[BuyersAgentParticipant@knightmJoin Date: 2005Post Count: 338]

February 21, 2015 - 7:57 am

As stated its much more complicated than just building a kitchen. There are other ways to plan minimal land tax across a portfolio. In my view there are problems with contaminating the PPOR as income producing so this may not be the best way forward.

What is more important is having a set of goals to start with. Work backwards from that. What do you want property to help you achieve? Think about what kinds of properties will be the best vehicles to arrive at that destination.

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[BuyersAgentParticipant@knightmJoin Date: 2005Post Count: 338]

February 13, 2015 - 12:32 pm

I find them regularly. There is a range of tactics.

1 Owner and Agent know what the land is capable of and it is well marketed – in that case be honest pay market value and move fast.
2 Revers above, owner and agent may not know, and it may be poorly marketed and the market has missed it. In that case negotiated harder on price.
3 Cant find the right site, use paid data mapping services to find appropriate site and start calling owners.
4 Get approached randomly by people who know I am a BA and want to sell with no agent, I go and find a buyer who wants that kind of thing. I make it clear that I am working for the buyer and not the seller, and that my intention is to get them the best deal possible. No idea why people would want to sell this way but some people just hate paying a sales agent I guess.
5 There are probably more but this is what I thought of so far

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February 11, 2015 - 7:31 am

I have used it most days in the past week fine, time for you to contact them I think. I did go through a patch a while back where specific sites like this would give me grief. Spent ages trying to fix but turned out to be a bug in Safari so loading Chrome and switching between browsers helped. Try that first, if no luck from new browser then call them.

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January 27, 2015 - 7:30 pm

Joint ventures are certainly possible. Rob Balanda a very well known oz property solicitor has a series of educational resources available on this topic 2 are relevant:
1 Joint Ventures Made Simple
2 Options Made Simple

In 1 you do the project together
In 2 one of you options the other’s site for slightly more than market value and does the work then buys the other out. (or the developer options both, does the work then buys you both out)

Probably 1 is better for you, but be aware you need an agreement in writing and you really (really) need to trust them – that means personality, stress tolerance, financial backing etc.

• This reply was modified 9 years, 3 months ago by  BuyersAgent.

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January 10, 2015 - 11:29 pm

FIDO wrote:

For anyone interested – actuals below on these 1 bed units in Karratha:

Build time 2.5 years
Total Cost (exc interest) $437k
Market Value approx $320k
Rental return $450/wk if you can rent it

Wow FIDO that is a huge reality check for anyone in that market! Did you buy one?

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January 10, 2015 - 11:24 pm

Peter wrote:

Hello all,

I am new to this forum and new to IP.

Introduce myself first:

I m 31 yo in Sydney. I am working full time with approx 70K annual income.

I am currently living in my PPOR (house) which was evaluated at 850K with 293K home loan to pay off (interest only now).

I have an IP (terrace house) which I bought mid 2014 costing 820K and renting at 650pw, and 80% loan to pay off (interest only).

My mortgage broker is helping me get 20% from PPOR towards next IP and get the rest 80% from another bank, aiming at an IP worth upto 750K.

I am not confident with the next IP and not sure where to go, therefore would like some ideas from people on this forum.

My goal is to retire early with my rental income from IPs. Not sure how many IPs will be sufficient to achieve this goal. But I do like Richard Taylor’s idea of having 40 IPs in 10 years.

Looking forward to all you suggestion.

Peter

Welcome!

I would suggest if you main goal is rental income, that you sit down and think about building a portfolio of properties, with some good rental yields. You might want to do some value adding too (such as renovations) which will speed things up and keep the deposit money flowing. If you want to remove the emotion and buy on the numbers you should do some more research and get as much help as you can (just make sure its independent help not a sales pitch for an off the plan development!)

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January 9, 2015 - 5:29 pm

I stopped worrying about property vs shares a long time ago.

I am lousy at shares (equals gambling) but have been doing property for a while so I know I can outperform averages in the short term with active strategies (negotiation, cycle, renovation, development) in the long term properties will revert to the mean anyway but the returns are fine in my view when combined with the essential ingredient of leverage.

