Forum Replies Created
What’s the CG been on the prop for the past 10 years ??
What are you expecting for future CG ??
If the place is really cheap, I imagine the “ins and outs” would be a large percentage of the purchase price…growth would have to cover that as well otherwise aren’t you going backwards ??
Have you factored in your ‘time’ costs, or does the place run on automatic pilot ? My experience with rural places is that they are quite time intensive…that’s fantastic, as long as you don’t have anything else going on in your life like family commitments / business oppotunities etc.
If it is time intensive, and you placed say a low $ 30 / hr value on your time, would it still be CF+ ??
Cheers,
Dazzling
“Go hard or go home”
Jill,
Good luck…getting involved with other people’s personal lives…and hitching your financial well being to those “goings on” which you have absolutely no control over is pure madness in my opinion.
Tenant being pregnant is one, but there is a thousand and one excuses why your rent doesn’t get paid and the house is a mess;
I split up with my boyfriend
Lost my job
Hurt my back and am now on compo
The wife just left me
What’s the problem – it looks fine…
We have 5 kids – houses look like this with 5 kids…It goes on and on…I disagree with Steve’s philosophy about having to wade into this mess and treat them like your customer. Of course, if you don’t, your wealth takes a huge hit so you’re left with no option but to wade in…yuk !!
As Landlord you provide a roof over their head without fail, every night. Does the tenant have the same commitment to provide the landlord with rent every night without fail ?? Some – not all, just don’t have that same committment level – it wouldn’t even cross their minds.
These stories re-inforce my decision to ban RIPs from my portfolio…dealing with professional business people and Govt depts as tenants beats the ‘domestic dross’ hands down.
Cheers,
Dazzling
“Go hard or go home”
Hi Sonja,
I always find these “Who’s responsible” tussles between Landlord and Tenant amazing.
The logical answer is all based on our ‘perceived’ frame of reference, what’s the “norm”.
If your background was RIP’s (residential) you would automatically assume it is the Landlord’s responsibility – fair enough.
If your background was C&IIP’s (commercial and industrial) you would instantly agree it is the Tenant’s responsibility – fair enough also.
Go ask a veteran C&IIP Lessor who is responsible for maintaining / fixing a faulty A/C….he / she would laugh at you and say “Well of course the Tenant is”.
Just depends on what your background is. The vast majority of people are firmly rooted in the RIP side of things, and hence they naturally lean towards the Landlord coughing up every time.
Has the experience altered your perception regarding your own RIP’s…or are you still happy to fork out for them as well ??
I’m in the northern hemisphere right now freezing my proverbials off, so hard to relate to you needing A/C…once again my frame of reference is not the norm.
Oh, and this OH&S thing is a smokescreen – we are talking about who is ‘liable’ or ‘responsible’ for the repair of the unit. No-one mentioned anything about you or a family member personally having to get up on the roof. That’s what contractors are paid for. The real issue is who is going to foot the bill ??
Cheers,
Dazzling
“Go hard or go home”
Hey Rick,
Nothing like having a solid plan in place and having performed solid research on the subject before taking the plunge….good luck with your endeavours.
On a positive note, you are an inspiration to all of the folks out there suffering from ‘Analysis Paralysis’. Step up to the plate and have a crack at it.
Let us know how steep the learning curve is.
Cheers,
Dazzling
“Go hard or go home”
Ellie,
My advice would be to do the following;
1. Grab anyone / everyone you believe is impartial and experienced in property.
2. Both / all of you get in the car.
3. Drive up the street 50m and do a Uuey.
4. Slowly drive up to your place and stop outside the front of your place.
5. Analyse what you see from the carseat perspective.
6. Buyers have already made up 75% of their decision sitting right there – so whatever they see from the carseat – make it good.
7. If you are able to entice them out of their carseat, by the time they reach the front door they are up to about 90%.IMHO, it does not matter, and hence a waste of money what is behind the front door. It will not change their overall opinion that is already 90% formed.
