Hello George,
Can you explain how you calculated any Brisbane residential property to have ever been positively geared? What factors did you allow for?
Cheers,
MKD.
Originally posted by MKD:Hello George,
How did you ever calculate a Brisbane residential property to have been positively geared? What variables did you factor into your calculations?
Cheers,
MKD.
Hi MKD,
They were 4 or 5 years ago when I got into the IP arena. Now they are not anymore and it is getting worse every time.
Reasons:
1) Interest going up
2) Insurance policies up (Katrina striking next year)
3) Taxes down (People moving from 47% to 42% or from 42% to 30%)They are just a few and I believe the worse is the taxes one.
That is the reason I am selling, IP is not for life is an investment like anything else, if you get your profit you get out, no holding for holding
The only people that are saying that the IP market is good are realestate, brokers and mortgage people but remember this rule, they are there to make money for themselves not for you. (Rule of gold)
George
Closing another one.
I’ll post more details later.
George
Read clones post:
https://www.propertyinvesting.com/forum/topic/19799.html
Another reason for selling my IPs.
George.
Hi George,
Good on you for taking a profit, I was fortunate enough to sell 3 IP properties in Brisbane in the last 4 years for a profit of $500,000.00, started with $5000.00 deposit for 1st, borrowed the rest, sold first for a small profit, bought another and trebled my money and sold, bought another and doubled my money in 14 months. Have just bought another in Mount Isa returning $43,000.00 a year for $400,000.00 with development potential see https://www.propertyinvesting.com/forum/topic/19796.htmlBy the way the second property I sold to a developer and it would have gone down in price by $80,000.00 since he bought it, just good timing or luck on our part I guess.
So as to selling all your IP, I say go for it. Something else will come along if you want to get back in.
Cheers
Dondjr
yes but it’s not just a matter of taking your money out and being able to go back in at will. by the time you pay REAs, tax, (and GST if applicable) and discharge the mortgage, then go back in with stamp duty, new mortgages etc it can be a very expensive exercise. If you bought for $100k and sold for $200k, you would clear say $50k if you were lucky, possibly less. To invest that again you would probably have a nett to spend of around $140k after stamp duty etc., meaning your are willing to bet that property values will fall by at least 30% (and that’s just to break even). hence why there is a compelling argyment to buy and hold, even if the market looks like it is going sideways or falling slightly.
http://www.megapropertygroup.comINVESTMENT SALES * RENTAL SOLUTIONS * STRATA MANAGEMENT
True, I’d be more inclined to hold on longer since it’s been growing cause it’s highly unlikely it will go back much in value (depending on location) unless I’m unable to service the IP’s and ready to retire..
Roy H.
L.R.E.A., Dip FS (FP)Guardian Property Specialists (GPS) is a research-focused company that specialises in sourcing and providing residential investment properties Australia wide!
Dear Matt and Gross Realisation,
What do you mean about Banks not lending the other fellow any more money – I am in the same boat too. I feel like I am missing the boat. We hage 3 properties, 2 ip, but the bank has said that is enough now. should I be listening?
Hi Shelley,
There are other lenders around – I would recommend a chat to a savvy broker. I am sure that they could help – even if it means looking at non-standard loans and lenders. Obviously you would need to apply your own checks and balances to ensure affordability etc.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958Shaelley
I understand your problem – its the same one I have. You need to have enough equity to purchase, but then you also need to be able to service the laon, so you need cash flow. I think that is why I am so confused!!!!!!!!!
I read these posts all the time but I feel very inexpereinced compared to others. I also feel like I am missing out, or missing good opportunities, simply because the bank is a bit cautious.
JAH
– Regarding the loan affordability question –
I remember going to a seminar that Steve McKnight put on in Brisbane when he was just getting started (predated this forum even). His whole focus back then was getting people to think past negative gearing and onto positive gearing, and the fact that he was buying property all over the place, whereas most people only had 1 or 2.
One guy stood up and asked the question which is appearing in this thread ‘I have already got 4 properties and the bank won’t lend me any more – can you tell me how to fix that?’. Steve’s reply at the time shocked me – he basically said – I can’t tell you how – you’ve got to work it out for yourself. The guy thought that Steve was pretty useless at the time and the dissapointment was obvious. But if you think about it – you need to stop blaming the banks and find a solution to your problem. By blaming the banks you are absolving yourself of responsibility for the predicament. ‘I would have gotten rich if it weren’t for you meddling banks’.
Banks lend on affordability balanced with risk. If you are servicing 4 or 5 mortgages (including your own house), all negatively geared, you are high risk for default on one or more of these. I wouldn’t lend you any money either – and I don’t have shareholders to answer to.
If you go to a private lender they may discount your income situation by concentrating on the cashflow of the property itself – if it can’t pay for itself they might not lend to you either – or charge higher interest.
I read an article (I think it was in API) that if you always buy IP at 10-11% yield, you won’t fall foul of most banks lending criteria. If you buy lots at 4-5% yield, you’ll soon run out of money.
Ask yourself this – how many properties can you afford if they cost you $100 / month. Most people can only afford a couple. How many properties can you afford if they pay you $100 / month. Maybe 130?
I’ll admit there are few positive cashflow properties in todays market. But 5 years ago they were everywhere. It could be a matter of just waiting for the opportunities to arise.
_____________________________
We all need somewhere to live – but do we all need a CBD apartment?Hi Investors,
I have read lots of people stating “THE Bank” will not lend me anymore money as if there were only one bank in the world. The mortgage market is huge and competition is fierce. Search around for non-bank lenders, credit unions, non-conforming lenders. Try this link for a list of lenders you will be blown away by the amount of loan options out there (if you do not know already). http://www.cannex.com.auRemember that mortgage brokers have arrangements with a list of preffered lenders and will not have access to ALL lenders and their associated products. So if I hit a brick wall when investing, I ask my mortgage broker first and then I’ll do my own loan product searching if she cannot provide something suitable from her list. To be fair to my broker I always ask if she can get licenced as an originator for the suitable loan I buy.[exhappy]
Try HSBC to increase you servicability. I have been told by my broker that they accept 100% of rental income when most lenders only accept 80%. There are also a host of No Doc, Lo Doc lenders that you will probably find it much easier to get a loan through than a bank.
I sold one SE QLD property recently in order to readjust my finances but now I am holding on to my properties and drawing down on equity when I need more cash rather than selling properties. This saves a lot of buying and selling costs, CGT and other hassles.
A suggestion for the person who posted that he is going to have a BIG captial gains after selling- You may want to consider prepaying interest on another IP loan (if you have one). One can offset the other if they are done in the same financial year. Obviously it would be advisable for you to get some professional financial advice on this but I am just throwing it in as an idea that has worked for me.
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