Forum Replies Created
I m going to UK soon… I m doing the study now…. they call ” buy to let”.. many different strategies..
fancinating.. they even have a name for subletting as ” rent to rent”.. boarding house as ” HMO”.
I love the way they named those things.. I saw the property there are very cheap… ( outside london).. espcially big cities, like Manchester , Birmingham, Glasgow.. very cheap and good yield…
I m like a girl in a candy shop.. where do I start ???I rang up OSR today . and I think i found out the answer. correct me if i m wrong though.
1. the threashold is appied to ‘account’, which is basically can be understand as ‘ ownership structure”. so say if you own 10 properties with your husband, then all the 10 properties total land value will be add up, and you will only get 1 lot of 549k threadthold applied. the rest will be subejct to land tax.
2. now this is really eye opening, she said on top of the the joint owner if you own some property under your name or jointly own, then you will be access too seperately as an ” account” ( hence the double taxation terms comes from ) . which means , all your 50% holdings which you already paid from point 1, you will be once more asked to those under your name as a seperate ‘account’ , I assume there is also a 549k threadhold applied here to the individual account, then they will use the above stupid method to give you a deduction for double taxation.
in summary : there is no free lunch i know , from Tax man ? are u fxxxing kidding me? i get that.! but this double counting is just pure exploritation… why the hell am i accesss one more time for the tax I already paid ! now i can feel the pain from karl marx when he wrote ” das kapital” ….
yep… okies.. thanks very much.. Terry !
that’s the same as my understanding…It depends…. if you have substantial cash/equity… i would buy a PPOR, pay it off or down as much as I can, then refinance it out the other way and use the euqity to invest as many IP as I could. this way you reduce non deductable personal debt into tax efficient deductable debt.. which will improve your overall position.
if you still need to carry a significant PPOR mortgage, I would say keep renting in homebush for 250 pw.. you know that you are paying half of market going rate.. so that is a big advantage.. ( pls buy your aunt some moet for her generosity) , even though the PPOR is coming out the other end as CGT free, but I found if you need to use a large portion of your after tax dollar to pay it down, not only it decrease your cashflow on other aspects in life, the most important thing is its’ hinder your ability to spread your asset base within the limited time frame that you can invest.
thanks very much guys ! I appreciate all your replies.
yes, i go ahead with the contract. this is the no. 3 property I bought this year, now it’s time to celebrate with Moet rose 2006 ! :-) :-)
have a lovely xmas and great successful 2016 !yes. i agree with you. I come up with this this website, and listen to their videos . I agree with a lot of things they say. but on the other hand, there is no such thing as “let-others-do-the-work, you-sit-back-and-count-the-money”. such things simply does not exist. unless that person is your dad.
thanks Terry.. i think the same as you…that should be how the logic goes. luckily my PPOR loan is not a big amount.
this is a better than offset in my view, as offset will lose the interest deductbility.
my banker said it’s the purpose of the funds that determines the LVR, so if you buy investment properties, the current LVR is only 65% as per banks policy.
hi there jose
thanks for your reply.
Im asking for the miniumum lot sq meter and frontage requirment for a multi dwellings ( under 10 units) in a LMR zoned area. I m doing my research at this stage, I beleive somwherer in the council website provide this information. but there are a lot of stuff and to find it is like digging a diamond via a huge trash bin.I found the info i wanted from a town planning company, but not sure if it is still up to date.
so that is the question..i think i probably need to call that townplanning compnay.
have a nice day.
hi guys.
thanks for the tips..@melbourninvester, for me, what i do is to pull up a Brisbane train map , and circle the inner city subs that was on the train map ( basically the circle within the diameter shorter than half of my little figners size, lol) , the highlight a few major station, up / down/left/right, and go to the details of that suburb on demographics, income levels etc.. rent/ownership ratio etc.. then take a pick.. then I pull out my calculator calculated the BTCF and ATCF ( Befor tax CF and After Tax CF ) and figure out the gain/loss per week based on median price /rent.. then decide, I dont mind ATCF slightly neg ( say less than 30 pw, but i dont like a big neg on ATCF weekly) .
for further away subs, i make sure it’s BTCF neutal or postive.I know it’s probably against some investment rule that you dont invest for tax purpose, but because we pay a lot of tax and are PAYG, so in my situation specifically, i have to address that and take that into consideration when select my invesments. afterall, i want to use taxman to help me lift up some burdens of my cashflow, there are some tools you can use free or payable, that can help with this process. i use RP data and Real estate investar.
again, I dont knw brisbane at all, the only time i went there was few years ago in a suburb called toowong to attend a firend’s wedding. i only stayed 1 night . i felt it s a modern suburbs with lots of nice shops and restrauant .. the truth is if you are not from that city, you will never know the city that well .. so that’s why i m going to pay a visit to Brisbane and see for myself.. drive around, see the retails shops/ coffee shops.. people lived there, what they look like, how they dressed etc.. those are a better barameters in my view.
