Property Wizards can also help with finding good commercial property deals for you. If you have read property investor magazine you will find that the directors of PW are very active in conducting property research and they know the Perth markets very well.
You may not have seen them advertise the commercial buying service since most of their clients demand is for residential investments however I know that they have strong knowledge of the commercial market as well.
In fact my experience with them has made me consider using a buyers agent to purchase in interstate markets. I believe if they (buyer’s agents) are passionate about what they do and service their clients honestly (like I believe PW do) then the fee for a good buyers agent is well worth it.
Hope that helps.
JHi Wayne (& Lisa),
Firstly I’d like to say a HUGE congratulations on what you have achieved so far. I don’t think their would be many people in Australia that would be in your position at 26yrs old when you did it all yourselves!
Just a quick question: You mentioned that you bought a couple of vacant properties obviously for CG purposes. Did you find it hard to service the loans for these when you weren’t about to recieve any rent or anything? Is their anything that the tax man or you can do to help service a loan on a vacant land? Can you qualify for FHOG on a vacant land if you don’t see it within say 12 months?
Any help on the advantages of buying vacant land over a house would be much appreciated!
Cheers
Paul[suave2]Hi All,
jaclift – cheers for that. I will give them a call:)
Paul – thanks mate! yeah it feels good looking back on everything that’s happened – especially when we had no “silver spoon” helping us:)
Yes although the blocks of land returned great CG – servicing the loans was quite a strain!
I adopted a strategy that not a lot of people would be comfortable with; though I believed the returns I would get would be much higher than my loan’s interest rate so I structured it this way.
For example, with one block we had $300 p/w in mortgage to pay. Therefore when getting the initial loan I actually borrowed extra money to help with the loan repayments. eg, if it was $300p/w I new that I could only afford to pay $150 – so I worked out $150 x 24 months then took this out on top of the loan and left in as reserve and drew down on it each mortgage repayment.
In today’s market I wouldn’t do this, though back then I was confident of 25%+ returns.
Unfortunately FHOG doesn’t apply to a block of land unless you are going to build a house of your own to live in on the block.
When selling the block I was able to claim all my “costs” for holding the investment which helped – though unfortunately I wasn’t able to claim much whilst holding the investment.
cheers
wayne
Wayne Leech
http://www.WaynesGuide.com.au – Accommodation in Western Australia.
List your holiday home for FREE!Hey Wayne,
Thanks for your response!
Just to clarify, so those costs include closing costs when you purchased the property, ongoing mortgage management fees etc??
Did it also include the interest on the loan because that would probably be the largest thing??
Cheers
Paul[suave2]
Hi Paul,
Yes, all buying costs, holding costs, and selling costs.
This basically forms your “cost base” which you then deduct from the Capital Gains amount. (which after 12 months is only 50% of the selling profit).
Rgds
Wayne
Wayne Leech
http://www.WaynesGuide.com.au – Accommodation in Western Australia.
List your holiday home for FREE!Gday Wayne just got a question on that “cost base” that u were talking about, just wondering (because i also have an investment block of land) would getting a firebreak done on the block come under that?? I had to get a firebreak done on my block last month and just wondering if i should like keep the reciept for when I go to sell it etc. ?? thx!
Hi,
I’m no accountant so I maybe wrong – though yes I believe it would. It’s something you had to pay for to maintain your investment so I wouldn’t see why not:)
Wayne Leech
http://www.WaynesGuide.com.au – Accommodation in Western Australia.
List your holiday home for FREE!ok thanks for that wayne just checked my records and that guy that did the firebreak never sent me a reciept so i phoned him and he;s gonna send one out to me next week. Just got another question while we r on the topic .. wif my block of land I just pay the interest only , if i was to pay like a chunk off my loan, like if i put 20 grand down on my loan to reduce the interest, does that affect my capital gains at all?? Or does it just mean I have less to pay the bank back when i sell it?? I assume that it wouldnt but some1 told me for investment loans its better just to pay the interest but i dont know if they were talking about capital gains. thx
Hi Wayne,
great success story on the back of great capital gains. Great equity available as foundation to continue to grow portfolio.
I think most property investors get to a point where debt servicing restricts growth during the building of a portflio.
Cash +/+geared properties should always allow growth, but most of us know that capital growth and $+ properties are rarely strong together in one property for a long period of time. This is a generalisation of course and there are exceptions – maybe you can find one.
