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I have had an ING account for about 10 years. Don't use it a lot these days as even at 6.45% interest, the NETT RETURN is woeful.
We throw $30 per month ($1 per day) in it for our 6 year old' son's IP deposit. A token effort mainly; he gets to see the deposits in the on-line account, and it gets him brainwashed towards being a property investor! Been doing it since he was 5 and could understand how money works.
If you factor in tax on the interest you earn (yes; you'll pay tax on it), and inflation on the capital, your nett return is probably something like 2%. WOOHOO!
Having said that, if you are saving for a deposit on your first IP or PPoR, and you have no other money-making schemes you are good at, then this is the best and safest vehicle for your money until you are ready.
You will get the full amount of your funds after you transfer it back to your normal Bank account, but you will have to factor the interest into your end of year tax return.
Gee what great advice……lol Of course you could always look at putting your money into where ever you are going to maximise your return instead of blindly holding on to property just for the sake of it. Try reading some books on people who have actually MADE IT and you will see they very often sell and move there money around to maximise profit. Pretty narrow minded comment there LA….[/quote]
Guilty of being biased towards property Blogs.
That's all I've ever done investment wise, and it's been good to me. You could do worse.
What makes you think I haven't MADE IT?
Writing a book is not the only yardstick for that.
NETT WORTH is.
And I don't mean nett worth from PPoR's and doodads like cars and boats. I'm talking about Investment Nett Worth.
My first post was basic admittedly, but it is a wise saying. Time to elaborate.
Assuming that Tony13 has no other investment knowledge, and obviously already has some success with property, I'd encourage him to do what he is already knowledegable at, become expert at it and keep on going.
You talk about property as only ever getting 5% growth in the last post, and the Trumps and Packers sell and put the cash into other investments.
Yes, you can sell and move the money around, but you can also HOLD the property and use the equity towards other investments. Selling attracts lots of selling fees and cap gains tax, and is not always the best move financially. This is what I have found.
And, this can easily be more property. While one market is stagnant, there is always another one booming, so if you are constantly studying the market and looking for areas that are about to boom, or are booming, whilst still retaining your other property, your wealth will continue to grow at varying rates, and if selected wisely, will be easy to beat your 5% average.
To assume all property goes up at 5% is narrow minded.
NEVER SELL, NEVER SELL, NEVER SELL, NEVER SELL.
got it?use your existing equity to buy more.develop the land, sell a couple and keep one or two as cashflow positive IP's with nice depreciation deductions.
With no income at all other than rent, you may find it harder to increase the loan limits at all unless you switch loans over to things like NoDocs and LoDocs.
devo76 wrote:L.A Aussie wrote:Trying to sell our Honda Accord now for the return back to Aus in April.Spent 2 hours madly cleaning the car inside and out this morning as there was someone coming to look at it.
They never showed and no phone call. Seems to be a standard thing for this caper.
I've done it once before and was the same deal. Ended up keeping the car.
Selling cars privately has got to be the biggest pain in the @rse in the world.
Never again.
I know this pain. Because a lot of my past cars have been special i tend to get different people wanting to buy them.it can be a real pain.
PS. By the way LA. I sold my car yesterday to a top bloke. Cant say what for exactly but i can put $100,000 of my PPOR plus some left over to buy a new toy( Still gotta enjoy life) .
Good work Steve,
I was beginning to think it was the car that would never get sold!I'm assuming the students are Uni students?
The fees you mention work out to approx $101 per week, not including the insurance and rates, maintenance and any vacancies.
Don't forget that between late Dec and early March you will have no students there if they all go home for the summer break.Your total rent for the year is likely to be $15,400 ($296 p/week) gross. That's based on 44 weeks – 2 months over Jan and Feb vacant.
Then take out your expenses of say, $120 per week to include the other expenses and you have a nett rent of $176 p/week. Best case scenario is maybe $200 p/week nett.
Without knowing what the apartment costs, how much each of you are putting in in terms of loan and deposit, we can't work out the rest of the numbers.
If it were me, I'd be moving back to a rental in the hometown, rent out the PPoR and keep both properties as IP's.
Of course, whether you could hold the two and service the debts on both as well as pay rent yourselves would depend on your new incomes and what the rent you will be paying will be, and what rent you get from your current PPoR.
If this equation doesn't work, or you simply must have a house in the home town which is yours, then I would sell the current PPoR and use the funds for the new PPoR.
Don't sell the IP. As you said yourself; it basically pays for itself, and there will be good tax deductions to consider as well no doubt.
The stats are something like more than half of the investors only ever get one IP, sell it soon after and never invest again.
Mary Wilson wrote:Hi Guys.
Sorry to burst the bubble of negativity, but i signed up with Lending Institute six months ago, and it has changed my life. I know that sites like this can be great for advertising, and I am sure that Trent is a great broker, but i changed my loan from a CBA 100% offsett to a Lending Institute loan (And belive be there is a BIG difference!), there was an initial fee of just under $7,000 that I had doubts about also but there monitoring program has become a part of the way i look at my money and my mortgage and my consultant is a like a family member now. Most importantly we have reduced more off our loan then ever before.
Best of Luck with it all!
Mary WSounds more like an ad for the company.
You wont find the 11 sec rule around on anything decent these days. The sort of areas where you'll see it are dogs.
The only way you will achieve pos cashflow is to either create it through renovations, or subdivisions and building – adding value.
The other way is to look for POSITIVE CASHFLOW AFTER TAX properties.
