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Hi everybody,
These are certainly very interesting times. I know for myself, if i am unsure about something my best strategy is not to act but sit back and watch and learn .
Which is why i love this site so much . I do have a few thoughts as to my next move though ….
one strategy i am considering at the moment is to temporarily get out of IPs, by selling my 3 IP’s, (just sold first one with a $103,000 gain) , and OWNING outright my new PPOR, which even in this market has good CG potential . Like a few other forumites have commented I also think that high end quality properties will defy a big marke shift , if and when it happens.
Then, from this point, i will buy more +ve IP’s which ARE still out there if you know where and how to look .
I think there is one thing we can bet on , we are coming into a buyer’s market , so more +ve IPs are going to be out there.
Then i will do what i know best, “smart renovating” thus adding CG and insuring maximum rent and rentability. I personally enjoy the challenge of turning an “ugly duckling” into a swan, having a design background and building skills makes buying IPs easier as i see potential that others may not .Anyway , just thought i would put in my 2 cents worth ….. cheers
RABBITHey everyone ,
Great new site, love the changes!!
Scotty this is my doom and gloom plan… I am dumping extra money into all my redraws so that even at 10% i still have the same re-payments i have now. All my loans are IO, but i make my payments at the calculated P+I amounts,(go loan calculators!) so this way i still have a lower minimum payments if i really need them . To achieve this plan (but after much deliberation) i am selling one IP at a very nice CG of $100,000 after 12 months and lots of paint. My thinking being i can always buy more when the market drops again.Hi Philip,
I have done a fair bit of re-organising myself lately, it sure can be a bit of a financial juggling act when it comes to multiple properties!! And now that i have 5 separtate loans i have had to change a few things to make life easier ….. I had my property manager direct credit the rent into the corresponding mortages, and i changed the dates they pay in to Sync with the date my lender charges my interest. My PM uses direct debit for tenants, and they have a choice to pay f/nightly or monthly, so i match my loans to when they pay . I insist on them paying me as soon as their system allows, rather than at the end of the month, alot of PM’s complain about this because they loose any extra interest gained from rental income sitting in thier accounts , but they do have the ability to pay sooner.I also use direct debit on my insurances and water rates to spread my bills out over the year.
But the biggest time saver by far has been using net banking. I have my standard bank accounts connected to my mortgages, and all my loans conected to each other , so i can shuffle money from one account to another if need be… very handy, and very easy to know where you are at .I also use phone banking quite a bit to pay bills and trasfer money if i am not near a computer. I use my redraw as a line of credit, and always have enough cash in reserve for worst case senarios.
I think having free redraws with a low limit of $50 is helpful also as it means i can keep most of my cash in my loans, keeping my payments to a minimum. Good question though Philip , it seems to me that keeping track of everything is fairly crucial in the world of property investing.
I tend to check my balances at least every second day .
Sorry that should have read
“i changed all of my addresses over to the second knowing that the first would be rented”i hope that makes sense now ……
Hi everyone ,
Just on the PPOR and CGT stuff , how does this senario stack up ….. i have three properties and i need to sort out the “structure” of. One i have lived in for 10 years , which i want to keep and rent. The second i bought more than 12 months ago with the view of renting. I have nearly finished renovating this one and due to a massive CG i am thinking of cashing in to finance more IP’s. And the 3rd i have just settled on which will be my new PPOR . I changed all my addresses over to the second, knowing the third would be rented. I have also been using the second to live in while i re do the kitchen and bathroom in the first ……Do you think the ATO would accept a claim of the 2nd being my PPOR (and hence CGT free) given that i haven’t rented it or claimed it as an IP …..????Kevin,
http://www.homehunter.com.au/calculators/stampduty.asp
here is a stamp duty calulator i find quite useful , it also calculates the stamp duty on the loan amount, and allows for different states having diferent rates. I hope this helps.RABBIT
Yep Mel, there is only so much you can rent you can charge for any property. But for me that is only a part of the equation. When one lot of tenants move out i always spend a well planned out week or two to lift stakes a bit higher.I am up to new blinds and a dishwasher on one property. I figure, i am not only increasing the rent but also hopefully aiming to a better class of tenant, and making the property more competitive.
