Forum Replies Created
Well, if the tenant isn't happy with the "accurate" calculation used to establish monthly repayments, then they are welcome to go back to paying the rent weekly and pay the same amount anyway!!!
I think I will take your advice Scott and ask the PM to use the more accurate calculation when establishing the rent on the next lease.
I find it absolutely unbelievable that you all just accept this as the norm! The ATO must be just an@l retentive, because it seems everyone else on this forum believes a year is 52 weeks. I bet there are a few forumites out there that still believe that the world is flat.
Does anyone here just accept 6.98 days of rent for the week rather than 7 days? No! So, you expect the agent to accurately calculate the weekly rent, but then just come up with a completely fictitious number when calculating monthly rent.
L.A Aussie wrote:Forget the Leap Year.It's a weekly rent; not daily. Have you ever seen a property with a permanent rent advertised by the day?
Just multiply the weekly rent by 52, then divide by 12.
$200 x 52 = $10,400 / 12 = $866.66
That should be the monthly payment.
Rent is charged on a daily basis, it’s just a matter of convenience that the tenant pays the agent on a weekly basis.
By the way, this is not a matter of whether the tenant signs up or not. It’s more a matter of accuracy.
Sure, but I'm in the game to make a profit!
I have simply used the ATO approved calculation that my accountant will use when working out my TAX return at the end of the year. By the way, I still have to pay Interest on the mortgage for the full 366 days. Do you think the ATO will excuse me for 1 or 2 days of the year?
The tenant has specifically asked to pay monthly, which is not a set number of days, so the calculation has to be different.
Should I accept this just because you do? Every little bit counts.
True, but the additional day/s roll over into the following weeks rent.
In the scenario above, the tenant gets 1 or 2 days free by paying monthly compared to paying weekly.
Hi Terry,
I appreciate your feedback.
My preference is actually option 3 (keep some cash for a rainy day), but I thought I would check with some of the guru's on this forum to make sure I was on the right track.
Thanks for your advice!!
Hi Richard,
Yes, the IP is crossed with the block of land and the PPoR (not the best arrangement, but the PPoR is very close to being under the 80% LVR, so I will remove the cross when it reaches this point). The IP was valued at 190k earlier this year and currently has 86k owing.
No, I don't own the land outright, and there is no available equity in this property as it was purchased with 100% finance.
The PPoR loan isn't currently tax deductible.
Hi bjozef,
Cash flow positive, as opposed to positively geared, means you are making a negatively geared property cash flow positive through depreciation.
As the value of your property is depreciating over time on paper, this can be used to reduce your taxable income and allow you to claw back the difference between the tax you paid on your income, and your income minus the depreciation. For example:
If your annual income was $50k and the depreciation on your investment property was $5k, then you would be entitled to claim back $0.30 for every dollar you paid in tax above $45k, so in this case it would be $1500.
The higher the tax bracket, the more you are able to claim back. For example:
If your annual income was $200k and the depreciation on your investment property was $5k, then you would be entitled to claim back $0.45 for every dollar you paid in tax above $195k, so in this case it would be $2250.
Therefore the higher your tax bracket the higher your chances are to source cash flow positive properties.
Mark,
Cash flow positive investments are all relative to your income.
What sort of income do you need to earn to make these properties that your company sources cash flow positive? It's not that difficult to source cash flow positive properties if you're in the highest tax bracket.
Yes I understand this, by the way I have depreciation schedules for my other investment properties, which I have owned since new.
My question is, how are the building cost determined if they are not known (lets assume that this hasn't been used as an investment previously)? I imagine this would be especially useful when establishing whether purchasing a property is a good or bad deal.
Some of the savvy investors on this site should be able to tell me how they work this out.
Hi MGK,
You could try Depro (www.depro.com.au). I have used them for an investment property in regional Victoria, but they are a national depreciation company. It cost $550 for them to create the depreciation schedule.
If its a new property and you have the total price, plans, asset list etc. you can usually get the depreciation schedule created for less. Depreciator (www.depreciator.com.au) who are also a national depreciation company quoted me $275.
