Boom Boom Rob yes experience is a wonderful thing
Byronent yes i know what you are saying but i never like to see people get burnt does’t matter how naive they may be.
It goes to show though that figures can make a compelling argument for
Reasons to buy
Reasons not to buyIt depends who is telling the story to the uninitiated.
Cheers
Wow!!!! So according to your accountant every place must use only 40 weeks rental calc, so basically all properties are un-rented for 3 months (or 25% per yr!!!)!!!! Most places that are very CF+ in the US & NZ would be by that accountants definition CF-!
Perhaps for a hotel/motel/short stay accom. but for a rental??? If you are unable to rent a house, you can always drop the rent by $10 (so your return would of been a $320 profit).
When i said “Who would of ever thought that the ‘professionals’ could get it (so) wrong???!!!” i didn’t imagine that wrong!
Good choice for moving!!!
Rgds.
Lucifer_auBy the way, lenders use 75% of rental income for servicing like your accountant did but this reduced amount replaces all the expenses as well as vacancy. Your accountant included expenses on top of 25% vacancy. I would report him for manipulating you to earn commissions on managed funds.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter – Click Here
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdI only use accountants that do what i do.
Otherwise they are just no good for anthing other than advice on how to minimise tax
Byronent
Adelaide SA“Otherwise they are just no good for anthing other than advice on how to minimise tax”
And to tell the truth most are hopeless at that! I read a statistic that approx. 60% of business owners pay more tax than they have to, and that was using simple and common deductions, I would hate to see the figures if you took into account more sophisticated strategies.
Rgds.
Lucifer_auLucifer
Yes that is correct all properties one should use the 40 week calc.
Rob
This guy was the wrong accountant for me. He genuinely was conservative and his calcs were always conservative. Even for a straight tax return he would not stretch anything. I think i changed also so he didn’t suit my needs. At the time though there were not Forums to discuss and raise issues as it is now. If there were i wasn’t as yet involved. Perhaps i expected too much from him i was looking for answers in one direction and he was taking me in another.
Byronent
Yes i have had two accountants since the one in question and have stopped using them both. Both told me property was a loser. I currently use an accountant in the CBD who had quite a few properties. He did sell them all though so i am thinking whether i should change or not.cheers
alfI would think a 12 week vacancy period is excessive. However, when I do my budgets I work on 4-6 weeks vacancy. The issue might be more one of risk management ie if the property is vacant for x weeks, have I resources so I can make the payments.
Instead of emotive words like “dog”, maybe it is better to look at other terms like opportunity cost, ie if I do y, then I can’t do z. Is doing y the best return on my money.
The issue probably is not whether Alf’s friend was foolish to sell, but whether what he did with the proceeds was a better use of his money than keeping the house. If he invested in something else eg other property, shares he has probably done OK. If he used the money for a new car, etc that may have been a luxury.
Some years ago some friends sold some land. It was obvious the price would only go up because of various factors. They used the proceeds towards their new flat. They did well. The land increased in value too.
I sold some comercial property I had 5 years ago. After costs and inflation I had made no taxable capital gain. The sale price was substantially lower than the replacement value (still when I purchased the purchase price was substantially lower than replacement value too. That property has gone up in value. I invested the proceeds in other property which has also increased substantially. The sale put me in front by giving me the capacity to invest elsewhere, change my risk profile etc. The decision to sell was the correct one.
A 12 week vacancy allowance is a sensible thing to do and I have always used it as a guide. I also try to be generous in determining expenses.
Why not? It is my money that I don’t want to lose!
These factors have contributed to my selling off most of my IPs because they no longer work out as ‘safe’ propositions anymore. I am not a gambler or a loser.Hi all
Yes it appears there are many thoughts on this. However i would have thought as a risk management tool a LOC dedicated to investment wouldact as a buffer to any shortfall due to vacancies etc.
This interest would be tax deductible as the reason for use is towards an income producing asset.
cheers
alfeveryone knows that property will appreciate in the long run. But for every seller there is a buyer. Why did they sell in 94 ? 20-20 is great in retrospect. At the time they were probably seeing no capital gain in sight and the majority view was that property was going nowhere.
Simple human nature : people follow the herd. An interesting question is why did the people who bought in 1994 elect to buy a dog ?
Marsden, based on your theory, do you own any property?
I have never had a property empty for more than 10 days. I only buy “dogs” as defined so well here.
My accountants keeps my tax bill to an absolute minimum. Especially after I showed him an article from the USA. IN short, one of the accounting associations sends out an example to the top 100 accountants in the country. The best result varied immensely from zero tax to as high as 69% tax which was 20% off the worst case scenario.
So as good as we get in investing and property portfolios grow, accountants are a very important aspect in our plans and success.
Byronent
Adelaide SAByronent,
Would you mind if giving me the details of your accountant?
I’ve yet to find one in Adelaide that i have felt comfortable with, let alone knows about property investment.
Cheers
kinks
In theory, there is no difference between practice and theory, in practice, there is….
Joe Barbaro
MTS accountants Salisbury
0412950424
82816944Laid back and very helpful
Byronent
Adelaide SAByronet,
The term Dog comes from a corporate portfolio matrix developed by Boston Consulting Group in the early 1970’s.
A dog refers to an investment that will not produce the required investment outcome you are looking for like capital gain or income.References
Robbins, S, 2000, Management, published by Prentice Hall 2000, 2nd edition.Thanks Duckster I am aware of what the term means.
I just didn’t believe this particular property was one.
Byronent
Adelaide SA
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