Hi all, bought my first property last week! Got the keys yesterday and i’m over the moon!
Now just want to ask all you experienced folk..I can’t lose with a water view right? My place(how proud!) is situated in a nice suburb in NSW’s Lake Macquarie…the house itself is nothing flash but i really like it because it’s situated one lot behind the waterfront houses, and from the front deck I get a great view of the lake. Also there’re a lot of new houses going up, most of them are huge millionaires’ houses. Reason why i asked this question is because the rental return is CRAP! Place cost me $415000 but potential rental is a measly $250/w. But i bought this place with CG in mind. Comments please!Are you serious?????
Simply:
NO WAY!!!!
Well done; congrats!!![medieval]
Don’t worry too much about the low rental yields, some of the most expensive postcodes throughout the country are returning low yields, but the potential for CG is still strong!!!
Jo
Jo please check PM!
Hi Picklesam,
Gotta dash off ATM, but have noticed the PM red light, and had a quick sticky at your message, thanks for the vote of confidence; I am both flattered and humbled!!! [blush2]
Anyway, I promise to get back to you ASAP, you have my word!!!
Till then, be good [winking]
Cheers, [biggrin]
Jo
11 Second Solution:
Rent = 250
Occupancy rate ‘3 Weeks’ = 94.23 Percent
Solution = $117790.00
Asking price = $415000Closing costs:
Deposit 10 Percent = $41500.00
Legal fees = $800
Stamp duty = $14165.00
Mortgage app fees = $475
Mortgage insurance = $0
Valuation fees = $0
Other borrowing costs = $400
Clean up costs = $0
Inspection costs = $300
Other costs = $0
Total closing costs = $57640.00Mortgage details:
Loan Principle and Interest = $373500.00
Interest rate = 6.5 Percent
Term = 30 Years
Weekly mortgage repayments = $544.79
Total repayments for life of loan = $849877.20Annual costs:
Management fees 5 Percent = $612.56
Letting and advertising = $0
Body corp fees = $0
Rates = $800
Utility rates and fees = $0
Insurance = $350
Miscalanious costs = $0
Land tax = $300
Maintenance 5 Percent = $612.56
Other ownership costs = $0
Total annual costs = $2675.12Summary:
Total annual rent = $12251.20
Total annual mortgage = $28329.24
Total annual costs = $2675.12
Total annual cashflow = $-18753.16
Annual Cash On Cash Return = -32.53 Percent
Cashflow Positive Weekly = $-360.64Yes I love jaffasoft’s calculator.
Just thought you want to know.Rgds.
Lucifer_auWahoo Picklesam, congratulations! If you want to make it a better cashflow, you could put some cash into the loan to lessen the interest costs.[biggrin]
If you want to get out of a hole, first stop digging.
speak to u soon Jo…
Brenda: i got about $20000 cash but that’s for a deposit for my next one! hehe…it’s gonna be TIGHT for the 1st 6 months(living in it to get the 1st home buyers grant) have to cough up $2300/month!Lucifer: don’t really get your post…i’m pretty dumb when it comes to figures…i know cash flow is really BAD but like i said before i got CG in mind.
Hi Pickle,
Congratulations on your purchase – yes it will be negative cashflow but given the water views you should do well in the long term.
Without knowing your salary etc it is hard to provide much in the way of concrete comment but you can assist the cashflow situation by placing the $20K in an offset account – this will have the effect of reducing your monthly interest bill.
When you do move out you will be able to apply for a PAYG variation to your pay period tax – a depreciation schedule will also help this if appropriate. These will help your cashflow. Convert loan to I/O as soon as you possible can.
You maybe able to give the place a bit of a cosmetic renovation (paint and patch up) to improve your cashflow with a higher rent return after vacating.
And finally – it is not a race so I would advise you ‘bed this one down’ first before moving onto something else.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
thanks for the advice derek! Just want to ask what is a PAYG variation? And what does it do? last year i earned $52k before tax.
yeah i’m planning renovations at the moment…I hate the shaggy smelly 80s style carpet!
yeah i understand it’s not a race…i definitely have the patience, just need guidance, A LOT of guidance [biggrin]
anyway here’s the house if you guys want to have a look.
Hi Pickle,
A PAYG variation can only be completed when you rent the property and it allows you to claim your tax refund every pay period rather than waiting until the end of the financial year while, in the meantime, you are on bread and water.
See the following links – they may be of assistance.
http://www.ato.gov.au/individuals/content.asp?doc=/content/17023.htm
http://www.ato.gov.au/corporate/content.asp?doc=/content/43572.htm
I would also recommend you complete a detailed budget as from my rough calculations your cashflow is going to be very, very tight depending upon the size of your deposit.
Have you checked, or had an independent person, check the figures out as they relate to your situation?
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
“Can you lose with a water view”.
You can loose significant CG if the view is lost either naturally (trees) or through a “millionares” developement blocking your view.
Why is your view under threat? I always consider firstly the potential threats to the view when paying a premium for that luxury.
Unless you get absolute waterfront
yeah derek you’re calculations are correct! Extremely tight for the first 6 months…repayment is $2300/m i earn approx $3000/m after tax. So $700/m to live on…good thing is i don’t pay rent, only expenses are food, petrol, bills.
But I did some research and apparently
I can rent out the other rooms during the compulsory 6 monthes of residence! So that will ease the squeeze a bit. Now i want to ask how do i declare the income from the rent of my spare rooms?
Can I just keep a book and get the tenants to put a signature in every week after they’ve paid me rent?Hi Picklesam,
Yes either a rent book or some other form of record to show that you have received income from boarders, which you can produce for your accountant or tax agent when it comes time to lodge your return.
Bear in mind also, that as you are going to be renting out some of the rooms, even whilst it is your PPOR, should you ever decide to sell the property, CGT will be applicable and apportioned accordingly for the period of time in which the premises generated income.
Cheers,
Jo
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