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  • Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
    Join Date: 2014
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    CGT is only paid on the increase of value from when you start renting until you sell unless you can fall under the CGT exempt rules -https://www.ato.gov.au/General/Capital-gains-tax/In-detail/Real-estate/Treating-a-dwelling-as-your-main-residence-after-you-move-out/

    Have a read of the page above aas i don’t know a great deal about it. However even if you can’t claim the exemption what would be a better investment? Leave it in the house, possibly appreciating or withdrawing it and doing something else? Also selling is a bit harder when it’s rented too – so another consideration.

    I don’t know enough details but my first thought is to hang on to the house rather than sell with no plan to use the money. It costs to buy and to sell, and the money would probably just burn a hole in my pocket.

    Would the house be positively geared if rented?

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    Is it really worth $380k if the bank valued it at $340k. My experience is that bank values aren’t that far off. After CGT and sales costs how much are you actually expecting to walk away with? Assuming you have an 80% LVR you’d probably get enough to buy elsewhere I’d just confirm that before committing. Plus the purchase cost as well.

    My other consideration would be whether it’s now generating a passive income which might be more useful than a deposit – although it sounds like you need cash and your serviceability is fine.

    Either way just run the numbers and see what decision best matches your goals. For me a passive income and lower chance of growth sounds pretty good to me.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    As above. The only risk is that your property doesn’t get as valued as high as you paid so you can’t redraw as much as you think.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    I’ve never heard of that company. It might be worthwhile starting a new thread with the name in the title so others can respond rather than hiding in this post. There are quite few buyers agents on this forum who have a good reputation too. Also consider where you want to buy, I use s buyers agent specifically because I want to buy outside where I live.

    Trusts etc come up all the time. If you do a search you should find a bunch of info. My perspective is if you’re not in a job that is likely to see you sued for all your property, and you’re only starting off then the cost probably isn’t worth it. However I’m always considering the same thing as I buy my 3rd IP.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    You can find a good investment during any period of the property cycle if you’re willing to look wide enough or be creative enough. The days of buy anything and watch the cash roll in don’t exist today so you’ve got to be a bit more careful with your purchase.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    My motto is fairly simple, ‘buy a problem, sell a solution’. If you’re buying new you’re buying someone’s else solution and trying to profit from it. It’s not impossible but probably not the best use of money.

    Examples of buying a problem and selling the solution are like David said – by a problem house, renovate it then sell / rent the solution. That’s where the money is – same with subdivisions, worst house in the street etc.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    If you can service both then there is a benefit in keeping the car loan. Do you have any property with capital to help the deposit?

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    Accountant != investment advice.

    The accountant is wrong. If you have spare cash flow there is probably better ideas!

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    If the question is what is the minimum squares per townhouse you won’t get an answer. It’s different everywhere and for every council. Plus you’ve already spoken to the council – that’s your best bet.

    Plus just because a place can be subdivided doesn’t mean it’s a good investment – if that were true you’d have other people bidding (upping the price) or the owner would do it themselves, especially if the neighbors have done it.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    Hi Jon

    Realistically I’m a couple of decades off retiring so I’m always playing with some legislative risk. My bank currently takes 80% rental income into account, so as long as my LVR remains low (below 50%) the rental income easily covers the interest on the loan. Obviously you need rental increases each year as well.

    On top of that it’s only part of my plan. I still have super (accumulative) and a pension based super as well. All going well the combo of those should be enough… hopefully!

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    It’s seriously situation dependent, however, to give you a feel for my situation. I’m in my 30s, married with kids with a fairly high income. I’m in the accumulation phase and still have some serviceability from my own income. I’m looking for buy and holds that are generally neutral geared with the expectation of above average growth over the next 5+ years. In reality that means it costs nothing to hold them from the start (assuming rented etc) but my net worth on paper goes up and I don’t pay tax unless I sell – redraw though is tax free :)

    I look for the ugly duckling free standing home, either in a good suburb or next to one. My goal is to gain about $4m in property with less than 50% LVR and live by redrawing capital growth every year and pay the interest from the rent (some deductible / some not). Tax is reduced significantly. I have super as well.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    A couple of ways to look at it. One is to look at how you found it and see if you’re just falling for a bunch of marketing tricks. Given the really big range of ‘potential’ rent, then I would immediately be concerned. Just check what the similar places are renting for now and see if it’s even in the ball park. Speak to a different real estate agent than the one selling and get a rental figure. Have you had the other costs confirmed, like body corporate / rates? Are you getting offered rental guarantees, or other perks to try and make you buy it? How did you calculate the mortgage? I used 425000 (100% house + stamp duty / other costs etc) @ 4.5% IO, and it was closer to $365/wk.