I am even thinking of partly furnishing one at the moment.I hear heaps of tenant horror stories but so far in 10 years i have had no problems. So i figure i must be doing something right . The last property i listed for rent was empty for 6 days.It is a balance to catch the best possible tenant in the shortest possible time, once i waited three months, but i was worth it, the next lot stayed for 3 years. I learnt from that experience to try and avoid listing a property for rent during winter, seems no one likes to move when it is cold.
My strategy has been to think of my tenants as business partners, because my income is fairly low and irregular, there is just no way i would have achieved what i have without being very mindful of how vital the tenants role is in the IP picture.It does also help heaps having basic building skills, and good contacts with trade suppliers.. i get premium paint for $3 a litre. I am aiming to do the property thing full time some time soon in the near future, this site has given me heaps of ideas as to how i can achieve this . thanks everyone.
RABBIT HOP!!! HOP !!!
>I don’t know about carports, but i just put in a shed for one lot of tenants (they had heaps of stuff to store), cost $273 and i put it up myself . I increased the rent by $10 a week.
And in another one of my IP’s there was no off street parking but room at the front to put a drive way in . So i applied to council for a permit $70, and paid a concretor to put in a crossover, $700, then i put some gravel down for the drive . Increased the rent by $20, and added $20,000 to valuation, not bad for $770 and some gravel!
I have been wondering about this subject myself …. my low doc status limits which postcodes i can buy in , but there is a few properties i have been looking at both in Tassie and rural Vic . I was wondering if buying outright from existing equity, was one way to get around it. Mind you i would want to be fairly sure of a good +ve return to do this . And I am taking about cheapies here , like $70,000 max. Also bare in mind that these postcode lists are being added to all the time. I think it can depend on the connections your mortgage dude has too , i have heard stories about some forbidden postcodes beng allowed because the broker has good knowledge of the area. It does go to show you what REALLY happens behind the scenes…it is not always consistant. I think it depends how your broker presents your case . And some lenders give the brokers a chance to re-submit if they are rejected , while with others if your are knocked back that is it … and you don’t even get to find out why . There is no way i would ever go directly to a lender, i would never have bought my first IP if it wasn’t for my broker, i was studying at the time .
I think the main obstacle in getting these “out of town” loans is with the mortage lenders insurers, ( i’m sure a broker from here will correct me here if i’m wrong) From what i can gather there is only two of them , PMI and GE.
My last loan was fairly complex but with every loan i am learning more about the process, and becoming more confident knowing that i am also involved in that process.Hmmmmm , very very interesting stuff , i am also thinking of building something in the next year or so with different but similar thinking in mind… ESD (environmentally sustainable design). I have two possible sites already . Might be worth exchanging emails for future reference. What is your address?? Good luck rabbit
BTW love Yoga
but might buy a few more “cheapy” IP’s first to cash myself up a bit.
I know one who is in Geelong who is brilliant .. he is in Melbourne a fair bit also . He has a background in finance, and is pretty clued up on IP’s … what’s your email addy??
Yeah ZIZ,
i am definitely going to try to hold onto Prop 3, the tempting bit is selling it will wipe out 2 of my loans which would be nice,money to poor straight into the new venture in Ballarat …..(no CGT, or so have been told as i have been calling it my PPOR for the last 6 months while i have been working on it.) I’m sure i will have more of a plan in place after this week , i settle Ballarat on Wednesday . A bit scary as it is my biggest purchase to date, but the bank vals came in higher than the purchase price so that is a good start, and it is in a prime position for capital growth. I know the market is slowing down in capital cities, but regional areas seem to be still strong, and from what i can gather high end properties seem to be less effected by market fluctuations. I saw a house in the same area on a much smaller block listed for $800,000 last week , i was blown away …this is Ballarat afterall!!
CHEERSBTW ,
i was wondering how the ATO would deal with someone that was didn’t have a PPOR , ie was living BETWEEN properties??? Which i have been doing lately so i can renovate in between tenants.I wonder how would they see me if i firstly moved into the main Ballarat house, then built a second cottage and lived there only when the main house was booked???