Scott, thanks for the information.
While I can appreciate that it will cost more to have a qualified QS perform the on site inspection. I'm curious to know why Depreciator only offered to do the depreciation schedule for $275 after I questioned the price of the quote?
Can you also answer the following questions:
Does the QS also write up the depreciation schedule?
How do you ensure that your QSs all work to the same standards when creating a depreciation schedule for a customer?
Hi all,
I am thinking about investing aggressively in property over the next several years.
My plan is to change all of my residential loans (deductible and non-deductible) to interest only to increase my cash flow. My non-deductible loan has a 100% offset attached to it, so I plan to pool all of my funds into this account, which will also have the benefit of reducing the loan on my PPoR.
My questions are:
1. Does this sound like a reasonable configuration to increase cash flow in order to maximise my property investment potential?2. How do other investors in this forum structure their loans?
Jon, I appreciate your feedback!
It is a sewerage easement. I will contact the local water authority today for advice on whether the easement can be moved or bridged as you suggested.
I will also speak with a local architect for further advice once I have answers to the above question.
Hi Cameron,
I do have equity in other IPs, but some of this would be used on purchasing the land, and the remainder would not be sufficient to cover the 20% of the development.
I believe the shortfall will be between $20,000-30,000.
Hi Jon,
You have a good point, but unfortunately there is a poorly positioned easement that extends across the block and down one side, limiting the number of possible dwellings that can be developed on the land.
With reference to the question of whether I mean 3 units or 3 houses on separate titles.
I mean 3 X 2 bedroom units. I'm not sure that my definition of unit is the same as yours because it would be difficult to squeeze 5 units onto a 1000m2 block, and still be in compliance with the regions planning schemes.
Also, I merely made the suggestion of subdividing as a possible way to come up with the capital for the deposit. Unfortunately, this option will add to the construction time frame and as a consequence increase the risk and reduce the potential profit margin.
I have taken your suggestion on board although, I was hoping for some other creative idea's as possible ways to come up with the 20% deposit without having to provide the cash.
I have heard other property developers on this forum mention that they can borrow up to 80% of the retail value of the development, effectively allowing them to borrow 100% of the construction costs. Is this correct?
What do other property developers on this forum do?
Simon,
The folks at Depreciator must have changed their guarantee. This is a quote from their website.
"If we can't get you more depreciation than our fee in the first full year of your schedule …
You get to keep the schedule FREE and use it in your tax assessment for the FULL 20 years with our compliments"I guess they had to alter their guarantee to accommodate their pricing?!?
Thanks Simon,
Depro advised me that they will do an onsite inspection, but they advised me that they will be sending a data collector rather than a qualified QS. They assure me that the ATO has endorsed there assessment methods.
I confirmed with Depro that the $550 includes travel expenses. Of the $990 Depreciator quoted, $270 was for travel.
I did contact Depreciator to find out why there was such a big discrepancy between them and Depro. Their response was that they were sending a qualified QS on site rater than just a data collector. Depreciator did mention that they could do the depreciation schedule for $275 if I had the appropriate info, but they only mentioned this after I questioned their quote. By the way I don't have all of the info they require, unfortunately!
Depro also appear to offer a better guarantee than Depreciator (i.e. if the depreciation entitlements don't amount to at least double their professional fees in the first full financial year, they will refund the fee charged and provide the report for FREE).
Has anyone had a bad experience with Depreciator or Depro?
Thanks folks, you just saved me $400.
I gave Depro a call and they quoted $550 to create a depreciation schedule.
For your information it was Depreciator that quoted $990.
devo76,
I'm interested to know how you came up with the figure of $2500 for depreciation?
I would like to arrange to have a quantity surveyor put together a depreciation schedule for my IP, but would like an indication of what the return will be like when I complete my tax return.
By the way, do you know if $990 to get a quantity surveyor to put together a depreciation schedule for a 2 bedroom unit in the country is reasonable?