Before they get to the front door the following has already been established;
Block size
Frontage
Street appeal
Suburb feel
Neighbours
House construction material
Roofline – leading onto termite problems etc
Garaging capacity
Vegetation status – neat or overgrown
Orientation w.r.t light. Winter sun etc
Neatness of facade etcTheir opinion on the above will also be automatically ‘assumed’ to continue on the inside…if they aren’t happy by this stage they won’t be getting out of the carseat and you’ve lost a potential buyer. Hence my earlier comment about the interior costs being a waste of money.
Concentrate on what you can see from the carseat and you’ll pull ’em in every time. Of course, if they are happy and they’ve made it to the front door, you are 90% home. Even if it ain’t special inside, you are only swaying the last 10%…it won’t affect the vast bulk of their opinion which was formed in the carseat.
Hope that helps.
Cheers,
Dazzling
“Go hard or go home”
Brian,
Welcome to the forum. I’m pretty new myself so here we are….
I’ll have a stab and say that you have yourself a 5 year lease, with 2, 5 year options. That means at the end of the 5 year lease, the Lessee (tenant) has the right – but not obligated – to extend the lease for a further 5 years at some pre-determined terms and conditions (T&C’s), then again 5 years hence.
You as the potential Lessor (Landlord) really have only the enforceable 5 year lease. Six months before the 5 yr lease is up you typically write to the Lessee and formally ask them whether they intend taking up the option or not. If they do – usually, if the T&C’s are good – happy days….if not…get looking for a new Lessee.
That is, if the Lessee doesn’t want to take it up, the 2 x 5yr option ain’t worth squat.
Many CIP and IIP are advertised with these enormous trailing options, which are not legally enforceable for the Lessor and therefore you should not pay anything extra for them….I believe banks don’t place any weight on them.
Hope that helps.
Cheers,
Dazzling
“Go hard or go home”
M75,
Ah – my favourite subject – land tax !!!! One that most of the property gurus like to brush over as being just a price you need to bear…bugger that.
I remember reading something from a famous Qld lady when she brushed it off by saying, “It’s small in comparison to the overall scheme of things and it’s firmly entrenched in the State’s budgets so just get used to it. Usually it can be offset by smart financing and a slight increase in rent.”
I agree with her second point, but points 1 & 3 are absolute H.S, especially as your portfolio starts to climb up into a serious level.
We wrote a cheque out for over $ 36K last year but shall not be stung again.
We were always advised to put the RIP in the name of the highest earner and hence they are able to claim the deduction with the best effect….well, that’s true up to a point. This Land Tax issue soon swamps the tax benefit and the tactic is definitely not the way to go.
We solved the problem by allocating different tenant in common percentages to each place. Have one RIP (100 / 0), have the next (99 / 1), the next (98 / 2) etc…
You get almost all of the tax deductions heading to the highest earner, but the State Revenue Dept classifies them as different owner structures, and so their ‘cumulative’ rule for tax assessment – which is the real killer – doesn’t kick in. Every RIP value starts from scratch instead of being lumped on top of one another for assessment purposes.
This tactic alone shall save us over $ 30K this year and more every year thereafter.
Of course, the best tactic of all for avoiding Land Tax payments is to have the tenant pay it, as you get with CIP and IIP. We have this going now, and compared to RIPs, it’s heaven on a stick.
Hope this helps.
Cheers,
Dazzling
“Go hard or go home”
JCLS79,
I’ve always found in the past showing the building report to the vendor has absolutely no affect on them whatsoever.
I do the report for my own knowledge now – obviously accompanying the builder as he does it to get maximum value out of it.
In terms of what this has to do with the vendor, the result of the report should determine whether you go ahead with the purchase based on the already agreed price and terms.
If you still want the place after the report comes back negatively….that’s when it becomes difficult for you…don’t expect any help from the vendor…they’ll simply say “Yes we know that, if it was good the price would have been what we agreed + X, instead of just what we agreed..”
