No there is no difference between rental income and salary for the purpose of obtaining a loan. Banks will look at your historical income (rental/salary/business), to judge its stability, and any current loans you might have.

alfrescodining wrote:

What I’m getting at is how do you know you can quit your job, and still be able to buy more properties….

That depends on how much income you will need to cover your expenses and service your current/future loans.

Andrew

No worries Ben.

The best thing to do is to read as much as you can and talk to people and ask questions. And over time, without noticing it, you will get better. You’re on the right track.

The best thing to do as a starting investor, who is ready to invest, is to dip your feet in the pool before you jump in it. No matter how many books you read about swimming, you won’t know how to swim without slowly and safely trying it yourself at the shallow end of the pool. The same goes with anything in life, including property investing.

Ben wrote:

are positively geared properties given the same depreciation as negative property?

Yes.

You are entitled to a tax refund if your taxable income is negative (taxable loss). The amount of the refund is a fraction (tax rate) of the taxable loss.

Try to understand how to calculate your taxable income.

Income – deductions = taxable income

Deductions = interest, depreciation, deductible expenses, etc

If your taxable income is negative then you’re entitled to a tax refund. Don’t think about your cash flow when you do these calculations.

Tax refund = taxable income(if negative) * tax rate

Note: you will only get the refund if you have paid tax from other income. If not it will be carried over to next year.

Hi Pat

have a look at a thread I started where I list positive cash flow properties that are currently for sale.

https://www.propertyinvesting.com/topic/4989954-positive-cash-flow-properties-real-world-examples/

Ben wrote:

What that means is if you do find a positively geared property your loan would be interest only.

This is not correct. Depending on the investors situation, but in general Interest Only loans should be used when negative gearing to maximise your interest deduction. In this case you don’t want to pay down your mortgage as that would lower your Interest deduction.

A positively geared (positive cash flow) property has a higher rent than your loan payments and hence will provide you with cash surplus. This surplus can be used to pay off the mortgage and thus reduce your interest payments and increase the cash surplus and your equity in the property.

demkel wrote:

Could anyone please advise if land tax is payable on an investment unit apartment in Queensland and if so how is it calculated.

Yes it is payable. You own the land together with the other owners in the building. The amount will be apportioned according to your share. There are 2 option it could be apportioned:

1. Land Value / number of units in the building
2. Land Value * (your unit size in sqm / total units sqm)

The best methods for valuing commercial property are:
1. Cap Rate
2. DCF Approach
3. Recent Sales

I would recommend 1. and 3. At least 2 methods need to be used. 2. might be a little complicated and requires a lot of assumptions.

3. Find similar commercial property sold prices per sqm and apply them to your property. You can use this website which is free:
http://www.realcommercial.com.au/sold-leased

1. Determine the Net Annual Income of your property. Find the appropriate CAP rate for your property. Valuation = Net Annual Income / CAP rate. To get CAP rates you can use reports like these or phone up agents and ask:
http://www.propertyoz.com.au/library/March-2013-cap-rate-analysis-Commercial-Property-Insight-Knight-Frank.pdf

However these reports mostly cover bigger cities and I think you will find it hard to find a rate for Ipswich.

Another way you can look at the CAP rate is to treat it as your return rate. So let’s say you want 12% return and assuming net annual income is $50,000 then you wouldn’t want to pay more than 50000/0.12 = 416000. However using this approach you are not valuing the property.

Unfortunately commercial properties are harder to value then residential and you could be completely off if you make the wrong assumption for your CAP rate or don’t compare similar commercial properties to yours.