I have approx 20% of portfolio with stronger cash flow knowing the properties will not have explosive cap growth in a cycle, but maybe consistant, moderate growth.
I have sent you a private e-mail outlining an opportunity which I think would contravene forum rules to talk about too much.
best of luck,
RonnyPaul – your capital gains is the selling price minus your cost base.
Yes, it would be that you have less to pay back to the bank. The only thing is, is that because you are reducing the interest your paying, then this will mean that your cost base will be less as your interest paid amount will be less.
However if the $20k reduces your loan repayments then you will end up with better cashflow. Saying that though, $20k will probably only affect your repayments by say $30 a week. You could look at using that $20k to fund another IP, then sell up that other IP and use the profits from that to reduce the initial loan for the block:) decisions, decisions….
Ronny – Cheers for that – will check my email tonight!!
Wayne Leech
http://www.WaynesGuide.com.au – Accommodation in Western Australia.
List your holiday home for FREE!Why not buy another property? Only $40/week, if ur interested, email me [email protected]
Website: http://www.maylene.zoomshare.com
G’Day Wane,
long time between chats! I see you have had some exiting times….congratulations ‘Grass-hopper’. Last time we spoke you were building websites for advertising of RE?! – I sdee you are advertising one of the nowhttp://www.WaynesGuide.com – Accommodation in Western Australia.
List your holiday home for FREE!are they not doing the right thing for you? I thought they were an awesome idea and had hoped they would give you the opportunity to stop working!
10 yrs your senior and I’m still way behind you. My hat off to you! My focus has been to kill off my PPOR debt and keep all my IP loans on interest only. Not an exciting method but it allows me now to focus on paying out my Non-deductible debt while still benefitting from the Tax deductions of the investment loans. Change in job (again) meant for a tighter belt setting and a change in tacticks.
As you’ve already mentioned, the market in WA has slowed, why not relax the pressure on yourself and get yourself ready for the bargains that will be out there in the next couple of years? I know that, had I been more dilligent I would have been ready for an fantastic opportunity (no doubt they are still out there, but…) which would have allowed me to buy two properties and put 5 IPs on there fully contracted for 5+5+5 – had it all set up….[blush2]Congrats anyway! See you around the traps.
Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas EdisonDon’t let reality be the benchmark for your Dreams
cheers calvin;)
Good to hear from you! it’s been a while! Yeah I’ve started up a company on the side called OpenTravel (http://www.opentravel.com.au) I’ve moved away from Real estate in general as this is too competitive. I’m now focusing on holiday homes – eg, go to http://www.waynesguide.com.au and you’ll see hundreds of holiday homes in WA:)
Yeah hopefully if this takes off, plus property investing i can build a residual income:)
Are you still up at hedland? Or have you moved back to Perth? Lol – I can remember when we used to talk about IPs in karatha or hedland for $200k and thought these were expensive! The growth up north has been amazing!
cheers
wayne
Wayne Leech
http://www.WaynesGuide.com.au – Accommodation in Western Australia.
List your holiday home for FREE!Hi just logged onto your site. Have done similarly and have a lot of equity but not good income to service loans. I have gone 50/50 on a house/land development and am building on the back block with a friend. My accountant reckons we have to be GST which up to now, haven’t thought about as an individual investor I haven’t ever sold or had “turnover” from property.
Notice you sold property you had 50/50 with girlfriend. Was GST an issue. Do you claim GST in your property deals.
Sorry I am not with it on this issue of GST does anybody have tips or sites I can look at. Can’t find much on forum about it.
Markat
Email MeHi WayneL2,
Are you still up at hedland?yeah, still here. it’s now nearly 11 years….. getting to old for this heat. Boodarie IRon closed up shop then I went to the Department of Health as an Inventory analys/ advisor – showed them how they are over stocked by about $750K which made the Regional Mnager happy as he found some easy savings, but there was no job in that savings for me.
So now I work for Onesteel up here, felt like I needed a challenge…. famous last words! It has been a challenge from day 1. Never think for one moment that your Manager has it easy. I cop it from the customers about my staff, about my warehouse and about the stock I carry. I cop it from me team who think it my responsibility to sort out their ‘Issues’, I cop it from my upline Management because sales are down and costs are up and why did I submit that CapEx…. then I come home and cop it from the missus fro working too hard and too long…..at least I got that one sorted! Lol on the up side, when things go well I really like the job, keeps me on my toes!have you moved back to Perthnope not yet, but I have bought a house there; it is due to settle in the next couple of months. I look forward to that. Bought an option to buy mid way thru the boom in Perth so the 10% invested is now worth 29%, hehe makes getting that finance soooo much easier!
