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It depends upon how much you use the car – keep an ATO approved logbook for 3-6 months (recording every trip, odo readings & purpose), record all costs (rego, servicing, fuel, oil, tolls etc). Split costs according to what your accountant then recommends.
1) Depreciation – new units have a developer's margin (profit) as well as GST recovery built into the price, they don't give them away. You would have to be extremely lucky to find a unit at the start of a boom/end of a downturn and hold for short time to make a profit.
2) This type of unit is hard to sell – it is the managers who make the money from these deals.
Well some of us have missed a recession (ha ha) and others just deny it. NSW
CAn you be more specific sweeper? What type of investment & what structure (if any)?
No, you have a partnership return prepared and the income is split in accordance with the partnership agreeement/%. This income/loss is then distributed to your personal income tax return.
As for including personal debts into a partnership – the partnership is its own entity (although there is unlimited liability), so personal debts do not come into it unless you are using those assets to fund a loan to the partnership.
Being a sceptic of median house prices, get hold of a copy of the SMH or other median price guide for 2009. Look for suburbs which had massive rises in median unit prices eg Greenwich. This is not generally indicative of huge cap growth but of recent sales of new units which have skewed the results – 2009 will show a drop in median prices (unless there are other stages/developments to come online this year). Those suburbs which have had big drops have been affected by both the general slowdown and the previous years developments having washed through the stats.
If you could insure it (I don't think the insurer would question whether it had been approved or not) then, if it burnt down you could lodge a legit DA and get it approved.
Don't know of any houses in Balmain, Camperdown or Chatswood for that price range, do you mean units? (Even then you'd struggle for anything more than a decent/modern one bedder except at the top end of the price bracket).
As it is an owner-builder, all the more reason to be wary. They will need to provide you with home owners warranty insurance (will be very difficult to get if there have been no approvals or inspections).
You would want to pay less than land value due to the risk of council demo order and the cost to demolish so that you would be in no worse a position had you bought a similar but vacant block.
When you say that the house has not been approved, is it a new house (recently built)/additions or a house built say 30+ years ago?
In order to have the house approved you will probably need to submit a DA as well as have engineer certification of footings/structure and certification from a building certifier. This may involve destructive testing of footings to ensure that they have been built correctly, opening up of walls to reveal frames/flashings, removal of tiles to reveal waterproof membranes etc
By rights council can order the demolition of unapproved structures.
When all of the above is considered, will the place still be a bargain if you have to demolish and rebuild?
It is very much horses for courses scenario: low entry costs compared to a house, budgeted annual costs for maintenance (strata levies/sinking fund/insurance etc), no mowing/grounds to worry about, easy care.
Units appeal to a different demographic, especially outside of the capital cities. You'll need to understand who wants to live in a unit in the area, whether housing costs are driving people into units, supply/demand for one bedders, competition, capital growth projections/expectations, town planning (for further units/land releases), wider issues such as if/when a dam may be built etc. Factors such as proximity to shops are more important than location near schools (one bedders wouldn't have kids to worry about).
Simply put, no there isn't. It is treated in the same way as a holiday house or any other property (except productive rural land). I'm not sure what the threshold is in Vic but you would generally be liable for tax above the threshold. It would not be unreasonable to generate a nominal rental (or enough to cover the outgoings/insurance/rates/land tax/interest etc) and claim it as an investment property (speak to your accountant about this approach).
According to the SMH prices are set to continue falling throughout Oz. When you read on, they say 18% (avg) from 2003 highs, which is OK provided that you didn't buy at the peak as your losses will be less (if you sell). On the otherhand, you could well be buying at 18% less than what the vendor bought the property for. Add that to the FHBG and you've made a motza (depending how big you think a motza is).
god_of_money wrote:Too specific type of invesmentSo are residential units, industrial, commercial, retail, hotels, pubs, storage units – each one has its own market, risk profile, returns etc. It is up to the investor to determine their property mix.
An expensive bit of realestate which could be seen as a high risk – that is, availability is subject to planning laws (is council restricting the number of parking spaces in new developments thus increasing competition/parking space levy increases/land tax).
As for the gst, unless you're registered it will make very little difference. Commercial tenants will be more concerned about getting an invoice.
jazamite, some will disagree with my reasoning, these would be considered capital costs as they are part of the work required in order to create the new blocks, the physical works could not take place if you had not done these works. However, in saying that, these aren't costs that can be depreciated, so they would need to be added to the 'cost base' of the land. To back this up, they are not costs which can be directly related to generating an income as this is vacant land, similar to interest costs/rates etc (unless you have found a way to derive income from vacant land eg the property is considered stock in trade as you carry on the business of land subdivisions & construction).
shangrila00 wrote:Hi All,I'm interested in investing in commercial property, and while I generally know what to look out for and where to begin prior to investing, my main concerns are mainly financial –
1. How to actually get started without a lot of (and if I can avoid it, any) capital input from me (I'd be relying on the banks for this exercise);
Banks will generally fund up to 70% so you will need to stump up 30%.shangrila00 wrote:2. Whether I'll need any deposit to initiate something so big and financially important (or can I just rely on Mortgage Insurance?);
LMI is no substitute for a deposit, refer #1shangrila00 wrote:3. Should I really be that brave (or perhaps stupid) and invest in something that will more than likely not return as much as what the bank would otherwise want from me, in terms of monthly payments (e.g. a 6% yield against a 10-11% bank interest)?;Which banks are lending at 11% on commercial? If you shop around, you will find plenty of commercial property with net yields of 7%+. These properties are leased (often with reasonable terms remaining ie 3+ years). Most commercial properties are advertised on the basis of net rentals (regardless of the lease being a gross rent). Prices are quoted as ex gst (though if they are leased they can generally be purchased as a 'going concern'.
shangrila00 wrote:4. I have a house with plenty of equity in it, but do not wish to use it as equity or security against a loan for a commercial property (I'm guessing this won't be in my favour, but I really don't wish to risk my residential property!)You will have to provide the equity or deposit from somewhere.
Sam, outgoings are very subjective on units and vary widely depending upon several factors – age of building, owner/tenant mix, no. of units, services (lifts, concierge/onsite caretaker, pool, grounds maintenance/landscaping etc), and the list goes on. By rights, a 1/1 may have proportionally higher costs associated with it as the floor area is usually not that much smaller than a 2/1 (the difference being only a bedroom – they still have bath/kit/lndy/lnge/din) however a review of the unit entitlements on the strata plan will reveal how closely the ratios reflect the charges.
I'd also throw in Mitchelton/Gaythorn – rail access/schools/sub-regional shopping centre (can't remember prices around the area but they weren't too bad a few years back).