    I imagine you’re in for a buy and hold, because as a townhouse you’re reasonably restricted in regards to improvements. Since it’s brand new then you really can’t add value to it. So you’d want to be confident in the rental figure and that it will go up over time. So, it will be a neutral hold with the plan to have capital gain. I don’t really count depreciation as ‘making money’ because in theory you’re supposed to replace everything you’ve depreciated anyway, so you’re just ‘saving money’ before paying it back.

    I would never buy a brand new townhouse anyway, but I would be 100% confident of all my costs, rent and expected capital gain over the next 3 years before I did anything.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    Do both. Cut the branches over your property and speak to a resident.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    Hi.

    I can’t help with the majority of your questions but I’m interested in what people say. The obvious problem is having 4 people involved means more issues moving forward, loss of income, separation etc.

    The business idea is interesting but I’m not sure how you’d get loans for property of you’re making a loss, and you’d probably still have to put in money / equity anyway. There is likely GST implications and extra admin overhead as well. I’m interested to hear what others say too.

    In regards to lowering income tax, which seems to be one of your key goals. All I’d say is there is a difference between saving money (paying less tax on your day job) and making money (generating income from somewhere else). While saving money is important, you should be focusing on how to generate the income first. So don’t buy property because it has good deductions, buy it because it can generate income. In the end the most you’ll ever ‘make’ is $60K a year and it’s a deduction because you’re expected to replace carpet, etc over time which eats back into your savings.

    Also, depending on how the income is split Ie. $70k by 4 or $200k by one person, you’ll be paying tax in low tax brackets so you’ll need a lot of deductions to save much.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    Negative gearing has been scrapped before in the 80s. Many different opinions on whether it was responsible for rent increases. I suggest you do your own research and form your own opinion.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    Not enough info. My personal opinion is that Brisbane is improving overall so you’ve seen the worst of it. Whether or not your particular place will go up,I’m not sure because you haven’t given enough info. But you’d expect the valley to be ok since it’s pretty much the city.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    I’m not a lawyer or a real estate agent, but I’d say your obligations are to provide a safe and habitable house. This does include things like running water, toilet, shower etc.

    So, will the bathroom last to October when the lease finishes? If so, maybe just wait it out. If not, stop guessing and get some quotes. From memory and depending on what state you’re in the tenant needs to provide access for safety issues and repairs – probably some notice requirements etc. Specifically ask how they will limit disruption to the tenant.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    I literally rely on the numbers. For each option, Previous capital gain, future capital gain, rental return, maintenance costs, potential capital improvements, future infrastructure etc. Then I decide based on that. If I can’t afford one now then I look at opportunity cost. For example if I need $40k more savings but the property is likely to go up $40k before I save it then maybe I should look elsewhere or consider mortgage insurance etc.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    How much is the unit worth? Ie. How much equity do you have?

    With the $200k, $80k in the offset (or is that part of the $200?) and equity you’re probably in a very good situation. If serviceability is high you’re certainly in a position to buy multiple properties if you choose. How are you using your money now? Is the $200k just sitting in an account not doing much? Or is it invested elsewhere?

    With units, gross return can be high but net return can be low because of body corporate etc. Capital gains is often harder as you’re restricted on renovations / subdivision etc. So I tend to stick with second hand houses – worst house in the street etc.

    Do as Corey suggested and start confirming numbers with a broker and then make a goal. Use that goal to determine what / where to buy.

    Profile photo of TheNewGuyTheNewGuy
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    @thenewguy
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    Zen check out the allhomes website as they have reasonable research data for the ACT. From memory capital gain for apartments was horrible and mostly in the civic / gungahlin area. Houses were ok, but again in established gungahlin areas (palmerston, ngunnawal etc). So for OTP apartment in tuggers… no way. No chance. Never.

    • This reply was modified 8 years, 9 months ago by Profile photo of TheNewGuy TheNewGuy.
Viewing 20 posts - 21 through 40 (of 145 total)