[CattleyaParticipant@cattleyaJoin Date: 2008Post Count: 121]

July 17, 2015 - 4:34 am

All, thanks for the input. Much appreciated.

Terry, would be grateful if I can have your essay on company please. Or is it in this forum? What’s the title please. Hopefully I can search it.

The company address: I wonder why this is needed when virtually all correspondence with ASIC and ATO are via email.

Thanks,
Catts

Cattleya

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July 17, 2015 - 4:01 am

Corey, thanks for the input – much appreciated.

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

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May 20, 2015 - 2:41 am

Thank you crj and Terry.
I had decided to look to Brissie, but now changed my mind.

Many thanks,
Catts

Cattleya

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May 18, 2015 - 1:07 am

Ben,

I totally agree with you. It all depends on our strategy.
My strategy is to hold long term and rely on my strong personal cashflow, hence I am not too concerned with CGT and equity.
I am more focused on low purchase price, rental return, low maintenance and location, location,location.

So I select a few post codes with robust price increases. Then I record all the sale and rental advertisements for a each postcode for a specific period of time.
Just to add more calculations to your hefty calculations, I calculate the average rent per bedroom, property price per bedroom and property price per sqm.
So I know which area’s got the better return and the next time an interesting property come up, I know whether it is overpriced or a good buy.

Just my 2 cents, :)
Catts

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

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April 16, 2015 - 6:01 am

@deancollins – Sorry, but would you please elaborate how the government steals money by way of inflation?

Inflation is caused by all sorts of things / people increasing their incomes, fluctuation of AUD exchange rates, supply and demand impacting price of goods & services, etc, etc – all ups and downs are summed up and are usually causing overall price increase ie. inflation. And inflation is healthy and desirable, so long as it is within the targeted level of 2-3%.

So it is actually all of us contributing to inflation, not the Government. Tax is also not stealing? It is our contribution to the well being of us all ie. building roads, paying for Army, police force, the dole, etc.

Just wondering,
Catts

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

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April 19, 2014 - 12:05 am

Hi Weatjess,

 

Firstly, the situation you are in is Negative Equity, rather than Negative Gearing. Both can happen to a property and at the same time.

My suggestion is to find a property agent who is willing to let the property by the room. So Letting is by room rather than the whole house. Good location usually means students or, like Long John suggested, nurses / doctors for the hospital.  Room letting usually gives you more money, and hopefully eventually it’ll bring you out of the negative equity side.

But you need to put in some basic furniture like bed and wardrobe, some cookery, etc.  Depending on your target market, you may need to strategize. For example, if it is student / single nurses / locums you buy single bed rather than double, etc.

Just my 2 cents.

Catts

 

 

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

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June 10, 2013 - 7:47 pm

Emails can be changed, for example you can make changes before you forward / print it. Email address can also be fake and some email addresses are from free accounts like hotmail, etc. If it is on paper, you have address, name and signature. Plus nobody can make changes without somehow damaging / leaving marks on it. This is also why emails are not as strong as written evidence in the eyes of the law. Cheers, Catts.

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

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May 22, 2013 - 5:20 pm

Gee… sorry to hear your story, mate.

I’ve never been in your position nor know anybody who is. But theoretically these are the procedures (same for all banks, not ING specific):
– ING will claim the difference from LMI.
– If there is no LMI, or not enough from LMI they’ll come after you.
– They’ll talk to you, negotiate, try alternative payments etc. Stop interest (they are legally obliged to stop interest if you apply – I think you need to use some government agency to do this)
– Still not happy with that, they’ll continue pursuing you, trying to get their hands on whatever assets you have car, watch, jewellery, anything. But they cannot touch your super unless you take it out. So if you decide to take your super out, be mindful on how much you take out and what you do with it.
– Next step is ING will either outsource or sell your case to a debt collector who will contact you.
– At one of the above stages, depending on how much they think they can collect from you, they will start amortising your loan. Meaning in their book they write off your loan. But this has nothing to do with how they chase you. They still ask you for the full amount, just in case you win a lotto. Basically they won’t stop until you either pay in full or declare bankruptcy even if your loan has been fully written off in their book.
– If outsourced, you are chased by the debt collector acting on ING’s behalf. So ING is still legally responsible for their conduct. All funds collected go to ING and the debt collector gets a fee or a cut.
– If sold, the debt collector act on their own. They pocket whatever money you pay them. ING is not legally responsible for their conduct.

