Forum Replies Created
Competition…..oh bugger.
Well I was first in line even tho I didn’t camp out so I get first pick right Aly ?
Well it seems like you don’t have a concrete plan with either !! ie..you planned to flip the blocks for a profit but now you are not sure what to do !Regarding the Lancelin block, you can contact the local council and ask them, and even if they say ‘NO’ now does not mean you can’t go ahead in the future.
Also, you can bypass the council and go direct to DPI with a request to subdivide.
They quite often overturn council decisions .
I think you need to spend a bit more time doing some homework and some running around.But if you planned to flip for profit, please flip in my direction ( wellard only pls)
Can email me if you would like to discuss further:
[email protected]Cheers!
kpThanks Richard,
So it looks like the rates over there are not much lower than over here.?Are they lower for locals and citizens I wonder ?
kp
PS…I have heard that Ark Homes manufacture in Townsville and will transport to ISa….
I have also heard of a ‘Squadron’ transportable home that was sent up there.
From what we saw, I would recommend stay away from them…kp
Interesting question…
I was in Isa last week to have a good look around.
We met Xstrata, the council, some local business owners, our preferred agent ( Ray White…great people)We got some blocks in the new subdivision, and as a result are also going to build.
But we took along our own builder from the Sunshine Coast.We believe we can get to lockup within 60 days and completion in a further 60 days.
Clock starts from building approval from the council.
Can’t wait to prove we can do it !Sometimes you have to offset paying more for your building vs the time savings. ( eg…you will make it up by saving on holding costs as well as getting rent quicker )
We have heard that local builders will not give you a quote to build till Dec 06.Its a great little town and I am actually looking forward to visiting again.
We are also proposing to build for locals if there is any demand….look out for the signs on some of the blocks in the new subdivision….
kp
Richard,
I need to come and see you next time I am in Brisbane…..kp
You’ve picked a tough market ot work in. Perth is red hot at the moment.
Having said that, my broker just told me she picked up another place in Perth over the weekend. Don’t know the details.I have similar experiences in that I started doing renos’ as part of the process in duplexing properties. This was also in Perth.
But I started in 1990.
And I was a shifworker hence had lots of time off.I have moved onto other things ( subdivisions, syndicates, etc) and I still have a full time job ( still shiftwork)
But now I jv and partner people and we share the workload around along with the profits.
My jv partner is like you in that he is spread too thin and suffering as a result.
We have both made a commitment to sort this out this year, and screen out some of the time sapping activities that do not produce the required results that we are getting from our property investing.As far as the friends go….. its much easier if you are mixing with like minded people.
That way you don’t have to keep overcoming objections all the time, and to have to justify your decisions.
In the end all that negative energy will create self doublt and distract you.Keep your friends by all means but just don’t discuss property and investing around them.
In the end they will observe how much better you are off in the wealth department, and they will approach you..
Even if they don’t you will still be better off.
Trust me, it will happen…but you need to maintain you focus and make conscious decisions to not allow doubting thomases to cloud your dream.kp
Ummmm…Richard is being sarcastic I think ???
Do yo mean ASIC send someone along to monitor what she is promoting as part of their investigation into her ??
Poor Dymphna….
kpHi Nigel,
Just out of interest, would you know what sort of prevailing interest rates are available in the US ??Its just out of curiosity.
Thanks
kpSell the Wellard block ( coz I may want to buy it!)
Can you de-tail how long you have had both and what was the purchase price ?Also, was was the purpose of buying them in the first place ( ie what was the initial object and was there an exit strategy ?)
Has the lancelin block got any potential for future subdivision into smaller blocks ? This may have a big effect on its future value.
As an example we bought some acerage in Qld that was effectively a cow paddock, but it was zoned for rural residential.
Its market value ( purchase price) was $220k but if you took it to its highest value ( as the subdivided land) its potential value is $2.44 mil.So this may apply to the Lancelin block as well.
Wellard will just appreciate along with other urban blocks in the area. If the boom continues it will probably end up close to $200k.But if you have to sell one and decide on Wellard, I was serious that I may be interested.
Good Luck which ever way you jump
kp
Interesting comments…
Imagine…bamboo reactors.A lot of the demand within China for power and manufactured goods is for domestic consumption.
Some of the numbers quoted for their planned electricity needs are truly staggering.
They are an emerging economy and very class conscious. Consumerism is the best way to display this.As for having your cake and eating it too ?? you can…as long as its not yellowcake..
kp
Yeah can’t agree more.
I got lot 56 Board St. Where abouts are you ?
Still not sure who to build with and whether its worth going dbl storey or stay with a single level…kp
Man!!
Talk about building in the sand dunes!!
Hey Wayne, that agent is a bit sparse with the words in the advert.SuzieQ, what do you reckon your block is worth now based on the new sales data from stage 4?
Reckon those stage 2 blocks must be up $50k or more !!kp
Great thread!
Lots of interesting comments.
