ IP as well as pay down your mortgage as much as you can or even faster over time. You’ve got plenty of equity to borrow against – if you purchase and is CF+ and/or +geared you can maintain or increase rate of mortgage reduction. There are plenty of other influences & factors such as lifestyle, aspirations etc. to obviously consider. You may be in a position to purchase more than one cf+ property. I am not qualified to advise and these are my thoughts only.
All the best.
Steve B