Hope this helps, and good luck.
Catts

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

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May 12, 2013 - 11:51 am

Yea, you are right about the 3-5% pre tax cash flow.
Reason for that, I think, is because everybody can count and wants profit. So sellers want to get higher prices and they know rent is a factor in determining price. The buyers also think the same. So market consensus seems to settle at 3-5% above which, sellers will increase the price and below which buyers think they are being ripped off and shy away.

Having said that, if you find something with more than 5% either the seller is stupid / desperate or there is something they know you don’t. Vice versa for buyers.

In terms of strategy, there is plenty of them. You just need to understand your own situations and build your own strategy. I understand that cash flow is important but don’t want to do a lot of work. A guy I know owns 4 properties and rents it out by room (total 12 rooms). So she has 1 lady who rents 1 of the 12 rooms. This lady gets a reduced rent, but she has to collect the money from the other 11 tenants and puts it in his account. She is basically the live-in land lady. The pre tax cash flow is closer to 30%!

So basically, the more you rent out the better. I think there is this imaginary rental floor where you can’t rent anywhere in Sydney for less than that. And size, convenience, luxury of your property add more layers on top of the rental floor, but not much. Also, the lower the rent, the more demand to it so price increase compared to the luxury accommodation. Another example of this is, given the same area and quality apartment IPs are usually more profitable than house IPs.

That’s certainly my case – for cash flow.
Oh, and here in London, real estate agents have started renting rooms rather than the whole flats. So watch this space, Australia (Sydney?) may follow suit soon enough.

Capital appreciation is a different story all together.

Please note, I am not a professional mortgage broker or whatever. So my opinions are personal. But then again, depending on your point of view, my opinion can be worth more simply because I’m free to say whatever I like and do not expect to gain money out of it.

Cheers,
Catts

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

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May 12, 2013 - 8:47 am

Hiya,

Interesting topic. I do think about this as well. I think it signals that the economy is not doing well, possibly worse to come.

These are my thoughts:
In the short term, there will be more people who can buy properties,
In the short – medium term the possibility of losing one’s jobs are getting bigger.
So even if the people who buy property have been careful, there could still get into trouble.

Back in the 1990s-2000s it was easy to borrow because economy was booming, lending criteria was laxed.
This time round, lending criteria is tight however the low interest rate makes people borrow more.
Like in the 1990s-2000s period, people may get into trouble because they lose their jobs. The difference is: the probability is much bigger now because the economy is not doing well.

The key to overriding this period is also liquidity – having enough cash flow. The 1990s-2000s period liquidity problem came from high interest rate, living beyond your means using credit card, etc. People have their jobs, but simply cannot pay their expenses.
This coming period of 2010s is about job losses, reduced income and shouldering family and/or tenants who lose their jobs.

Implication for those thinking of buying
1. Make sure the property is in area where there is jobs, so tenants (for IP) and yourself (PPOR) have a better chance of keeping their jobs. These Job centre towns must be supported by
a. various industries offering jobs, not just say tourism or manufacturing. The more the better.
b. The industries must be robust / resilient, meaning really needed by a lot of people or subsidised by government. For example, the army.

2. The property value will go up or down depending on the demand ie. no people buying, prices go down. Where there is jobs, there will be property demand and prices will respond accordingly.

3. Cash buffer is more important than ever because tenant (for IP) or you (PPOR) may lose his job, but you still need to pay interest and other costs. In The 1990s-2000s one can wing it and hope for the best. Not in 2010s.

Implication for those who are selling
1. Depending on your location, ie. job centre or not, you may want to sell now.

The adage location, location, location still holds true.

Cheers,
Catts

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

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May 11, 2013 - 1:53 pm

Terry, it is just good first impressions from 6 years ago. Cheers, Catts

Cattleya

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May 11, 2013 - 1:49 pm

Lack of cash flow in Oz?? With the interest rates coming down, I am now in positive gearing category.

Agree with subdividing (being a lot of work) and mining towns (risky).

3-5% pre-tax ceiling?? Seems like you know more than me. Would appreciate further info?

Cattleya

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May 11, 2013 - 7:12 am

Ziv,

Australia is better for peace of mind.

1. Social issues is a factor when deciding which property to buy whether an IP or PPOR. Unfortunately London is quite unnerving at the moment.