I can remember when we used to talk about IPs in karatha or hedland for $200k and thought these were expensive! The growth up north has been amazing!hehehe yea it seems so futile now to have been so upset about it all. We bought for $150k and with a few changes now have a val of around $340-360k which is nice to have but not really usable at the mo as I don’t have any other income to service more loans.
Our focus is to reduce the loan on our PPOR to reduce the non tax deductible loan and then get soemthing sorted so that when the market or our situation changes we are ready to pounce! Gottat love this Investing stuff. I would like to get into some Stage 1 developments, but the timing isn’t right for us right now – it’ll come…When things slow down a little at work I might be able to get more time in on this website. Needed a break – I felt like I was getting too Theoretical and didn’t do anything practical. You get that.
My Rotti femal is having pups soon so if anyone is interested……[biggrin]Ciao!
Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas EdisonDon’t let reality be the benchmark for your Dreams
Hi all,
I’ve found plenty in this thread that seems to be relevant to my situation, so rather than starting a new one, I’ll simply tack mine on here…
“What do I do next?” is a key question for me right now.
I am 29, and after 8 years working my backside off in sales, earning great commission and being ULTRA frugle, I have managed to fully pay off a 2BR unit in St Kilda, Melb. I paid $223,500 in Dec 2000 and it is now worth ~$340K (very, very conservative estimate)
For a variety of reasons, I have returned to University to study law (postgrad is only 2 years, whew!). For those Kiyosaki readers out there, I am treading the path of an “S” (I want to be a Barrister) but have a firm commitment to “mind my own business” and build up my assets. (The Mercedes can wait!)
My wife earns $45K pa and I am currently not working as the degree is so intense. Since we moved interstate for me to study, our St Kilda unit is rented out ($315pw) and we are paying $310pw rent here, so we’re slightly behind after property managment fees but nothing too bad.
Since we can’t quite live on her salary, we have taken a LOC loan against the unit to make up the shortfall in our living expenses and to clear some existing debts.
In summary, it is likely that I will start work again (article clerkship) in 2009 with:
– Around ~$40K owing on the LOC loan against the unit (therefore ~$300K equity)
– A combined household income of ~$100K (my salary will likely increase quite quickly after the articles year)
– Living back in the St Kilda unit
– No savings (it all went into paying off the flat)
– Another 1-2 years before kids!My question:
Is it completely old fashioned thinking to want to pay off the debt as soon as I’m working again or should I ‘go for it’ and use more of the equity to buy another property? It is a concern for me that I have no cash reserves and part of me would like to build them up a bit before getting too far down the investing pathway, or is that old thinking too?!
Any comments/thoughts would be appreciated.
Stanners[strum]
G’Day Stanners
Most newbies fall into the trap that ‘IF’ they have no savings, they are not able to show their savings capacity. Funnily, though, if you can show thta you have fully paid off your Unit (refer to your statements) that that is actually proof of savings! So let that one go, but you might need to point it out to the Bank once you apply for an investment loan.
RE: wanting to pay off your debt as quickly as possible, well …, for me it depends what the loan was used for! If it is to suplement your living and therefore NOT Tax deductible, then yes; a focus to pay it off would be in your best interest. If it is for further investments (shares, IPs, busines) then I wouldn’t put quite as high an emphasis on it. Depends on where you are at and what you need to be able to sleep at night – again this is what I would do (and am currently doing).
The beauty of equity is, is that you can use it in place of ‘cash’ in certain situations, so for me I’d use it for a deposit on an IP and for closing costs – this saves me coming up with all of the money thru bonafide savings. Just a thought.
Remember:
Tax Deductions are based on the intent or better purpose of the loan. So Borrow money to buy something that will make you more money (ie: IPs shares or business).Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas EdisonDon’t let reality be the benchmark for your Dreams
Hi. I am also situated in W.A. U can e-mail me for an advice at [email protected].
You could play your cards in the property development side of things or commercial property… more lucrative.
invest in the mining sector mate, shares, property whatever the boom has been on for a few years and aint about to stop any time soon, beleive me i work and live on the mines in wa. one of my properties has gone up 200k in the last year. mining all the way.
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