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All the best with it @s9nny! Put some progress pics up when you have the house underway we all like to watch :).
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
My wife and I are wanting to invest in our first IP.Have been doing a lot of reading in regards to the state of the economy and it`s a bit scary given that we are in a super debt cycle & a slowing economy. I do not wish for someone to hold my hand, I would be very appreciative to know where you think we may be currently situated in the housing price cycle. I have been reading the forums & there are some very experienced investors amongst you & we would value your thoughts. Thank you.
Perhaps it would be helpful if you explained the “super debt cycle and slowing economy” background as you appear to have answered your own question, then asked for people to argue against your view? If you want to discuss the property cycle my strong view is that there isn’t ONE cycle there are many. Are you referring to / coming from Sydney? If so my view is the current cycle is at a peak. I have been on record on this forum and the other one discussing that since early 2015. If you want to discuss other locations I believe their spot on the property cycle is highly varied and it really depends what you are trying to achieve as to where to focus your property buying attention.
Thank’s for all your help guru’s. I hope there are not to many of you borrowing above your means in this cycle,be careful,be patient & good luck.
Hmm, not sure there are many folk here who would call themselves gurus. I certainly don’t. There are plenty of folks with much more than my level of experience too, being 15 yrs or only 2 active property cycles, but we are all busy and come and go on the forum, so at times there are luls. Please feel free to continue the thread if you want to have a genuine discussion about property, if the point is to lecture others on the risks of debt, then this is valuable but perhaps less so when framed as a topic about something else? Not sure how to be helpful here. I am more than happy to discuss with you but it seems there are a few things you have a view on so perhaps enlighten us?
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Our bank has started playing hardball with our application so there is a chance it wont go through after all but at least I have learnt something if it doesn’t pan out.
I’m biased – but I’d give the DIY a miss (going direct to the bank) and get a decent investment focused broker on board. Shouldn’t cost you anything – and should ensure there’s no hiccups.
Cheers
JamieI agree. Good broker wins when thing get messy every time. Those replying to you on this forum and this thread are some well above average ones from direct experience.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Hi Rillanon,
The plan of course is to get a discounted price though o hopefully we can get it discounted enough to cover all those costs.
They say “You make your Profit when you buy” – but you don’t always get to see it at time of purchase (for the reason stated above – “the Bank will only lend to the lower amount of Contract Price or Valuation”). …. Despite all of that, the Equity you created on Purchase is YOURS to utilise – but not from Day one !! ;)
BennyYes, Benny is correct. I have had a couple of client purchases come in with pre purchase valuations higher than the contract price (not often) but bank won’t lend on the higher number. The patient can win as described by Benny but you need to find deposit and cost money from somewhere for the short term.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
I agree with Terry bit risky – plus I would put the money into your build as soon as you can, it is only a few months away now then once build is done refinance the house hopefully some equity in it, this is all tax deductible if then used for investment properties.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Agreed @terryw I prefer coffee.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
If you do substantial enough renovations, it can be as soon as 1 month – however this would mean needing to replace kitchens, bathrooms and full cosmetic reno.
In reality the valuer will note nominal increases after 3 months, but the biggest bang for buck will be achieved by waiting 6 months where the recent sale will fall off the radar and the value will 100% be based on the recent sales in the area.Yeah nice thanks for confirming @cjaysa – 6 months seems to fit a nice sweet spot, with banks being happy, new comparables arriving to support a better price maxing the potential equity pull, and even human limits, for some folk anyway where one has a rush of energy to research and buy, then reno, then u need a break for a few months. Then a month to refinance, then regroup, then go again. It can mean 2 good ip’s a year, without destroying yourself, and without needing huge funds as the deposit is recycling. Some go faster but its good to avoid silly risks or burnout too.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Vendor finance is always case by case, you just need to ask. If they are older, retiring, and motivated to sell you never know your luck, just pitch the income they will receive. If they want their capital out you are probably not going to get very far.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Gday @gabsy welcome. Lots to learn in the forums so keep up the good research work.
My short answer would be yes. The long answer is it depends. It is actually more about resale than rent, but it applies to both. If its cheap enough for you to be able to discount the rent you will still get a tenant, but it is likely to be a lower socioeconomic tenant needing the 4th bed (ie family with kids and low income) if the investment works under those terms, go for it, but to be considered a quality 4 bedder in any good area and get top dollar rent and top dollar resale (no idea where you are talking about btw that would help) you need 2nd bathroom. It can be built later though, no need for straight away. If you have a floor plan put it up or email me we can see if another set of eyes can solve it.
