Forum Replies Created
Where are your properties located?
Might know an agent or two in the area.
But you are correct 3.3% is REIWAs recommended starting point. Don't also forget to talk about services, how they sell, home opens and so on. A couple of percentage points here or there will pale into insignificance if you get a quick sale at an acceptable price.
Hi JPS,
OK – so your building report has come back with lots of questions marks. You are meeting the builders on Monday. How did it go?
Let's take a step back and think bigger picture here.
You are buying a property in a complex that has been built by the same builder. If your property has a number of defects – what is to say the others are not similarly affected?
You now have a complex with more than it's share of building issues – sure many of them may be covered by maintenance warranty and 6 years structural warranty but the problems could well be widespread which in turn may mean higher strata fees, below standard construction which then negatively impacts on the long term values of the properties in the wider complex.
While you may manage to get repairs done other buyers may not be so diligent and your wealth plans may be adversely affected by their lack of interest.
Hi Jamie,
Making your profits at purchase is an often made statement.
You can also make profits by adding value to the property purchased. The add value approach to property investing can be effective in any market whereas property investors who simply buy 'run of the mill' property need to wait for the market to move.
Adding value can be achieved through, buying under value (which reinforces your first point), well planned renovations, sub-divisions, small scale developments and so on.
REIWA suggests a selling fee of 3.3% (inc GST) for the sale of a property in WA. Marketing fees may, or may not, be included in this fee depending upon your negotiation skills.
Note all fees are negotiable and you are entitled to bat hard for yourself.
If the properties are in a reasonable distance from one another then a single agent may be reasonbaly placed to handle the sale of both.
Agents in WA are reporting reduced selling times and when I last looked a few months ago stock available on the market was below long term averages. Strike the right price and you may end up moving your properties reasonably quickly.
Hi Blade,
As others have said it is important that you spend some time educating yourself so you can make decisions and control y our own destiny. Relying on the advice and guidance of others means you are in their hands. For DHA and NRAS, to a certain extent, fall into that category.
Having said all of that – Jac is spot on. Don't confine yourself to a 4 X 2 as 2 X 2, for example, may be a more suitable investment in some localities. Leave the type of property blinkers off and focus more on your long term objectives, from this the type of property will be identifiable as will the location.
PS most 'experts' are giving a general thumbs down to Vic. Mind you every state will have pockets that perform well. See if you can find these.
Was going to mention flying solo. I did spent some time there in the past.
Your decision to NG or PG needs to framed with your disposable AND taxable income in mind.
I don't see a lot of point negatively gearing a property if you are scratching to make ends meet every pay period. I appreciate that may seem a silly thing to say on $130K but I have seen enough people earning similar (and more) without much in reserve.
NG and PG both have their position in a property investment strategy – it is just that one strategy may suit an individual better than the other. Of course there are also the opportunities to purchase an IP which has cashflow and which has the capacity to be valued added.
Sounds like you are self-managing.
As others have said – grab a copy of the tenancy laws in your state and follow them to the letter of the law. Just because you self-manage doesn't mean you can operate outside the tenancy laws in your state.
Always handy to have a copy in your files even if the property is professionally managed.
Hi SNM,
Reading the OP he/she did suggest that his previous offers had been rejected. I assume the offers were submitted through the agent/office now chasing their share of commission.
On this basis there should be a paper trail as proof.
Most listing contracts have a clause in the agreement which covers this exact situation and based on what you have written it would appear as if the agent has a legitimate claim to commission.
But, as Richard as pointed out, this is an issue between the vendor and agent. You make your offer on what you are prepared to pay and then leave the vendor and agent to come to terms – whatever that may look like.
Your expenses will still be deductible while you are seeking a tenant.
Avoid renting to a friend at 'mates rates' – there is a reasonable expectation held by the ATO that any rental arrangements are at 'normal market' conditions.
As Jamie said – why not get a property manager on the job too?
Gee that course content is a little different to the one I recently completed.
Hi BigO,
Given you signed the contract to purchase this property two+ years ago I wouldn't be making any grand plans until your valuations are in and both properties have settled.
The Melbourne unit market is a very different beast now to what it was two years ago and there are a number of things that can throw a curve ball at you even at this stage.
While you have/had a pre-approval the bank has, in all likelihood, not done its final checks and balances. You probably had conditional finance approval and the final outcome will only be determined when the bank undertakes valuations and further assessment of your financial situation is completed.
Hi Jewel,
Methinks time to reduce your offer if you still want the property.
Christmas, vendor has waited a few weeks, agent looking for a sale just before quiet time at Christmas. Could be an opportunity for you.
Hi Jact,
Let's leave the tax questions to one side for the moment and only focus on the strategy you are considering.
At the moment you are paying $5K/month into your portfolio and want to redirect that into your own home mortgage while allowing your LOCs debt levels to increase by the same margin.
On this basis I have a couple of questions for you to consider.
1. Will the existing LOCs limits allow you to make significant inroads/pay-out your mortgage before they reach their limit?
2. Assuming you still have a mortgage on your own home when exhaust your LOC limits – how will you manage that scenario?
While, in effect, you are moving debt from non-deductible to deductible have you considered the possible scenario you will create if you want to sell off an IP or two?
Just some thoughts for you to consider.
hbbehrendorff wrote:Yes, I agree with much of what you said… though one thing that really bugs me is when your sorting through hundreds of different property's and they all say lines such as…"WOW, Great Investment Oportunity !" or "GREAT RETURNS" or "INVESTORS ONLY!" though most of the time they don't say how much they rent out for
And likewise a lot of property that lists there income says "POA"
Those issues are agent input issues rather than website issues.
A key ingredient for real estate marketing is to start the conversation and there is a perception that ads (as per your example) will start more conversations than an ad that gives away all of the information required by investors to make a decision without the need to start a conversation.
Seems ASIC is making moves to provide an educational course on financial skills which goes as low as 8 year olds.
Not sure why Melb. RPData, and others, are reporting declining vacancy rates are reduced market activity.
I think other markets would provide better investment options at the moment.
Any chance you can get vacant possession and remove the problem entirely?
Probably too late now but maybe next time.
Not a broker & not Richard – can be done.
The bank needs security over their loans before they lend money. In some cases a bank will accept cash in a term deposit as security.
For example you want to borrow $80K but you want to retain the cash you have (a bit like OP situation).
Some banks will allow you to deposit money into a term deposit (out of your reach) as security for the borrowings – in the example I have given you would need to put $100K into a term deposit to borrow $80K at 80% LVR.
Good strategy when you are selling your home which also provides security for investment LOCs, Secure your LOCs by term deposit, retain cash and when you buy the new home transfer security from first PPOR to term deposit and then to new PPOR.
This is not a simple, straight forward process and you will need to work closely with your broker,
