Forum Replies Created
Hi L.A. Aussie,
Yup newcomers get often alured by some unscupulous finance institutions offering 100-110% finance.
Its not that hard to take talk someone into these kind of loans especially when the times are good and media/tv/everyone trumpet around how every propety is increases in value by tens of thousands. Sometimes I think this should be outlawed
To BankWest account – the only catch I see with them is that the 6.8% is only introductory rate reverting to about 6.25% after 12 months (still more than 6% fm ING). But since I cant get any existing customer's experience I am going to stick to what I know and stay with ING.
After all I reckon that risk of losing substantial portion or all of my cash is not worth the 0.8% reward.
L.A. Aussie,
Even though quite a bit OT, I think we are pretty much on the same page here.
to
b) it obviously goes case by case which is everyone must do a thorough research before purchasing I understand the past Sept 1987 argument I only tried to say that (all things equal) the necessary high depreciation amount is easier achievable with newer properties but purchasing those will hurt you on interest. So in general the property must fit right between those two limitations.But your argument about older renos is a valid one indeed. As a suggestion what if one was to focus only at properties in 1985 -1987 range which I think is the 4% building depro time range?
c) Oh no no no I was not advocating or trying to suggest somebody should use 11 secs rule for today's market not at all. IMHO a real positively geared properties do not exist here these. In "as is" state that is. I dont realy count a complete rebuild/subdivision/other magic performed on neg geared house to make it positive for a positively geared property from the outlay. I am a big fan but no sorry Steve
But back to my original question – if I direct you this way – say you dont have any debt to speak of and the cash on your hands does not really make a decent 20-30% house deposit (because errrr you put the majority of house sale proceedings into sharemarket
) and you want to park it somewhere for the period shorter than 1 year (I know I did not probably make myslef this clear initialy). Would you still be suggesting me to invest in a positively geared IP?Good to talk to ya, got me thinking again which is always a good sign.
I think you are trying to cover lot of ground at once. Maybe try to understand each step by step in little pieces. Ie. If you want to know what is you casflow situation if you invest in property make a little spread sheet with IN on one side and OUT on the other. Start with 1 year sums and dont go crazy with too much variables for starters. For example I would start with something like this:
Property purchased for $300,000 with 20% deposit and 7.5% p.a. interest only loan renting for $300 per week.
Yearly rental: $15,500
Less yearly interest: $18,000
Less other expenses (maintenance, body corporate fees, council rates etc.) $3,000
Yearly cash return: – $5,500And than you can keep adding on as you go eg. based on your tax rate deduct the depreciation amounts, include a reasonable capital gain to help you with the bottom line. Just remember that with more variables (especialy the ones you "assume" based on the past performances) come higher potential for error
And in same manner you can play around with all the cash coming in or out if you invest in the fund (or any other asset).
Try to keep it simple because, even though some may not make it sound this way, investing is a very basic algebra where your only aim is to come out the end with more dough than you went in
Marc:
It may have not stand out from my previous post clearly enough but yes I am parking my available cash temporarily (max upto 1 year depending on other factors) as it is not enough to pay down, in my opinion a comfortable deposit on any new IP.And I also tend to agree with you as to paying the debts (assuming they have higher interest rate than your potential return on another investment) before anything else.
Looking at your analysis closely reminds me the technique by Margaret Lomas called "positive cashflow" if I remember correctly
I think this is a very valid technique however there are some points I think one needs to keep in my mind.a) you need to have other income for the life you hold this type of IP otherwise there is no paid tax against which you can offset your on paper loss from IP
b) your property must fit neatly into a very thight spot. On one side it should not be too expensive (ie. too new) so you rental return is high enough and 80% leverage is not killing you on the interest payments; On the other side the property needs to be reasonably new to provide you with depreciation high enough to offset the paper losses you will (no doubt) encounter.
c) I for one prefer to make investments which are not making any (not even on the paper) loss so I dont need to rely on questionable and ungaranteed kindeness of the taxmen.Um I have more but I think this will perhaps keep you going for a while now
Take it easy
dk
What's rich?
I think its pretty hard to define in a definite number as the goalposts are constantly moving (inflation, interest rates etc.).IMHO the answer therefore would need to be somehow more philosophical on the lines which others here have already suggested ie. Being free to do whatever I want whenever I feel like it without even thinking about any kind of financial consequences.
Not sure if that make sense to anybody else tho
Cheers
dkDamian,
Saving is good you cant go wrong with that
. Since you plan to purchase next year I would perhaps leave the actual market research for some time later and suggest you start learning about the ins and out of making a deal.For example what are the steps (getting finance, researching properties, making offer, talking to solicitor etc) and in which order they come. Then I think you could familiarize yourself how does the timeline for a deal look like ie. what happens after your offer is accepted, how many days to do you inspections, when it becomes uncoditional etc.
Just drawing this on a timeline (remember each state will be slightly different) really helped me to understand when are things happening and how one thing relates to another.Hope that makes sense,
cheers
DanHi Kate,
Whereabouts in Asia? I am currently in Thailand long term (negotiating my first IP deal here right now
so maybe I could lend a hand over here.Cheers
Dan