The ex neighbour owned a DHA house and has since sold it for a small profit. I remember when he was debating whether to buy or not, he managed to talk himself into it and ‘justify’ the purchase. I recently met up with him and quizzed him about the DHA investment to confirm some of the terms and conditions of the lease, all of which have been mentioned in this thread.
The conclusion I came to is that there ARE passive investors out there who are still working to the neg geared stategy utilising the benefits of tax breaks, depreciation, etc, etc. These types of property are perfect for this type of investor.
The same applies to GEHA and DHW properties in WA. Average yields, and top prices, but they still sell like hot cakes ! Mostly they are also new so this adds to the appeal from a maintenance point of view.In fact we are ourselves packaging up some houses for a corporate mining company tenant on the basis of a 10 year lease, and the tenant is offering to include some incentives such as the refurb/renovate at the end of the lease. We were requested to factor some of these incentives into the equation in working out the rental amount.
The impression I get from this thread is that most of the investors here are more proactive and experienced, hence the DHA equation is too passive and therefore not attractive for them, but there are lots and lots of passive and inexperienced investors out there who can’t get enough of this stuff.
As far as Westpac are concerned, they are not stupid, and you can bet that they will make a return on the investment.
With regard to DHA ??? Smart move…run the housing department like a commerical business and make a commercial return.
kp
Hey Jes,
If you are concerned that the agent earned an easy $16k then you should have negotiated the fee down. All commissions in WA are now negotiable.Was there a reason given why the buyers would not accept the delayed settlement ? Maybe they had a valid reason themselves ( eg…had to move out of a rental by a fixed date, etc) hence your inconvenience would be turning into theirs ?
Anyway, hope the outcome is not too distressing.
kp
I would say that if you were looking for the most ‘cost effective’ way to do this, then use a spec builder. Most of the bigger ones have a ‘special projects’ division to cater for multi unit sites and duplex additions to existing single residential homes.
The best place to look is in the weekend papers, both Sat and Sun as they have seperate liftout sections with details of many Perth builders.
Many professional developers end up using a spec builder anyway.
Either one they have a track record building with in the past, or they might put out a set of plans to tender and select the winner from this process.As a starting point I would get a surveyor to perform a contour survey of the block. All builders ( & architects) would require this to be able to work out what will fit on the available space.
The building cost for a 3×2 will depend on the size of the building, and whether you are getting them to complete the fitout ( turnkey) or if you arer going to do the finishing yourself.
The price could range from $95k to $150k.In addition to the cost of the additional home, you will have subdivision costs and strata fees, which may include having to add carports/upgrading the existing house. This can add up to $15,000 to the cost of the whole project.
kp
Originally posted by Mkc:Thanks very much KP , will you come and oganise it for me please if that’s doable l’m selling my block next door and kicken back .
Not that l understood much of it but with another 20 reads there might be hope .
Cheers.
MkcHey Mkc,
Its very do able and very common, and you don’t need me to organise it for you.
You can do it direct through Leveraged Equities or BankersTrust ( BT) and probably some others who will happily lend you 50% against a porfolio of blue chip shares or against a selection of managed funds, including income funds.Best bet is to do some research/homework on how it works, and then with some correct structuring, you can easily generate a healthy return either by using the equity in your property, or reinvesting the proceeds from the sale of your property.
kp
Originally posted by Mkc:Originally posted by ecatt:Im with you MKC… I didnt understand what quiggles was saying either
Looks like we’re out of luck Ecatt , why do people always disappear when you want to follow up something they said .
Cheers
MkcTry this:
$200k returning 10% in six months = $20k.
Over 12 months at this same rate of return you would get $40k
If you leverage it or gear it to 50% this involves borrowing another $200k.
Now you have $400k invested returning 10% for 6 months = $40k and over 12 months you will get $80k.
Interest bill for the $200k of borrowed funds at 6.5% is $13k.Hope this helps..
kp
hb,
China’s just the beginning.
Theres India next.
They all wanna TV and a refrigerator too….and theres a billion of them as well.So, unless we have a flu pandemic, or a global natural disaster, the good times are set to keep a rollin’ for WA for the forseeable…
kp
Lots of assumptions there Sailesh.
First one being that the resale is $260k each.
What if it was $350k each ?
Would it be worth going ahead then ??I would suggest that resale in this suburb of Perth WA, is quite different to what you are used to in Bogan ( oops…I mean Logan)so making the assumption that the market value of each @ $260k when you don’t know the market is misleading.
Better to get and then use, a more accurate market value for this particular suburb than to guess at a figure, before making a comment.
kp
As Michael Y mentioned earlier, apparently theres more to it than the obvious.
This from Michael’s monthly newsletter:SHOULD A PROPERTY BE HELD IN A TRUST? By Ed Chan, Accountant
The word “TRUSTS” is used very loosely by some people and when someone says to me that one should or should not use a Trust its like saying should you or should you not use a ‘MOTOR VEHICLE.â€
The answer is simply what are you trying to do?
