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My husband was the same when we met. His parents advised us to get married, pay off our house and put some money in the bank. His father even did a timeline showing that in ten years, we would actually own our home and have a little nest egg.
Of course, his timeline did not include the magic of a property boom, of which we have had a couple in my investing time.
I got hubby to come around and we have a small portfolio of inner ring houses. We could have a lot more, but have made lifestyle choices which slowed us down. I have not been in the workforce for 15 years, and am loving being home when the kids are at school. We have also put money into our own home, which is tax free whenever we sell.
We have worked like dogs on houses to turn them into silk purses and enjoyed doing it (even though at the time, we would have rather been sitting in a ski chalet or on a beach).
Why don’t you show your partner and possibly her parents some appropriate threads from this forum and Somersoft. If you look them over and pick ones that will sway her in your direction, she may just be tempted.
Just don’t procrastinate. In about 1977 my parents went on a trip to Europe. They were away nearly ten weeks. They had sold my grandfather’s house (estate – one third share to them) prior to going and spoke to a couple in Scotland about house prices in Brisbane. This couple were wanting to move here. My grandfather’s house sold for $29K and when they got back, the market had started to move. They reckon they could have got $45K when they got back.
They quickly phoned this couple and said “hold everything”. Explained that houses were moving up in price very quickly. They had told this couple that with the money from their house in Scotland, they could buy a house to live in and one to rent in Brisbane. This had changed “almost overnight” and they sent off real estate magazines to this couple to show them that prices had moved quickly.
It happened then, and it happened several years ago in Brisbane. The house next door was rented to a family who had just sold and were sitting, cashed up, waiting to buy their next house to renovate and make money on. They missed out on contract after contract and said that each month they were renting, houses were rising by at least $5K and it was nothing to have six or eight contracts on each house. They ended up renting for a year and their buying power was much less than at the start.
So it does happen that things move very quickly and you don’t want to miss the next wave.
The other thing is just do it on your own and let her see it working.
Good luck, Wylie.
I have self-managed IPs for over 25 years. When I was 15 my parents bought their first IP and managed it so I kind of grew up watching it.
When I bought my first iP at around 19 I didn’t even consider having it managed. In all that time I have had a handful of tenants who had me worried. Only one of those damaged the house and luckily the landlord insurance paid up. Otherwise I would have had to repair and repaint the room myself, no biggie.
I am in Brisbane and the RTA website is really helpful. You can download, fill in and print off the forms required. They are super helpful with phone queries as well. You do need to keep to the propert times as far as giving notices etc.
I have managed our IPs while having a full time job and having three children.
I have to say though, that living very close, we don’t do mid-lease inspections and never have. With our feral tenants last year, we did spend a bit of time chasing rent etc, and spent probably the most time ever at the house, annoying them until they went, within the law of course.
We treat our tenants like real people with rights. My mother still manages their IPs and she is 70. We have always been very hands on and have done a lot of renovations over the years, but even if you get tradies to do any work, you can still manage the house yourself.
To me, it is a matter of checking whether the money has gone into the bank, and writing our a receipt. If and when a problem arises, the RTA is the first port of call.
It is a doddle but I realise it is not for all. When I think that every week I would lose $30 per property in fees I shudder. I need that $30 in my pocket.
Wylie
Don’t let her get away with giving you part payment or anything. With our tenants, we kept issuing notices to remedy the breach, and on the last day they would hand over a week’s rent, which meant they were not in advance and from that day on were living rent free until they again went into breach.
Once they made some payment, we had to wait for them to go into breach again. It happened several times until they just stopped paying and we could issue notice to leave.
Keep on them, or they will play you along and DOCUMENT everything. I kept a running diary so I had a documented timeline in case we had to go to the tribunal.
Wylie
In may 2006 we evicted two tenants, named in the lease document. They were actually lovely young men, but they had invited a third young chap in. He was not added to the lease. He caused lots of noise and the neighbours were pretty annoyed.
In Queensland the RTA says that having that third person living there but not on the lease is a breach of the lease. That is how we got them out. We actually would have been very happy to keep the two young fellows we originally approved (we self manage) but seeing that the police had been contacted we suggested they would be better off to start fresh.
