What ratios or calculations are you talking about? There are a bunch of websites etc that broadly outlines how to calculate costs of IPs, and with that you can use the rent to work out expected income / loss per year.

Right, so my question is, why do you think ‘this property’ will go up more than the rest of Brisbane? If you have $400k to spend in Brisbane, you’d want to spend it in the right place. Some places might go up 15%, while others might go up 5%… that’s a big difference on $400k. It’s more of a rhetorical question than anything, but it doesn’t sound like this is any better than just picking any old house.

I haven’t lived in Brisbane for a while, but I was looking relatively recently. There is nothing wrong with Taigum (which is way closer than an hour from the airport), but there is nothing right about it either. I was looking at Fitzgibbon because it’s at least closer to the train station and eventually will be caught up in the inner city ‘vibe’, but at the same time you have Zillmere which has larger blocks and is even closer. No new infrastructure that I’m aware of, nothing out of the ordinary where you would expect an above average growth. So, you could probably pick a property anywhere within 15km of the CBD and get a similar return.

I’m still very new to this game, but I personally wouldn’t even look at the suburb.

Why do you think that you will get ‘good’ capital gains on the house? Are you working on the assumption that if there are a lot of people building then demand must be high and therefore prices will go up? If that is the case, then I would say ‘no’ that’s not a good enough reason to buy a property. I can’t imagine 50% of the complex being NRAS would help.

Why else would the area go up in value faster than the rest of Brisbane?

I am not an accountant. But depending on your interpretation of recent ATO statements around capitalising interest, and where you think the property market will go and the rent on your Melbourne property… you could do something like this:

– Move into your parents and live rent free! Yay.
– Refinance everything to interest free loans to minimise repayments.
– Rent out your Melbourne place, which I imagine might be positively geared. Use the cash for whatever you need if positively geared, otherwise it’s a tax deduction and since you just refinanced you have a new account to figure out your deductions for tax time.
– Draw a LOC on your Melbourne property. Put the rent from Brisbane in this account. Pay the interest from Brisbane into this account. Do not touch the account for anything other than investment expenses. Since it’s negatively geared it will slowly go up, but the interest should be tax deductible… again, not an accountant, but would love some advice on whether this is ‘legal’ according to the ATO in 2014.

This should buy you some breathing room, so if you think there is capital growth it might get you through to better times or better job prospects. Definitely discuss with an accountant about whether they think it will fly though as it’s purely based on my readings lately.

Hi MattyC

It sounds like you’re in the exact same situation as me about 6 months ago when I came to this forum and posted a similar post! You could probably find it if you do a search. In the end I went with the BA and I’m happy. I did go through a few other options, financial advisors etc that I found didn’t really align to what I wanted. For me, it was worth the investment. I’ll PM you my experiences.

Hi yuley,

As mentioned above, I would have a goal that I’m aiming for and then try and figure out how I’m going to get there. You have $1mil+ in equity and plenty of people retire with less, so the question is how do you best use that equity to meet your financial goals. Property may or may not play a role, so I would be looking at finding someone to help you meet your goals. These will vary depending on your age, expectations etc.

Just as an FYI, I want $3mil in equity plus a free hold home. On an extremely basic equation, that will give me $100k a year income (3%) that will go up with CPI (3%) while still maintaining the $3mil in equity forever (needs a 6% return).

Before jumping into property, I would have a chat to a good Financial Advisor / Accountant to talk about your options.

Good luck.

• This reply was modified 10 years, 5 months ago by  TheNewGuy.
• This reply was modified 10 years, 5 months ago by  TheNewGuy.

Congrats. I wouldn’t worry about the article too much, as hopefully your IP won’t be empty for 5 years!

Just remember that the agent is there to get the most money possible, and things like calling you to say that there is ‘other interest’ is a way to help get the sale and increase the price. If the property is only worth $210k to you, then don’t go above it (especially if you already said that you wouldn’t).

I would reply with an email and say, $210k with 60 day settlement, and you’ll come in and sign the contract today. I would state that the offer is valid to Friday (because they will have more open days on the weekend, so you don’t want them to have another showing), otherwise you’ll move on to other properties and the offer will be withdrawn.

My father did the same thing a few weeks ago, and it was rejected. After 4 weeks the agent came back and said they’d accept the offer now, my father dropped the offer by $50k, and they accepted…

• This reply was modified 10 years, 5 months ago by  TheNewGuy.

I just wanted to add that if you throw in some cash again, to try and get that from a tax deductible source. So if you have a PPOR, pay down a loan and redraw a LOC for investment purposes. In your case you should be getting tax deductible loans for 102% if you set it up correct, which in this case it sounds like you’ll probably do.

My wife gave birth to our 2nd child, so I’ve been getting very little sleep!

Bought another IP through Richard, and that’s going well.

Looks like my father, brother and I will be doing a sub-division of a property. The contract was just signed for a house with a 2000m2 backyard, and we’re looking at a 12 townhouse development and keeping the front. Still very early stages.