The risk reward equation for property is about SAFELY using as much LEVERAGE as you can to MAGNIFY your base returns without risking bankruptcy in event of a short term but painful problem (ie unemployment, interest rate rise, extended vacancy etc).

• This reply was modified 9 years, 3 months ago by  BuyersAgent.
• This reply was modified 9 years, 3 months ago by  BuyersAgent.

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January 9, 2015 - 9:02 am

I get that you want a nice car – and if you are asking the questions here you obviously want to find the balance and preserve your borrowing capacity for IP’s too. Well done for asking BEFORE committing to the shiny new expense.

If you really want to salary package – here is what I once did to try and get the balance right (nice car but not overspend).

The leasing rules say you need to have cars at say 7 yrs old at end of lease. (they vary a bit but give or take)

This means you can find a second hand car and run it through the system. It doesn’t have to be that old.

I once bought a 4 wheel drive. $58k new, but I purchased ex lease 18-20 months old for 21k. Yep thats some depreciation. That is why I don’t like new cars.
Then I sold the 21k car back to a leasing company (getting my capital back) and salary packaged it for the fortnightly pre tax payment.

The payment will still effect your borrowing capacity but not as much as the debt amount is much lower.

Alternatively you could just go get it financed on the lowest interest rate and longest terms you can find.

Alternatively you can buy more properties, set up multiple offset/redraw accounts off the equity (talk to your broker and accountant to avoid screwing it up) and use the equity to buy a car. You will be servicing a lower rate.

Alternatively just buy the 21k car for cash.

Alternatively ride a bike.

Aternatively ….

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January 9, 2015 - 8:50 am

Has anyone mentioned this?
http://forecast.id.com.au – population growth forecasts

…my top 5 are available as a free download toolkit. Go to home page of my site and scroll down, click the green button.

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January 9, 2015 - 8:41 am

Terryw wrote:

e process of setting up a trust at the moment and want to know the best way to structure it and also if I should create a business which controls that trust for future tax reasons??

+1

If going down the trust route get good advice from someone with real residential property investing experience.

I have no affiliation with Terry and I am not an ongoing client of his but I have previously paid him and his business partner to provide structuring advice (so I could cross check with my own accountant/advisor) It was TOTALLY worth the money.

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January 9, 2015 - 8:36 am

GoodProbs wrote:

Also get benefits of CG on $900K with no tax payable on PPOR

I can’t comment on whether its worth it due to the emotional baggage – that could be a deal breaker. Otherwise good replies above from Terry and Richard.

The CG exception alone could see you in a good year making 100k in tax free equity gains. Thats a pretty big deal.

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January 9, 2015 - 8:27 am

Sammie wrote:

Hi knightm, thanks so much for your feedback. Just wondering if you’d know if there are articles that could give me a little more insights on the structuring strategies of the loan? Maybe examples of ways on loan structures?

many thanks!

As above Richard Taylor has a great track record and some good wisdom in this area – chat with him. As a private investor starting out I did everything in my own name but different lenders across each property to avoid cross collateralisation. Otherwise my view is that loan structuring is quite important and you should probably see an accountant (who is experienced in property and structures) and a good broker. I have recently heard from a client of Jamie Moore from passgo homeloans happy with the overall structuring advice. A lot depends on your risk profile. If you are a standard wage earner in a low risk profession (risk of getting personally sued) then own name is probably fine. If you are in a high risk profession (like a sole trader medical doctor or something) then use trusts. Trusts have commercial applications too other than asset protection but they are expensive and daunting to some, I would argue its better to make a start rather then spend years debating the perfect structure and actually doing nothing. Get the best info you can, then move forward!

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January 6, 2015 - 11:11 pm

xkfalcon wrote:

Hi Jamie,

They claim to be a “One stop shop for service provisions in the fields of investment property acquisition, risk assessment, wealth creation and planning helping plan a self funded retirement.

They promote new properties rather than old. They source the properties that they believe are in good growth areas and only use quality builders.

