Forum Replies Created
Hey Dr. X,
Good for you!!! I have a few thoughts about this subject, and here they are in no particular order –
1. An associate has a “sig” that says “Be who you are, and say what you think – for those who matter don’t mind – and those who mind, don’t matter” Worth some thought, yeah?
2. Some say “money is the root of all evil” – but they are mis-quoting the Bible. It is the LOVE of money that is the root of evil.
Now, think about that, and consider whether those WITHOUT money might love it more than those that have it. e.g. If your whole life is spent “waiting on a paycheque” doesn’t this keep MONEY more foremost in your mind than those that have a “sufficient supply” of money? So who is loving money more in those two situations?
Also, in reply to those that seemed to “down” you for giving up your friends to associate with others who “make more money” let me say that everyone continues to grow through life. If part of that growth involves a realisation that some friends are “holding you back” – isn’t finding other friends VALID?
And does that mean that you automatically turn your back on your former friends? Or simply that you spend more time with your newer (more uplifting) friends?
Don’t doubt yourself, Dr. X If others aren’t seeing it your way, hand them a business card and invite them to call you back when they’ve caught up a bit more,
Benny
PasandBec,
Though you have $100k equity, this is on total value of $500k (i.e. 80%) so if you don’t wish to pay LMI I reckon you’re stuck.
But then, you only need $15k as a deposit and costs for a $64k property – can you not use a personal loan or cc to get this? The interest might be a lot higher, but if it’s for a short period why not?
Even LMI for a 90% loan on $64k is not going to be huge. Sounds like you think it’s a deal – is it worth the extra cost of making it happen? With a 90% loan, you only need to find $8500 + LMI cost ($1000 ???) You sound keen on it.
Benny
Len,
Things do not compute. From statements 4 and 8, you appear to have $380k in Equity but in 11. you seem to have only $25k equity.
Something needs correction Is 11. giving correct numbers?
Benny
I’ll have to find a knowledgeable mortgage broker to discuss this further. Where would be a good place to look? Any one know of a good one??Look at the last three replies carefully
Benny
From what I understand it seems to have some good growth prospectsReally??? With 250% growth in the last 2 -3 years, I wouldn’t have been so sure. Maybe I need to call DD too
Benny
Hey Dr. X,
You certainly raised a great topic, and you’ve had a whole bunch of great responses.
Well done. Most of the others have given all of the answers that I could have given, so I’ll just say “Great thread, and similar responses” – one of the best I’ve read here.
Benny
221D is the old name – but I can’t determine what the new name should be. I’ve variously heard of it referred to as ITWV, or 1515. But nothing on the ATO website that I’ve found has added clarification.
Try this:
http://ato.gov.au/businesses/content.asp?doc=/content/17023.htm&page=2#P8_289I’ve found the ATO website is a good cure for insomnia,
Benny
JD,
I think Herb offered some good suggestions there. And TMA’s comment about 100% LVR could be valid too. So combine the two and see what can be done.
1. Do you believe that Spring Hill values will increase in the next 5 years?
2. By how much? Is this more than what you are spending to hold on to it?
3. Could you refinance this property? (see below)
4. The current yield is 5.3% – some landlords in Sydney would kill for this return.
5. I haven’t invested in apartments, so I could be right off the planet.
Refinancing:
I agree with Herb that the current Interest rate is quite high. It could be worth checking whether you can either renegotiate (or refinance) the loan. Even if (as TMA says) the actual value won’t replace the current loan, you may be able to get a normal 80% loan on $240,000, then shop around for a second mortgage for $20 to #30,000 at a higher rate. It may still be lower than your current payments.And, yes, do check on the use of Depreciation to lower the Tax paid, then use the 1515 form (ITWV – used to be 221D) from the ATO to get some more money in your paypacket on a weekly basis. This would help you to “hold” the property, but only if you want to go this way. (See earlier comments).
Good luck with your decision
Benny
Wayne,
You said this
I’ve managed to speak to the broker, and he said that even though the valuer’s may re-value the 4×2, in his experience, he said it’s Westpac’s policy to only work off the 1st valuation…?For what its worth, one of my two successes WAS with a Westpac revaluation. In that situation, the second valuation (13% higher than the first) was accepted by Westpac. So all I can say is that it’s not etched in stone. Or your broker might need a bit more experience? [blink]
Sounds like you’ve found a workable solution for now – good luck,
Benny
It might be too late now, Wayne, but I just had a devilish thought!! How about using your 3bdr house as a “comparable” in your submissions re the value of your 4 bdr?
