Forum Replies Created
Thanks Phil – and I thought I was quite competent in English expression!
Anna
Ultimately you will need a good accountant. I would find someone familiar with property investing and such – maybe a phone call to your own accountant or one recommended would be a start.
Anna
From what I understand (NSW) you don’t legally have to pay any holding deposit as they call it, even though we do pay that ourselves as the agent always asks for it. Ir’s just a good faith thing.
You can also negotiate to pay say 5% deposit or whatever the vendor will agree on. It’s then as usual paid on exchange of contracts.
When we have bought off the net, we have used fax and email for the offers/ contracts and sent the 10% by cheque.
Had an experience last year when one of our sons looked at a property with the agent, vendor accepted the offer, he paid a holding deposit and the agent wrote the receipt, congratulated him and shook hands. Later that night – we were at the local celebrating his first investment – the stupid agent rang to say he had missed out, that someone else had offered $5000 more. So much for the holding deposit and receipt. I would never deal with that agent again and told him so, not very politely. In a booming market he forgot about honesty.
Anna
I don’t know about other states, but the Council rates for our Queensland properties – and these are units – are twice those of our houses in NSW, eg $1200/$660.
Land tax threshold NSW $232,000 last I read.
Anna
We purchased a unit in FNQ last year over the net. The agent was honest enough to tell us that a cupboard in the kitchen had been replaced due to termites and emailed photos. We had a pest inspection done, spoke to the pest man who also treated a tree nearby and there have been no further problems. We will be having that checked again as it is just 12 months.
The purchase was subject to satisfactory pest report of course.
Anna
Hi,
Having used a few different methods to buy, eg. getting a loan outright, borrowing all and cross collateralising, using deposit out of equity L/C, we’re sticking with the L/C, as funds are available immediately to purchase, renovate if you’re doing that and then refinance the improved property. Want all the properties to stand alone.
It’s been a lot of learning and is going well.We did borrow a deposit from family a couple of years ago, renovated and refinanced and paid back the deposit. Years ago, we also managed to get a personal loan for a deposit, and we have also used a deposit bond.
Anna
Phil, I do a bit of casual work in property management and people often ask if they can have a pet. Most owners say no, but one offered to pay a little more rent.
Actually we have allowed a small dog in two of our rental houses. (no increase in rent though!!)
Keeps them happy and there are polished floors if the doggy happens to come inside, no fury carpet.
AnnaBarbara,
You’re ahead in having paid your mortgage in advance should you not get a tenant for a couple of weeks.
I believe with any property, a depreciation schedule is to your advantage as everything from the curtains to the doorknobs can be depreciated.
Have recently had 5 done at $330 each. (would have been $550 single) Look in the Australian Property Investor and you will see depreciation specialists who travel and you can ring on their free number. That’s apart from the Q/Surveyors’s in your area.An example – daughter has had a unit for about 6 years. She didn’t have a depreciation schedule in previous years and had used the same accountant who didn’t advise her to get one. She changed accountants, got the schedule done and gained tax-wise.
As for the curtains – they’re expensive and might not be looked after but they can be depreciated. Also you could put up eg. continuous lace or similiar which you would be able to depreciate instead, not nearly the cost, if you decide to store your good ones. I have found tenants sometimes want to put up their own curtains. We had the situation in the last week with one of our houses. They put up their own heavy drapes over the lace.
Seeing the carpet is really bad, I would suggest replacing it and over here in the east you can get a decent quality carpet for say $80pm laid – again tax deductible. A good tenant treats the place as their own and wont wreck the carpet. Sisal is supposed to be hardwearing, good for tenants. Save cost if you can, get family/friends to pull the old stuff up.
You need to get the unit in order before you get the depreciation person/quantity surveyor to do the schedule. They take lots of notes and photos in case there are any questions later.
A nicely presented unit should attract a good tenant.
Make sure you know what your agent will do for you when you are away, what percent commission will be charged, length of lease – 6 or 12 months, they should do 3-4 inspections per year,(the reports can be faxed to you overseas) so you know things are ok, they reviews rent if necessary, makes sure rent is in advance and not let get behind, your monthly rental statement should be posted to you each month, do internet banking so you know what is going on. Appoint someone who can maybe authorise a repair if that is necessary. You don’t want the agent willy-nilly eg. replacing a stove if a repair will fix it. You need to set a limit on what the agent can spend on repairs before having to contact you for the ok, or someone you have appointed here, and that goes into your management agreement.
Keep all your statements, receipts, everything to do with the property so you can substantiate it all at tax time as your income/expenses. Your depreciation schedule is tax deductible too.
Peter – those depreciation schedules are about 10 pages of really involved stuff, internal and external schedules.
Anna
Paulee Hi,
Try http://www.onsitedirect.net. They are at Surfers.
Phone 55794100.We are in NSW and have just sold a property through them at Coomera. We found them to be efficient and helpful. They deal with genuine investors so there is minimal interruption to tenants. Our property was listed less than 2 weeks. Their brochure says ‘the largest real estate exhibition centre on the Gold Coast’.