The left the house as it was when they went in and there was no problem, but the third chap not on the lease was our “get out” card.
Obviously the laws in SA must be different.
Wylie
That is interesting because the latest house we bought has the underneath enclosed in asbestos ripple roofing, well painted on the outside but raw inside.
As soon as we can, we will remove it. Is there an easy way to tell if it has asbestos in it?
Wylie
We had some feral tenants evicted last year, but can’t remember the technicalities. Sorry I can’t help more, but if you ring first thing Monday, the RTA will set you straight and you can get the forms done right away.
The forms can be downloaded to your computer and you fill them in and print them out straight away, so if they are already in breach, you won’t lose any more time.
Good luck.
Wylie
If you have a lease document which states they should be paying two weeks in advance then they are in breach already. If so, issue the appropriate “remedy to breach” form which gives them seven days to remedy the breach. If they do not, issue the “notice to evict” form.
I have typed this information from memory. To make sure you do the correct forms in the right order and, most importantly, giving the correct notice time, go to the RTA website, which is a mine of information.
If you have any questions, ring the RTA. They are very helpful and will give you advice on the phone.
I assume if you have a bond, you need to move quickly as it doesn’t take long before the bond is used up in lost rent.
Wylie
Asbestos roof usually has a large undulating wavy profile. I think it is called “Super 6” or something like that. It is a larger wavy profile than tin or similar.
Unpainted it is an ugly grey, and painted, it looks painted and usually not shiny like zincalume.
Wylie
I wouldn’t allow them until next week if they are behind now. I don’t recall without looking back but from memory, we had to give notice to remedy breach, then wait a certain number of days before issuing notice to vacate. You must be really careful you give the correct notice.
Ring the appropriate place (Residential Tenancies Association in Queensland – not sure about other states) and they will be most helpful.
Wylie
Our PPOR had an asbestor roof, in really good condition, well maintained and painted, although that is only the bit you can see.
We had it replaced for two reasons –
1. Having a real estate agent in the family, we know that many people are put off by an asbestos roof because they know that replacing the roof is an expense they will be up for some time down the track. It certainly was a factor in our PPOR purchase.
2. Even though it was in great external condition, we thought that as the legislation tightens up about removal, we would bite the bullet and replace it sooner rather than let it deteriorate and have to replace it later when the costs to do so will be higher.
So we found a roofer who assured us he would do everything by the book, have the roof sheets as unbroken as possible, placed into a plactic lined truck with springklers going to dampen the dust.
Pfffft…….. The smashed it up, threw it into our yard in all size pieces, threw it into the truck and hosed it at the end. It was an absolute joke. I made sure the kids were not home, but it just made a mockery of the whole process and I felt like I was playing russian roulette with our lungs.
I would definitely think twice about buying a house with an asbestos roof.
In your circumstances, I’d bite the bullet and have it replaced now.
Wylie
Don’t know which state you are in, but we had a situation similar last year when tenants just stopped paying rent until we had the water into the house tested. Reckoned he could see worms in the drains and in front of his eyes. Turned out he was on drugs but BCC tested the water for us for no cost. Most scary thing visiting that house with the BCC chap and our pest man at the same time, but that is another story. After having to chase the rent the whole time this was the last straw.
Anyway, my advice would be to keep a record of exactly what has happened and be really careful with your dates. We served notice a couple of times, but each time they would pay us some rent so we had to start the notice period again.
Keep meticulous records, diary entries to back you up and issue the appropriate notices at the earliest possible time to lessen the rent you may lose.
Good luck.
Wylie
Just to balance out the other side of the argument. We have only ever had one positive cashflow property, which we reluctantly sold to reduce debt and consolidate.
We have always bought negative cashflow because we stick close to Brisbane city in our local area which shows good growth. We are not saying that outer areas are not good, but we know our local area and when a good buy comes up, we buy. We don’t have a large portfolio but it is valuable and will increase.
I think the big difference is that our negative gearing means we get a fat cheque back (our choice to get the cheque, not get it through the year as reduced tax) and also my husband has no desire to give up work.
My parents are self-funded retirees, funded by IPs and shares. Since they bought their first IP 32 years ago, we have (as a family) renovated over 30 houses, including new bathrooms, kitchens, knocking out walls, decks, landscaping, painting, painting, painting.
