I haven't taken out a landlord's insurance policy for a while (I have commercial properties at the moment), but I do find insurance brokers are generally worthwhile, and here's one that specialises in landlords' insurance (no affiliation, nor a recommendation – I just found them using google):

http://www.terrischeer.com.au/

Good luck,

Tracey in Brisbane

ScottNoMates, I know I'm not Richard, but I hope you don't mind my jumping in and answering: my understanding is that the answer is "yes".

This is why I've advocated several times on the forum that one should never pay off a loan, but instead deposit excess funds in a 100% offset, even on your PPR. Then if you move out of your PPR and decide to keep it as an IP, you can simply draw the funds from the offset to buy a new PPR, and the interest on your "PPR come IP" is fully deductible.

Best wishes, Tracey in Brisbane

If you don't yet have landlords' insurance, I doubt you could get it to cover these existing tenants. It would be non-disclosure (fraud) not to tell them about the smashed window, and once they hear that, I can't imagine they'll want to take those tenants on. I could be wrong, but I think you've left it too late… make sure you have it in place before the next tenants and keep your fingers crossed that this time your gamble (ie not having insurance) hasn't cost you too much!

Regards, Tracey

OK, Bronte, I'd like a bit more info, please:

1) How much money are we talking about? What was the purchase price, how much do you owe, and what is the potential rental income if the work is done?

2) Have you thought about paying a handyman or retired builder or somebody from elsewhere maybe $2 000 to go there for a week and do all the jobs that need doing in one fell swoop? A retired gentleman (sorry to assume, but it probably will be a man!) might be happy with some pocket money and a change of scenery. Try ringing handymen from the free local rag in a nearby big town or nearest city.

3) Where exactly is this property located?

4) Is there any possibility of you and your new man (congratulations!) occupying this property again, even for a while?

And some gratuitous advice – I know some people will disagree, but I think selling privately is false economy. I can't think of an instance where somebody has done it where I think that they had a better outcome than if they'd used an agent. Apart from their contacts, a good agent has valuable knowledge about the best way to sell particular properties in particular markets. I think even a bad agent makes their commission – a good one makes you a lot more than their commission.

Regards, Tracey in Brisbane

Oh, yes I improved the ROI! The rent appraisal as a big house was $400 per week on a $720K house. Now it grosses $3100 per week … So yes, even with my exceedingly high leverage, it's cashflow positive.

It cost me about $1.1M to complete (purchase $720K plus refurbishment and furnishings plus holding costs $380K), was worth about $1.4M immediately on completion a few months ago, and nets $120K pa. So after finance, at the moment it's about $25K pa cashflow positive, with 100% of my costs financed (ie I refinanced on a commercial basis and now have $1.1M in loans outstanding; I've gotten all my equity back). Obviously the cashflow position improves every year, and this should be a great retirement asset for us.

With regards to the laws, they are a combination of local (town planning, accreditation) and state (fire safety, tenancy). It's certainly achievable, but it pays to talk to the experts. Fire safety and insurance are the two areas with regard to which it's essential to get expert advice.

Best wishes, Tracey in Brisbane

Hi Geoff. I hate to break it to you, but I'm with LAAussie (Marc). Your price seems way too high from a cursory look at the numbers – and the fact that it's been on the market so long would seem to support that. Have you dropped the price in that time?

The low rental yield combined with the fact that one couldn't get a low doc loan or high LVR lendings in such a small town, plus limited capital growth prospects, make this pretty unappealing as an investment, I'm afraid.

And look at your competition: http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=104445780&f=10&p=10&t=res&ty=&fmt=&header=&c=40098518&s=nsw&snf=rbs&tm=1199576696

I think you may need to drop you price $20 or $30K. I know it can be hard to take a loss – our very first property purchase was a bit of a disaster. We bought a cute old QLDer in East Ipswich in 1993 as our PPR. We paid $111K, and spent about $25K doing it up, so we had $136K invested in it, at a time when this was about two years' of our combined gross incomes. We moved interstate for work and decided to sell it. It was on the market for a year and a half and we ultimately sold for $85K. It was, at the time, a very painful learning experience; losing that much money was a big deal to us then. But looking back, my only regret is that we didn't get more honest advice from the real estate agents that this magnitude of price drop was required. We should have just dropped the price more dramatically, sooner, and have saved ourselves the mental anguish of the "death by a thousand paper cuts".

