Forum Replies Created
- creany wrote:Evening Bravo,
A little while back I was in a similar position with a choice of buying one or two IP's and renting with similar money. After seeing an accountant he gave me the advice of putting all my money into a PPOR and borrowing equity out of PPOR for the first IP. The first thing is he stated you need a roof over your head but it is also an investment. This reduces your non-deductible loan as much as you can.
Don't agree with what you were told.If say, you buy a property for $100k with a 20k deposit, then you have 20k equity.
So let's say the bank will lend you 20k as a LOC against the PPR for an IP and you buy one for 120k.
OK, your debt is now a total of 200k (80k non deductible and 120k deductible.)Buying the IP has done nothing to reduce non deductible debt, as you still have your original 80k debt on your PPR.
The advantage of buying a PPR, living in it for 12 mths, then moving out, and turing it into an IP, is that the 80k debt is then deductible.
But this is only an advantage if you move somewhere where your rent is lower, or you buy another PPR getting the stamp duty concession and add value significantly. This is a sensible way to start out.
I have modeled this in a spreadsheet analysing whether first home buyers should buy a PPR, IP, or continue renting.
The next part was all the money used to buy the 1st IP was 100% borrowed in effect. It was much better when it came to tax time. the initial deposit you pay in cash for IP's does not allow for any interest deductions. What happens in a couple of years when you want a PPOR and your money is tied up in IP's? Would it be the best time to sell?My personal opinion is that at some stage your mortgage repayments will be less then renting. The sooner you get there the easier it can become.
Cheers
Creanygreat info everyone…thx.
recently spent a week painting the outside of a new 90m2 hardiplank fibre cement country retreat. belongs to a friend.
painted with brushes as he is an old building inspector, and didn't want spray.
did two coats of the finish colour. water based trade paint.
the hardiplank first coat really soaks it up. but second coat goes on easily.regarding airless spray guns, do you still cut in with brushes, or do you mask heavily…i.e. where ceiling meets wall, and windows. and what do you use to mask? and when do you take it off?
after doing the outside of the house, I can't wait to give an airless spray gun a go. would even consider buying one. am sure they'd sell well on ebay or here.
finally, I used 12 litres for the external walls, though oversized windows and doors.
am wondering what an airless spray covers sq m/litre.
experts say you do around 10-16m2 / litre depending on surface when rolling with manual cutting.Concur with what you say above….but never underestimate the bank’s sly dog tricks to squeeze the last drop out of the common folk….Ponzi ain’t happy till he has sucked the last dollar out….consider these ways to keep house prices moving up….
– increase term of loan above 30 years. i.e. intergenerational loan.
– shared equity loan (misbehave, or get sick, and you get nothing, the bank gets all)
– joint loans via pseudo communal households (though how many Gen Ys can get on for more than 2 weeknights under the same roof
– honeymoon interest rate periods extended beyond 1 year.
– the rba drops rates, significantly (doubtful though)
– trend for median household to grow above 2.4 people.
all of the above stretch your debt serviceability that little bit further.
– Australia suffers some sort of emotional shock that makes us wake up to the fact that we must get more productive…..like Finland, Ireland, and Sth Korea…..extra wealth pushes property further. (hate to say it, but that’s a long shot too)
some good arguments in this thread…which has been going for 9 mths…..
these words from Saul Eslake recently add further clarity to what drove the last boom.
http://www.theage.com.au/news/business/the-great-australian-struggle/2007/03/08/1173166895673.html
“Although the borrowing capacity of buyers had more than trebled in the past 15 years, and immigration risen, there had been no corresponding increase in the supply of housing.”By the way, 9.35pm next Monday, Difference of Opinion on ABC TV are looking at what can be done about housing affordability…
So far, govts just want to throw money at the demand side, which pushes prices up further…..and have been slower to improve supply side…..probably because supply side solutions require hitting revenue sources for local and state govts.
Thanks for posting that stuff Macca. I often refer southerners to it when arguing that they continue to shift their welfare burden to Qld.
Qld has a long history of receiving southern welfare class and retirees. And why not…better to be unemployed or old, in the sunshine and warmth, then somewhere cold and wet.
In the last 15 years, there was an increase in young families moving here to escape rising house prices and cost of living in Vic and NSW. In fact last year the RBA encouraged young people to move out of Sydney.
I just hope the Fed govt takes Qld’s rapid and sustained net interstate migration into account in apportioning funding of infrastructure $.
As for how this effects property demand and prices, all very interesting.
Originally posted by Dr.X:We haven’t had too much success with letter drops either, most people are so disensitised to advertising, it takes several repeats to get any kind of response.
We’ve had a 2% success out of 10,000 letter drops done over several months. [biggrin]
Investment Property Management
http://www.adprop.com.auDr.X, can you expand on the 2% success please. Does that mean you bought 200 properteries?
Just like to add my 2 cents worth regarding cycles.
Many talk of cycles as if they are a cert.
However, rarely does one find analysis of cycles extending back into the 19th century. And continuity of cycles depends much on many economic and political variables remaining constant.There are many variables not remaining constant these days- i.e. we are seeing a serious shift of wealth from the USA and Europe to China and Saudi. The USA has been long THE MARKET for all consumables. It’s capacity to continue consumption at current rates is seriously questionable as there is little scope for further debt serviceability. The USA is exporting more working and middle class employment off shore.
If you are not preparing for further contraction in the Australian economy within the next 5 years, then good luck to you.