Either way, the ball is in your court – it boils down to whether you want it or not…only you can answer that based on all the facts of the individual deal.
Cheers,
Dazzling
“Go hard or go home”
PP,
After a few years of frustration and being blatantly lied to by 5 separate PMs, we were in a position to self manage and everything has been excellent since.
The wife gained her PM qualification and now works for an RE co. to gain more Comm & Ind. prop. experience.
Just saw a deal – since taken – where the tenant (a Fed. Govt agency) paid $16K p.a. to a PM to manage themselves. Getting a major slice of that action, or all of it, helps boost the return on the prop somewhat.
It can be lucrative – but I’d suggest getting a few zero’s onto the end of the deal – wouldn’t be worth my time with normal res. prop.
Cheers,
Dazzling
“Go hard or go home”
Based on the above info, I’d say it’s a toss up between;
1. 17 Smith Street for no more than $ 73 K, and
2. 28 Jones Avenue for anything under $ 76 K, because it’s on the corner and better access.But then, the bakery just listed and you never know….
Enough.
Cheers,
Dazzling
“Go hard or go home”
Marc,
Try putting the cost of the new pool into perspective.
Does the value of the block of land easily support it or will it overcapitalise the property ?
Is your intent to stay in the house for the long term ?
Are there children coming into the picture who would also benefit from it greatly ?
Is ongoing maintenance of the pool going to cause any problems ?
From a one-dimensional focus of ‘investment return’ for your 20K, obviously it ain’t gonna set the world on fire, but then there’s other considerations that may outweigh the financial aspect of it….
Up to you – your call.
Cheers,
Dazzling
“Go hard or go home”
Alexei,
We were in the exact same situation as you this time last year. Had been overseas and trying to rent out our PPOR all to no avail. Finally got some tenants in there and signed them up on a 1 yr lease. Then, the very next month unexpectedly had to return back to Oz, but alas the PPOR was signed up for another 11 months.
Our immediate thought was to go around there guns blazing and demand our ‘home back’. We sat around with a cup of tea with all of these “What if” scenarios. At the end of the day we realised we had not a jot of power to do anything about it. So, what’d we do ??
We rented a place just around the corner for the same after tax rent as what we were getting, and over time things got back to normal. It was a tad coincidental that another one of our other houses residential IP’s came up for lease renewal. This one was in a better area but as usual, the tenants had treated it like shite.
Killed two birds with one stone, got rid of awful student tenants who were wrecking the place and moved in giving us the opportunity to repair some of the damage at a lower cost and effort.
We just moved into this one, finalised our lease commitments on the one we rented temporarily….and best of all – with our previous ‘home’, just signed a new 3 year lease at $ 35 / week rent increase, with additional 5%p.a. escalation clauses for years 2 and 3….and to think we wanted to kick them out ???
Of course, if you don’t have another IP right now, why not go and get one and leave the signed up tenants happily renting away…get growth on them both.
Cheers,
Dazzling
“Go hard or go home”
Jenny,
From my wife’s point of view the decision would be quite easy to make. If the tradesman had
A) Bulging pecs and rock hard abs – the answer would be “Anytime honey bunch”…or
A huge beer belly with the obligatory arse crack hangin’ out of the Stubbies – the answer would be “Anytime honey bunch”…You see, if it was a good deal…it’s a good deal ??
Any help there Jenny ???
Cheers,
Dazzling
“Go hard or go home”
I’ve found in the past there is one of three reactions;
1. Active encouragement and willingness. Unfortunately this has happened only once, but boy did big things get done in a hurry….a quick sprint along the road to wealth was the result.
2. Disinterest at best. This is where the majority of the reactions over the deals would sit. Hard work, and a slow jog along the road to wealth is usually the result.