Whilst it is enjoyable turning a sow’s ear into a silk purse, to do that week in and week out does not really interest my hubby. He likes his office job. It gives him the pips sometimes, but it is easier than punishing his body renovating. Anybody who has renovated themselves knows it is hard work.
So, because he has no desire to ditch his job, the negative gearing has suited us. We have had many lean times in the earlier days, but the rents do catch up, and then we buy another one and start again.
If we hadn’t had three children, we would be far ahead in our assets, but there has to be a balance. I have also chosen not to work, again a life choice. If I worked, we would also be further ahead, but again, life choice must co-exist with wealth creation.
We also have no desire to be mega-rich. There is nothing in our lives that we would change if we won the lottery, except maybe travel overseas, but no great desire or any feeling that we are missing out on anything. We have a good lifestyle.
So for some, negative gearing is not a problem at all.
Wylie
Why not buy something cheap that you can do up and make some money. Do it a few times (if it is something you enjoy and can do yourselves – even better) and make some profit while you are young and don’t have any children.
Once children come along (if that is what you plan) then you could look at settling somewhere more to your liking.
Wylie
Could I suggest that rather than talk to your bank, you talk to a loan broker. They may find you some deal which will cost you less in LMI and other costs.
I am in Brisbane and if you want our broker’s name, send me a private message, but there are several on this forum who obviously are very good as they are always being given a good wrap by those who have used them.
Wylie
I know that in Coorparoo we have two blocks with two queenslanders with character housing and demolition control restrictions. Our town planner told me each house we put in the back needs 300 sq m. I suspect it depends on the mood the person you talk to is in and where the moon is in the sky as our street is in a similar area and the house across from us was allowed to be taken away, even though it was built between the wars. The house next to it had to keep its facade.
I also know that a house we sold about seven years ago was looked at by someone who approached BCC about splitting the block and putting a house in the back yard (just less than 24 perches corner block). He was told “no”. A developer bought it and got his approval and built the house. Two houses on 24 perches in Norman Park. That is why I think it depends on who asks the question, whether they are seasoned developers or not.
Go figure…..
I would call 3403 8888 and ask a town planner, because different parts of Brisbane will fall under different rules, depending on lots of different things.
Or call a private town planner, who should be able to help you.
Wylie
If you live in the house for six months, claim the FHOG and then go to the UK for five years, my understanding from reading this forum if that you can live in it again when you return and up to that point, you would not incur any gains tax. I assume you will not be buying in the UK.
Once you are back and have established it as your home once again you can decide what to do. If you decide to rent it out and buy elsewhere, the cgt would only start from then, not from much earlier if you claim interest and costs from before you go.
That is my understanding from reading things on this and the SS forum.
If this is the plan, I would not claim any interest, even if you rent out a room for a couple of months because you don’t want to jeopardise your cgt status.
I only know what I have picked up in the forums so a good accountant would be the next port of call.
Wylie
I wrote the initial post and certainly did not mention newbies. It was mentioned later in another post and I am certain it was meant tongue in cheek.
After all, we were all newbies once, and I wish I had had this forum to read 25 years ago. I still have questions although I don’t regard myself as a newbie as such. We can all learn, no matter how experienced we are.
Wylie
I bought the CD from the Reno Kings website. I have entered some figures and found some errors, both ways. I haven’t yet contacted my bank as I have several loans more to run through the checker and I want to double check my figures before I start demanding some money back.
I also, don’t really know about the errors in my favour. Do I ‘fess up to those as well?
Wylie
Sounds great, but I would be wary about why the price is so much lower than similar properties. Do you know the reason?
Wylie
Hi Frank.
I am curious about what sort of test you have every two years, if you don’t mind sharing.
We have renovated, painted or fiddled with about 30 houses in 30 years, our own and my parents, some more than once. I feel sick to my stomach when I let my mind dwell on the fact that we have pulled out asbestos without knowing it was dangerous, mainly early days when the public were kept pretty much in the dark about the dangers.
I have thought about asking for a chest x-ray for hubby (and me) so that if something nasty is developing, there is a possibility of doing something about it, although I don’t know whether there is anything that can be done.
Wylie
