[mckeroParticipant@mckeroJoin Date: 2004Post Count: 15]

June 11, 2015 - 9:33 pm

Yazdan,
I agree with the previous post. You have some difficult decisions and they need to be made now. In this situation you cannot afford to be picky. You’re in dire straits and discarding the share house/border options because you have teenagers sounds like you’re still trying to look good (and protect the children’s status) even though you’re up the creek without a paddle. You also seem to be hanging on to what the “potential” is for the various properties IF you had money to put into developing them. That’s great, but from the sounds of it you seriously don’t have the money to put into anything.
If you prefer not to go bankrupt you will have to make some really hard choices and life will not be a picnic for some time. I have been down that route about 25 years ago when the after taste wasn’t so bad. What you will need to watch is something someone suggested earlier about selling something and paying the family first, then going bankrupt. If you do go bankrupt they will investigate prior financial transactions and “claw back” or “rollback” any payment’s or structures which you have put in place that look like you were trying to avoid paying your creditors who you are now including in your bankruptcy.
You do have some advantages though, not cross-collateralised and different lenders which could work in your favour. You don’t say where your PPOR is though since you have all your IP eggs in one state I’m presuming your PPOR is also in QLD.
Luckily the Moranbah property has a lender all by itself and they won’t call you in unless you stop repayments. You say you can’t afford the mortgage but the flip side is if you don’t afford the mortgage they’ll come after you and the whole deck of cards will collapse. With the tenant moving out in Sept and the possibility of no new tenant you may want to investigate your “hardship” clause with the lender and see if there’s a bit of relief there. You should get a tenant though no matter what rent. Usually it’s better to be tenanted than vacant and subject to the possibility of vandalism. (I’ve had IPs vandalised when vacant.)
You also don’t mention if the other properties are negatively geared but it sounds like they might be. I guess if they were cash-flow positive you wouldn’t have posted this thread! You need to work out what each property is costing you in cash per month. Aim to sell down the most cash costly first.
You also have to seriously consider your PPOR. About 10 years ago I found it was better cash flow to move out of my PPOR, renting it out and renting another house. I had two teenagers at the time. It also turned the PPOR into a tax deduction – but that’s a side benefit as we’re talking cash-flow here. If the rent on the PPOR covers the expenses it could be an option – if it’s going to cost you money you’re no better off. As long as the rent on your new rented place isn’t more than the mortgage on your PPOR you’re coming out in front cash-wise. This might not be what you would “like” to do but you’re between a rock and a hard place!
You’ve borrowed a lot of money and spent it. If you’re not going bankrupt you have to pay it back. It sounds like you’re not going to be able to trade your way out of it because you have no more cash or equity to “trade with”.
Knowing only what you’ve said here, I’d be selling IP1 and IP2 ASAP hopefully with some proceeds, put 1/2 on Moranbah, give the other 1/2 to the family and ask them to wait another year for the rest. This gets rid of lender 1, removes some negative gearing and hopefully helps the family feel more confident about getting their money back. Sell Daisy Hill, pay the family off and put the rest on Moranbah. This has you with Moranbah, the PPOR and no family debt. While the family debt may be “OK” I think it’s best to only owe the banks. Work out if you want to sell or rent out the PPOR and do it. Get a second and/or third job and pay Moranbah down big time. You’re basically starting again from the ground up – except you’ve got to dig yourself back up to ground level. I wish you all the best with your decisions and following through whatever plan you end up with.

[mckeroParticipant@mckeroJoin Date: 2004Post Count: 15]

July 14, 2009 - 11:24 am

Second question first.  You can get rent sheets from the local real estate agents find out what something similar is renting out for.  Or get 2 or 3 property managers to go through for a rental assessment.  If they know they're not the only ones offering an assessment they won't be too surprised when you don't call them back.
Not being an accountant I can't comment on the tax or accounting standing on renting to family, but I rent 2 of my properties to family at "mates rates".
This in some instances is not a lot different to having rented to long term tenants where their rent hasn't leaped ahead in pace with the market rates, and they're renting at less than market value.  If they're good long term tenants I sometimes have kept them at a slightly less than market rent ($5 to $10 a week) to encourage them not to look elsewhere.
Hope this helps.

[mckeroParticipant@mckeroJoin Date: 2004Post Count: 15]

June 15, 2009 - 10:02 am

Yes, it would be double dipping.  (I've already asked my accountant that question.)  I'm already getting a tax benefit by salary sacrificing *all* of my vehicle expenses, which is way better than just claiming the kms to and from rental properties.  I would have flown and hired a car over there – that would have been tax deductible – unless you needed the kms for FBT.

[mckeroParticipant@mckeroJoin Date: 2004Post Count: 15]

November 5, 2005 - 5:01 am

If you salary package your car and costs then all the expenses come out pre-tax regardless of private or personal. I own the car but package the expenses because looking at houses (oh and other things [evo]) I do a lot of kms.