3. Active Resistance. Thankfully this has happened only once or twice, but is happening on the current deal…hence the original post. Extremely difficult / frustrating when someone who is very dear to you and financially involved working against you every step of the way. At best, a crawl along the road to wealth…
Conclusion, IMHO this subject has far greater impact on your goal of successful investing than any other factor you shall come across, regardless of property type / finance source / tenant mix and organisational skill.
If there is active resistance…forget it…go play another game.
Loanwolf,
You’ve gotta make a decision…which do you want ?? Holiday now or better start to wealth ??
I had the exact same decision to make way back when. Took the advice of two wealthy older gentlemen I respected alot and went on the holiday.
Best money / life experience I ever had…wouldn’t swap and couldn’t buy that experience again.
Up to you.
Cheers,
Dazzling
“Go hard or go home”
McDirt,
Chin up…I’ve had a bad run with 3 separate PM’s in the South Perth / Como area….changing around doesn’t help much…they are pretty much as poor as one another…can you take comfort from that ?? When you finally do get a statement, make sure you are sitting down and have a bucket with you…..”Eating into your cashflow” doesn’t really adequately describe what they strip from the gross rents received, especially w.r.t. short term leases.
C@34,
I’m far more interested in some of the illegal ones not mentioned….nonchalant PM’s respond far more promptly usually to these.
Cheers,
Dazzling
“Go hard or go home”
I believe this is a very personal issue and at “crunch time” has little or nothing to do with property investing.
I’m currently living in a country where every man can have up to 4 wives. The average wife has 7.2 kids each (highest in the world). Each man on average is supporting up to 12 to 15 kids, and their wage is about USD $ 6 per day…most of which is spent on chewing qat. They all survive no problem…don’t have any western luxuries mind you…but then your question didn’t address that…it’s naturally implied when western people ask questions like this.
These questions are usually generated from watching ridiculous sitcoms from the US where they fear having one child will bankrupt them…all hyped up for the all devouring well educated, highly paid, single, US hyper-consumer.
Cashflows and raising children is a mutually exclusive non-sensical question posed in a Western 1st world country. Believe me, you can easily afford way more than your partner will ever be able to physically have.
Cheers,
Dazzling
“Go hard or go home”
Derek,
His name is Greg Rossen. “Mr Nedlands” to the great unwashed amongst us.
He’s constantly banging on about Nedlands, but then with his business base there, you can’t really blame the guy for beating up business – like all REA do I suppose.
Cheers,
Dazzling
“Go hard or go home”
Hello all….rather long thread isn’t it…
Having spent the last good while reading all the comments on this one, I’m going to go against the trend and suggest the following IMHO;
Dalkeith
NedlandsBoth of the above are in “nice” family areas. Talk amongst the wives / they all either want to get in there or know someone in there and are a tad envious.
All infrastructure been there for yonks.
These suburbs are usually pretty average on the cashflow side of things, but no matter happens to the economy, there is always some sector within the overall picture that is doing particularly well…and the execs will always pay a premium to live there.
Saw some initial posters from 1914 when Dalkeith was first openend up. Quarter acre blocks for 24 pounds, 1 pound deposit and a couple of shillings?? per month repayment…no interest component at all…WOW…they are all over 1MM now. That’s a steady 11% CG for the past 90 years on the dirt – house immaterial…
Only downside is there is alot of lawyers living there…
Cheers,
Dazzling
“Go hard or go home”
Hi,
In a nutshell – yes. [thumbsupanim]
On my list of 17 that I am looking at, 14 are +CF from day one….
Biggest trouble I am finding at the moment – all of the chaps from the eastern seaboard must be looking at the same list I am and “fillin’ their boots”. [thumbsdownanim
Agents love them ‘cos they are willing to pay more – frame of reference or something they tell me ??
Keep searching – they are there. [whistle]
Cheers,
Dazzling
“Go hard or go home”
A huge beer belly with the obligatory arse crack hangin’ out of the Stubbies – the answer would be “Anytime honey bunch”…
