Forum Replies Created
Goulburn has been popular for families seeking a home but are priced out of the Canberra market. However from an investment perspective you need to do your homework on the area.
The commutability to Canberra for employment is a little murky. Most folks do the carpooling thing because the train service is not viable. Only a couple of services per day and not at appropriate times for commuting to a job. There are some coach services, however as we all know, coach equals slow by comparison to rail. I am not a huge fan of bus services as the routes can be moved to a less convenient path, or indeed removed altogether, in the blink of an eye. I like rail services. Big metallic lines in particular locations on the ground. Expensive to “move them” so they tend to stay in place.
However in Goulburn, despite the fact those big metallic lines are on the ground, they are not particularly well utilized. This accessibility issue concerns me. It is a great shame that the rail infrastructure is sitting there and not being leveraged. As has been said already, the rail services have been spoken about many times and nothing has eventuated. I spoke at length with staff at the railway station to try to understand why on earth there were not some sensible services, or if any were on the horizon. The answer to this question was that there was no logical explanation as to why there weren’t some services for the commuting Canberra workforce, and that there was nothing on the table being discussed. The brochures about commuting options that were available were confusing. I could not help but enquire how a person could be standing in a train station that had direct lines to Canberra, and yet not be able to catch the train to work in Canberra. It defies logic.
In theory Goulburn is an hour’s drive from Canberra but of course in peak hour that figure goes up.
On the flip side, Goulburn is a very tidy town with a proud council. It has some substantial services there which are unlikely to go anywhere in a hurry. (eg hospital, tertiary education and a prison). It sees phases were the town is full of tradespeople there to work on nearby windfarms and such, with insufficient rental accommodation on offer. So you see these people literally take up residence in motel rooms. Quite literally you see them head off for the work day with their little lunch eskies just like you would from home. Great for the landlords in town while that work demand is there. And Bob the chef at the Astor Hotel makes great food and is very happy to oblige when tweaks to a dish are requested. A lovely town with friendly helpful people.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
I agree with Richard. Given the proximity to retirement, the rental returns coming from the properties will have a much lower income tax applied when you are retired. Presently the tax is zero. Compared to outside super which will be the marginal rate.
I don’t think the superannuation drawdown tax rate will remain at zero for pension phase, but it is reasonable to presume it’ll always be lower than the marginal rate outside of super.
It’s about maximizing your net returns in pension phase… not giving some of it away in unnecessary taxes.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
As Terry has mentioned, not immediately tax deductible. If you ever sell the property these costs are factored in when determining the capital gain and thus the capital gains tax payable. Stamp duty and legal fees are also in this category.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Renovado
There is a closed facebook group called “Renovating For Profit Victoria – Graduates of Cherie Barber”. This might be a good group for you to join to meet like-minded people. They also have regular coffee meetup groups with good turnouts.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Wouldn’t touch it with a barge pole.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Agree with what the others have said. You need someone good. Not someone that happens to be just down the road from where you live.
Most of this sort of thing is handled via phone/email/skype these days anyhow.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
You have to watch out for how some of the insurers cover “contents” in unfurnished rental properties. Contents would be your carpets and window coverings basically. As an example, EBM has a standard $50k coverage on these, which is astronomical on say a 1br unit. Thus one example of where high insurance premiums come from.
I find AAMI to be fantastic for dwellings that they’ll insure. GIO’s rates are good on not-so-conventional properties, but they are very painful to deal with.
CGU is always great for a balance between pricing and quality of service.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Matt
The thing with mentoring is that it is tricky to define whether the outcome was a success. You need to be clear on what the service offerings are and how you’ll measure it’s all been “achieved”.
When you are conducting your purchasing process, if you have the right team around you (brokers etc) you will learn a heck of a lot from them along the way.
When people come onto the forums asking how to learn about property investing, the response is often “hang around on these forums for a while… read lots and ask lots of questions.” There is a LOT of information here.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
You would need somewhere to move it to… together with council permits. As a first port of call, ring the council relating to the block you intend to move it to. Other obvious costs are for the house removal guys, and tradespeople at the other end to put it back together (especially plumbers).
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Dean
The reason the SMSF cannot change the character of the property while it’s under mortgage is because the bank/lender has taken a specific property with a specific title as security for the loan.
You cannot take out the loan giving them one house on one block of land (ie one title) and then suddenly split that title into two pieces, because these would be new titles that the bank wouldn’t have security over you see. You can’t say thanks for the cash Mr Bank, but the title that existed when you gave my SMSF the cash doesn’t exist any more so you are now the proud owner of an unsecured loan. Nothing for you to seize if our SMSF decides to stop making mortgage repayments.