London society is very protracted and I can feel escalating resentment from both the poor and middle class side. A lot of social issues, benefit / dole payments being cut, a lot of unemployment, immigration, big gap between poor and middle class, etc.
Remember the 2011 riot? I wouldn’t be surprised if it happens again.

2. Prices is also a factor. There are obviously cheaper areas in London, but your neighbours will be council tenants and the like. I am trying to be politically correct, but I also want to be honest. With neighbourhood of people the level of single mothers who live on benefit, then your tenants would be similar quality and usually these people don’t really care about your property. There are some decent people, but would you leave it to chance? The areas decent hardworking people live are usually more expensive as well… beyond my reach, really

3. The tax rule is such that the gain / losses from IP cannot be offset against your personal tax. You need to accumulate your losses and wait until it becomes positively geared before you can offset it.

4. Most of the new apartment I saw here were disappointing. I mean… the interior is flimsy, cheap and poorly done while the apartment price is high. Similar with Oz, UK govt subsidises purchases for new dwellings. So the prices of new units reflect this subsidy rather than the cost of building the units.

5. Other personal reasons.

Hope this answers your q.

Tx,
Catts

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

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May 11, 2013 - 6:44 am

Back in 2007 I spoke with a guy from MC. John Kofiotis seemed good.
We didn’t go with him back then, and thinking to do it this time round.

So no special reason other than good first impressions years ago.

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

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May 7, 2013 - 7:42 pm

Stenno,

Sorry, didn’t mean to discourage you. I am also looking around for stress free IPs and DHA does look attractive.
Though given the factors I mentioned above, I am having second thoughts.

On top of that, DHA is very powerful. Hence the peace of mind… but only when what DHA does goes our (investor) way. If somehow DHA’s interests diverge from ours, it will be very difficult for us to complain or on-sell. For example, given government cuts etc, DHA might decide to lower rents it is paying investors. We can complain, but would it be heard? Probably not.

So its strength is severely qualified, investors do not have bargaining power.

Would be interested in your decision. I need to make mine as well, but currently I am still looking around so not deciding yet.

Cheers,
Catts

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

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May 7, 2013 - 7:32 pm

Hi London,

Interesting thing you are trying to do there. So you are in HK, wanting to buy in London. So why asking on this forum? Seems odd.
So how do you know which area you want to buy in. Or are you planning to just trust the developer?

Having said that, I am an Oz currently living in London, wanting to buy in Oz. Have looked around in London, but still think Oz is better investment.
I don’t mind answering your questions if you want. I am not a lender or mortgage broker or accountant offering services to you. I am an accountant and works for a bank, but if I answer your questions it will be on personal level rather than commercial / professional level.

Never heard of Grosvenor International. They probably use another name here in London? The areas they showed on the website are ok-ish areas meaning low to medium middle class. I’ve looked at some buildings similar to the ones they are showing. And IMO the interior is usually not good quality. From my searches, I concluded that new buildings are not good as they are usually over priced – given low quality interior, poorly finished skirting, low quality kitchen appliances, etc. Art deco conversions can have the same problem but at least the building themselves are more robust.

Hope this helps.

Cheers
Catts

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

[CattleyaParticipant@cattleyaJoin Date: 2008Post Count: 121]

May 5, 2013 - 6:11 am

I think that’s because of the premium the Ministry put on top of the market price.
The premium is because of the ‘sleeping soundly’ effect DHA provides.
So the price of ‘sleeping soundly’ is
1. the 16.5% management fee (compared with the 5% market rate),
2. the higher purchase price and
3. the long term contract. Meaning should you want to sell before the 12 years period, your market would be limited to investors who want DHA as well.

Ta,
Catts

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

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May 4, 2013 - 4:06 pm

Be nice guys… it's his money, his life. At least he's not on the dole, not costing us any money.

Cattleya

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May 4, 2013 - 3:16 pm

Sorry – hadn't read this far when posting my reply.  Sorry, Catts.

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

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May 4, 2013 - 3:15 pm

Your equity would be from the price increase.

So if I buy at $1 mil with a deposit of $200k, my equity is $200k
A year later I order a valuation and it is valued at $1.2mil, then my equity becomes $400k.
This assumes price increase. When market crashes you can end up with negative equity.

But I also share your scepticism. But my concern is more towards the end of the mortgage term when I have to repay all loan amount.

Cheers,
Catts.

Cattleya

Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.