Forum Replies Created
Melbourne – Tomorrow night (3/6/04)
Michael R,
being from the US or at least residing there, whilst the fed rates are 1%, what are mortgage rates? Business loan rates??
having spoken to someone in the last year from the US, they were indicating the home mortgage rates were around 6%. This seemed high given fed rates were at 1%.
I was watching CNBC the other night, and a range of experts were saying, that the market (bond and share market) has already priced in at least another 25 basis point rise. Not sure how much effect 25 or 50 basis point increase will have though.
James
Sebastian,
I can only confirm for Victoria and Queensland
For Vic, you can sign up as Name and/or nominees, and then you have 28 days prior to settlement to confirm the exact name on the contract.
In Qld, I was in a similar situation re trust. Signed contract in my name and/or nominees but I could only proceed with the contract in my name, unless we cancelled original contract and re-signed another in the name of the trust.
Not sure for WA…
James
Mel,
Interesting idea re other avenues of increased cashflow.
Have you pursued the 2nd mortgage/mezzanine funding option to increase cashflow?
How do financiers view this income?
Do they accept 100% of the income for the purposes of serviceability?James
Are serviceability levels for those lenders who offer low or no-doc loans different to standard loans??
James
Thanks Del & Terry
James
Ian,
Yes, you can claim all the relevant deductions, even if you plan to move in later down the track for the period of the property being an IP. ie interest, rates, depreciation etc.
You would however not be eligible for reduced home owners stamp duty concession in QLD. Not sure if you already own a property currently, and therefore eligible for the Fed Gov’t FHOG (?)
If you then decide to move into the property and later sell, you would be liable for the CGT for the proportionate time that you have rented the property out for,
Example –
18 months RENTED
24 months LIVE IN AS PPOR
Capital Gain $50,000Capital gain is 50% of $50,000 x (18/42) = $10,714
Depending on what your plans are to acquire property ie aggressive or more cautious, another option for you is to purchase as PPOR, become eligible for FHOG/ Stamp Duty Concession, which means you need to live in the property for at least 12 months to retain those benefits.
Then you could rent out afterwards, hopefully with some capital gain & savings be able to purchase another IP or PPOR.
If you choose to rent afterwards again (and not to purchase another PPOR), due to the 6 year rule, you will be able to maintain your first purchase and sell, within those 6 years, CGT free.
James
Rob,
Is this a good-bye e-mail? I have enjoyed and learmt from your contributions to the forum. Is there something that I have missed??
James
I guess I am in the relatively early stages of my property investing career, so I am trying to establish a significant enough portfolio to provide me with options in the future.
Not being married, I see the next five years, as fundamental to buidling on the portfolio already started a few years ago. So whilst I would hope that there is ability to enjoy some of that money, it is primarily designed for the future benefits.
The money in of itself will not make me happy (in a life sense), but will allow open options and choices that my parents didn’t have.
Maybe even that sports Mercedes… [thumbsupanim]
JamesWestan/ Hux001,
Nice work for charity, but the reason there were no Collingwood supporters wanting them is that most of us are members and have our reserved seats. Whether 16th or 1st, we are always there.
BTW, good result too. [exhappy]
James
Ez-rent,
Yes, the interest on the borrowed funds are deductible. I have recently invested in olives and done the same thing. In fact the amount borrowed for this was $47k, P&I taken over 7 years.
With the olives, the cashflows for the investment, included a $26k claimable loss in the first year (not including the interest component of the funds borrowed).
James
Personally, I would concentrate my efforts/rewards to the property manager. Minimising issues with the tenant throughout the life of the lease and minimising vanacy times, when they move out I think are keys to maximising your return.
Whilst a gift eg movie tickets may make a nice gesture, I am not sure how relevant it would be to tenants when making a decision to stay or go. Price, lifestyle change, work location etc I think would be more relevant.
James
Katsilidis (Nonder or Fender) are known designers who have undertaken many big residential apartment blocks (Docklands, CBD, Port Melbourne & St Kilda) The agents will probably use that to market these apartments, as you have already referred to. You will notice marketing of recent say 0-4yr old apartments, where they specifically mention these ‘brand’ designers. Not sure what credence that has today in the changed property market. (Maybe more, who knows??)
I am assuming there is a balcony/courtyard depending on level, so this would be approx 10-15sqm of the 100 as external. For example, $380k for 85sqm is $4470/ sqm. Anything above $5000 per sqm is very risky today, given the way prices are going.
I agree that the area of Prahran but to a much lesser extent Armandale, is very transient, which will ensure a high rental demand in the longer term.
I would look at 2 car spots, although that would depend on premium you are paying for that. Storage facilities on the car spots?? You would only be looking at maybe another $10-$20 per week rent(max) for the additional car spot. If you are looking at another $20k-30k for a car spot, that is a judgement call you will have to make between return v future capital growth.
Again look at comparable sales in the area for near new or renovated older apartments and see what they are attaining. Sometimes, the older style apartments (which are renovated) do achieve a better price than the new!! How many in the complex? Ask how many the developer or related parties are keeping for themselves??
Of course finance may be another issue/difficulty You should find out what LVR prospective financiers are willing to go to before thinking seriously about committing.
What is the development called?
James
Markgil,
Haven’t seen the specific apartments your mentioning, however, am quite close to prices as an owner of some new & close to new apartments in inner Melb.
High 300’s is what a lot of new 2 + 2 apt’s are selling for now. No big discount there. How big (in sq mt) is the apartment? Car parks? Who designed them? You would find rent ~$350 per week for these.
James
Luke,
A pergola would be deemed as an improvement, so it is claimable only to the extent that depreciation laws allow. The full cost I would suspect is in excess of the low-pool value threshold (although I may be mistaken), so would not be fully deductible in the current financial year.
James
Expectations and more specifcially future expectations are powerful influences on household and business actions.
So whilst tax cuts, global economic conditions will influence us, the expectation of future interest rate rises, have I believe an even greater effect on behaviour. If people think interest rates rises are inevitable, decisions to purchase/invest are either postponed or abandoned. A self-fulfilling prophecy. The reverse is true and played a key role in the property boom over the last few years.
IMO,the last 6 months is again evidence of that. Whilst we have had had a 50 basis point increase in rates, the effect of this rate increase and the expectation that we will have rises this year, has had a significant effect.
Business & household confidence surveys do give an insight into future behaviour. They are worth examining.
James
So how is the cellar going 1HotValuer?[biggrin]
James
Ausprop,
Some information/data on east coast property prices from APM
http://afr.com/articles/2004/05/26/1085461821861.html
James
Adam,
I have one being done for me now on the Gold Coast for $300 + GST. Firm is Napier Blakeley.
James
Further information for some context to the purchase.
The development is in Northcote (nth of melbourne about 7kms from CBD). Just near the old town hall for those people who know the area. It is an a development of five (5). There are all 2 br apartments. I purchased directly off the builder who needed to sell one before commencing construction.
Prior to purchasing the apartment, I commissioned a sworn valuation assigned for 1st mortgage purposes, which came in at $320k. Comparable sales in the last 3 months in Preston/Northcote areas are between $340k -390k.
I wasn’t intending to organise finance now. I have the cash for a 10% deposit based on $281.5k and additional equity elsewhere if things go pear-shaped. (current deposit is by way of a deposit bond)
Stamp Duty for the purchase will be around $2200 (land value of $100k at purchase).
Not intending to organise finance now, but looking forward to settlement and wanting to unlock equity for another purchase.
Yes, agree there are risks, especially in the new market conditions, but due diligence was quite extensive, so I was pretty confident that it was a good purchase. The extent of which will only be known at settlement.
James
