[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 9, 2009 - 11:48 pm

Looks like these properties are in the middle of nowhere anyway.  Not very useful as investment properties to me…

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 9, 2009 - 8:21 am

Ultimately, the pest inspector, the agent, all such individuals involved, will not be in a position to look you in the eye and tell you whether you should buy the place or not.  I think if you re-read your original post, you will see that you already had big doubts before we even put our 10c worth in.  I imagine that as a first home buyer, you won't have a big slushy fund to deal with unforseen problems.  This house already sounds like it has serious problems.  Forget the pool and the pretty stuff.  It can cloud your judgement.  Step 1 is to look simply at the price, location and structural integrity of the building.  Secondary to that is the aesthetics and nice-to-haves such as pools.  You can pretty a place up later.  You would not, however, want to have to do major structural works.

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 9, 2009 - 1:59 am

Indeed.  Remember this is just my opinion.  There will be many other opinions out there.  I just think getting all excited about the presence of the pool when there are major concerns about the house itself is a strange ordering of priorities

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 9, 2009 - 1:40 am

I would think you could use that income to initiate negative gearing.  Refer to the section on vacant land on page 1 of this document ; http://www.loganaccountants.com/ISSUES%20IN%20NEGATIVE%20GEARING.pdf

Basically it says this:
"You cannot negative gear a vacant block of land.  This is because in order to get the tax benefit from your salary job, you need to make a 'business style' loss from applying the income received (rent) against the expenditure of the operation.  As vacant land contributes no income, you cannot make a business style loss from it for tax. "

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 9, 2009 - 1:32 am

Personally, I would not consider the presence of a pool to be more important than the structural integrity of the actual main residence.  Have you thought about getting a house that doesn't have termite problems and doesn't have a pool, but has space to install one? 

Here is a rough guide of pool installation costs
http://www.improvemyhome.com.au/articles/swimming-pools/swimming-pool-prices-the-cost-of-splashing-out-on-a-pool

You would need to do more homework on these costs, and I would assume it would not include paving around the pool, installing the pool fence etc

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 8, 2009 - 11:26 pm

Can't say that I would even consider a house that had termite history.  You can get insurance for it apparently (http://www.jlta.com.au/files/PestWisePressrelease050508_F.pdf) , but I note there is only coverage to $100k, which appears to cover repair and replacement costs, but no mention of temporary accommodation costs while the said repair is occurring.

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 8, 2009 - 11:04 pm

This is worth a read http://www.realinvestmentproperty.com.au/renting-by-the-room

Looks like to understand fire regulations etc, you need to search for requirements for boarding houses

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 8, 2009 - 10:56 pm

http://www.housesharevic.com.au appear to offer such accommodation, but it is their own houses.  Gives you an idea of rents you can command, though.  They don't rent rooms in your house for you.  Perhaps a realestate agent could offer the service??

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 8, 2009 - 10:03 pm

I have previously seen ads for what looks very much like rooms in such properties advertised on http://www.domain.com.au in the Brunswick area.  I'm really keen to be kept in the loop on this one if possible – [email protected]

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 8, 2009 - 11:55 am

one visits a site such as Angel Investors or Venture Capital.  One expects to pay a tidy interest rate to the said investor…

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 8, 2009 - 1:29 am

Don't know any estate agents – but maybe you could also take a look at the corporate rentals sector.  Not sure how you'd go about this other than through estate agents – it is a bit tricky to expect to march into big corporates and ask if they fancy renting your flat from you such that their business people can use it when necessary.

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 8, 2009 - 1:28 am

These links should be useful

http://www.realestate.com.au/cgi-bin/rsearch?a=calc&jar=StampDuty

http://www.ownyourfirsthome.com.au/Do-your-financial-homework

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 8, 2009 - 1:25 am

5) Page 1 of the following document says of the First Home Owner Grant: "The grant applies to residential dwellings only and does not apply to vacant land."  http://www.osr.nsw.gov.au/lib/doc/factsheets/fs_fhb1.pdf  Have a read of the "First Home Plus" scheme on page 2 which talk about alternative assistance you can get for vacant land.  Basically it says that you'd pay no stamp duty on vacant land up to the value of $300k, or you'd receive concessions on stamp duty on land valued between $300k and $450k. (Page 3 shows how to calculate these concessions.)  Reading between the lines, it looks like the provisor would be that within 12 months, you'd need to have constructed  the home in a sufficiently timely manner to allow you to reside in the home for 6 months (within the afore-mentioned 12 months).  This is unclear in the document – you'd call to clarify.

7) I would ask which estates they've built nearby, and ask for specific addresses.  Do a lot of drivebys to see what you think of the exteriors, and even knock on a few doors – compliment people on their lovely homes and ask them if they care to comment on their experiences with the builder (ie if they would recommend them or not).  I did exactly this.

---

When applying for the loan – I think you'll find that the fact your parents are prepared to pitch in $1000 a month won't be included in the equation.  The only way to factor that in might be for them to be guarantors of the loan which they might not wish to do, as it can put there current residence at risk if you default on your payments.

I think you will find that the bank wants you to pitch in 10% deposit.  So on the land alone, that means $25k.  You'll then need a thousand or two for solicitors & conveyencors.

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 8, 2009 - 1:09 am

If you  are going to live in one and rent the other for a while, keep in mind you might find it painful observing your tenants each day.  They might not treat the property as you would like, and you'll have to see it happening each day   Just get in the right mindset in advance if following this path.

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 7, 2009 - 6:24 am

Just to state the obvious – the presence of a caravan at the rear of a property can give it a "poor" feel, and this could influence the quality of individual that stays at the boarding house. 

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 7, 2009 - 6:23 am

Start here; http://www.myrp.com.au and click on BUY.  There are free reports there that can give you a bit of a start.

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 7, 2009 - 6:22 am

Firstly, speak to your own accountant about your own situation.

My understanding is that once you are outside of Oz for 6mths or more, your income earned overseas is not touched (if there is a suitable tax agreement in place with Canada). 

The investment property income will be taxed in Australia at 30c in every dollar.  You cannot rescue your cash by sinking it into superannuation.

You'll have nothing to negative gear your property against – if it makes a loss, the loss gets carried over and can be counted in future tax years (not sure how long you can carry the loss for – look into that).

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 7, 2009 - 3:05 am

re my above comment, you might as well ask about vacancy rates in the area as well, then you can consider  the properties from the perspective of build and sell, and also build and rent

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 7, 2009 - 3:03 am

Sounds like you plan to sink a fair bit of money into this one basket – I'd suggest talking to several estate agents to get an understanding of how long properties are taking to sell in the area (on average), and how many have remained on the books for ages…

Jacqui Middleton | Middleton Buyers Advocates
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[Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539]

December 6, 2009 - 11:43 pm

Hi Brad, I am interested to hear your thoughts on townhouses and units (villas) as opposed to apartments…

Jacqui Middleton | Middleton Buyers Advocates
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VIC Buyers' Agents for investors, home buyers & SMSFs.