Forum Replies Created
liviwell,
what you do is have all your bills etc sorted out, this includes your depreciation schedule, rent coming in etc. get a good accountant and they fill out a form called a 221D.
this is basically asking permission to the ATO, that instead of getting your losses at tax time, they be reduced from your income tax fortnightly. you will have to have all paperwork to do it, and any changes ie interest rate rise etc you have to put in another claim. you are also at a higher risk to being audited by the ATO. so you really do need to have your s#$t together.gday wirrumbirra, and welcome to property investing. there are heaps of us here in canberra and we try to meet pretty regulary, so keep an eye out. we normally advertise on this sight when and where we are going to meet. we dont really have a mentor, but we do show each other numbers etc to see if we’ve done it right. Melbear is very cluey on this stuff, and fortunetly for those on this sight she answer’s every question we may have. just keep reading books and learning from everyone here, you will pick it up.
enjoy
shaunYou’re absolutely right about appartments, i have two, and am currently looking into a block of units.
the problems i find are:
usually there’s already a carport, so you cant increase value that way, and if there isnt a carport you have to convince all the other owners to fork out money to have one put in.
usually a snappy repaint, some carpet and a cheap kitchen can increase the rent and value of the property.
bodycorp and council rates, you need to have an accountant who will put in a 221D to the ATO for you, this costs money but frees up the 2000 odd dollars you paid in those fees. and reduces your income tax per fortnight.
If you buy in a good area the tennants will police themselves and are the first to complain about loud parties etcWhen: September 2003
asking price 220,000
purchased 210,000 (fully furnished)
buy and hold
weekly rent 265 p/w
(in after tax dollars) $74 a week
(neg geared pos cashflow)
of note is that darwin, in last quarter went up 38% in capital growth in the area i bought.melbear, and pinnit
thanks, i just wanted to bounce some ideas off people here, as for the accountant, he is pretty good. he only calls me a tosser when i think up some hair brained scheme to avoid/reduce tax. nothing wrong with that its just that i dont pay enough tax now to justify spending heaps of money transfering properties into a trust fund. when the accountant told me that (and showed me the numbers) i had to agree. he specialises in trusts etc here in canberra, so he must know what he’s doing. i also like the idea that he’s not a yes man, and is looking after my best interests .
thanks boys and girls i appreciate the information you’ve given me.
will sort it out in january. I have spoken to (what i think) is a decent mortgage broker in turner (ACT) and he said to get a plan together then come and see him, hence trying to work out what to do next.Thanks mel, as always you are a wealth of information.
ok, the plan now is (subject to the accountant not calling me a tosser)
january – refinance IP in darwin to 80% (leaving me with 24k after loan payed out)
refinance PPOR to 80% in a loc, so i can wait to strike (80% – 38k i owe = 90,000)
24k + 90k = 114k.i wont rent just yet, so when i get new job, throw money into savings like a man possessed.
if i need more money then i will move out, and just keep the one property neg geared by refinancing to 80%
by doing this i can get rid of the cross collatorisation i currently have and reduce the amount of interest im paying (7.79%)I understand mel, and i’m sorry if i came across as bullish or anything. i was just remembering what you said once at a meeting, where (if i remember correctly) was to refinance the IP to 80% then use some of the money left over in an account to pay the neg gearing for the year.
anyway,
the other way i was thinking was this:
ip in darwin owe 159600 (renting at 265 p/w)
PPOR owe 38000 (money was used as deposit on IP)
move out of my PPOR and rent
renfinance PPOR for 110k (then renting it at 180 p/w)
then use the 110k to repay 38000 and 30k on IP in darwin and PPOR.
would equal two pos cashflow properties leaving me with 52k to use on more IP’s.
disadvantage would be paying rent.
the PPOR loan was used for investment purposes, so i’m ok there.
i guess i’m just trying to set myself up and work out a plan on which way to go next. i only sort of have a plan so i need to sit down and work out exactly what i need to do. i appreciate all your comments (every one who has written here) and would just like your idea’s and comments on what to do next.I havent found any (yet). still looking..
I cant even put you in the right direction as the area’s im looking at (ACT and surrounding districts) will have different needs then the area you are in, sorry about that [
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ring RE agents, go to open houses, read news papers, circle properties that meet your criteria, if they dont give the price, ring them prior to open house. there is no easy way, if it was everyone would be a millionaire by now.Melbear,
i know what your saying, i did that with my place in queanbeyan (though accidently and clumsily).
