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  • Profile photo of young nyoung n
    Participant
    @young-n
    Join Date: 2010
    Post Count: 6

    teo me it just seems less profitable than the office block? i mean even if the office block only rented for 6months of the year it would pay 500*26 = 13000. i have no loan to pay back, and all income is profit instantly. and one would would expect it to rent at least 6 months per year? or is that unreasonable?

    Profile photo of young nyoung n
    Participant
    @young-n
    Join Date: 2010
    Post Count: 6

    ok, i can get a small re, i only need a cently renovated two bedroom unit in coconut grove. It is very simplistic, but is only 325000. i need a loan then of 25000. which i would assume would be easy enough to get from the bank. i could rent the property for between 280 and 300. 25000*8%= 2000 + 3500 body corp n rates = 5500 in expenses 280*52= 14560 i can also spare 250 a fortnight, which is what i currantly put away in savings. 2500*26= 6500 so effectively 21060 income – 7500.  15560 off principal of loan in the first year.

    after 2 years , the loan would be fully paid off with an excess of $1864.8 (hmm thats just me doing maths, not important)

    ok so now im 2 years along, and i own it out right, and have $280 extra income, im paying tax on. i then borrow against my unit, for something else, and use the 280 income to help pay off the loan for the second investment property.

    the thing is, the coconut grove place isnt really anything fantastic. Im not too sure how it would go with capital gains. althought 325000 is incredibly cheap for a unit in darwin and coconut grove is a very centralised position. close to both the city and suburbs and the beach. not far to schools, shops markets etc.

    should i just go for this, get one purchase under my belt. learn how it works, and then i have extra income for next ip and alot of equity?

    or do you think it would be more desirable to get a loan for 185000 and get the newer unit from my first post, that pays a better yield? and just just try and pay that off?

    Profile photo of young nyoung n
    Participant
    @young-n
    Join Date: 2010
    Post Count: 6

    Firstly i would like to thank everyone for there speedy response to my query. I am very glad i have signed up, and see that this forum is great access to a think tank of collective minds.

    i would also like to apologise for posting in capitals. Wasnt intended to be offensive and am a little embrassed that i have kind of got off on the wrong foot here.

    The office block is currantly leased until january 2011, with a 1 year option.

    House call you are spot on, i would be very vulnerable were i to spend a long period without vacancy. Also if i needed to sell it quickly i would probably end up getting less than i paid, and i would be out of pocket stamp duties and other associated costs.

    Back to the drawing board.

    Terry, are you sure there would be no tax payable if my mother simply moved $300000 from her account into mine?

    Terry, where can i find detailed infomation about discretionary trusts?

    I would have a hard time finding a place in darwin that i could buy outright for $300000. I could probably find an older unit, for 400000 or so. which is why i was excited about the office block, as i could buy it outright and it paid a very good return. But i understand that i may have underestimated the risks involved with commercial propperty. 

    When you suggested i buy a ppor, do you mean in the name of a trust and then rent it back to myself? if that is possible / legal? wouldnt it be unwise to be paying for interest that is not tax deductable?

    i was under the impression that if i had a a large deposit such as 300000, i wouldnt have much trouble getting a loan from the bank, especially if i was buying something under 600000 as the bank could easily recoup there money by selling the property were i to default is this incorrect?

    I guess i do really need to do some hard homework, can any body advise what i should read, and or the basic things i need to consider when buying an investment propperty? Sorry, i think i should have kept in the shadows a bit longer as it is dawning on me how little i know about all this :P.

    thanks again for everybodys time, in providing me with quick responses.

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