Matt
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Thanks so much for all the advice guys & gals!
If l do the cheap buy/reno/hold option – which seems the best option for me -thanks to your considered opinions –how soon am l able to access the ‘equity’ for refinancing – to be able to move onto my next project?It varies from bank to bank, I have had good response when allowing 6 months in between purchase and refinance 12 months even better. Any less than this it is tricky to convince a bank’s valuer of any real growth unless your reno is much more substantial. I have also had blanket policy of no refinance in less than 6 on occasion, despite the reno. It helps if you bought the cheapest house in the street and you have some higher resales during the window. Some of the brokers can advise if 6 month refinancing is still currently working with lenders in today’s market. @jamie-m? @cjaysa?
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Ah @benny I just sent you msg before reading this, so it was that thread! Sorry to be a pest but I thought it was worth asking the question. All the best with explorations on the options.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
107/1-21 ANDERSON RD
(1 to 21 ANDERSON RD RD) *
WOREE L107 BUP100437:PAR CAIRNS
CASHFLOW KID PTY LTD AS TTE 30 m²
$20,000 26/08/201130sqm not something I would normally consider, basically a hotel room, a small one. But to be fair @terry the story was true. I get offered this kind of thing on 10% yields all the time usually just ignore, due to no banks will touch it for a loan. If you want to buy cash property for cash flow then fair enough.
have you stil got this property in the portfolio nath?
@daniel-vic Nath hasn’t posted here regularly for quite some time but yes it appears he does on the records.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Hi @ren16 – great set of questions. I have done the reno thing and the build thing. My thoughts below:
1 – You can leap frog a reno without selling. Correct you pay more stamp duty at the front but no cg tax if you just refinance the equity out. It is how I bought my first 3 in a smidge over a yr.
2 – Building is great – but you NEED to have extra money. It is super stressful and takes long time and extra costs have a habit of arising. The first build I did I have over 100k deposit and spare funds and I spent the lot. No way would I suggest it for newby with only a small deposit unless in building game or with generous family who can help along in emergencies.
3 – If build and sell you will pay MORE tax as GST is applicable to new dwellings. ATO will also target you as a developer if you repeat a few times and want income tax not 50% reduced cgt.Personally the cheap buy reno hold model is the preferred for starting with minimal funds. I agree with @benny‘s post above and Corey had a good one recently too.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Good option, What about for people that have big savings, do they put a big deposit on one property and use the equity to buy a few more? Or should they split their savings in separate deposits?
Hi @guypuls there are a range of ideas on this, and as always check with your own accountant, legal and financial experts, but it depends on several factors. If close to retirement and you want cashflow now, then less leverage, higher yield, put the cash into the property so you can live on rent. If not close to retirement and seeking max gains – then you really should try and max your leverage. Smaller deposits, larger loans, more properties. and keep more cash aside as buffers to keep things safe. Just my opinion but the whole deal with property is it goes quicker with bigger numbers and more leverage. You do have to have a safety plan though so don’t go silly and borrow just because. You have to know you can service, and you have to have a plan on what you buy and where/when plus any value add accelerators like reno or development to ensure you get the desired result.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Hi @markae welcome to the forum!
Hi All,
I’m a long time lurker, and I have missed a lot of opportunities in the past due to lack of confidence.But I was hoping you could let me know your thoughts on some research on where to buy, there is so much information,Great honesty – but don’t beat yourself up. We all can look back and see missed opportunities but the key is to make a decision to act now and try to get good info to support your choices moving forward. The forums are a great place for that. You are right there is a lot of info out there – the key is to consume enough so you can see clearly but not to think you have to read everything ever written or you just end up back at analysis paralysis – which can also keep you from taking action. Balance is in there somewhere.
Objective – Capital growth in a property(s) for a total of around $500K to $600K for at least 10 years to help 3 kids with education and a house deposit.I’d use equity in my own house and aim to rent for as best as possible to balance growth with yield.
That is a sensible objective – and should be achievable long as you get the macro (major market cycle) and micro (property selection and due diligence) roughly right. I could definitely consider trying for more than 1 property if you can to spread the risk and access different capital growth drivers.
Locations – I have 3 locations in mind, each with what I think are pros and cons.
Sydney – Around Quakers Hill, Erskine Park. I know with rapid recent growth that future growth will probably be slow, but with inner suburbs so expensive I would assume the outer suburbs would be more affordable and in more demand. I live in Sydney so researching would be easier.Brisbane area – I don’t know QLD very well, but I have seen some posts around Brisbane suburbs not far from the city. From your posts it looks like Brisbane has not had the high growth that other cities have and there may be better growth here to come.Wollongong – This looks to be a popular area with a University and not too far from Sydney, so more people may head South to more affordable houses.
