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Also check your insurer will cover you as this is a style of subleasing really…
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Speak to your accountant but some of the deductions you are wanting to claim are probably claimable after you own one investment property.
A couple of articles that have addressed this are here;
http://blog.aussie.com.au/4-tax-deductions-you-should-be-aware-of-when-investing-in-property/
and item 11 here;
http://www.yourinvestmentpropertymag.com.au/tax-strategy/how-to-avoid-the-tax-traps-that-could-get-you-audited-by-the-ato-209653.aspxJacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi @jodyt
I mean when the tenant leaves. There are two different styles of Dept Housing tenancy. One being Dept Housing is the tenant and they sublet to whomever they please. The other is an individual applying directly for your property and Dept Housing paying their bond and possibly also their rent.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
I have different questions…
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– What sort of locations are these properties in? For instance, is the 9% in a town in the middle of nowhere that would earn 9% if rented but might endure long vacancies?
– What sort of purchase prices are we talking?
– What sort of properties are they? Both freestanding houses? The reason I ask is that one might be the type for which release of equity is more problematic later on.Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Be aware that (at least in Victoria) it is virtually impossible to succeed at tribunal in keeping any of the bond if it was paid by the Dept of Housing.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi @brwtito1978
Further to what Dean mentions… with the water bills, precisely what the bill will be will depend on which state the property is in, and how many water meters there are on site.
If there is just one meter, the body corp may pay the water bill and charge each unit an equal portion. Or each unit owner may get the bill directly from the water company.
As the owner you’re normally stuck with paying service charges, and if the property doesn’t have it’s own meter you’re stuck with water consumption also. If it has its own water meter you can normally have the tenant pay some or all the water usage, depending on the rules in that state. For instance in QLD for the tenant to pay all water there must be an audit done to ensure the property is suitable equipped to be water efficient.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
If it is of such recent construction, council may have a record of it. Or the draftsperson noted on the council plans might recall who the builder was.
As @mikesonthemic has mentioned knocking on the door would be a good idea since chances are, if it is an owner occupier they are probably still living there. Alternatively, neighbours may recall the company names on some of the tradie vehicles and you could hunt the builder down that way.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi @kuna
Welcome !
Too many people get a bit ahead of themselves and rush out and set up family trusts only to realize they are not eligible to borrow enough to buy an IP through that structure.
There are many brokers out there – the key is to get an investment savvy broker on board and get an understanding of your borrowing capacity as a first port of call.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Great post @terryw . The asset protection question comes up a lot and that’s the best summary I’ve seen yet. :)
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi @daweilin
Welcome to the forums
As the boys have pointed out, it’s all doable and there are slight differences in the prepped paperwork in each state if using a Buyers Agent.
As Richard mentioned, unless you’re going to the moon it can be done. With that said, if you intend to be uncontactable for a period of time during the searching process or while under contract, it is important to let your Buyers Agent and mortgage broker know so that this can be taken into account. Otherwise it will be assumed you are contactable via phone and have access to printer/scanner/email facilities each day.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks @aperry
@rsco I hope you don’t now feel as if we’ve stomped on your ideas and that you’re stranded. Chatting to a savvy broker will be invaluable for you and help steer you onto a path that enables to you grow your wealth as time goes on rather than stunt it. They will likely have suggestions relevant to your scenario that you’ve not yet considered.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Ah ok
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi @rsco
Taking a step back… you will want to give very serious consideration to the dilemma of “purpose of borrowings” which was discussed extensively here ; http://somersoft.com/forums/showthread.php?t=29734
The moral of the story is this:
Unless you are a person that cannot resist the urge to spend money that is sitting in offset accounts, it is generally better to put spare money in offsets rather than physically putting it in as a payment off the loan. That way if you want to move to another PPOR you can whip the money out of offset account of the old PPOR and use it as a hefty deposit on the new PPOR, thus leaving the debt on the old PPOR.