In the past, I’ve challenged location, size of block, and style of house. WHY would a valuer value a 4bdr as only $5k more value than a 3bdr in a similar situation?
In 1970, this might have been the best you’d get. But today, if a 3bdr is valued at $200k or thereabouts, a similar 4bdr would usually be valued at $20k more – easily!!! If not, WHY NOT?? They usually bring in better rents too. Sometimes way above the % uplift in value.
So go tap your valuer on the shoulder, and put the hard word on them. Can’t hurt, as you’ve lost if you just let it go.
Benny
JenD,
The real estate agent must submit our offer in writing to the vendor, regardless of what (if any) initial deposit we decide to payAs I understand it, a deal is made up of three parts – an offer, a deposit, and an acceptance.
If any of these is missing, I believe you might not have a valid binding contract.
The important part here is “the deposit” – and it can be $1 (but money must change hands). I have bought property with $20 down, remainder on settlement. This “might” vary from state to state, so do check this with your team.
An RE agent might well push for more – they are trying to ensure that you are a valid buyer, and finding out if you CAN AFFORD to buy is part of that negotiation. A decent deposit is one way they attempt to do this. Can’t blame them for trying
Benny
Wayne,
It is possible to “change a valuer’s mind” (I’ve done it a couple of times) – but then, I’ve also been UNABLE to change a valuer’s mind MORE than a couple of times.
On the occasions when I was successful, I presented “comparables” that showed that my property was worth far more than the “comparables” they used. And questioned their use of “comparables” that were in NO WAY the same as mine (inferior).
On the occasions when I was UNSUCCESSFUL, I presented “comparables” that showed that my property was worth far more than the “comparables” they used. And questioned their use of “comparables” that were in NO WAY the same as mine (inferior).
In short, sometimes you’ll win when fighting with valuers – and sometimes you won’t. And, if using a broker, be sure to work THROUGH them as there is a certain pattern to be followed when making a challenge to the valuation.
With only 4 days left, there isn’t a moment to lose – go find some worthy “comps” – and good luck. Failing that, take your credit card out of the freezer…..
Benny
Sam,
I’m hoping for some advice on whether to use the $23,000 I have saved to buy a place to live in or buy an investment propertyI wouldn’t like to see your question get lost in here, as I reckon it means a lot to you. Can I suggest you retype this as a “New topic” so that the good people here can address your question on its merits?
Re Dazzling’s original post:-
In my case, my wife instigated the purchase of our first IP. It went well, but we re-sold when Interest rates went to 17.5% (1989?). Later, (MUCH later) I became the “trend-setter” when I set about learning what I should have learned 30 years earlier. Today, we hold a lot more property, and the benefits are able to be seen by both, even though she “doesn’t understand the maths”. Most of the time, I keep this detail from her, so as not to confuse/alarm her. In the end, our net worth grows, and we find life is easier.We celebrate our own “Independence Day” every year (the date when she wrote the cheque – at my insistence – that paid off our home) This was then re-borrowed to fund the deposits and costs of our first 3 IP’s.
She attends the occasional seminar, but doesn’t get what I do from them – but she is “giving me a go”, and I appreciate that. We now buy most properties with mutual input, and can discuss deals without getting too antsie….. but that wasn’t always the case. As others have said, time helps to even things out – little by little, things just seem to improve.
Since we are now both in our mid to late 50’s, I guess we’ve had a bit more time than most to understand each other (even tho this can be difficult for guys and gals!!! – some times she is just so weird….[biggrin])
Keep plugging away, Dazzling – if you both appreciate each other, it’ll all work out in the end,
Benny
As “Debtdogg” said
That being said, if you do not have another income against which you can claim deductions then surely if income (rent) less expenses (rates, interest etc) gives you a negative figure you have negative gearing.Probably the most important thing to understand is this:-
If you are positive geared, then a positive cashflow is a given – your expenses are all covered, with an amount left over for your pocket. Any Tax deductions will only serve to increase that cashflow.
If you are negative geared, it’s possible to still have a positive cashflow, BUT ONLY if your deductions give you a Tax refund big enough to offset the losses that you would otherwise have.
Lose your job, and you will have paid no Tax, thus no refund, resulting in a negative cashflow because of the negative gearing.
Better?
Benny
She is wondering should she rent out her unit for $220/w and move in with her family thereby paying $210/w in rent herself. But by doing this she will receive an extra $70/w from CentrelinkThis sounds like she’s immediately $10 per week up – then Centrelink kicks back another $70 per week. And then, because she’s renting an investment property, there are Tax benefits that could assist further
I’ve long been a proponent of “rent first, buy yur own home later” – simply bcause it affords an individual so much more. In this case, it sounds like moving back with Mum and Dad could be the shot in the arm that this friend needs.
