Forum Replies Created
Balmain. 100%.
It depends what you want out of the property — cash flow or capital growth. If you plan on holding onto the property for a long period of time then a newer higher density apartment might not be that bad (if the rent return is good). As others have said, if you’re buying for capital growth, it might take a while as there will be many other apartments for sale which will keep the costs down. I’ve experienced this in the high density apartment I’ve bought — great rent return (much better than any medium density in the same area) and great for depreciation, but has not had much capital growth at all.
I don’t plan on selling it though, so this isn’t an issue for me.
Cheers
MattCatalyst wrote:Before self managing you need to know the rules.Do you know your rights? The tenants rights?
If there's a problem are you able to represent yourself in court?When there's a leaky tap etc the tenant will ring you. Are you OK with that? Are you willing to contact maintenance people? Do you have numbers on hand for emergencies? plumber etc. Sometimes tenants are great, but sometimes when they know they have the owners number it's very easy to ring you for the tiniest thing. PM's often deal with small issues without having to involve you.
Sure when things go smoothly it seems like easy money for the PM but when things don't that's when you appreciate them.
I'm not saying don't self manage (I do for some of mine- due to poor PM's) but know what's involved before jumping in and trying to save a few dollars.
It's a personal thing really. When I retire I'll self manage all the close ones.Good point. You definitely need to know the state/territory residential tenancy act as well as the rights of both parties if there are disputes etc. There are some great Australian websites that cover frequently asked questions about tenants rights and the process of going through issues resolution — just google and you’ll find a lot of useful information. It’s also worthwhile speaking to other people you know who manage properties themselves and see what they have done.
If you go through a rigorous application process, and do referees and look at previous rental history, you should be okay. But one thing I have learnt — trust your gut instinct!!
Hi Derek
Thanks a lot for your reply, makes sense. I can depreciate a lot of items, given it’s a 2 year old property. I also pay strata fees, but I don’t pay for property management fees as I look after it myself.
I’m actively looking for another investment property given the current one is almost paying for itself.
Cheers
MattHi Shannon
I manage my two year old one bedroom apartment in Canberra. It’s sooo easy and I would recommend you do it rather than paying for a property manager. The only reasons why I would personally go with a PM is if:
– i had limited time;
– i bought interstate; or
– i rented a house with no strata/BC.I have been very lucky to date (touch wood) and have had good tenants. Whenever I’ve advertised online, it’s taken about 2 weeks to find good tenants, and they have always paid on time each fortnight into my bank account. All i’ve had to do is:
– take bond and lodge it with ACT rental bonds;
– buy a lease agreement from the newsagency and fill in the blanks;
– photocopy keys and complete condition report (get a copy back from tenant);
– complete inspections every 6 months.I like managing it myself because i can see how the property is going, but also be more involved in the selection process (i.e. i always do referee checks and get heaps of details of the prospective tenants). The only issue I have had is when there was an error with one of the major banks and the tenants money didn’t go in my account for 4-5 days. I called them and they did everything they could, so i wouldn’t really call it an issue.
The best part about doing it yourself is you only need to look after the inside of your apartment (and even some stratas have kitchens etc covered under body corporate)… everything else is looked after for you.
I’m thinking of buying a property interstate — if i do this, I will definitely go with a PM because it would be harder for me to do it by myself. But if you live local and are up for a challenge (or some fun, depending on how you see it), then manage it yourself and save 5-9%!!
Cheers
MattYeah gosford has the infrastructure but it’s so disgusting (no better word). Plus I wanted something closer to terrigal and avoca. I would be buying a newer property, and renting it with a view to moving there in the next 8-10 years. I’m not really after capital growth as I wouldn’t sell. But the only thing concerning me is the opportunity cost of having my money in something on the cc versus a high capital growth option which I could sell in 8-10 yrs.
The other thing is vacancy rates on the coast, although I have read and heard that it is growing due to retirees.
I was recently in gosford over the new year break and I must say it is disgusting! I would never ever want to live there again ( I lived in Gertrude st then hills st in those apartments at base of hill).. That was in 2004 and 2007 respectively. Back in 2007 it was going downhill, now it’s a ghost town and looks like its falling apart. If you buy, make sure it’s near water and away from CBD area. They need to invest a lot to make it vibrant and trendy
coalstar wrote:Catalyst wrote:So you bought a property that will lose money so you don't have to pay so much tax? I know lots of people do it. It's called negative gearing but it's not for me. I like making money.The more you pay off the less tax you claim as a tax offset, but the more you pay off the less interest you pay.
I'm hoping you are paying the extra money into an offset account and not directly off the loan. By having the offset account the extra money you pay is yours to withdraw as you see fit. Down the track you may want that money to buy another IP or even a home to live in. You can take the money from the offset without losing tax deductions. If you pull it out of the loan to by a home you lose the tax deductions.
Agree totally,
also you will find that if you owe 240k and getting $250 a week in rent you will probably only get back 3-4k from that property as its not far off been positive geared. with that in mind your property then becomes pretty much neutral so you don't really saving anything as it initially costs you money to hold, and this is what you want, neutral or positve geared!!
always remember though the more cashflow you have, the better your serviceability…
This is a good point. My property in Canberra has a loan of about $230,000 but my rent is $400 pw. Does that mean I’m close to positively geared? Is it likely that I’m still negative gearing now, but after tax and depreciation, I’ll be in a positive cash flow position? I’ve heard this is the most desirable, as you don’t pay tax on any profits, but still make a profit at tax time…
I’m also nearing 100k per annum which is why I want to purchase another investment property.
Hey Josh
I recently bought an investment property (a 1 bedroom apartment) about 6km from Canberra CBD.
In terms of what is better as an IP, it depends on the market in the area you're looking at. I did a lot of research on my suburb before purchasing the apartment rather than a townhouse. A few reasons:
– there is strong demand for apartment living from students and professionals who want to be close to work (given the proximity to 3 schools/universities) and government departments
– close to a large shopping centre
– close to a large lake and bike paths
– close to public transportSo I determined that I would get a better rental yield and also be able to find a wider pool of tenants for an apartment than a townhouse given that the market in that area were mostly students or young professionals wanting an inner-city lifestyle close to puiblic transport, places of school.work and the shopping centre.
The townhouses were generally older (not as good depreciation) and more expensive. With townhouses, there is more that is likely to go wrong as you have a garden, hot water system etc…. where as an apartment has most things covered like the aforementioned under the body corporate, so really if anything goes wrong then it's up to the BC to fix. However with that said, you have a quartely levy that you'll have to pay, however this is tax deductible. I personally think an apartment is more easy as an IP because of the BC.
Also, from what i have seen many professionals in Brisbane are looking at apartment living (similar to Canberra). As it turns out, my place was on allhomes (like realestate.com.au) for 2 days before I found someone and i'm currently getting a rental yield of 5.9% with capital growth as well.
You're right about land appreciating more, however it depends what you want – strong yield or strong capital growth. You might be able to get both, however if you eventually want income from it, then look for yield. It really depends what you want out of it and whether you want to make money from rent now or money from paital growth if you decide to sell or borrow from it for future properties.
Just my 2c.
Chrs
Matt
Hi
Thanks for your reply. Yes I got a depreciation report done. I probably won’t be able to claim a lot this yr given the tenants have just moved in a few days before end of June however I will be able to next yr.
Cheers
Matt
