We have recently purchased a house and land package at Mawson Lakes (SA) and completion of building is Feb 2004, the total cost is $210,000.00. We have put in $30,000.00 and the average rent for this type of property in this area is $230 – $250 / week. This way negatively geared using the formula from Steve McKnight.
Has anybody got any creative ideas to turn this into positive gearing?
I would love to do a wrap (current valuation $240K – $260K) but it seems this is not allowed in South Australia.sorry j_o_rourke but im not into wraps, you will have a better response by posting this in the WRAPs forum [
]Matt
“If you do what you have always done, you will get what you have always had.”
“Isn’t it time for a change?”
Put more ca$h into the property.. hey , now it’s positively geared : )
sorry..no “creative’ ideaREDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Is it near a university? Rent each room out to a student. $100 per week per room (assuming you’ve got 4 bedrooms, as most new houses seem to nowadays), you’re now pulling in $400 per week, which should put you in positive cash flow territory.
More tenants means more hassles, and common areas become an issue you need to keep an eye on, but think about it and see if it works! If no uni nearby, see if you can adapt the idea.
Cheers
Elysium-MHi John,
Lease Options (LO’s) are allowed in SA. Click on this link and find more info on LO’s here.
https://www.propertyinvesting.com/strategiesCheers
Soosh []When a problem is created the solution is created simultaneously
Originally posted by JohnO:We have recently purchased a house and land package at Mawson Lakes (SA) and completion of building is Feb 2004, the total cost is $210,000.00. We have put in $30,000.00 and the average rent for this type of property in this area is $230 – $250 / week. This way negatively geared using the formula from Steve McKnight.
Has anybody got any creative ideas to turn this into positive gearing?
I would love to do a wrap (current valuation $240K – $260K) but it seems this is not allowed in South Australia.You might be able to increase the value of your property, and thereby increase your rental return. I would recommend a book by Dolf de Roos called something like “101 Ways to Massively Increase the Value of Your Real Estate without Spending Much Money”.
I don’t suppose you could subdivide the land and put a kithome on the other half? Or just sell off the excess land and put the cash into your mortgage?
Tenants probably won’t whine if they have less lawn to mow.Also, I take it that your home is mortgaged over 30 years, rather than a shorter period?
Originalsin.
Not dead yet.
Lo there do I see my father.
Lo there do I see my mother and my sisters and my brothers.
Lo there do I see the line of my people back to the beginning.
Lo they do call to me, they bid me take my place among them.
In the halls of Valhalla.
Where the brave may live forever.Of course, you’ll need to research the rentals for similar properties in the area. There’s no point overcapitalising on improvements and doodads when no one is going to pay the rent you are hoping to get.
Hey original, the kit home idea is cool! Only thing you gotta check is the local zoning requirements, since it could count as an additional dwelling.
Cheers
Elysium-MDo you get positive cashflow with the on-paper deductions?
If you intend holding the property, arranging for a quantity surveyors report and submitting a Capital Allowances Schedule. (I think it was previously a Section 221D certificate???) could reduce your weekly tax bill.
Shushar
“All our dreams can come true, if we have the courage to pursue them.” – Walt Disney
u could build granny flat out back also refinance to interest only loan with tax deductions u might scrape in.
Thanks for all of your replies. I think the lease option is the way to go. Cost of building is $210,000 value is now $240,000 – $260,000
JohnO
JohnO. Why not sell it at a profit on completion and use the profit to purchase positive cashflow properties instead. Why keep losing money week by week when you could be making money week by week? As the saying goes a positive is always better than a negative! You will have CGT to pay at the end of the tax year, however, you have a bit of time to look for more positive cashflow properties. There are still $50k properties out there that will give a return of more than a $100 a week……….you just have to look! My wife and I have just got approval for 3 houses in the country. They are as follows: PP $55k, rent $120, PP $38k, rent $115, and PP $40k, renovations $20k and rent $200 after renovations. We have 3 more commercials waiting for approval now. Good Luck!!
Tnanks for all the suggestions guys. I think I will be looking at a lease option.
JohnO
Ok why not put a garage at the back make it into a granny flat another $120per/week if the house is 4 bedrooms put a new kitchen in the garage put in a divier wall and lease it as 2 flats at $150 each
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