Anna
By short term tenants, I mean a 3 month lease which happened with one of our of our units. At least it was occupied and she paid bond.
Namaste, hope the above post explained a bit but ring an insurer and enquire.
Redwing, maybe $5 a week increase is OK if they aren’t on a fixed lease any more. I’ve heard of a tenant being happy to pay $5 extra to have a small dog!!
Anna
Hi Redwing,
There seems to be a difference between the states.
Our property manager in Qld changed from one LL insurer to another because the cover wasn’t there unless tenants were on a fixed lease. We also have a holiday unit for which we took out LL insurance with no problem.But then I certainly would not agree to anybody going into one of our properties without a lease – if their name isn’t on a lease, they wouldn’t be responsible for the property and who wants short term tenants with one weeks rent and lease fee coming out of rental income each time.
We have had tenants in a house (NSW) for over 2 years, They initially signed a 12 month lease and now they are on a week to week since that expired. They have to give 3 weeks notice of vacating or we have to give them 60 days. Our property manager says we are covered.
Anna
Hi Uncivilised,
You asked what is wrong with negative gearing. My thoughts are probably nothing depending on your strategies and your goals and ability to pay.
Just an example though is a townhouse we bought 4 years ago at Coomera, borrowed all and we were putting in over $100 a week to support it. We got caught. Have sold the above, settlement next week. It’s a go ahead area there now and a block of land goes for what we paid for the townhouse. Houses then were around $180,000, and are now twice that. The townhouses were $20,000 less.
We have bought quite a number of houses and some cfp units since, but the -ve gearing and cross collateralisation does have a bearing on borrowing so it was time to sell. Prefer to use a L/C and all properties stand alone.
Anna
Hi FatBoy,
No, not from Mackay. Going to Cairns next week to check on the IPs though.
Live on 80 acres – semi-retired, ride an ag quad round this place too, goes well!!!
Anna
Hi Ringading,
See you’re in S.A. If you have the opportunity to go to Peter Spann seminars, even the three hour introductory ones have tips on renovating. Their website is http://www.freemanfox.com.au. You can also buy their videos of the seminars if you can’t go.
It comes down to your budget, whether you are going to live in it or rent it out.
A few ideas from renos we have done –
Don’t do anything structural though unless you’re a builder or have mates who are, takes too much time and you want to get the rent coming in asap.
Paint a neutral colour – the tenants can put their own colour with curtains, lounges, bedspreads, etc.
Polished floors can’t be damaged in the same way as carpet or vinyl. You can always sand and re-estapol, easier than replacing carpet or patching vinyl. But you can also get good remnant or end of roll carpet and vinyl.
Have a neat functional kitchen and bathroom. A new vanity, say $300 and tiling (seconds, end of runs at sales) makes a difference. Maybe new tap fittings. You might just need to replace a couple of kitchen cupboard doors, the handles, sometimes the benchtop. You might find a kitchen manufacturer that has benchtops that are unclaimed orders and sell them half price and less and cut them for you.
Light fittings don’t have to be expensive – we just put new ones for under $25 each (sale price) and they were stainless steel and glass. New light switches look good and double power points in the kitchen area.
We have replaced internal doors from dull looking luan to panel.
Some tenants aren’t gardeners – and there might be water water restrictions. Last reno, we tidied up a lot, removed dead shrubs, trimmed trees, weeded the garden, spent $65 on good cyprus pine mulch so it ended up virtually easy care. New letterbox if it’s rusty.
Anna
Mel, all the accounts used to come to us too but we’ve had them redirected to the property managers. Bit easier on all the paper work at home.
Anna
Hi Celivia,
In NSW, yes tenants pay for their own water usage which is indicated on the water bill – we pay the fixed charges. At each new tenancy, the water meter is read and noted on the ingoing condition report so there can’t be any dispute from the previous tenant. Sometimes though units might not be separately metered and so then the tenant can’t be charged for water usage. The tenancy agreement will also make reference to the conditions of payment for water usage.
We pay the water usage for the units we own in NQ.
The water accounts are tax deductible – but check with your accountant as well.
Anna
Hi all,
I would pay off the PPOR, extend the L/C, and keep looking. May sell a couple of cfp units in NQ as well, and put surplus into another house – looked today in our area at one which is not cfp, but a good buy – next door to one we own. Do like the SEQ area and think it will continue to do well for a while yet, but I think it would take some research & travelling to find property at the cheaper end of the market.
Often find properties that would make a good profit after reno and sale, just need that extra on the LC.
Anyway, always looking and thinking.
Anna
Thanks Fudge – good to learn something new. Not enough hours to read everything.
AnnaI had problems with a property manager in Queensland 6 months ago so asked another agent who managed other properties to take this one over as well. I then emailed the first one that another agency would be taking over the management and the keys would be picked up on a certain date. There was no problem at all, but I did receive a phone call from the original agency and had the opportunity to explain why I had terminated their management.
Anna
Hi Westan,
Settling on one in a couple of weeks (was a long drawn out one, not of our doing), selling one which settles early december, looked at one this morning and having a second look on Monday. It could be a reno/sell, money to be made.
Interesting post to see what everyone is up to.
Anna