there is always a risk in anything you do in terms of investing, but if you are capable of holidng things for longer term and the cashflow per week situation is not too exhausting in any ways, i think that itself has smoothes out the risk. I dont normally adopt the clock theory, because i think it’s extremely hard to know and to get it right. I look at the deal itself and CF for that deal with a little of gut feeling. ( to put simply term, if CF is slight bad, but growth is ok long term, i buy. if CF is good, growth is not so sure, but it wont hurt my pocket i buy. if CF is bad, growth is not so sure, i walk away. if CF is too bad, growth is good , i walk away as well)it doesnt matter where we are in the market.. cos you are holding for a longer term, so the key here whether you can still around in teh bad times.. if you cant. you have to forced to sell, that’s when you shed blood. otherwise, you play the wait game and live your life as normal. I know people always wait for the price to drop, but it never happens. by the time they can afford the deposit finally, the priced moved again. and when the prices drops.. they got scared and dont want to get into this as no one else buying.
@richard taylor, I had my morning coffee in a coffee shop before heading to work, and saw your post, it took me 10 minutes to realised that there is no suburbs called Bangers in QLD.. lol.. thought that was funny thing to have a laugh..
btw, can you share why you think Woodridge is a no no ? is this a similar subs than the crime town or full of people on the dole ?yes… i think so.. nundah seems a good inner subs with lot of young professionals..
i m going to brizzi next weekend.. to go through the subs i m interested at..
i was thinking buy a few in nundun and pair up with woodridge ones to neutralise the cashflow . geez wont that be a marriage in heaven?
thanks for all your input buddies… .. brizzi.. here I come !
Liana..
the LMI is way high.. check out the genworth calculator..http://www.genworth.com.au/online-tools-forms-and-reports/lmi-tools/lmi-premium-estimator
Liana..
the LMI is way high.. check out the genworth calculator..http://www.genworth.com.au/online-tools-forms-and-reports/lmi-tools/lmi-premium-estimator
Hi Liana
for 320k .. you probably looking at Marchathur/camden area for a very old 2 bedder.. rent out around 290 to 300 pw. you probably will need to offer on the 1st day of it’s open and be lucky if the vendor will lock in with your offer.
you can still get into the market with that sort of money in sydney, but the cashflow is bad.. my view is if it’s for long term.. you wont go wrong with the entry level of IPs in a major city, but you are probably overpaying in sydney at the moment.
I think other captical cities offer better buying opportunity currently.
Hi Mick mate
thanks very much. Your suggestion is very useful and see how we think alike !
yep.. am currently doing 1, 3, 4, 7
after that, am going to go for 8 , 10 . I have some investment in funds and shares.. but i prefer things that I can control to be honest.. even though i can get it wrong sometimes.. but the most fun part of investing besides making money is to make the decision and act on your judgement and learn.am always doing 11
hahahaha
happy holidays..
Arent we a bunch of rare animals ? you have to be smart, dynamic and hard working to be successful . there is just no way around it. It feels good to be surrounded with people want to get ahead and making more money.
Re: CF and CG, you absolutely need both to succeed. go out and buy CG IPs, utilise the tax benifit/ neg gear/ depro etc to minimise your outlay. go out buy CF IPs , put under a trust and distributed income to the lower marginal person, then subsidise the CG ones.. accumulating is the key ! and time will do the trick. if not, just waited out a bit longer using your buffer. The theory is easy, action takes a lot of guts and is the hardest part.
@clint : yes, your thinking of valuation based on Cashflow is well received in pricing business and commerical real estate. but it’s not a convention (as yet) in residential real estate market. I have two questions on that : one is the same as others : why you kill a chicken that lay egg , after all, isnt that what Postive cashflowed IP is all about ? It’s fine you want to get the gain now, but consider the cost of selling and losing of the future cashflow. you are getting a reduced gain in exchange of a long term lost future cashflow ( how much you put a price on the forever lost cashflow from now onwards) ? this is a million dollar question in valuing a business. a popular way people do is to use the Discounted method to discount the future cash flow back to the present value. what is your method of pricing such IP ? do you add the component of the present value of the future lost cashflow on top of the yield?
two is : the Cashflow dynamic can be changed , taking the examples of lots of mining town used to be ultra high yield now it goes blood shed. that bring us back to the location location location classics. the location gives you assurance that is not going to change for centuries.. that is why i would much rather stick to cap cities for it’s security it provides. Occasion regional hub for cash in pocket is fine, and nothing wrong with that.
