Forum Replies Created
Yes, Catalyst – A is NOT living at the property. B is living there rent-free (in that they don't pay rent to A), but they're paying their share of the mortgage (rent to the bank).
I understand if A is living in the property, then it's a PPOR, not an IP. A pays their share of the mortgage too, but see no rent as such from B, as it's B's PPOR (why would B pay rent to A when they're paying a mortgage for their 50% share?). I see what you mean, though. No rent = no tax benefits can be claimed. It's as simple as it gets, I guess.
Reading through the scenario again, it would appear B is getting the better end of the deal, as they would be paying their share of the mortgage, living in a property that's their own PPOR (which then has no CGT when they sell), so A has no benefit whatsoever. The only thing I can think of is that A would be of use to B in being able to obtain the loan in the first place, as A's serviceability isn't great from a bank's perspective.
Thanks for the input!
I rang Council today. It is what it is.
The majority of the costs are services-related, although it still doesn't excuse how much, costs-wise, they're actually charging. Efficiency might be their biggest problem and how they're using their money. The fact that they're struggling as a result of other factors (e.g. tourism) should not, in my opinion, affect what property owners pay for their rates.
This reminds me of a movie scene – "You want $5 for a $1.99 hot dog and you're wondering why the Democrats are in trouble".
Thanks JacM. I'll be ringing the council soon to find out how they decided to value the majority of the base rate. There's nothing on the notice to indicate what value they've put on the property and consequently nothing for me to use to find out how they figured out the final cost. The other costs were in the docs they sent out with the rates (I can live with those).
Your council, however, seems to be kinder than this one, at least partially explaining why they've raised their costs. The document I received in addition to the rates notice only mentions the costs, but not why they are what they are.
Stay tuned…
I've recently purchased the property, but there are horror stories online about how much they've risen since 2008 – double digit increases, percentage-wise.
It's a shock to the system, especially when I'm used to paying half the cost for my own PPOR and it's worth so much more than the IP. The only positive is I can claim it come tax time, but it seriously casts a doubt over the efficiency and effectiveness of council up there, how they spend their money, and how they've based their rates.
As a percentage of the property's value, it's through the roof!
I have. All of them. They still haven't indicated on what basis (and why) they've calculated the rates the way that they have.
Absolutely appalling!
JT7 wrote:engelorumora wrote:Hi Jack,Thanks for your interest and support mate. I value your kinds words and would love to hear your story about your investment dreams.
Kind regards,
Engelo
It's an absolute pleasure Engelo…… It truly is a great success story and a wonderful example for others of what can be accomplished if you set your goals and stop at nothing to accomplish them.
I've just sent you a PM mate.
Jack
So did I… In October of last year, but still waiting to hear back…
Otherwise – good work.
Thanks for everyone's comments so far!
My plan is to do a cosmetic renovation on the property and rent it out. It's a bit of a dump at the moment, so the renovations can't be too flash. Must be in a decent, liveable condition, with a reno on a budget.
Painters, for example, are quoting me an arm and a leg, however! The amounts I'm being quoted are worth about 30 weeks of rent, so even if I personally did the painting, I can take my sweet time doing it and still come out on top (obviously I won't take 30 weeks to complete it).
I've run the to-do things past my property manager and she agrees with what I have in mind, advising me any more will not be necessary. Hence, I'm trying to keep costs at a minimum.
This is my first IP reno, so learning curves ahead…
Thanks for everyone's input! Plenty of food for thought here. I'm definitely looking at those who have acquired what I want, following their lead and paving my own humble way to what I want to achieve. I settled on an IP yesterday and looking forward to the future!
It's hard to be positive around so-called investors, whose advice is to purchase the "more secure" option of shares (?!?!), negatively gear them, and wait for the magic fairy to do her thing. Oh, and apparently CF+ properties is not the strategy to wealth accumulation. Obviously those 30+ years of experience in real estate haven't amounted to much.
Thanks again!
I've been asking myself the same question. Knowing my risk profile (very risk-averse), I've decided to do it. A good property manager (and landlord's insurance) will take some of the hassles out. If tenants are paid via Centrelink (e.g. a pension), you can have an arrangement with Centrelink where the weekly rent is sent directly to your account (don't have to rely on the tenant to pay you each week – it's already been done for you). Yields are generally higher and if you keep the property in good condition, good quality tenants will come around.
Check out the growth history of the suburb and what it's been doing for the last decade or so. There are good and bad pockets in low socio-economic areas – drive by and you'll see what's what. Talk to agents and put yourself out there. There's always an element of risk with investment, regardless of which area you buy in.
Point taken.
The IP I have in mind is in capital city metro area, with sales history since 2003 indicating there's been a 50-60% increase in values since. So they've doubled for a decade. That's not to say it'll happen again in the next 10 years, but it's a comforting thought, at least, that the area's been growing.
How do you handle serviceability/holding costs during the development (which I know can last a while), especially if more than 2 or 3 at a time are involved? Assuming you're only relying on income, that is? And if they don't sell for expected/wanted prices?
Higher interest rates = better economy. Things won't be so grim then.
When you put it that way, it's seemingly risk-free, but all investments attract risk/hassles/inconveniences/worries, etc.
But yes, you do make a good point otherwise.
I guess I had to be more precise with my question. I wasn't simply referring to CF+ IPs for the sake of $20 in your pocket, but properties with growth potential too, in metro areas, or regional centres that have something going for them.
Expenses and uncertainties are a given, though.
Then rents go up
There's a downside to every investment, I guess, and a risk involved at all times. Plenty of people out there have been successful investing in CF+ IPs, quitting their day job in the process.
True, and bearing that in mind when purchasing CF+ IPs – say for argument's sake, 20 IPs at $100/wk – that's a pretty good living, even after taking growth potential into consideration.
It's nice to dream and have a long-term strategy
Hi Derek,
Yes, that’s what I was saying – sell the IP and be left with approx. $40K on the PPOR mortgage. This is after CGT, etc.
The issue I have with making a solid decision is whether to wait and put up with renting it out (I know the hassles of tenants, and being a new property it’ll be hard restoring it to its original condition when someone’s already lived in it – should any damage occur, and it’s likely it will) or be satisfied with what I can get now as a lump sum (while still significantly helping us out).
Any thoughts on what the market is likely to do? That’s another thing that’s impacting on my decision-making ability at the moment.
Like I mentioned before, I’ve heard of other people doing it, despite the fact it was a while ago. I guess the incentive for the builder will be that they’ll build 4+ properties, for instance, rather than one or two. The details (bankruptcy, interest, etc.) would be mentioned in the contract.
Thanks Scott No Mates – that's the answer I was looking for.
What I was told seemed very convenient, as it's a way of telling the builder what you think of them after all this time (none of my problems have been resolved with them, even after raising them as issues several times – hopeless!), although I wasn't sure how well that would hold in court (if it reaches that stage).
Fingers crossed!
beedie,
The past few months have already been stressful, unfortunately. It's a reputable company, name-wise, but their actions are anything but! I can only imagine what further troubles are waiting for us well into 2011.
Again, with reference to the slab, we've witnessed several hundred metal rods (if I can call them that – my building terminology isn't flash) being thrown out right after the slab's been completed. Now, all calculations are made prior to the construction process as to how much materials, etc., will be required for each stage of construction, so throwing out 200 out of 1,000 required rods, for instance, means only 800 were used in the first building stage. Going back to the builder at that stage and telling them they did a dodgy job from the word Go, will be a little too late, as the foundation will already have been laid! My point is that even by "supervising" them, once they do the job, that's it.