Of course that’s not an option for everyone’s income source but if you do enough kms it’s worth looking into.

[mckeroParticipant@mckeroJoin Date: 2004Post Count: 15]

November 5, 2005 - 4:01 am

Hi Shelley,

Sorry to hear of your troubles. Unfortunately, it sounds like you have to go at the pace of the PM you have. I do think though that some PMs need to be held more accountable for the tenants that they do put in. And if situations arise like yours where the tenants are in default from day one then the PM should forgo their letting fee at minimum.

I manage my own (personal choice) even doing that you really can’t pick the good/bad tenants. One lot I had came with excellent references but were permanently late with the rent. They were always apologetic and had reasons. After a short period of encouraging them to move on – in the nicest possible way [exhappy], they finally left owing 4 weeks rent and leaving about 4 weeks rent’s worth of damage. I took the bond in lieu of rent and put the repairs on the tax bill.

That one’s chalked up to experience. Current tenants are lovely and prepay each week – their preference.

I hope you’re soon over your hic-ups and things get back on an even keel.

[mckeroParticipant@mckeroJoin Date: 2004Post Count: 15]

November 2, 2005 - 7:39 am

Hi Jon,

Have emailed you direct.

[mckeroParticipant@mckeroJoin Date: 2004Post Count: 15]

October 31, 2005 - 3:14 pm

I’m an IT consultant (DBA & Apps developer). It will finance my addiction to real estate … until my portfolio becomes self supporting!

[mckeroParticipant@mckeroJoin Date: 2004Post Count: 15]

October 31, 2005 - 2:57 pm

I would definitely be interested in which financials go to 80% on units.
I once went to offer acceptance on 5x2br, and build/pest inspections with a pre approval from a bank on 80% and then as soon as it went for real they’d only go 70%.
Although I understand their theory of fire sale if their % required wasn’t such a problem they’d have more investors interested anyway.
I find it really contradictory. A block of units for $500K (more rent return too) has a less chance of *all* being vacant at any one time than a $500K house.
Therefore the risk of having to have a fire sale because of cashflow problems or vacancy is much less than for a single dwelling.

[mckeroParticipant@mckeroJoin Date: 2004Post Count: 15]

October 31, 2005 - 2:36 pm

The one thing I found that worked is to deny that Mr or Mrs X lived here. If they ask for either of these people I know they’re going through the phone book.
Since I’m not a Mrs (or a Mr) and my children don’t have a surname of X they don’t know me or my children, so I don’t want to talk to them.
Had a persistent one though the other night who said she’d call back later then … and she did another 2 times … but she didn’t change her question so I didn’t change my answer!

[mckeroParticipant@mckeroJoin Date: 2004Post Count: 15]

October 31, 2005 - 2:18 pm

I would be:
1. Talking to an accountant.
2. Getting a proper valuation.

But my opinion is:
Your 1/4 or 1/3 share would depend on what the original agreement was when the purchase for $150K was made. If your parents were operating as 1 share then it would be 1/3. If they were operating as individuals then it would be 1/4.
If you are selling your share then you are the one paying the CGT. Your brother doesn’t become liable for CGT until he sells the property. Then it’s a mix of a % of the 1/3 or 1/4 gain in value until now, and then % the total gain in value until eventual sale.
To my understanding if you were in it 1/3 (ie. your parents were only one share and each of you originally contributed $50K each) and since you are recieving $200K total I would assume that you have valued the property only on the rates unimproved land value of $300K, and you would be receiving $100K from this transaction. That would mean a profit before any other attributable expenses of $50K. That means that CGT would be 1/4 of that – in this example at most $12,500.
Unfortunately, from the interpretation given by coastymike, since I find it hard to believe that a land value rates notice would be a correct market value of a property in Reserviour (unless there is no house on the land) then the market value would be considerably higher than $300K. Let’s say for eg. it’s market value is $450K. Then 1/3 share of that is $150K less purchase share of $50K leaves a personal CGT assessable amount of $100K. 1/4 of that is $25K. This would be regardless of what you amount you recieved in the transaction.

But I’m not a tax accountant and it would be advisable to seek one out!

[mckeroParticipant@mckeroJoin Date: 2004Post Count: 15]

October 31, 2005 - 1:44 pm

1. Yes emailed you direct.
2. Depends what you’re using the solicitor for. Conveyancing doesn’t matter so much if it’s investment or PPOR. If it’s for other legal matters regarding IPs then it would matter.
I’ve always heard that the accountant should, but my experience has not been that good.
The accountant with investment properties gave me the most grief with getting the return right. Dispite being given a pretty detailed and explicit set of books, he missed things, spelled names wrong and had to have 3 drafts before he got it right.
Another accountant I was with was a business accountant he was efficient but it was always next year before he got the return in.
My most recent accountant has no investment property but is the most detailed and efficient one I’ve worked with. I had my return back that fast I didn’t know what to do with it! … well that’s not true …. it went toward another property.