I am just a bit weary as i have heard mixed reports on negative gearing.

Paul

So “one stop shop” in this case appears to mean “we will take money from the developer, and we will take money from the loan” – no I don’t think this is in your best interest

“promote new properties rather than old” this is because it appears they get paid by the developer. If this is the case they are not working for you, or looking after you. You are not the client, you are the patsy. The client is the developer.

They also get paid by the bank for the loan. Brokers are fine, and commonplace (Jamie M who has replied on this post is one of the good ones) but when they also happen to work for the developer how can they possibly give you independent advice or service?

conflict of interest.

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January 6, 2015 - 10:33 pm

Thats fine babyflynn – if you want to chat about more affordable options in Wollongong – drop me a line. I have done a bunch of sub 400k deals recently. Sydney is indeed the most solid market, and it always will be. I just worry that its had a long run of growth and people always expect this will continue forever at the end of the cycle. It doesn’t. They cycle applies there too.

• This reply was modified 9 years, 4 months ago by  BuyersAgent.

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January 6, 2015 - 10:28 pm

Gday Sammie,

I can still remember saving the first 5% deposit and costs at 23 (too many yrs ago now!). Bought a renovator. Spent another 5% on reno. rented it at increased rate due to reno. Refinanced after 4 months. Purchase IP#2 entirely with equity from the refinance signed contract exactly 6 months after the first one. Repeated this process again 6 months later so 3 in just over 1 yr. That was my speed. Others have done faster, some slower. You need to decide how aggressive or passive you want to be. Adding value is the key to speeding things up.

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January 5, 2015 - 8:06 pm

Yep no doubt some of the cheeky ads are generating interest and selling above asking price. Best of luck. Still a few in that price range in Illawarra, not many.

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January 5, 2015 - 7:59 pm

babyflynn wrote:

Hi All,

I am looking to buy an ip in the next few months in Sydney metro preferably – any hot tips on where to buy for early $400k’s? Not having much luck in this hot market!

Thanks,
Babyflynn81

Any reason you want Sydney metro? What are your investing goals? Where do you think Sydney is at in the property cycle?

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January 4, 2015 - 9:41 pm

welcome maycefactor, good questions…

Buffers are a great idea, and the size of them depends on your SANF (sleep at night factor) many people use multiples of time, such as “what if my property was vacant for 6 months”, or “what if I was out of work for 3 months” the work out what you need to keep the ship from sinking. I advocate basic percentage if you are just doing quick calcs – such as 5% of total debt (or 10%) for the more conservative. Just put in in an offset or redraw somewhere and leave it there in case.

Regarding costs – I generally find purchasing costs to be in the 4 – 5% range (being conservative) when you include stamp duty, solicitors, borrowing costs etc.

Independence is important, but remember everyone in the property industry gets paid somehow. For example I am an independent buyers agent meaning I am paid by the buyer only, no other commissions or kickbacks and I act only in my clients interest. My business lives or dies by my working to get my client the best deal possible each time. Brokers are more independent than banks as they get paid across the board so can often get you better loan products than your local branch manager but they still get paid. Jamie M above is one of the good ones in broking (and no I don’t get paid to say that) Solicitors act for you but also charge. etc etc. Knowledge is important, and there is a wealth of it in the forums, so enjoy your reading time! Its important to build a quality team to help you progress in real estate, so check out references etc to make sure whoever you choose is trustworthy and then leverage as much of their experience as you can. This will speed things up rather than having to know everything about everything all the time.

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January 1, 2015 - 11:11 pm

JustWoody wrote:

If you pay the property sourcing fee and they don’t deliver on their promises. say goodbye to your money!!! …. I am still waiting for nearly $7K!!

Sorry to hear about your experience here!

I don’t know this would ever happen with a good independent buyers agent? I charge an engagement fee, then I work (sometimes for months) to source the right place and only get paid the success fee after the property is unconditional. I would never want a client out there who hadnt received full value for service! I couldn’t think of anything worse.

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January 1, 2015 - 11:04 pm

Be careful.

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