Cut your losses, get out, learn from it, move on…

Best wishes,

Tracey in Brisbane

Anthony, I think you pretty much already have your 2 investment properties, so well done! Reached your 2008 goals by the 4th of January!

Seriously, I think Richard has some great suggestions and I would talk to your accountant. Ensure you ask them what the structures will do for you from both an asset protection and tax perspective. (I think accountants aren't supposed to talk about asset protection, but a good one hopefully will at least tell you from a very basic level if the structure isn't complicated.) But if you have to pay a solicitor for advice about asset protection of the structure proposed by your accountant, then it will be money well-spent anyway. If you're very lucky, you may be able to find an accountant/solicitor team who can meet with you together and set up the structure that best balances these two aspects of structuring.

With any property you own, you are pretty much always financially better off renting it out as an investment property and renting your own place somewhere else. But you can retrieve some benefits of living in an investment property if the property is owned by a Trust. Even if you don't do it that way, there's an intangible benefit that comes from living in your own home that I think supercedes purely financial considerations…. but if you're not emotionally attached to either the particular home or the idea of living in your own home, then heck, go and rent!

Best wishes,

Tracey in Brisbane

OK, first let's address the fundamentals:

Do you have a (GOOD) accountant, solicitor, and mortgage broker? I think these are your key team, and the mortgage broker is "even keyer"  – plenty of people on the forum to give you recommendations on this front.

Do you have structures in place? (Trust, corporate trustee, etc – as appropriate for your situation – talk to that accountant and solicitor.)

Do you have clear objectives? Examples: Are you after capital growth or income? If you're after growth, how much income are you prepared to sacrifice to get it, and vice-versa? Do you want to quit your job(s)? If so, in what timeframe? Or do you just want to build a retirement portfolio? If so, how much do you need to retire and when will that be? Where do you ultimately want to live (ie do you want to move back into your Perth home)? How "active" do you want to be – do you want to be a "set and forget" "buy and hold" investor (and yes I know you can't really "set and forget" any property), or do you want to be much more active by doing renovations or developing? Personally, I recommend that if you're going to be active and manufacture capital growth, make sure you hold the asset (or some of the asset) when you're done; at least some passive component to your portfolio is a good idea to let time work its magic, and so that your portfolio doesn't totally stagnate when you take a break (or are forced to take a break). I also like to be an investor, rather than have a property-based business (as many people doing wraps and developing have).

Once you can answer these questions clearly, then you're ready to invest some more.

In the meantime, don't reduce the loan balances; put the additional funds in a 100% offset instead, and that way if a PPR (principal place of residence, ie your home) turns into an IP (investment property) at a later date, you can withdraw the funds from the offset to buy a new PPR and the interest on the full IP loan balance is tax deductible. (But if you pay off the IP loan and redraw to buy a PPR, the redrawn component isn't tax deductible.)

Warmest regards,

Tracey in Brisbane

Personally, unless you think it's a fundamentally bad investment – ie negative cashflow won't be compensated by anticipated growth – then I'd refinance rather than sell. You'll get as much, or more, cash in your pocket, and you continue to benefit from the property's capital growth. Two years is not long enough for time to work its magic! Pundits seem pretty optimistic about the future of this area, so I'd be inclined to refinance to max LVR and use the equity you pull out as deposits on further investments.

Best wishes,

Tracey in Brisbane

I've been in this situation and my legal advice was that, unfortunately, the contract in QLD only imposes (or imposed at that time) performance penalties on the buyer for not settling on time, but not on the seller!   Definitely seek legal advice; your lawyer should be "all over" this. If you're using one of those conveyancing mega-factories rather than a solicitor, then that would explain the lack of action and is one of the reasons that these places are a bad idea, IMHO.

Don't let it drag on – and update us on how things are going!

Regards,

Tracey in Brisbane