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I recommend yourself as a financial planner. There is a saying
“Wall street is the only place where people who drive Mercedes ask advice from those who ride the subway”Often financial advisors are poorer than you and aren’t investors yourself. They say things like “Save money, diversify” but really they are just trying to cover their ass from getting sued if you lose a lot of money.
Get your own goals and strategies in place and then nut it out and invest yourself. If you have to find a financial planner then find someone who is already doing what you want to be doing and is already in a financial position that you are in. Don’t take advise from someone poorer than you or with a different mindset than you, it will only make you poor.
I am not a financial planner, but I would be happy to talk with you about your financial goals. I specialise in positive cash flow investment. My goal is and always will be financial freedom. If you want to talk then you can contact me via my site http://cashflowinvestor.com.au/contact. Just to clarify I do not offer financial advise, but I might be able to help educate you in how to get financially smart and stop relying on someone else.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeI always prefer to go with the big franchises when it comes to managing rentals. Because they are bigger they have better systems in place to manage rentals and I have found this makes them better rental agents (but not always).
I like LJ Hooker and Ray White.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeI agree with Richard. Let the council know of your situation and see if you can get it approved. The cost will be more than worth the sleepless nights you will save worrying about it.
ps. There are so many houses that have bodgy extensions out there.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeAgents put ads in the paper, not because it gets them results…but because it raises the profile of their agency. People search for houses on the internet now, not in the paper. So maximise your internet profile. Put your listings on realestate.com.au and domain.com.au (by far the two biggest property search engines). Put in some great pictures and explain what the buyers are getting. Point out the things that make your house different (and better) from every other house in that area.
Can you put a link to your listing in this post? I would love to see your house and what you are asking for it?
ps. If the house is cash flow positive maybe I can list it on my site for you.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeSounds too good to be true. Maybe have your accountant check over things and see if they can find any discrepancies.
You might be better off seeing a mortgage broker and looking at refinancing your loan. They might not look for discrepancies in payments, but they could save you thousands a year by getting you a lower interest rate. Or have a look around at the banks and see what they offer and look for a great deal yourself.
I know BankWest and St George have very good interest rates.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeWhat you are doing to help your parents is noble. But would it be easier and better for them and you if they simply sold their place and downsized and bought a place off someone else.
As a new investor doing a development could be a difficult first step. Putting your parents in the mix could make it even harder for everyone. It might be an idea to do it yourself and leave your parents out of it. Just thinking out load here, no need to take my advise. Just try to be really careful because when family gets involved it is no longer just an investment…it’s personal.
If it is for investment only then yes I would agree with what others have said and go I/O. This way you can maximise your cashflow because you can minimise your outgoings. It also makes your tax return a bit easier and maximises your reductions. With only around 5% rental return you are going to want to do your best to minimise outgoings so you don’t have to pay huge amounts each month that you can’t afford.
It is an interesting situation so good luck
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeI am all for positively geared property. The question is a little silly. What is better, to put $100/week into your pocket, or to take $100/week out of your pocket?
Either positive or negatively geared it is still the same house and will get the same growth. So it is better for it to be putting money into your pocket than taking money out of your pocket.
What is your goal with investing? Do you want to achieve passive income or growth?
If you are after growth then maybe you should get your property revalued and draw on the equity to buy another property? Just an idea.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeI would be different from everyone else and say it depends on what your goals are.
What is the purpose of having your property valued at $650k? It is only worthwhile spending money on the roof if you want to borrow your equity and you think you will get more money from borrowing equity (due to a higher valuation) than you would spend on the roof.
Lets say you wanted to draw out $100,000 for another investment. For this you would need to increase your valuation by $125,000 (assuming you can only draw out 80% of equity). Say if you don’t do the roof it only gets valued $100,000 higher and you can only draw out $80,000. But what if you spend $20,000 on the roof and the valuer only gives you a $125,000 increase. You can then draw out $100,000 but you had to spend $20,000 on the roof so you end up with the same result.
So it depends on what you want to do with the money. If you were selling then I would probably say yes, you want top dollar in a sale. But getting it revalued is a different situation.
So what did you want to do with the money? Are you going to draw it out? Or is the revaluation just to make you look better on paper?
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email Me@ Daniel – You say it is $5k positively geared and you ask if that is good. See the problem is what is good for one person might not be good for another person. For someone earning $40k/year in their job, an extra $5k from their investment would be awesome. But someone earning $200k per year, then $5k would be pocket change.
It all depends on your goals and what you are trying to achieve from investing. I can achieve $5k per year (almost) in passive income on a property worth one tenth of the price of your property. Does that mean it would be a good investment for you? Not necessarily. It depends on your goals.
Do you want growth? Do you want passive income? Do you want to invest in capital cities because you feel they are safer?
Your property sounds pretty good. Having $230k in accessible equity puts you in a really good position to buy again.
I would look at buying a place to live in in QLD, but I wouldn’t stop there. If it were me I would be looking for a whole bunch of cheap positive cash flow properties to get your passive income up and spread your risk and growth potential over a few different areas.
Having tax benefits on losses is good, but it is always better to make money and pay tax than to lose money and save some tax. Well I think so anyway.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeI am looking into subdividing also. I would like to know how much it costs to subdivide a property into two blocks.
Looking forward to seeing the responses in this thread
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeI WOULD NEVER BUY A PROPERTY IN MY OWN NAME. Not even when you are starting out.
A trust effectively costs around $300 to set up with Cleardocs. If you use an accountant to set up your company and your trust for you it will likely cost ONLY $1,300-$1,500. A tiny amount considering the asset protection you get. On going costs are around $250/year for the company and $0 for the trust.
