Forum Replies Created
Thanks Simon
Yes, they own the land. Any recommended web-sites/contacts where I might be able to get more information on development/construction finance.
James
Tell me Jack, what are the spoils of this victory??
James
Jack,
The purpose of the forum is for a free exchange of opinions and beliefs.Your response to Mel I believe, is overly emotional and personal. Did not Andrew Hewitt recommend a deed of arrangement as clearly the best course of action to maximise creditors’s returns.
You have obvioulsy made your opinions well known (in another post as well) about Henry Kaye. Should we censor you ?.
May I ask, were you affected in anyway, directly or indirectly by Henry Kaye??
James
My suggestion (a little different), is to
1.know/learn the market value of your property before giving it to an agent to sell.
2.Choose one (1)agent based on your criteria
3.Set your reserve based on your research.
4. Incentivise the agent with a significant commission over your reserve price.ie Property Value (based on comparable sales) $500k
If you sell below or at $500k, provide normal commission (eg 2%).
If sell the property over $500k, give up to 50% of the price obtained over $500k.
For example, sell at $530. Commission would be 2% of $500k plus $15k.James
Many factors will dictate capital growth, however I base my opinion on the following;
1. Feedback from agents selling them
2. No land component
3. Usually very small in size (less than 50m2).
4. There are many serviced apartments that have come on-line throughout the 90’s.
5. There is a different risk level – reliant on the skills and expertise of the group running the complex. ie Quest (similar to commercial lease in that sense)
6. Smaller pool of clients/users versus traditional rental.Would be interested to know if anyone elses experiences contradict my thoughts
James
Some interesting snippets of information about SE Qld ie Gold Coast.
I currently work for CUB/Fosters (located in Melbourne) and one of our plants is located in Yatala (half-way between Brisbane & SouthPort/Surfers). Over the next year, the capacity and output of the plant is doubling. It will be in by mid-2005, of equivalent output to Abbotsford (Victoria). There are an approximate 90 additional people to be employed over the 230 currently working there.
It is the benchmark across all CUB sites, and longer-term would be in an advanatgeous position to grow as the largest brewery in Australia.
In addition, notwithsatnding some of the boating/leisure boating industry being established just on Hope Island. There are others that I wouldn’t bore everyone with.
I could not disagree more that, SE Qld will be like a heavily biased retirement centre. If you see the housing development occurring from Robina right up to Coomera, these are future suburbs, where predominantly familes will be living. Commuting to Brisbane or within the Gold Coast for work & schooling.
With regards to the QLD government, they have been very aggressive in attracting industry and jobs. You could argue better then Kennet for Victoria throughout the early to mid 90’s.
In addition, if you look at the migration numbers, more and more immigrants are actually choosing Brisbane/GC (14%) as their first destination when they reach Australia. Historically, this was around 2-3%. These are ABS figures just in case anyone is wondering.
Prices will not reach melb & Sydney for many years, however, for an investor, does it really matter!!
James
Have not heard of them, however, I have also been looking at Brisbane/Gold Coast and there are plenty of developments/property groups/agents all looking to ride the property wave in SE Qld. Do your research. I am going to be be purchasing in the area, however only after normal due diligence.
Their advisor is using a negative gearing approach ie out of pocket costs are minimal, to make the sound of it an attractive proposition (which it might be, depending on your IP strategy) Have a look around the area, get a feel for the development and what is available.
Fore-warned is fore-armed.
Not aware of any model/formula etc, however you can try this and see how you go.
1. Go to http://www.ato.gov.au/scripts/taxcalc/calc_standard_hire.asp
This allows you to calculate your tax payable based on the income you nominate for a given time period (ie weekly, fortnightly, monthly or quarterly)2. Gross it up to an annualised figure ie if your tac bill is $1k per month, multiply it by 12.
3. Do 1 & 2 again, after you have determined what your deductions are. Therefore your taxable income (inclusive of deductions)
4. Minus the results you get in 3 from 2 and you have the reduction in tax for the year.
As to what is the best price/rental income to get best tax benefits. I would rather choose the property based on potential capital growth & rental demand. Let the tax be a benefit which makes this ‘future’ property easier to acquire/manage.