[mckeroParticipant@mckeroJoin Date: 2004Post Count: 15]

October 31, 2005 - 1:16 pm

I’ve got no problems with PI in Mount Isa and I think the returns are good. Although they’re not as good as they could have been this time last year at least they’re on the market long enough to go and have a look at them! The vacancy rates are really low, and with the new mine opening/opened I think they’ll be low for a while.
I just bought a 2x2br there. It wasn’t on the market but the agent chased it up as a posibility for me since I was up there for the weekend. Also have a private sale opportunity in Healy that I will be taking advantage of when all the figures are in.
My opinions on Jon’s questions.
1. (top suburbs) Healy … Townview, Soldier’s Hill, Sunset are OK … stay away from Pioneer. There are more suburbs but I’ve forgotten. I found it better to go and have a look and get a feel for the place.
2. (PM) 7.5%+gst because I bought through them. Not sure yet how good they are. They lost the keys for inspection and had to get the tenants in so they could cut others – not a good start!
3. (cap growth) Not in the short term possible 8-10 yrs before any meaningful increase – but that’s not why I bought there.
4. (4br) I wouldn’t buy one unless it was a really good price in a really good area, as I think that a 3br will get as good a return with more rental appeal.
Like I said …. my opinion [trigger]

[mckeroParticipant@mckeroJoin Date: 2004Post Count: 15]

October 31, 2005 - 11:35 am

Hi Melmac,

Having just been down that track I know exactly how you feel. Seems a bit raw that out of 7 you only get the PPOR but there’s a story to everything. I at least got the PPOR and, after an additional cash settlement to him, 1 of the 3 investment properties. Since I did *everything* related to the properties it was just a matter of doing it all in my own name. But that didn’t turn out to be as simple as what it sounded. As part of the property settlement every thing was mortgaged to 80%, and because equity wasn’t increasing as fast as it had been I couldn’t do the next one as fast as I would have liked.

It’s really so frustrating wanting to do something, chasing the finance broker with scenarios, and not being able to do it because the numbers don’t add up yet. My finance broker quit – he probably got sick of me hounding him Well no, he went to a bank, then was such a good bloke he referred me to another bank’s loans officer that could do what his bank couldn’t.

A year ago I decided tax-wise it was better off for me to move out of the PPOR and turn it into an investment property. (If you’re going to do that, don’t forget to get it valued for CGT purposes.) Finance people still look strange at you when you don’t live in one of your properties – especially if you only live up the street.

It’s now 20 months since the separation, 15 months since the property settlement and refinancing into my name, and after a small hicough because I went contracting …. I’ve finally beaten my head up against the brick wall long enough and it’s fallen down. I’ve just signed the contract for my first “post-relationship” investment property – and it’s positively geared to boot. Just have to keep the snowball rolling now!

Don’t know if there’s any good reading material about “PI after divorce” but there’s plenty of good reading material – just keep reading it. I found keeping the research up, going to property investing nights, seminars and expos was the best thing. Even if you’re not actually buying anything yet you’re hanging around people who are, and still swapping ideas and enthusiasm.

May be if you start your own “PI after divorce club” …. you can write your own book on “PI after divorce” – that would help with the serviceability

Serously though, hang in there – you can do it.

[mckeroParticipant@mckeroJoin Date: 2004Post Count: 15]

October 31, 2005 - 10:05 am

Having just been through property settlement after a nearly 4 year defacto ralationship, I believe pre-nups and any other form of financial agreement in a relationship, only work if both parties still want to stick to it. If only one party wants to stick to it, and they’re prepared to argue over it, then basically anything you might want to be fighting over ends up in the lawyers pockets.

Through out the relationship (with only a 30% income contribution) he was the totally hands off, unenthusiastic, risk averse partner …. until it came time to divi up the assets then he was *real* interested. In the end we agreed to split 50/50 regardless of the history. Although this ended up better than if I’d decided to fight him over it, I was considerably p#ssed off about it. I sort of console myself with the undiscussed assumption that we did go into the relationship with a 50/50 mentality. After a hard to handle drought of being asset rich and cash poor in a plataued market, I’ve just signed contracts on my first “post-relationship” property!!

I absolutely agree with the idea of relationships having separate houses and any co-habitation by invitation only – and then not presumed to be long term. After all everyone loves a weekend romance where both parties are on good behaviour

… and here’s a “friend” story. Friend of mine had a pre-nup drawn up for his investment property because his parents were living in it and he didn’t want them out in the street if the marriage broke down – second marriage for him. His now wife was fine with it and it was his parents who had the “unromatic” issues about them drawing it up. Of couse “IF the marriage breaks down” compounded by the “IF there are children from the marriage” and “IF it turns hostile” his parents could still end up in the street, but at least the decent intention was there to start with.

I do think pre-nups have their place. Like the point of making a will (that can be contested – it’s just that one party isn’t around to fight for what they said) …. at least the reality of probable statistics has been discussed, and at least the intentions have been discussed in a hopefully amicable honeymoon atmosphere.