Any time a request is made to change the title, the mortgagee (ie the bank) is notified. And they would put a top to it quick smart. And this is in addition to the fact that changing the nature of the property while it’s under mortgage is also against the law in the superannuation space, and I hear prison is not a nice place to be, so it’s best to play by the rules. At the very least if you broke a rule like this, you would expect ASIC/ATO to fine you and force liquidation of all the SMSF assets and have the SMSF closed, forbid you from being a SMSF owner any more, or a director of anything for that matter, which is a problem for folks in many professions such as the building, accounting, financial or legal sectors.
In order to do a subdivision, the SMSF would first need to pay off the loan, and then use its cash in its bank account to perform the subdivision.
With regards to renovations, as has been mentioned they are allowed within reason, but the SMSF cannot use borrowed money to do the renovation. If it has enough money in its bank account to perform the renovation then excellent. If it doesn’t and a member chooses to beef up the SMSF balance by transferring money into it, then as Richard says, that would be deemed to be a contribution and would be counted within the annual contribution caps.
You need to be very careful what you do with a reno … if you manage to devalue your property due to your reno (oh yes, people manage to make poor decisions and make the place less desirable than it was to start with) then the SMSF will need to worry about what the mortgagee would have to say about it. If the property is under mortgage, it is much less headache for everyone that tweaks are kept to repairs and minor improvements. Perhaps some paint. Perhaps some new carpet or a new benchtop. That sort of thing. Most folks take a fair while to get money into super so you don’t want to have to spend it all straight away on a reno. It’s easier if the property is newish, or dated but not offensive and not in need of a renovation for at least 5 years. This gives the SMSF to get some runs on the board before it needs to stump up cash for renovation.
Hope this helps.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Once upon a time, bank interest rates were closely tied to, and tracked the RBA cash rate. This has not been the case lately.
Irrespective of whether the RBA lowers the cash rate, it does not directly follow that the banks will do the same (particularly in the case of investment loans and fixed rate loans).
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
It depends on whether you can afford to do it alone, whether you would enjoy renovating alone or not, whether what is more important to you about the project is the companionship or the profit, etc.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
So in the same area, if i spend less money to purchase a unit, and if the rental income for the house and unit is roughly the same, the ratio for unit is higher, that is what the bank want when it comes to assess the borrowing capacity for the second property. Do you think this is not true?
Yes and no. Yes they are interested in yield but they also know units have the burden of body corporate fees that erode your rent. If you look at the NET yield (rent that is left after paying the bills) you will be surprised how much the bills chew into the rent of a unit.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Maybe don’t rule out considering other suburbs/areas where you can afford a whole house.
Banks will look at servicing so the rental yield is indeed important. You cannot make loan repayments on the hope of capital growth, but you can make repayments with your day job income, and the actual rental yield of the property.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
I Matt
You will also half your ability to service for other loans, since on a joint loan, you own half the property but all the responsibility to repay the loan (the bank will expect you to stump up the loan repayments in full if your partner doesn’t pay their half).
When you say you are looking for a partner who has experience buying and selling property, what do you mean? Do you mean you are nervous about the legal process and would feel better after one or two properties, or do you mean you are thinking you’ll do your selling without a sales agent and are looking for people with appropriate marketing skills, or other?
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Anyone know of a good agent in Ballarat?
Ballarat Property Group.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi mddedf
Nope it is most certainly NOT true. Never heard of such a thing.
Your borrowing capacity is influenced by your ability to repay debt. This is evaluated by income streams (your salary job, rental income from other properties, likely rent from the new property purchase, etc).
You might compare a unit and a house and the house has a better rental yield, and as such that one would be less of a drag on you moving forward than the unit.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Try not to be snobby about areas that have proximity to the city. They polish up as suburbs closer in or on the other side of town get too expensive. By way of example, I can recall a time when I didn’t even want to be on a train that passed through Richmond, let alone get off the train there. It was a seedy seedy place. And now the entry price is prohibitive for most.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hi Newbie
RPData can be deceptive since a lot of agents do not disclose their sale/rent prices they have achieved. So the results are skewed.
Grab yourself a copy of the Australian Property Investor magazine and sift through the statistical pages.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Any solicitor recommendation?
Apologies didn’t see this message. Shoot me a PM if you haven’t got a solicitor as yet and I’ll give you some suggestions.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
