Forum Replies Created
Hi Cathy,
you really need to talk to the Council to work out how long sub-diving would take, how much it would cost and if 4 or 5 blocks is even feasible. Every council has different requirements in terms of minimum block size, how much of a block has to be put aside for the driveway (for your battle axe block) and any other requirements they have when considering a sub-division. Ideally, you should talk to a townplanner before even putting in an offer. You will be suprised how many issues the Council will raise, and they will all affect your feasibility of this project. It could be very profitable, but you have to get all the facts first.
Hi,
there are many things to consider here. I have done both in the past.
It is easier to overcapitalise on a house, because a unit is more limited in what you can do. Also, remember that even if you fully renovate a unit, it is still a unit in an old block. Getting an entire block rendered and painted is a huge project and it can take many years to convince the other owners.
I would start out comparing the yields between the houses you are looking at and units, post-renovations. This is not easy data to get, and will involve many open inspections that you will have to attend. Also, speak to real estate agents and ask them, if I did and that, how much rent could I charge, how much would the property go up in value?Hi Reginald,
in NSW, there is land tax payable on units if the land you own across all your properties in NSW exceeds a certain value. The tax payable per unit is calculated based on the land the block is on and depends on many factors. For example, I know of a case where two blocks were located in the Estern Suburbs of Sydney. One block had 7 units, the other block 31 units. The land tax payable on the unit in the 31 unit block was higher than the other one!
The only way to find out what exactly the land tax payable is, is to call the Office of the Valuer General with the lot number of your unit. You can find more information on this here http://www.lands.nsw.gov.au/valuation.
Hi Karen,
It depends on the state the property is located in. If it's in NSW and a contract was signed without any 'subject to' clauses, then the seller keeps the deposit if the buyer doesn't settle.
Hi buymore,
I have also once bought an IP interstate and wanted to do it before the end of the financial year for tax reasons, and couldn't get there in person because of work committments, so I bought unseen. I've had no issues with it and was actually pleasantly surprised when I went to see it a year later. However, that was in a small town in a suburbian area. I would be careful about doing this if it was in a city for the reasons mentioned above. It might be opposite a power station, brothel or who knows what. Sending a friend to inspect it, and getting rental appraisals from unrelated agents is the way to go, I think. Also, ask to speak to someone on the Executive Committee and ask them if there are any issues with the building that might require work. An EC member would know about them and is less likely to lie then an agent.
Thanks, wealth4life, for sharing Dent's views. I'm tempted to subscribe, will have a look at it.
Miccalady,
investing in a mining town can be very lucrative, if you get the timing absolutely right. One of our customers bought in Roxby Downs a few years ago when property prices and rental yields were going through the roof. The rent went up another 25% over the next two years (in between tenants), her property went up by about 30% and it looked like a great investment. Then the expansion of Olympic Dam got delayed, then there was an accident, and the mine's production dropped by 75%. All of a sudden, casual workers were laid off, and demand for rental properties plummeted. She said rents dropped by about 30% within a few months (lucky if you had a long lease in place).
So, whilst for a while (or maybe a very long time if things go well), a mining town property can be a great investment, it can also very quickly go bad. High return, high risk..amsaini15 wrote:SandraL wrote:Amsaini,I think you should be able to set up an LOC with your existing lender (MyRate) to access the equity on your PPOR. This then becomes the deposit for your IP. You can then take out a new loan for your IP with CBA or whoever you like. The interest on the LOC will be tax-deductible, since its purpose is the IP. So a pretty good outcome if you can set it up that way!
Sandra,
When you say "This then becomes the deposit for your IP." Does this mean my loan amount will be 80% or 90% for the IP. This will defeat the aim of having 100% loan amt for maximum negative gearing benefit? I do have extra cash as deposit as well but I donot want to pay any deposit for maximum benefits."The interest on the LOC will be tax-deductible, since its purpose is the IP." – Does this mean even if I have paid for the deposit on the IP through LOC, I am still able to claim tax benefit of the deposited amount virtually making my loan 100% tax deductible? Please excuse me I have misunderstood it.