This occurs when the cashflow is initially negative, but after you apply the tax deductions and depreciation to your earned income, your tax return increases the cashflow back to the positive. Because it is after tax; there is no tax to pay on the profit.
Read all Margaret Lomas's books to find out more about the strategy.
You can claim without the diary; just hope you don't get audited.
Just give him the correct figures and tell him to do it.
He gets you to sign a bloody waiver anyway; what does he care?
Have you got a deposit of any sort saved yet?
Try seek.com.au
Trying to sell our Honda Accord now for the return back to Aus in April.
Spent 2 hours madly cleaning the car inside and out this morning as there was someone coming to look at it.
They never showed and no phone call. Seems to be a standard thing for this caper.
I've done it once before and was the same deal. Ended up keeping the car.
Selling cars privately has got to be the biggest pain in the @rse in the world.
Never again.
I've lived in SoCal for the last 2 years and never heard of this place. It certainly hasn't hit the news that I know of.
I think the situation is a lot more complex that the video shows.
Or, it could be simply a congregation in one area of homeless people; of which there are a huge number in this State.
Bottom line; the Country is great if you have a high paying job, if not; you'll be living a pretty empty existence and broke.
Could be the owners were starting to feel the rate rises and sold.
Look on re/com.au at the sold properties for the area, find the properties in question (they should be there) and then call the agents and ask them what's been happening.
In 1993 I got offered a block of land by my Uncle at Kilcunda; a small, sleepy coastal village south of the Philip Island turn-off in Victoria. It was $5k, and I had the cash sitting there; I was saving for my own PPoR. I said no thanks.
Good houses with views are going for $500k plus.gully wrote:I am renting a property and have done for the past 6 years. It has now been on the market for 3 years. We have always admired the propery regardless of the amount of work that needs doing[alot]. Any advice on how to approach the landlord with maybe Rent to buy situation or vendour finance would be great. i feel i need to think outside the square and exaust all options before i can move on. Obviously this has arisen because we cant traditionally lend that sought of money. Its on the market for 400+. does any one reckon there is any hope of them considering this?If you offer them the asking price, they may consider your offer. But what are comparable properties in the immediate area selling for right now? Not the asking price; the sold price.
Think about it from the Landlord's perspective; he wants to sell the place, no one's buying it (maybe it's too expensive?).
If you offer low, you are just like all the other hopeful buyers who have been rejected by the Landlord, and you are hoping to delay payment. There is no real hope of getting the deal done that way.
But if you offer the full asking price, this is more attractive to the owner, even though the payment is delayed.
It needs to be a win-win, so think about structuring a written offer that will hopefully make everyone happy, and then present it.
It will also need to be formally written up in a Contract by a Solicitor if the offer is accepted, to protect you.
Sticking the money in a high interest savings account is useless. Worst investment going.
Say you get 7% interest (ING pay that with their online Maximiser Account). You pay tax on the interest at your marginal rate, and there is also inflation eroding your capital at around 3% per year. Your nett return after tax and inflation is probably around 2%. WOOHOO!!
Even an average performing IP will easily eclipse that, and the capital is invested in a growth asset.
The repayments are only $453 a fortnight, if you rent it out, what would you get? $250 a week? More?
Allow for about 20% of the rent you get to be eaten up by the holding costs such as insurance, management, repairs, rates etc.
Meanwhile, you have all the tax deductions associated with the expenses on holding the house such as rates, insurance etc, and if the house was built after 1987 you have the depreciation as well. That will return you a few thousand in tax each year most likely.
As a tenant yourself, all you are responsible for is the contents insurance and utility bills such as phone, water, elec/gas.
There is a pretty good chance that, as long as you don't go too high in the rent you are paying for your place for you to live in, that you would end up with the rent from your home, plus the tax returns, wiping out your loan repayment and a chunk of the rent you would have to pay.
The other option is as Terry says; take the plunge in an IP. It looks as though you could do it comfortably.
Investing to get a tax deduction is not what you should be looking to do. Why invest to make a loss?
To minimise your tax through neg gearing IP's it means that you have taken a cashflow loss. You will be spending $1 to get back 50c.
With the financial position you are in, you could invest in something like a small reno/subdivide/sell and make clear profits. This is what I am moving towards with our investing.
Or maybe buy cheaper IP's, put in larger cash deposits and have pos cashflow from day one. Don't be fooled by big ticket IP's; cheap ones can still give excellent returns.
Or, my favourite; buy IP's that are initially cashflow negative, but are cashflow positive after tax. That way, you still get your tax deductons, and there is no drop in your cashflow. read Margaret Lomas's books to learn more on this strategy.
If you are looking in Melb's s/e suburbs it would be wise to look at properties that have good land content. This will allow you to do sub divs (depending on zoning), or build units etc later on.
Don't forget that you won't be able to access all that equity.
Unless you go for a very high LVR LOC on your PPoR – 95% (which I personally believe is very risky; your house is on the line), then in normal circumstances the Banks will only allow you to use 80% of your PPoR's value for re-borrowing, minus any existing loans.
So that means, say for example your new house cost you $350k, and now it is worth $470k (based on the new valuation),you can use $376k for investing.
But ,you still owe say $300k. You can only use $76k for your next deposit and closing costs.
I would never leverage your PPoR more than 80%. Life happens, and you wouldn't want to have to sell your house in a hurry, and take a loss. Better to be able to sell the IP and keep the PPoR.