Then, again, with this now being an Investment property, the Bank might entertain the idea of allowing an IO loan rather than P&I – which helps the cashflow situation even more.
In the end, since it will remain her PPOR (up to 6 years) a later sale would be CGT exempt. As a recent Tooheys ad says “It’s all good, mate”.
I say “Yes!! Rent it out and stabilise a bit.” Any of the excess funds she finds herself with, she can choose to pay down the mortgage. Meantime she will find things easier and be able to keep a residential investment that will pay her back in later years. Maybe, in 6 years, she will be able to “move back home”.
Benny
To me, it doesn’t matter what you call it (but it can lead to confusion, especially in forums) and it seems different people call it different things. The important thing is to understand what your situation means to you, rather than what it’s called.
FWIW, my take on things is that “negative geared” is when the investment returns a loss BEFORE tax, and “positive geared” returns a profit BEFORE tax.
Negative gearers can produce a “positive cashflow” from a negative geared property AFTER Tax as long as they have paid tax that they can claim deductions against. If their job disappears, though, there is a non-cash deduction, but no Tax paid which they can claim against, to bring it to “positive cashflow”.
That’s the way I’ve learned it – so I guess that aligns me more with Margaret Lomas than Steve (now THAT’s a surprise). But then, Steve has a helluva lot more runs on the board than me, so make of it what you will. And he was an Accountant – and I haven’t been one (has Margaret?)
I should close by stating “Be reasonable – do it my way!!”[biggrin]
In the end, as long as you undertand where YOU are at, that is probably far more important than “who calls what which”.
Benny
GavinH,
Try these – they work on post codes, rather than suburbs – but could be worthwhile for you.
I like Aussievaluer as it includes a bit more than most, but they do limit the number of inquiries you can make per month.
http://www.homepriceguide.com.au
http://www.commbank.com.au/propertyvalueguide/
http://www.eaussie.com.au/aussie_valuer.htmHappy hunting
Benny
Since then I have been renting it out…Is this now treated as an IP from the date I put it on the rental market?
Thanks!
Hi Thinker,
I believe this was an IP from the moment you advertised it as a “renter”. But there could be other issues – one of those is the CGT exemption of “your own home”. Will you get to retain the CGT exemption on sale down the track? I don’t know…
This seems to me to depend on a few things:-
1. Did you claim the unit as your PPOR?
2. Did you use FHOG to buy it?
3. Are you now living in another PPOR?As I understand it (and, I’m NOT an adviser, or accountant, so this is just my “take” on things) you can live somewhere, claim it as your PPOR, then move out for up to SIX years – as long as you don’t purchase another PPOR in that time (are you now renting?)
The FHOG issue adds a further dimension of which I have little knowledge. If you DIDN’T use the FHOG, then the above should apply, but if you DID use FHOG, you should check this out in detail with your accountant,
Benny
Hi,
I’d like to add my support to WAPrincess’s comment about Bruce Davis
Have you read “How to Build Riches” by Bruce Davis?
Don’t be put off by the cheesy title it really is a good bookI would second that in an instant. For those who might be wanting a well-rounded view of everything in investment, Bruce Davis (Sydney) is a hard act to follow. Check in your local library, or spend the $25 or so at the local book-seller.
Benny
Hi Grant,
I was 52 when I realised I hadn’t been doing the best I could (this was 1999) – so, congratulations for starting off so young. Even at MY age though, I spent 9 months just reading, talking to people, going to seminars, etc. to start to understand just HOW to start out with property investing. I’d suggest you do something similar – i.e. don’t be too eager to spend money.
When I did start, I bought 2 properties right off the bat, as I’d determined that this was going to work better than just one. That plan suited me, my wage, my situation at that time. And it has been beneficial.
But even MORE beneficial has been the people I’ve met who have advised, encouraged, and mentored me – perticularly in those earlier years.
So, can I say, don’t be in a hurry to “leap in” – you have many years ahead of you, and several property cycles to build your wealth.
Today is FAR different than it was 5 years ago when I started – so, don’t be in a hurry. Use your $$ to educate your mind first – then your mind will fill your wallet. I’m sure there will be several threads that discuss worthwhile books to read. Go seek them out, spend a few dollars, and bring yourself “up to speed” quickly. Meanwhile, save up those first dollars as banks like to see a “savings history” for your first property (after that, it doesn’t matter so much – but we all must start somewhere). Good luck
Benny
