Relatively inexperienced investor here. Looking for a property to offset tax but not so much that we have a huge gap between repayments and rental income. Are there any kind of formulas to understand whether or not a property is a good price for the rent it can achieve.
Also, would like to know where to invest in Qld. Was thinking Ormeau area, Gladstone etc.
Thanks for your opinions
Sorry I wanted to add that our investment would be under 400K.
Louiero .. the one word that has me shivering in my boots is .. inexperienced. I have an expression that i use … BITE AND CHEW. Because its something that people can understand. BITE – get an investment that isnt a mouthful for you. CHEW – take on board the intricasies of your existing investment before moving onto the next one. As experienced .. you can usually Bite N Chew quite quickly and you'll know whats working for you. But as a novice .. i would seriously suggest taking smaller bites. You have the ability to negative gear? Cool … allow the leverage to get you a FIXED term deal thats a bit of work in the early years but you'll know what you are paying. A five or seven year fixed deal will allow you to get familiar with investment expectations .. rental depreciations .. deductions, and even capital growth WITHOUT sitting there praying for no more interest rate rises. Its a neat way of making sure you are in charge of your property and not the banks.
Do your research .. and make sure that you become your own expert in your area. Aside from that .. GOOD LUCK.
Hi Louiero,
I would suggest that you first do some reading/research into property investing. There are many great books out there that will explain the pros and cons of everything real estate. Once armed with this information you will be able to make an informed decision on what it is you want.
There are no magic formulas that will tell you whether an investment is good or bad, whether it returns an adequate rent etc. However with a bit of research into the area you are looking at you will find what rent average properties are returning. You can also find long term trends for capital gains, population growth etc.
You mentioned you want to reduce yout taxable income, this is a starting point. This means you may want to consider purchasing negatively geared property in your name. Later on you may even decide to purchase other property in the name of a trust. You could revalue and redraw you first loan to purchase cashflow positive property in the trust. This would reduce your personal taxable income and allow you to distribute the trust profits in a way to minimise tax.
If purchasing a neg geared property you should look at its historic sale prices. If a property has performed well over the last say 20 years than it is more likely to continue doing this into the future. In saying that you should never use information without understanding it i.e Why did they property perform well in the past (location, style, size, scarcity of land etc.), is there any reason why it shouldn't continue to perform well?
I hope I haven't confused you more. If you have a more specific question feel free to ask.
Mitch
Sorry for delayed response. Just wanted to say thank you for your input Mitch and Xdrew. I am researching and looking and trying to decide whether we go for a property that is close to positively geared and put it in my name (low income earner) or a trust, need to learn more about this. We have found a property that we can do that with. Alternatively, go for the negatively geared property in husband's name that will give us long term growth but be out of pocket for a while. Just need to keep reading and learning. Thanks and any info more appreciated.
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