The ATO must hate us creative types !cheers RABBIT
Thanks Shaun, and REDWING. I will check out that book too . All food for thought .I am toying around with the idea of developing next . The fouth IP is in Ballarat on two titles, with a big victorian character house on one title, vacant land on the other . My idea is this ….. to build a second dwelling (or find a house for removal) on the land title, and turn the house into a B’N’B …$250 per night . Tourism is where it is at in Ballarat .
My loans are all low doc due to my casual income status, so my rates are highish….. The low doc lender for the vacant land component of the fourth IP was very hard to find, but fortunately i found one at the eleventh hour! Otherwise i would have had to consolidate both titles , which would both de-value the property and remove the any options down the track that an extra title would give me .
I am also currently thinking of creative ways to lower my interest rates ….Get a full time job in the same field for three months and see if i can’t get converted to full doc loans. Or maybe re financing at the current valuations. I now have a LVR of 70% or less, so i shuld be able to get better rates than when i first borrowed at 80% . And fortunately my credit history is squeaky clean…I make sure my loans are paid BEFORE anything else, this does count for alot when i go to buy more property. Although i have all but one loan with the same lender, which i understand to be a bit risky as one lender can’t touch another lender’s security. I know one thing for sure i am going to keep buying, i am looking forward to moving into a new area where i can broaden my search. The net is great , but personally i have found the best buys BEFORE they hit the market .
Any way , enough rambling, keep up the posts everyone this is a great resource.Hmmm .. i have been battling with this subject myself . My mortgage dude who has a finance background tells me that all my loans are claimable as they are all low docs and HAVE to be for investment purposes ….. but my accountant has a different opinion and keeps telling me that my structure is wrong . I must admit i am a bit confused as to the whole PPOR v’s IP when it comes to the claimablity issue.I have just used my current PPOR to drawn down for the deposit and costs of my next PPOR. So the old PPOR (of 9 years) will become an IP . I have heard of people setting up a company to rent their PPOR off .
Geelong, 45 min from Melbourne were i have bought 3 IP’s. My 4th , the latest purchase is in Ballarat, where there is currently 12 new families settling each week .
Hi livi and others,
I was driving around my home town of Geelong today and i couldn’t help notice the huge amount of properties on the market. This last week in particular has seen a lot more signs gone up. It’s amazing how quickly (and badly) renovated some of these properties are. There will surely be good buys to be had with vendors wanting to avoid another rate rise, but also some lemons out there for those who don’t know what to look for .The agents here are all still working 7 days knowing that the market may cool down. It may take alot of leg work to get through all the properties but i think if you are informed and ready to sign you may find yourself a good buy .
But it definitely feels like there is a sense of panic in the air , i guess some people consider selling the only option .
I was also considering selling one of my IP’s but after reading all of your posts over the last few weeks i have realised there are plenty of creative options to consider in the event that rates go much higher. So i have decided to keep all of my IP’s, get them re-valued and concentrate on finding the best tenants. I think this site is an excellent resource, none of my friends or family are doing the property thing , they are all either old school or think it is too risky so it is good to chat to like minded people . Thank-you all
RabbitOn the “bubble” subject , there was a very interesing interview on this morning’s business Sunday program on channel 9 in Melbourne with Macquarie Bank’s Bill Moss. He disagree’s we are in a bubble . Here is a transcript if anyone is interested …….
http://businesssunday.ninemsn.com.au/BUSINESSSUNDAY/INTERVIEWS/STORIES/STORY_1997.ASPI have just bought my fouth IP and am tossing up whether to sell or rent my third. Although selling would be more to free up some cash to work on the fourth rather than anything else, the uncertainty in the market is only causing me to lean more towards consolidation and sitting back rather than keeping and buying more at this time.
sorry cornel…
my email addy is [email protected]
cheers cathyC
Hey Cornel,
Email me and i will give you the name of my broker, i have done pretty well with his help . Cheers Cathy
