[lifeXMember@lifexJoin Date: 2004Post Count: 651]

December 25, 2010 - 5:51 am

I like Ghandi’s quote

“What is not given , is lost”

[lifeXMember@lifexJoin Date: 2004Post Count: 651]

December 25, 2010 - 5:47 am

I assume you have posted a letter to the address you are interested in.

It would then redirect to the owner.

And they could then reply if they are interested.

?

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December 21, 2010 - 11:47 am

Marthamel,
Great questions for those that ponder them honestly and carefully. Thankyou!

Personally I have to say that I invest in property because i think that I am getting more from it than what I am actually putting in.

Basically selfish gratuitus greed.

Please let everyone know however that I may consider small insignificant donations to charitable causes to wash away any guilt and claim I am not pure evil.

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December 21, 2010 - 11:18 am

I think everyone needs to bite on LMI to get started.

But after a few years the equity in your properties should be enough to set up LOCs to pay that extra 20% and avoid the LMI sting.

In the long run, the thing that holds you back is actually serviceability.

Funny, I remember thinking of every idea under the sun to buy property with no money down and now I wonder why I bothered.

Now it is just a calculation on serviceability which gets easier as rents and inflation goes up.

Best approach is to buy property with potential and add value. Then equity will abound.

Or….. just wait. Time will give it to you.

I would suggest that most seasoned investors aim to gear between 65 – 80%. And never consider LMI.

If you constantly gear over 80%, you risk giving all your profits to the bank in the form of interest and loan costs.

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December 21, 2010 - 10:52 am

Tell your agent you want an ongoing lease and to not send your tenants harassing letters suggesting that they will be kicked out unless they sign a new 12 month agreement.

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October 17, 2010 - 11:19 am

You need to keep an eye on the GST when regularly developing (ie: more than once),

Ie; Dual Occ Sub divisions,

Extensions,

Or even major reno’s ……..

My understanding was that you may have to charge some GST on the price you sell for , in these circumstances.

… And that now the ATO considers you to be in the business of developing, then you may also lose the 50% capital gains discount and start paying full income tax rates on all profit…….

Definately worth a chat with accountant prior to planning a deal just in case the tax man steals all your profit.

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October 17, 2010 - 10:49 am

SNM,

I agree due diligence would have covered me, so this is now on my list.

I am not convinced that views aren’t a legal issue, I know of a few council and building regs that clearly define and protect views of existing properties, especially in new development estates.

Views are easily quantified as a dollar value, every valuation has an amount included specifically for “ocean views”. I’d suggest that this could be up to 40% of the property value.

Terry, Matt,
Cheers for the suggestions, wonder if these would hold up in a lawsuit….

I can wear this one on the chin, but I was really just wondering how many others think that the Sect. 32 disclosure or your own solicitor would pick up nearby pending developments….. as I did…

Thanks again for all comments.

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June 9, 2010 - 4:59 am

Dom,
In Vic, you would likely give the Agent 5% commission just for selling the place.

You would pay 5-6% in government costs to buy the new house (about double Qld. Stamp Duty Rates)

Moving costs and incidentals would be insignificant.

… And Just to confuse you more, consider market moves.

If you sell and then start looking for a new place, what happens if the house market price goes up 10-20% ?

What if you buy the new place and then can’t sell, you may have interest rate expenses on 2 mortgages. Imagine if interest rates spike 10%.

Ideally, if you could sell your place for a good price and buy the new place at a discount in a flat or declining market with stable interest rates… this would effectively recover the cost of the move.

The other thing I would consider, is how desirable the new house is. If it is a better/bigger house in a more popular suburb, the long term capital growth may far outweigh the transaction costs sting.

Don’t miss the forest for the trees, the costs at the time of change may hurt, but could be insignificant in the long term gains of a better property.

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May 21, 2010 - 2:13 pm

Is this the tax you are referring to W4L?

http://watoday.domain.com.au/real-estate-news/property-buyers-hit-with-new-sales-tax-20100514-v3p2.html

It is a NSW State tax according to article.

