Hi Vardy

Looks like you’re getting plenty of advice. I’ll just add that CGT is only a problem when you sell and you can gain access to that equity as well through LOC’S etc which are tax free. So it’s not just extra rent you’ll get. For example if you’re positively geared you can get a LOC against the property for $X (say 50% of the equity gained that year) and use the rent to pay the interest (it’s not tax deductible or income tax free though). Eventually you can live this way.

If you said your last offer was your final offer then I would stick to it (money wise at least). You can’t say it’s my final offer and then offer more. I would probably go the opposite direction and say you’re a serious buyer but you’re getting pissed off with the back and forth, same amount but go a short settlement or something.

I must admit that it sounds like a good deal on the surface so I am worried that there is something wrong. Why would a positively geared (probably) property sit on the market for 12 – 24 months? It has a bit of an odd feel to me. I would double check my due diligence.

Not that I think it will change the answer but what state is the property in? But I doubt you can increase the rent or get them to vacate without their consent in any state. Happy to be proved wrong though.

I’m not sure about what state you’re in, but where I live you can’t just evict a tenant without cause. Even if they are on a month to month agreement. However if they are not on a lease you can increase the rent to market rates and they either need to pay it, vacate or contest it. That is a minimum 8 week process here.

If you buy the property you also buy the leases. So asking for vacant possession might mean the owner needs to pay the tenants to leave. So, I would find out the state of the leases and if out of lease increase it to market rates. If in lease determine if a rate increase is included. Then figure out if that works for you.

When I first started out I wanted $100k net passive income (paying forever including CPI) before I retire. It’s changed a bit as my investments / work / family situation has changed. But I took that and worked backwards across all investments (and insurances). So far, so good.

https://m.realestate.com.au/property-studio-qld-woree-107265403

Address is
307/1 Anderson Road Woree, Qld 4868

In my opinion the likelihood of buying straight off a real estate / Internet and into a positively geared IP is near zero. The reasons are that other people will see them and push the price up. Maybe the real estates themselves, buyers agents who get in early through relationships, other investors etc.

You need to be a little bit more creative or simply play the long game. Renovations is an example, buy a house and renovate it, push the rent up enough to become positively geared.

Hey Sydneyguy

I can only talk about what I did… I hung around here and read a lot until the point where I felt confident about what I was doing (months). Then I started looking for a BA. A few general rules…

if they are trying to sell you something new / off the plan then I got worried.
If I couldn’t verify their history then I ran. I researched them before committing. Positively verified – had to prove they were good not disprove they were good.
If they didn’t have more money invested in property than I did, I was very worried.

Message me if you want more info.

• This reply was modified 8 years, 11 months ago by  TheNewGuy.

Hi Tim

That’s pretty much how I do it. I have interest only IP loans and pay down my PPOR loan as much as possible. I then redraw a second / third / fourth loan to cover all the purchase costs of the new IP. I then repeat until I run out of serviceability / risk level. One of my IPs now has enough equity from capital growth where I could do the same thing.

You can get the growth from renovations as well. Just make sure you structure your loans correctly so your claiming 100%+ of the interest costs of your IP. Ie. $300k IP means you have over $300k of loans you can claim the interest on.

Oh also, the interest on loans for renovations is tax deductible. So don’t pay for that in cash. Add it to your PPOR then redraw a loan for the work. This decreases your tax liability.

• This reply was modified 8 years, 11 months ago by  TheNewGuy.
• This reply was modified 8 years, 11 months ago by  TheNewGuy. Reason: Can't spell good

I would do a bit more research before jumping into anything, but $100k in equity is enough to start. Serviceability will come into play, but that might be ok.

$100k is my point where I buy another property.