Forum Replies Created
I tend to see the two like different routes to get to the same destination.
James
Just think of it as a success tax! (I guess most taxes are)
Doesn’t ease the burden of paying it, however, the land component of your property will drive the capital growth and future wealth. So the more land, the more growth, more wealth…..yeah, more land tax…
James
I have used Washington Brown. They are located in almost every state. H/O is in Sydney. I used them in Melbroune.
http://www.washingtonbrown.com.au
James
I have paid $600 plus GST in Melbourne. Just recently I have paid $300 plus GST in Qld (on the Gold Coast).
James
Noam,
If I was thinking of buying, I would be looking at it this way. (I realise that it won’t be ready until 2006)
That is approximately $5460 per square metre. That is defiitely on the high side.
Rent for 1br plus study are probably around $320-$330. Don’t forget 10% vacancy rates so, one would probably need to provide some financial incentive to rent it out. Probably avergaing to about $300 per week.
Given the current climate and some other sales currently in the Docklands area, I think you may need to revise your expectations to ~$350k.
Don’t forget, many banks only lending 70%LVR on these properties.
If you really, really need the money, then sell it. Do what you can to avoide such a loss. Good luck.
James
One Lesson Learnt from this story that I don’t think has been mentioned is, this is another excellent reason for having a mortgage broker organise your finance. They get to see the valuation and can at least flag where there is such disparity between valuation and contract price.
Many banks now even officially notify you where there is a difference of greater than 10% between valuation and contract price.
James
You’d have to ‘do the numbers’. If the property is right, then you should try and make it work.
Speak to one of the motgage brokers to run some numbers for you quickly to establish where you may or may not be. At least that will tell you what the banks think. Then you can decide if you are comfortable with that level of financial commitment.
James
Definitely increase size of room. 3 x 3 would be minimum in my view.
Not sure whether this is 2nd bedroom. If you are renting out to 2 people (not involved), the second bedroom still needs to be big enough for someone to ‘retreat’.
As long as meals area sufficent and kitchen functional for use, minimal is better.
James
Nathan210,
I agree with your calculations. Make sure you include depreciation as a deduction as well.
James
Ozboy,
To qualify for a deposit bond you need at least 5 x the amount of equity to the deposit bond you are applying for.
Do you have the finances to purchase the 6? If not, applications for deposit bonds are almost defacto loan applications.
Even if you went to 6 different companies for deposit bonds, they all mark your credit history, so you cannot hide these applications.
James
From the sounds of the work you are considering, this is probably an improvement, which would not be deductible under current legislation.
Your ability to claim this would be to get a tax depreciation schedule completed, which will take into account the work completed and maybe capture it under the Low-Value Pool arrangements.
James
I would think about it in this way. If you were to retire/resign from your wrok today, what would be your disposable income be.
If you have investments in general that you are living off the passive income, its like you are running a small business. Therefore, it has to be revenue minus expenses.
In your example, this would be $1000
James
Brekingout,
Just bear in mind that body corporate rates will increase. Not forgetting the reqirement for a sinking fund.
So if you think it is expensive now, it will only grow.
If the complex is new, many of the areas that would need maintenance are under warranty eg lifts. After the 1st 12 months, you start paying, which therefore increases the rates.
James
Cia,
My understanding of a hybrid discretionary trust is that you purchase units in the trust. The consideration for this is money that you have or borrowed funds. Not sure for a standard discretionary trust.
James
The greater the land component (all other things being equal) the greater the capital appreciation.
As a general rule, house prices are higher than units. The lower price points of units may be of advantage to you.
Units are not to be confused with apartments.
Maintenance is not intrinsically higher on units, it will depend on the age, construction and general quality of the building.
My advice would be to buy a house, subject to due diligence, over a unit. (Due to land component)
James
James
SIS,
I believe there is a case in the Federal Court which is still determining the validity of whether you can claim the capitalised interest. The waters are still murky.
James
Hi cromie2,
Welcome to the forum.In the interim, there is nothing wrong with renting it out and then trying to sell it. It may give you some time to re-assess whether it is the right thing to sell without burdening the mortgage without assistance from your tenants. Unless the price is unrealistically high, then again, if you don’t need to sell, hold onto it.
Are you comfortable (both financially and psychologically) with having the two mortgages, with one being rented out. The reason I ask, is that some people are just not comfortable with going down that path. Although I suspect the fact that you are here on this site, would mean you are happy to countenance all suggestions.
You can utilise the excess between your rent and payments in either paying down your new PPOR’s debt or can assist you in servicing another IP if you so choose/have the debt capacity for.
James
Madankumars,
What sort of rental guarantee are they providing? I know the area quite well, as I live in the area. I also own an apartment in Sth melbourne close by so I am well-versed in both rentals and re-sale values.
What is the size of the apartment?
Car park?
Body corporate?Some background information. they have been selling/marketing these apartments to the US & UK for at least 2 years.
The phenomenon originally started by selling them to investors in Asia (especially Hong Kong). This has been happening for the last 6-7 years (right throughout the property boom as well). So selling overseas is nothing unusual.
Like houses, one apartment is very different to another. Finishes, size etc. However, you will find that many of the re-sales now take a very long time to sell at a range that the vendors are looking for.
There are two examples that I know, whose apartments have been on the market for close to 10 months trying to sell them (Central equity buildings). They are obviously not that desparate to sell though. The asking price on one hasn’t come down that much, but another’s asking price has gone from $415k to $379k.
James
Yes, he did need the money to build. He had a few projects on the go, but knows that this is one he definitely wanted to do. For similar reasons why I wanted to buy.
My only point was to highlight that you can in fact by below what you might consider fair market value. Maybe I was lucky….who knows. But more to the point, I had made the relevant contacts within the area with real estate agents, knew the prices pretty well and had some credibility so I guess I was lucky enough to be referred onto him…or vice-versa, I can’t re-call now..
James
Ok, without sounding like a re-incarnation of Henry Kaye, it can be done and I will give you my example.
Through contacts in REI (inner Melbourne suburbs), a reputable builder had land and plans for a small 5 dwelling development. I did the requisite due diligence on his previous work, the architects that he used (ie previous projects), comparable prices on similar property sales within the area.
He needed to sell one to get finance from his bank to build. Comparables in the area were around $330k’ish and after negotiating and meeting with him a number of times, i was able to purchase at $280k. A month later he decided to sell another (to a client of his accountant for approx $320k).
Yes, before anyone asks it is negatively geared. And you may say that $50k could be just good negotiating, however, before I signed I had a valuation for 1st mortgage purposes completed which came in @ $320k Contract was signed just after New Year (2004). Settlement in Q1 2005.
I’ve just re-read that and it read a bit like the HK’s of this world. However, I don’t have any greater skills than what anyone else has on this site has, so it can be done.
James