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May 20, 2010 - 11:45 pm

Very Interesting comments.

If all the central banks and major economies are printing money faster than ever before, surely the value of money has to be decreasing at the same rate.

This would resolve all the government debt. issues as their debt would be reduced to nothing.

History tells us that this is what governments do when they have no other option.

Unfortunately it means the price of living sky rockets and no-one can afford to buy anything. With long protracted periods of poverty for the people.

I hope we aren’t headed for hyper-inflation……

…Maybe time to bury some gold and baked bean cans just in case.

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July 13, 2009 - 11:38 am

You would only have to take out a public liability cover…. the same one that a homeowner takes out with their landlords insurance. You do not have to take out cover for replacement of the building.

We do this with a rural property that has no dwelling, to cover us as landlords if someone is injured on the property. You could take out the same public liability insurance as a tenant on a building.

However as a tenant, there would be very few things that could go wrong and that you as a tenant could be proved as a negligent person.

…. unless you like practical jokes with fireworks in someones underpants.

So, basically …. harden up. If you are really interested in asset protection, look at trust structures to minimise exposure.

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July 12, 2009 - 1:02 am

Thanks mike.

Extremely useful info – will keep your services in mind and pass on your contact details

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June 6, 2009 - 6:03 pm

Rule of thumb for servicability:

It used to be that the banks would lend to full time workers as long as the loan repayments were not more than 30% of your AFTER tax income.

  So as a rule of thumb you would need $400 p.w to cover the interest repayments on loan. And an income after tax p.w. of about $1350.

   Banks usually like a deposit of 20% + money for all the closing costs on the loan.

   So about $18k closing costs plus about $70k deposit would put you in a good position. (remember you have $24k from govt grants to help here)

    Personally I don't like CBA as a lender. I avoid them like the plague.

   I find that Mortgage Brokers a lot better when you are unsure if you qualify for a loan. Remember that every time you apply for a loan and it gets rejected a big black mark stinks up your credit record.

  However…..  a pre-approval is a very good sign. Best of luck.

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June 6, 2009 - 4:36 pm

You can have a certain amount of land in any one persons name before you incur land tax in Vic.
  I think it is about $300k or so.

-remember it is only the land value, not the value of the buildings on it that is counted.

   So if you already have land in your name, simply put the property into the name of a different family member.

   You could potentially finance the mortgage in your name, and have the property in the other family members name.

[lifeXMember@lifexJoin Date: 2004Post Count: 651]

May 20, 2009 - 5:13 pm

here is a pretty comprehensive rundown of what income and expense factors I look at for a property purchase.

Don't forget to allow for income and benefits of the following when calculating the total value to you from this investment.

Gross Rental Yield,
Depreciation Benefits,
Negative Gearing Benefits,
Capital Growth
Other income generated from this investment (ie: a car space you may lease separately)
development potential   (ie: a reno or subdivision)
Creative Options (ie: Wraps, Rent to buy or options)
Benefits of trust (ie: potential to spread rental income and capital gains tax liabilities to trust members on lower tax brackets than you.)

And remember to have realistic expense budgets for:

Purchasing Costs( building inspector fees, stamp duty, mortgage stamp duty, conveyancing, mortgage loan application fees, other, titles fees, LMI, pro-rata reimbursement of rates to the vendor, sneaky mortgage costs like their legal fees they trick you into paying that are never mentioned etc) I usually use 5.5%of purchase price as a rough guide and add 1.5% for LMI if taken

Property Management (including annual leasing fees and there other sneaky charges). I'd assume 1 tenant turnover per year.
    so subtract 6 -8% for the agents management costs AND a further 2 – 6 weeks rent for their annual leasing fee

Tenancy Vacancies (can range from 4 weeks per year to 3 months in some areas(ie: uni areas and holiday rental areas)) I'd assume 4 weeks minimum in most areas. This also factors in the odd bad tenant who trashes the place

Maintenance (older houses cost a lot more to maintain) I'd say $500 – 1500 p.a. for average house

Accumulated Capital Gains Tax Liability (remember some depreciated items will actually increase this liability) …so everytime your house goes up in value, you lose money because the government will eventually want that back as CGT. I Factor in about 20% of any capital gain expected to be made and set that aside to one day give to the tax man. 