You need to set up a NEW NON TRADING company to act as the trustee. The directors of a company are liable for that companies actions if the company is trading insolvently. If you use a NON TRADING company it is impossible for it to trade insolvently and thus you as a director are completely protected.
Basically with a trust structure you are protecting yourself against your own negligence. and with buying property there is almost ALWAYS going to be some negligence you will miss. Insurance doesn’t cover you if they deem you to be a negligent landlord.
Trusts can also be better for passing on ownership to children or spouses.
PS. It might not be wise to listen to your financial broker. They are brokers because generally they are broker than you. My accountants tried to talk me out of the company/trust structure because they didn’t understand my long term investment plans. I went ahead against their advice and never looked back.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeSack your mortgage broker he is feeding you lies!
At the end of the day a mortgage broker is a typical salesman, if the sale appears to difficult they will back out.
I am sure there will be banks that will lend you money for your investment if you take into account both you and your wife’s income. If they don’t like that then try accessing as much equity as you can to invest with. It costs the same (almost) as getting a new loan but might be easier to get approved.
Approach the banks yourself and don’t trust your mortgage broker’s advice.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeI would love to find one in Sydney. Where are they?
Ryan McLean
http://CashFlowCapital.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeWell it seems you have already had your question answered. I would have said the same about NOT going with one lender because you are increasing your risk.
You may want to look at purchasing all future properties in trusts. You said you want to be aggressive. If you are buying properties if your own name then you are opening yourself up to all sorts of litigation. If you are sued on one property then ALL your properties can be taken from you. So do the right thing and look (seriously) into using trusts for all future investments.
Good luck
Ryan McLean
http://CashFlowCapital.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeI am currently looking for insurance for a property at the moment. Anyone know a good insurance broker?
Ryan McLean
http://CashFlowCapital.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeSeriously,
If you are going to do it DIY then do it yourself. If you are going to get someone to help you then go the full flog and get a real estate agent.
People always try to skimp out of paying real estate agent’s their sales fee. But chances are they will get you a higher sales price that will cancel out their fee if not make you more money AND you didn’t have any of the hassle.
My parents sold their property for $825k through an agent, and they wouldn’t have been able to get $800k themselves. So the agents more than paid for themselves.
Don’t be cheap, consider using a real estate agent
Ryan McLean
http://CashFlowCapital.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email Me@ John – I wouldn’t stress about those links. They all add to this post so no one is going to prosecute you for putting helpful tips up on the site. As long as you are adding to the forum and not be a spammer then links are always helpful.
Thanks for this post. To tell you the truth I just skimmed though it as it is pretty damn long…but some of the research and information your provided was helpful to me and will be helpful to a lot of other people in this forum…so thanks.
Ryan McLean
http://CashFlowCapital.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeI would either go the split. Timber living areas and carpet bedrooms, or I would go fully timber. I would never go fully carpet. Especially not if your floor boards are good.
Carpet is cheap to replace, but needs to be cleaned whenever a tenant moves out (usually done by the tenant but not always). Floorboards cost nothing once they are reading and only need to be swept when a tenant moves out…super easy to maintain.
I agree with Toni….speak to your property manager and see what they think. But at the end of the day you are the investor…you make the decision based on your research and what you think will make the most profit. Most real estate managers are not investors and thus I wouldn’t take their advice as the be all and end all.
Ryan McLean
http://CashFlowCapital.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeWe can’t answer whether or not it is a good investment. What might be a good investment for me might not be a good investment for you. I have seen good investments go bad because of bad investors and seen what looked like a horrible investment make a ton of money because it was run by a great investor.
To determine whether something is a good investment or not I would first need to know your investment strategy. What are your goals? What do you want to achieve?
Do you want to achieve positive cashflow? If so this property probably isn’t the most cash flow positive property. Any cash flow you make will be eaten by the strata fees. You are looking at paying almost 19% of your YEARLY rent into strata fees. That seems like dead money to me. I would much prefer to buy a house and LAND!!!
If you are after growth then it is speculative whether it is a good investment property. As Basbog said, the market in Cairns is boom bust. So it could be good, it could be bad…it depends how the market responds.
If it is positive cash you are after stop chasing units with less than 7% rental income. I find better details that that everyday and share them with my members. Have a look at my site (link in my signature). If you need help then my site could be the place for you.
So, in conclusion, get a goal and an investment plan. Then weigh the property against that investment plan and see if it fits in. My investment plan is to invest in positive cash flow property so for me this is a BAD investment. What is it for you?
Ryan McLean
http://CashFlowCapital.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
Email MeI have never personally worked with a buyer’s agent. But from what I have seen they are good for two things:
1. For the home owner who wants something very specific for their home. This might be a relocation or it might be finding the home of their dreams
2. For the lazy investor. Someone with money, but no time to invest it. They send a buyers agent out to buy property for them.The first reason is good, the second reason I would never use. Mainly because of the expense. Buyer’s agents charge you 2-3% on the purchase price of a property. On a $600,000 investment property you are looking at $12,000-$18,000. The problem with that fee is that it nullifies the first $12-$18k in profit you make. But if it is a long term investment it could be worth it.
I started http://CashFlowInvestor.com.au because I wanted to offer people a cheaper option than the buyers agents are charging. Basically I find positive cash flow property and give the details to my members. I do less than a buyer’s agent would do, but I do the hard yards (finding the positive cash flow properties).
I am also looking at doing some buyer’s agent work myself. I have some clients who want very specific properties (such as vendor finance deals and positive cash flow properties in specific areas) and so I am looking to become a buyer’s agent for those clients.
Are you looking at using one yourself? or becoming one? What makes you curious?
Ryan McLean
http://CashFlowCapital.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
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