Hi DrSupachicken,I should have provided more detail in your other post regarding yield.Yield is calculated using your rental income without factoring expenses… there are two more formulas you can use to determine accurate results:Yield = (Annual Rent / Purchase Price) x 100ROI = (Annual Cashflow / Purchase Price) x 100CoCR = (Annual Cashflow /…[Read more]
Matt,Yeah, I remember that part clearly, which is why I'm confused in the first place.If timing the market is key, then why invest in positive cashflow property now? Prices have great potential for a huge drop all the while interest rates are temporarily low – it's not going to last forever, so why is cashflow so worth it now?I am under the…[Read more]
Great idea Matt,I'd like to ask a question in regards to focusing on positive cashflow while the window of opportunity is open (low interest rates).If property prices drop as many suggest, then what happens when interest rates go back up? You'll have -ve equity and -ve cashflow. What's the exit strategy in this scenario?Perhaps it's better to wait…[Read more]
Hi DrSupachicken,Your yield is calculated by dividing your annual rent by the purchase price and multiplying the result by 100, i.e:Yield = (Annual Rent / Purchase Price) x 100Yield = ($20,280 / $300,000) x 100Yeild = 0.0676 x 100Yeild = 6.76%Sounds like a good return to me considering the 5.81% interest rate.
Hi Tuboo,- Lender's Mortgage Insurance (LMI) insures your lender in the event that you default on your property loan.- You will need to pay LMI if you borrow more than 80% of the purchase price.- LMI does not offer you anything.- LMI is a once off fee that you pay to the lender.Cheers
Well in Dolf's case he refinances his properties to purchase depreciating assets (a.k.a liabilities) like his PPOR(only an asset once sold and if it makes a profit)/Cars/Other luxuries – This is how he 'realises' his gains. If you've read Steve's book '0 to 260+ Properties…" you'll find that this technique can become dangerous if you're not…[Read more]
Blai,Refinancing is when you borrow against the current value of the home if it has gone up in value. Dolf chooses not to sell because he'll lose his positive cash flow property and a large chunk of capital gains in tax. If he refinances on the other hand, he keeps the property and is able to use the equity to invest further without being taxed…[Read more]
Hi RubberduckyAU,An option is an agreement between you and the seller. I'm positive you can negotiate subdivisions within the option clause, but I doubt you are able to do so without the owners consent (without him knowing). It will remain the owners property until you 'exercise' the option.I'll just write up a quick example:You find a property…[Read more]
You could purchase an 'option' with the same clause, which can also act as a deposit (if specified) but you have more control ie, a long option period, set price, etc.Options give you and only you the right to purchase the property at an agreed price within the specified option period. If you choose not to continue with purchase, the option…[Read more]
You never pay capital gains tax when you sell your PPOR. But since it is now an IP, you will need to pay CGT on sale. If the property is owned as an IP for longer than 12 months you will be entitled to a 50% CGT discount.I suppose the capital gains will be calculated from the exact date it was converted to an IP to the day you actually sell it -…[Read more]
Hi Shellb78,Don't forget when you sell the investment property you will pay capital gains tax (you'll have the 50% discount though since you've owned it longer than 12 months). It might be more effective to use the equity in the home to help purchase your new one or at least provide the funds for a down payment.I wouldn't be worried about land…[Read more]
Thanks for you comments on the site, if you ever have any suggestions / comments on how to improve or what to include, please let me know!
Sure! I think your search bar should be placed at the top on all pages (like PI.com) as it's a convenient place to have it. Most users when they can't find what they're looking for won't bother…[Read more]
Hi Erik,Good on ya for sharing some nice pointers. And thanks for sharing the hot spotting site! – I should mention it's http://www.hotspotting.com.au/ and not hotspotting.com as this directs you to ebay (for me anyway), go figure.By the way, I had a look at your site recently, it's coming together nicely Cheers mate
Hey Linar,Yeah, good advice is key. I'm forming a solid idea of what I want in terms structuring my investments. It'll save me a lot of time and heartache finding the right lawyer & accountant once I can clearly identify what I need.I am leaning towards keeping several properties within certain trusts depending on their suitability as you have…[Read more]