It really does depend on the age and style of the property. There is nothing wrong with buying some thing second had at auction or even ebay etc. When furnishing a property you cannot forget the small things, like wall hangings, mirrors or painting, bookshelves, lamps etc fake plants are good.

For depreciation purposed, I’d try and keep purchases below the $1000 value, this allows all the item to be included in the low-value pool of depreciation which attract a higher amount of depreciation in the early years.

There are some depreciation gurus ‘Depreciator’ that may offer more specific advice re the depreciation.

Mal

Getting out of your comfort zone, can help you become comfortable

Simon’s scenario was the one that made me change my stance.
I’d say tty avoid the whole CGT scenario, give them an incentive to leave before the 8th. Pay the moving costs or waive the rent for the last few weeks.

Don’t you just hate seeking professionsal advice and then having to go elsewhere because you think they are wrong!!

Mal

Getting out of your comfort zone, can help you become comfortable

Adl_Cat,

I suspect that once you go over the 6 year cut off , the 11 days count for nothing. The capital gain will be based on the portion of the time that it was an IP to the Total period of ownership. Which given that if say you sell it in December, the period that it was an IP will be about 75% of the time.

The capital gain (assuming you selll it for 675k in Dec), will be in the vicinity of 150,000 and 250,000 depending on the method of calculation the cost base.
Now depending on your tax bracket, that a lot of tax to be paid. And worth paying the tenant to leave before the 6 years is up.

Speak to an Accountant – NOW.

I am NOT qualified at all to give financial advice and my figures are just as made up as yours, but I suspect that you are going to be up for a significat tax bill (well beyond $1249) . Assume that you are up for in excess of $50,000 and then figure out whether it’s worth speaking to an accoutant now.

Mal

Getting out of your comfort zone, can help you become comfortable

That smell does not come out in a hurry.
The problem is while the place is untenanted it probably locked up all day which only makes the smell worse.
I’m with Fast Lane on this one, replace the carpet. Or get another dog lover in there, this can work out quite well sometimes, allowing pets.

Mal

Getting out of your comfort zone, can help you become comfortable

MJ,

Terry is right on this one. I use equity for shares, but on sale you should use pay back the capital component (original purchase value) back into the loan, you can keep the profit but not the principal.

Mal

Getting out of your comfort zone, can help you become comfortable

Good result. Beats having to evict to tenant as I had to do.
I did threaten my PM to take the management of my properties elsewhere, forget about the rent owing and start afresh with a new agent. PM covered my court costs, and waived the new lease fee for a new tenant, + rents were increased 10%. Apparently my ongoing business is important to them.

For some RE’s, Property Management is easy money. Make them work for it when it comes to the crunch. If they don’t, take YOUR business elsewhere.

Mal

Getting out of your comfort zone, can help you become comfortable

MJ,
I’d suggest that you set up the investment loan so that the difference up to the 80% LVR was available for redraw to pay for expenses relating to the property once it becomes an IP.
IE. Pump all the rental income into your PPOR loan and draw down any IP related expenses from the IP Loan. It will keep the tax man happier, as you can prove that the money being drawn is related to the IP. Plus it’s good to know that you have money there as an emergency for repairs etc if required.
It’s a slower, but effective way of increasing your Investment debt.

Mal

Getting out of your comfort zone, can help you become comfortable

I evicted a lovely old lady last year from my unit. She really was nice, but it just didn’t make good business sense to have her there, in the end I had to take her to court to get her evicted. Harsh but true.

The real story.
I owned a unit, where I went through a couple of tenants in a short period of time, one even left and continued to pay the rent until the lease expired. Alarm bells were ringing, get onto the agent and find out exactly why the tenants were leaving. It turns out that they had left because of the neighbors next door were too loud and causing trouble in the neighborhood. My property manager was even scared to go there without he 6+ foot son. The neighbor was an elderly lady who just happened to have family that stayed there permanently who were the trouble.

As luck would have it the property came on the market, I was onto it like a fly to you know what. The tenant stopped paying rent the day it went on the market, and had several times been way behind. I had great bargaining power because 1. I knew the true value of the property (not that advertised), 2. I knew that the sellers were older couple living in a retirement home. 3. The tenants were a nightmare and the seller wanted out. I put in what may be called a low ball offer, but I backed it up with facts and previous sales figures offering a quick settlement, I got a bargain buy in the end.

I now own two units in a peaceful block of 4 getting 15% more rent that I was before, saving money on lease fees, and have had 20% Capital Gain in that time.

Why wasn’t this rutheless.
1. Sellers got rid of there problem property,
2. I got a property at a good price.
3. I got stable tenants
4. Existing tenants (not mine) and neighbors are happier.
5. Property Manager is not scared to go to the units.
6. Property Manager is getting better commissions.
7. An older man looking for fully furnished a ground unit has somewhere to stay.

I just hope the old lady moved to a 1 bedroom unit where she can live in peace herself.

Mal

Getting out of your comfort zone, can help you become comfortable

Don’t go blaming Dazz, you are as bad as each other.
Now go to you room.

Mal

Getting out of your comfort zone, can help you become comfortable

Kroc,

For starters get the standard building and contents insurance in place NOW. Once you have exchanged contracts, you have an interest in the property and should insure it as such. Do not wait until settlement date, because if anything goes wrong between now and settlement , you may find out the hard way that you are out of pocket a lot of money.

I’m not sure if I’d bother with rental default or tenant damage insurance if its leased to the government.

Mal

Getting out of your comfort zone, can help you become comfortable