I guess i am just trying to formulate a plan
which is as follows:
until market correction neg/pos CF IP’s until no more tax to pay.
refinance using melbears theory (throwing some of the equity money into the loan to pay for neg balance)
then use monies left over for pos cashflow.
my concern is the RBA recommendation into tightening depreciation laws in australia. that would hurt big time, so i’m not sure if i want to go this way, or just refinance the IP (capital growth of 38% in last 3 months)
pay out the LOC i have on PPOR (38k)
then just have a LOC waiting to go when the market corrects itself, then buy pos CF IP’s
what do you guys think?Queanbeyan (NOT Canberra) [
]Pinit,
i know i could do that, but the problem is i used the FHOG on it. i was intending on living in it, but was then sent overseas to a couple of warzones for that time. Although i can justify why i couldnt live in it to the ATO, not sure i want to tell them anything unless they ask.
as for running through the numbers… why not!
what do you need to know?,
it may not be worth it, cause everytime i came back from oversea’s i was dumping anything from 5k – 20k into the loan (i paid it off in three years)i know how you feel. what i do, is i have a map and i circle all towns, suburbs in a 3 hour drive radius. refine your searching to those area’s and the price range you’re looking at. ring real estate agents up (preferably on their mobile) then hit the road. leg work and time is what you will need to find the deals. I havent been able to come up with a quicker way then that.
Thanks for your input.
i have a good accountant who checks my numbers before i buy, i question the accountant all the time. as for how many properties, as much as my equity and cashflow will allow at present. when i refinance next year i will have around 80k left to play with.
i have a secure income stream (i’m a public servant) so thats not really a problem. i have just been questioning what i’ve been taught, before reading steve’s book.
my object is to quit work, so pos CF IP’s is the way i will have to go, if i want to achieve my dreams.RugbyFan
one more bit of advice that will save you.
GET A GOOD TEAM AROUND YOU!
What i mean is, find a good accountant, solicitor
and mortgage broker. i prefer to use ones that invest in property themselves… why? because they will know the pitfalls you havent even run into yet, they will save you from yourself and will be able to help you along the way.
An example of a useless accountant i had.
I owned an pos cashflow IP 3 years ago, accountant didnt tell me anything, and said i couldnt write off half the things i thought i could. i also didnt know about depreciation.
for three years i neg geared a pos cashflow IP.
My ignorance cost me, so now i only have people who at least know i’m ignorant but help me.avoid them like the plague.
its one of henry kayes former partners in discuise
http://www.jenman.com.au/NewsNews1.php?id=175Peter M
“I am not an accountant but the advice of spending $ 400 on a depreciation schedule sounds ludicrous to me”if you dont get one done you are ripping yourself off. i had one done on my Ip in darwin, cost me 440 dollars, return for this year 17,000 dollars in depreciation alone.
i dont have an electronic copy of it, but i can show melbear it, to verify i’m not lying.
Rolf De roos… always always get a depreciation schedule.. he says this in his book and he says it at his seminar.. the guy has millions, believe what he says.Melbear,
if you need someone to split halves in the cost in getting there, let me know i will come with you!I only had about 2000 dollars in the bank when i bought my ip. but i had plenty of equity to use as a 20% deposit. when i made the offer i just told them that i was only going to give them a 1000 dollar holding deposit until funds became available. what ended up happening was, the vendor was a very nasty piece of work and was demanding money for the fittings in the house. she even had the gall to demand 5000 dollars. i ended up giving her the 1000 dollars for it, then reduced the asking price of the IP from 210 to 209k, saved myself a little in stamp duty anyway.
Aafreen and others:
AVOID BRIDGEPOINT LIKE THE PLAGUE
its henry kayes ex partner in a new company
http://www.jenman.com.au/NewsNews1.php?id=175
see web page for more info.
please please check before you sign up for any seminar. ontop of that 12000 dollars is a lot of money. do steves course for heaps less than that. even de roos in only 3000, and he (as far as i know) is more reputable.I’ve found a really good accountant here in canberra who specialises in them.
i rang him to see about puting two properties into a trust now. he said not to bother just yet as i didnt have enough property, i told him that i intended buying more anyway so it was better to do it now. he said we would work it out when i got more IP. not sure if he is just being lazy, or running the odds that 98% of people only buy one IP and therefore i dont need a trust.
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