Mortgage Interest Rates (+ annual bank fees and other fees they will throw in like break costs and variation fees) Remember the rates do change!!!

initial Renovations/repair costs (which are capital and can't usually be a tax deduction)

Land tAX – WHICH GETS EXPONENTIALLY WORSE AS YOUR PORTFOLIO EXCEEDS A CERTAIN LAND VALUE (remember to get trusts as the portfolio gets bigger for this reason)

Any income tax liabilities for positive geared property.

aNNUAL aCCOUNTING cOSTS- can range from a few hundred to a few thousand per property

depreciation schedule costs

Trust Running Costs (if using one) this can add easily a few grand per year to your costs.
Annual ASIC costs (if you have a trust with corporate trustee)

Council Rates

Water Rates

Insurances

And try to figure in a value for CPI, knowing that the value of a dollar falls with each year that passes.

SANF – there will be some of your time and some degree of stress as with any investment.

Potential Risks and this cost – can you wear the worst case scenarios- Property prices fall, Interest Rates, go up, etc.

*******************************************************************************************

As you can see there are many things to consider

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May 20, 2009 - 5:09 pm

I'd be taking your problem up with the purchaser. Your losses now are due to them not fulfilling their original obligation in a signed contract of sale.
 
If they had originally signed a contract for settlement in early April, and you are now incurring a loss because they have been jerking you around, they could be liable.
 
Even if you re-signed with a different purchaser, I'd say you still have a case to sue the original purchaser for any loss you are suffering now.

   Just send them a bill for "17.5% Penalty Interest compounding daily", to recoup your losses. It is THEIR responsibility to ensure they pay on the day of settlement.
.
  You would be surprised what a kick in the bum like this will do, which is to get your purchaser to actually chase up this loan through their bank to get you money. 

  In the past when I have purchased and my lender stuffs up and I can't give the vendor payment on time, I have been slugged with penalty interest until I sort it out. And rightly so.

    In my experience the banks don't particularly care if things are done on time or not. Not their problem. I will bet the paperwork for your purchasers loan is sitting in an "INBOX" doing nothing because no-one is chasing it up – and you are paying the penalty. 

GET ANGRY.

  Stand up for yourself, and read everything you sign into carefully.  Very good experience to learn from. 

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May 20, 2009 - 4:47 pm

Investigate some positive cash flow deals?

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May 20, 2009 - 4:43 pm

If you have a property in your own name already, you will probably find that moving the other properties into your name would make negligible difference to the land tax payable, as the more land in your personal name , the higher the percentage of land tax anyway.

   Remember also that land tax is a deductible expense.

  If I were you, I'd leave it as is.

If you are highly geared however, it may be worth selling a property if the land tax is eating into your equity that much.

  If my memory is correct, queensland has some of the cheapest rates of Australia anyway.

  ….Oh, and I love how accountants will recommend that you change your entire structure and incur thousands of dollars of stamp duties and transfer costs simply because "They would have set it up differently"

   All structures have different benefits and drawbacks, changing things halfway through is a "Last Resort" in my opinion.

  Tell your accountant to "jam it" from me.

   …oh and your friends advice is …..um.  …    incorrect.

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May 20, 2009 - 4:23 pm

Thanks for the link tracey

Would love to know if anyone has successfully sold their property privately for a price they wanted. Or purchased a property cheaply from a service like this.

   My thoughts were that anyone selling in this way usually expected way too high a price and never made a sale.

Correct me if I am wrong.

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May 20, 2009 - 4:14 pm

Could they instead put their rural retreat into a "Trust" with their kids/grandkids as beneficiaries. Then they technically do not own it.