Amsaini,
you take the funds from the new LOC on your PPOR (the LOC will be most likely 80% of your PPOR's valuation minus your existing mortgage, but this depends on your lender) and use that as the deposit for your IP. You borrow the rest from another lender against your IP. So your deposit could be 5-20% depending on the size of the LOC and your new loan will be 80 – 95% accordingly. If you proceed with this scenario, then the entire 100% of the purchase price for your IP will be tax-deductable.I hope this makes it clearer.
Hi Wealth4life,
I am currently reading HS Dent's book, The Great Depression Ahead'. Interesting theories, especially given that the book was written a few years ago. What else is he saying about the stockmarkets at the moment?Thanks,
Amsaini,
I think you should be able to set up an LOC with your existing lender (MyRate) to access the equity on your PPOR. This then becomes the deposit for your IP. You can then take out a new loan for your IP with CBA or whoever you like. The interest on the LOC will be tax-deductible, since its purpose is the IP. So a pretty good outcome if you can set it up that way!
Ladybird,
I think Fredo is right. It might be worth the extra expense if you were selling the townhouses. If you are renting them out, however, then a spa bath is just another item that can malfunction and be costly to be repaired.Propertymistro,
a townhouse would generally have a higher land value as part of its valuation than a unit. So the disadvantage would be a higher land tax (all other things being equal). The advantage, of course, is that if it's in a high growth area, the townhouse should go up more than the unit.Zeable,
as Terryw pointed out, if you borrow against your IP to pay down a loan on your PPOR, the interest is definitely not tax deductable. What counts is the purpose of the borrowing, which is to reduce your PPOR loan. The best thing you could do is pay down your PPOR loan as quickly as possible with any surplus funds you have, rather than paying off your IP mortgage (keeping in my mind I am not a financial advisor).
Hi FrugalOne,
as Richard pointed out, the bank will usually do their own valuation, so you paying for one won't really help you. What you could do is to get a few appraisals from RE agents, take the average, take 10% off (because this will be a market appraisal, and will be about 10% higher than the bank val) and see if you still have an LVR below 90%. If so, then you can approach the bank and say you would like to access some of your unused equity. They will then do a bank valuation and you can take it from there.
Jezzah,
no problem, that's what we're here for!
Marshes,
as is usually the case, the answer is 'it depends'. If the proposed unit blocks were 'luxury apartments', meaning of a highers standard than the existing, presumably older properties in the area, then that could lift values. I have seen this happening in the area where I live. Three new unit/townhouse developments in the street, RE agents claim this has lifted property values by about 15% in the last 12 months.If, however the proposed unit blocks are indeed housing commission blocks, then that would most likely not have a positive effect on property values in the area. Why don't you find out from the council if they are indeed housing commission, what the zoning is, if the council is planning to change the zoning on your property in the future, and also if you can object to the proposed development. That way you know what your options are.
Hi Jezzah234,
we offer listings on domain.com.au and realestate.com.au at a very competitive price to landlords like yourself who don't want to go through a traditional agent.
The brochures and a sign are definitely worth doing. If you have a good idea about the market for similar properties, then you shouldn't have any problems selling privately, and you will save a bundle of money.
Adding a bedroom will be at least $10k, however it should in most cases increase the value of the house by a lot more than that. Adding a bathroom depends on a number of factors. Is there any existing plumbing that can be used? I have previously converted an exising laundry into a bathroom, and it cost me about $10k incl. tiling, toilet, bath, tapware. Obviously it was all basic, nothing fancy. What will kill you is if you have to get all new plumbing installed. If that's the case, then I would guess you'd be looking at $20k at a minimum.
Pleiades,
the main issue you will find with this type of IP is that the banks aren't keen on them, so you will face difficulties in borrowing. Either your LVR will be lower than for a straigh-forward IP, or your interest rate higher, or a combination of both. The yield looks very attractive, but given that only investors will buy them, your potential market when selling them will be smaller, and therefore the banks don't like them. So you will need a much bigger deposit that might be better used elsewhere. They are a good investment if you have a lot of cash lying around to buy them outright.
If you go ahead with this, then think about increasing the yield by being innovative. One thing you could consider is putting in some laundromats (coin-operated) in one of the common basement areas. You could also install vending machines in the same room. I've heard of a case where the landlord made the equivalent of one unit's rent from this.