I may end up using a buying agent for some of these areas, as I have no experience or knowledge.I have been quoted some big fees to find a house, so I’d rather do as much as possible myself.
Thank you in advance for any advice or even some tips on what to look for such as rental vacancies etc.
– MarkOn locations – any of these (might) work, but I offer the following thoughts. Sydney is widely recognised as being at the late stages of a fairly major price cycle. As such you may see cap growth rates below the recent norm. If you are still mad keen on Sydney, don’t let me put you off, there are plenty of good BA’s and locations to consider. Western Sydney whilst cheaper than Eastern has also had huge growth and is pulling back now in certain areas due to speculation by greedy investors. If buying in Sydney I would target high owner occ percentage suburbs to avoid negative equity.
Brisbane/Gold Coast/Tweed – Yes I believe at the correct point in a major cycle after not much action for nearly 7 yrs. Inner Bris has grown though so be careful what you choose. Freestanding homes in the best areas you can afford close to CBD should do well. If units/townhouse then stick with older, smaller blocks, close to great infrastructure, avoid highrise than can be easily duplicated.
Wgong – My personal view is that much of Wgong is only half way through current cycle. Northern suburbs perhaps a bit more, southern a bit less. I am indeed seeing lots of folks moving out of Sydney for lifestyle, and increasingly it is not just retirees but young families who are in mobile service jobs (computer programmers, tradesmen etc). The ripple is well and truly started, to get property selection right is a bit tricky as there are so many options.
It really depends on what you want to achieve, and how active you are prepared to get. Many of my recent clients have been targeting older homes on large blocks so have future dual occupancy/small unit development options in the future, they may not see themselves as developers yet but it is nice to have the option to manufacture more equity if you want to. Also the land component is what really drives growth so having an extra site in a block can mean up to double cg rates in certain circumstances.
As always, keep reading, do your research and you will improve.
All the best!
MattBuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
@benny and @goosehead – normally what Benny is saying is correct that major improvements and renovations are all added to the cost base like stamp duty for future capital gains cals, so you get it back at sale, NOT as a tax deduction.
HOWEVER
For asbestos roof removal, there is a special rule I believe (please check this for yourself with your accountant etc etc disclaimer yadayada)
https://www.asbestossafety.gov.au/article/removal-damaged-asbestos-residential-or-commercial-investment-property-tax-deduction
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s40.755.htmlThis part of the act I believe means you can claim asbestos removal as an environmental activity and get an immediate claim for it, even though replacing asbestos roof with colorbond would normally be seen as value add improvement.
As I said, that is my interpretation of that tax ruling and I have known people who have used it and claimed the full cost in the year they did the work but I don’t know for sure that it is still applicable so perhaps check with your accountant and/or call ATO for confirmation.
Could be a big tax break.
Regardless – it is more efficient to use debt to fund it and claim the interest, I usually prefer to keep the capital on hand for emergencies. If the debt is available and tax deductible interest then why use valuable dollars? Keep them as a buffer. That is my preference, unless you are about to sell in which case you will get dollars back anyway it wont matter either way. If keeping long term, max the tax deductible debt, keep dollars for personal savings.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Great post @planning. In our local one of the biggest hurdles is drainage. Council are not favourable to charged systems or pump outs so need the easement through neighbouring land or slope straight to street to make it work. And bushfire overlay…don’t get me started on bushfire.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
This is why I never self manage. Do you have a clause in the lease preventing pets? Make sure you review the tenancy act in your state and follow legal avenues to the letter. If it ends up in tribunal you need a paper trail of letters sent etc. If mailing, keep copies and possibly use registered post, if emailing, keep copies of it all, keep it professional but firm. Not sure if you are allowed to issue a breach notice based upon information received anecdotally. Check the act.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Hi Azalia, just a thought, if you renovated NOW before the tenant moves in you will be able to claim depreciation on those renovations, likely improving your cash flow during the period you own the property. As Benny mentioned, you would also likely benefit from higher rent.The timing may not be right for you, but it may be something to consider if it can be done.
agreed this will be preferable if holding for medium to longer term, but if the goal is a 1yr turnaround with reno for maximum resale I would say putting a tenant in takes the “gloss” off the renovation and makes it less appealing at sale time. If holding for longer for sure do the work sooner and improve rent and tax.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
PS I have absolutely no affiliation with hotspace whatsoever and I receive no commissions for recommending them, I have just heard good things that is all.
BuyersAgent | Precium
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Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