yes, i agree with the granny flat strategy. it’s a very smart way of pumping up CF while holding a piece of real estate that has a ‘ land’ component. I have to say, some of the conventional wisdom does not always stack up. its true that land goes up , while building goes down, but it is only certain areas of land goes up ( here we go , location again) . the land is the middle of no where certainly does not go up. I would buy a unit/aparment inner mid ring to CBD (with the train line) every single time.
for Postive cash flow. you’d be looking at rural multis.
the best strategy i think is to combine the growth with CF strategy in a timely order .. of cause, if you have more funds and more skill sets, you can move onto commercial and development projects which create huge capital in relatively shorter period of time. For me, I would rather stick to a thing or two that i m familiar with and keep repeating the same thing over and over.
if you observe Robert Kiyosaki and steve mcknight ,I found they went through very similar path.. which is acquiring Postiviely CF property from the begining when they dont have a lot of spare cash and capital, and gradually build up their base.. then almost always they need to make that swtich at some point to something more capital intensive investments by nature with or without immediate day 1 cashflow.
I think when starting out, you can do cashflow and acuqire as much as you can.. but once you got the cash and a little bit experience you need to focus on growth assets for the reason i explained to Lauriek above.
the theory itself is actual quite easy to understand, I found the hardest thing to be successful is to have that consistent drive and sheer determination and endless action to go out and achieve your goal. that’s why most people can not be that success, only a few stand out in the end. It takes a lot of energy and disipline to stay focus and constant in action regardless of the resistance you are facing. That is a lot to ask for an average person who has the day job and maybe children and a tight budget to start with. Also, You have to be extremely good with numbers. probably that’s why a lot of successful investors are accountant.
“You must have a cashflow problem in the eyes of the banks, otherwise you would qualify for servicing.”
yes.. i do have a CF problem to churn out more IP .. but not sercing the current exisitng IP , that is what I mean.1. I don’t have a cashflow problem. Never have. My IPs are self servicing taking the tax incentive into account. My prob is servicablity.. which if I want.. I can always go to CF method to enhance my serviceability down the track as I already build up my equity base over the years.
2. Compound does work the same way, just on different rates and different bases. Do the maths if you want a IP that gives you a net 4% rental yield on a 2% annual growth, Or you rather have a net -2% rental yield with 8% annual growth ?
3. Its funny that the debate among the CF and growth is almost as brutal as the debate between keynes vs hayek in the 1930s. sometimes it makes me laugh, there is not really a need to say which is better than others, they are different things and focus on different areas of a matter. And you absolutely need both of them in order to succeed in the game of real estate investing. Which one is more appropriate is largely depend on your own personal goals and start up financial point. They both have their good and bad sides.
4. I said there is nothing wrong with CF investing style,..It aims to give you a surplus cashflow which will enhance your income position or a lifestyle to replace your salary and buy you some time or pay your bills and food etc without working. But its just not going to help you accumulate your wealth faster enough compare to those growth assets , , that is why growth assets generally has a lower yield by nature. However we d like to have a free lunch or get something for nothing, unfortunately , this is rarely happens in this universe.
5. Don’t get me wrong. The cashflow is awesome, but you just need to be aware that the catch is your forego some of the capital growth in future in exchange for that cashflow now. Remember, your wealth is the net between your asset value and your debt. Assume if your asset is 1 mio, your debt is 1 mio ( assume you borrowed 100% ) , and the property didn’t growth much.. your net wealth is 0 . Yes, your CF will still be there. But it will acting more like a salary replacement rather than wealth creation tool.hi Lauriek,
thanks for your reply. I m afraid i have to disagree with you here.
Cash flow is like your blood, while Captital growth is your muscle . you will die without blood straight away, but it’s the muscle that makes you stronger and grow bigger. I had enough of the education on those things ,among all the endless debate between the two, i found this is a very good and best simple way to describe it.
the game of the property is to increase your asset base using leverage in a clever and safe way. However cash flow is attractive and important, you will notice that all the mega riches that started off with cashflow switch back to organic or manufactured capital growth one way or the other.
It’s true that you can not buy designer handbags with your balance sheet, it’s also true that you can not accumulate your wealth via the cashflow alone. It’s a delicate dance between the two, and how you go about achieve it largely differ from your own financial sitaution, risk profile etc. You cant cashflow to leverage the same way as you cant save to be rich… You need your asset to grow in order to buy your next one. While Cashflow gives you the lifestyle or free time whatever, it is the capital growth that accumulates your wealth and work for you day in day out compounding.. this is a very important thing to understand when it comes to investing in property.
a better way is to find capital growth properties in disguise, so you can add value and bring it to cash flow neutral or even positive in relatively shorter period of time.
Selling is a sure way to decrease your wealth fast, i have sell a few of my properties and each time I regret it.. if the property is purchased based on well calculated numbers and correct structure. You never need to sell them , it passed on your next generation with no tax complications whatsoever.
