Hi All,
Hope every one has had a good start to the new year.
Last night my fiance and I where talking about investing into the property market. We have done a few projects over the last few years.
Even though we want too it does not mean its the best time for us to get back into.Looking at properties that suit our needs we have found properties on a good parcel of land for 320k to 340k. We do have money for a deposit and even equity through the home we own. But when we do our figures it looks like we are outlaying to much for a small return.
If i borrowed: $300,000 @ 7.8% on a interest only repayment type our Monthly repayments would be: $1950.00
Rent in the area where looking at is $1280.00 a Month. Then you have insurance ($38 a Month), water rates ($25 a Month), rates ($81 a Month) + Rental Managment rates. When you look roughly at these we will almost have to outlay $1000 + from a pocket & when intrest rates go up then we will have to outlay more.So when i look at these figures it look likes we are outlaying more then acutally getting a return? Does any one feel the same about the current climate in property????
Jpcashflow | JP Financial Group
http://www.jpfinancialgroup.com.au
Email Me | Phone MeYour first port of call in finance :)
With your calculations are you looking at Interest Only repayments on the loan? Plus depreciables – will the negative gearing drop you down a tax bracket? You can claim theses as a reduction in your pay or as a lump sum when you do your return
Hi Johann
You’ll be able to get a much lower rate than that. If you had a $300k IO loan @ 7% (for arguments sake) you’d be looking at $1750 per month. There’s also depreciation and negative gearing (as mentioned above).
On face value though, it does appear that this property will be negatively geared by quite a bit. However, the amount you’re required to pitch in should reduce overtime as rents increase. Investors generally accept negative gearing in exchange for anticipated higher growth – do you envision this property achieving decent growth?
I have a spreadsheet I provide to my clients which provide estimated holding costs of an IP. Feel free to shoot me an email if you’d like a copy – you can have a play around with the numbers and run through some different scenarios with different purchase prices and rents.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Maree, Good point in regards to negative gearing.
I am 5 month into operating a small business and my wage is pretty average as i am investing the money into the business at the moment. I am not really a fan of negative gearin even when i was earning 100K in real estate my tax return from the property was pretty average.
But with prices so High in property and with out goings raising so much like rates, insurance ande even intrest rates you still need to have the money in the first place??????I think what im saying to my self i rather invest into some else where i might get a smaller retun in capital but maybe more of a passieve income.
Jpcashflow | JP Financial Group
http://www.jpfinancialgroup.com.au
Email Me | Phone MeYour first port of call in finance :)
Jamie M wrote:Hi JohannYou’ll be able to get a much lower rate than that. If you had a $300k IO loan @ 7% (for arguments sake) you’d be looking at $1750 per month. There’s also depreciation and negative gearing (as mentioned above).
Cheers
Jamie
Best I can find Variable is 7.11%. Fixed is 7.64%. (these are Package discounts too). Are you saying there is better out there?
Hi Frank
Yep, there’s better out there in terms of interest rates (however, keep in mind that the rate is only one factor to consider when sourcing finance). Check out some of the products offered by the non-majors – ING, Adelaide Bank, AMP, Homeside, Choicelend (the last two are owned by NAB but are quite competitive at present).
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Guys,
I understand we can all find better rates. But there still going to go up? So what ever you pay know is going to go up any way thats the point im comming too. Is the market a bad time to invest in?Jpcashflow | JP Financial Group
http://www.jpfinancialgroup.com.au
Email Me | Phone MeYour first port of call in finance :)
Hi Johann
It’s a very broad question. There’s so many markets within the country that are all doing different things at present. Some areas are rising in price, some are going backwards and others are going sideways. Check out the Herron Todd White month in review – http://www.htw.com.au/Month_in_Review/Month-In-Review-February-2011.pdf It’s a great read and provides an indication as to where property markets across the nation are sitting.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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