Some folks instead opt to sell the old PPOR to free up the cash to spend on a new PPOR. The nuisance is of course that you don’t get the stamp duty you paid for the old PPOR refunded, and you have to line up to pay stamp duty again on the new PPOR, so $$ pros and cons of each course of action have to be weighed carefully.
Again, best to talk to a savvy broker before you get too far down the track of taking action.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Great news !
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi @rsco
Righty-oh then let’s see if we can help you steer the ship !
First and foremost, let’s address the idea of the units you mentioned.
Based on the pricepoint and rental return I’ll assume the units you’re talking about are in a regional location. It’s really important to check on holding costs because councils and water authorities like to hit unit owners with big bills that are more in line with 5 bedroom homes. It can really chew into your rent money. For instance, a one bedroom unit will be slogged with the same service charges for water and sewage as a 5 bedroom home, despite the fact there is less showering, dishes-washing and toilet-flushing happening in the 1 bedroom dwelling than there would be in a fully occupied 5 bedroom home. In regional Victoria, the councils and water companies can issue rates per dwelling, even if the dwelling is not on its own title (for instance, a unit in a block of units that is not yet strata-titled). The water company can indeed also rate dwellings separately even if they do not have their own water meters. They can, and thus they do.
Another thing to consider are whether it is possible to get residential finance for such a purchase. If the units are still all on the one title there will be very few lenders that will now do a 4-pack at residential loan rates. Commercial rates are more expensive.
I personally wouldn’t acquire something that fetches less than circa $200 per week in rent. This is because regardless of how high or low the rent is, you must still provide and maintain an oven, hot water service, electrics, toilet, shower etc. Just talking about the oven, if the oven blows and the rent is $165 per week, it is many weeks of rent gone just on replacing the oven. The hot water service would hurt even more.
You didn’t mention whether you would intend to use savings or equity release to fund the deposit on the proposed units purchase. Most lenders would only go to 80% lend on a block of units, and if you do an equity release you would normally still have to leave 20% aggregate equity on the table with the bank (aggregate being total of your home and the units). I looked at a very similar set of figures to yours only last week, and in order to comply with leaving 20% on the table in an equity release situation, the PPOR (home you live in – Primary Place of Residence) loan needed to be down to $200k (yours is presently at $240k).
Now for ownership structure
An investment property that is cash-flow positive may not be best purchased in your name while you’re working, since you would be taxed relatively heavily on the cash-flow positive component. If your wife isn’t working, ownership in her name might be a consideration. These sorts of things are best discussed with the family accountant to nut out pros and cons of each ownership structure scenario.
Another consideration is superannuation – many folks now set up SMSFs (Self Managed Super Funds) and use their super to fund deposits and buying costs on investment properties.
Questions
Are you able to fill us in on how you plan to fund the deposit money on the investment property so we can ponder your case a bit further?
Also irrespective of whether you intend to tread down the SMSF route it is always important to have an awareness of how your superannuation is going and be proactive in ensuring it is performing.
Hope you found some helpful thoughts in the mix there!
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi @maya
As Richard has mentioned, an email is pretty normal and accepted. Some agents may try to force you to put your offer in on a contract. Be aware that in doing so you’ve signed a contract without having your solicitor/conveyancer check it first, which could be dicey move for you.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi @ragnar
Pleasure.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Ragnar
Welcome to the forums.
In all three of those suburbs, there are pockets and there are pockets, and it is critical to know which to avoid.
I do not like Norlane at all and never purchase there. It has problems that would be virtually impossible to overcome. The other two suburbs have pockets of goodness and pockets of quite the opposite. Knowledge is key.
I don’t see how you would have a vacancy for 3-4mths provided you have a good property manager (again, there are good ones and terrible ones).
As to which will perform better in the long term is a question for the crystal ball and also the answer will differ depending on what your definition of long term is.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Maybe they’ll at least let you tarmac over it so that you can have a parking bay. As you’ve mentioned they won’t allow a structure but might allow the ground surfacing. Perhaps you could then put up a shade sail over it.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks @benny . Yes I eventually found it that way but wonder how many people would find their way to the members area in that way?
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