For example when someone says to me that you should not use a Trust because it traps the negative gearing inside a Trust and cannot offset the interest against your salary than they are referring to a Family or Discretionary Trust. Well that’s only because you used the WRONG Trust.
It’s a bit like saying that Motor Vehicles cannot carry rubbish to the tip. Well a truck can take rubbish to the tip. It simply depends on what type of Motor Vehicle you are talking about.
This is the same in the use of Trusts. There are dozens of different types of TRUSTS and they all do different things. Just like there are all different types of motor vehicles and they all do different things.
You really need to understand what they all are and what they are used for. The common types of Trusts that people are familiar with are Discretionary or Family Trusts and the less familiar ones are Unit Trust and Hybrid Trusts. There are dozens of other less known Trusts such as Testamentary Trusts, Absolutely Entitled Trusts, Bare Trusts, Blind Trusts, etc. They are all used for different things.
For example a Superannuation Fund is a Trust but is not a variant of either a Unit, Discretionary or Hybrid Trust.
It’s in fact a whole new type of a Trust which has its own rules but has none of the traits of the other Trusts.
There is our “Property Investors Trust†which is built specifically for properties taking into account the different land tax rules around the different states. It also allows the rental to be passed onto the spouse who is on the lower tax rate before the property becomes positively geared on its own accord.
For example our Property Investors Trust allows us to distribute a portion of the rental over time to the wife (if she is on a lower tax rate) and hence take advantage of her lower rates of tax without triggering capital gains tax nor stamp duty and at the same time increasing the negative gearing benefits to the husband (assuming he is on the higher tax rate). It also allows properties in NSW to retain its land tax threshold.
Our “Property Investors Trust†is the prefect Trust and the only Trust to be used for properties.
The reason why we have trade marked it, is because we have spent many years (over 16 years) and many thousands of dollars to perfect this structure for properties.
The Unit/Discretionary/Hybrid Trusts are STANDARD Trusts which accountants and solicitors have tried to ADAPT to properties but they were not initially developed to hold properties in hence they all have some disadvantages or short comings when used for properties e.g. Discretionary Trusts are bad for negatively geared properties or to hold properties in, in NSW as they lose their land tax thresholds.
The Unit Trust loses its cost base after the depreciation of the property is passed through to the unit holder and a Hybrid Trust is unusable for properties in NSW as they lose their land tax threshold unlike a Unit Trust which retains its land tax threshold in NSW and so on.
These standard Trusts were set up for use in other things such as Businesses and to protect assets such as shares etc but when adapted to property had their shortcomings.
Our Property Investors Trust was developed JUST FOR PROPERTIES and in fact we do not use them to hold other assets in as they are NOT developed for this.
We recommend the usual Unit/Discretionary/Hybrid Trust to hold other assets other than property. Again it simply depends on what you are trying to do as they all do different things.
For example if you ran a service business such as a Cleaning Business its always best to run that through a Discretionary Trust with a Company as a Trustee because it gives you asset protection and allows you to distribute the income to anyone you want who maybe on a lower tax bracket to yourself. However if you were planning to negative gear some shares or property you simply would not use this type of a Trust as it traps the losses in the Trust.
A Discretionary Trust is not good for a business if that business was made up of a few different people/principles hence a Company or a Unit Trust maybe better to help identify the different ownership percentages.
We never purchase a property in a COMPANY because when you come to sell the property you miss out on the 50% exemption for capital gains tax and also if the property was negatively geared the losses would also be trapped inside a Company.
You would however use a company to run a business through because a Company has the advantage of limited Liability i.e. has a limited amount of asset protection but it allows you to retain the profits in the Company and limit your tax rate to 30%.
The tax that is paid by a Company is not LOST as it is if the tax was paid by an individual because it simply goes into a “holding account†called a Franking Account where sometime in the future you can withdraw those funds (like a pension) totally tax free as long as your income at that time is taxed at 30%. In fact if your tax rate was under 30% e.g. say 20% you would receive a 10% refund.
You would not however put the shareholders of that company as yourself. We would hold the shares in the company under a Discretionary Trust to protect your assets since shares in a Company is considered assets and someone could try and sue you to get at them.
You can see that it’s a mine field and one should get proper advice BEFORE one purchases anything let alone a property as it’s extremely expensive to try and unwind a structure that was incorrectly set up.
An example is a property bought in the wrong entity would require another payment of stamp duty e.g. average property of $500,000 attracts stamp duty of around $25,000. You would be required to pay this twice if you tried to fix the problem.
My Best Advice to people is to TAKE ADVICE BEFORE the transaction and not AFTER the transaction. An ounce of prevention is…………………..you know the rest.
This article was contributed by Ed Chan. Ed Chan & Tony Melvin are authors of “How to Legally Reduce Your Tax … Without Losing Any Money!” It’s the best book I have read to explain complicated accounting principals in easy to understand language. You can order it online at: – http://www.knowledgecentre.net.au/