However, to answer your question directly, the maximum benefit you receive is when you are on the 48.5cent marginal tax rate. Therefore, as your deductions increase, with more IP’s, the benefit falls as your taxable rate falls from 48.5c in line with your taxable income.
I have probably told you the bleeding obvious haven’t I? Trust my ramblings have helped.
James
Of course, if you read the article below, maybe the phenomenon is more pronounced in some areas than others.
http://www.couriermail.news.com.au/common/story_page/0,5936,8705291%255E952,00.html
James
Will be purchasing one (1) within the next month. Currently tidying up offers etc.
Will then have to wait until approx February 2005 to be ina position to take next one.
James
From the advertisement, it mentions the Quest Group, who are a large chain of serviced apartments. I have seen this before, where they (Quest or similar) do pay all outgoings The only thing I would question is what capital growth you would get from this over the long term. My opinion is this would be minimal.
James
Judi,
Most banks in my experience, would not allow a second mortgage to be registered on title. However, it can be an unregistered mortgage – this will probably increase the interest rate though.James
Interest rates are only going to increase as a result of an improving economic outlook, both local and international. Don’t forget, North America & Europe are coming off recessions and historically low interest rates as a result.
Whilst individually, it may be difficult to asses what that means for each of us financially, on a macro level, that means more income as an economy.
So whilst the increase in interest rates will have an affect, so to will rising income levels affect issues such as housing affordability & rentals.
Westan, I think my commerce degree (economics major) has helped me, but people get their information from a range of different sources. My road was a tertiary degree and subsequently working across various industries, some get from running their own business, others from just trial and error and actually investing and learning.
Property investing is not rocket science, however, street smarts, a degree of business acumen can be developed over time, whether with or without a degree.
Mark,
That is one huge lot of negative gearing if I am reading correct. After your deductions, you are still actually paying an additional $17k. Wouldn’t this also be tax deductible or are you effectively paying no tax??Don’t think negative gearing is the issue as a general principle, just whether it corresponds to your overall property strategy.
If you can’t use the $17k as deuction of some sort, then on the surface, paying off your PPOP would be far better option.
Of course you would have to way up CGT & other costs if you sell your IP.I am currently negative gearing, although my out of pocket expenses are a fraction of what you outline. Has an accountant (someone who delas with property of course) ensured that have fully maximised your deductions. $17k (which is $326 a week!!!) is a lot (sorry to repeat myself)
James
Of course the extra monies can be funnelled into an offset account on your PPOP to reduce interest payments each and every day!!
James
Ultimately it depends on the area that you are looking to invest in and what suits the area. Apartments tend to suit younger people and to a lesser extent empty nesters.
not familes.You make a valid point to negative geared property, that eventually, either tax benefits are exhausted or you do not qualify because of serviceability issues. A balanced portfolio, with a combination ot both -/+ ve prop. to suit your own circumstances is an excellent point.
James
TerryW,
I guess what you did lose is time. Time to invest into something else which may have turned out better.There is an opportunity cost for everything.
James
I just wish for a Collingwood premiership in 2004. (Have been wishing the same thing every year since 1990 though!)
James
GO PIESTraceytd,
In priciple, the Clayton property is the one to choose for all the reasons previously mentioned. However, if the Clayton apartment is 70sqm, that means just under $4000 per sqm. Now for outer Melbourne area, that is somewhat pricy, I think.What are the quality of the finishes? Builder? Architect/designer? Floor plan, car parking facilities. As a rule of thumb, the further out of the city you go, the larger sized property you should buy, due to lifestyle, tenant and/or future purchase preferences. 70sqm isn’t large for 2br for suburbs greater than approx, 15 kms out of Melbourne.
Negotiate a bit harder (which I am suer you will do). Would be worthwhile to spend a few hunderd dollars on a sworn valuation.
James
