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Thanks Jenny, Wylie, and everyone. That’s good advice. I will increase her rent to $115 and write in the letter that I am happy for her to continue paying $10 less than the market rent as she is a long term tenant and looks after the place very well.
Her unit is actually in better condition than the more expensive one which has had a series of bachelors in it.
Originally posted by hmackay:How would you feel if your landlord was to hit you with a 15% increase.
I would feel OK with that, but I’m only one person, hence putting it to the forum
Perhaps the tennant has been getting cheap rent.
She has. She will still be getting cheap rent after the increase. Please see initial post.
Terry’s suggestion appears fair 7.5% now and 7.5% in 6 months or something similar.
Do you really think so, for such a small amount? Two lots of stress and complaints.
If they are a low maintenance tennent (i.e. minimal maintenance costs) then I would make the increase as low as possible.
She is and how much is as low as possible? I am losing money now so she can have cheap rent. As I said previously, if she moves out, I will be in a better position finacncially, but that’s not what I’m about.
These are my thoughts.hope it helps.
Hope springs eternal. OK, now I’m being a smart arse [wink]
hrmLet’s make it a yes or no question.
Is a 15% rent increase fair if there has been no increase for 18 months and the increased amount will still be under market rent?
I think they may mean “permanent part time” which is secure employment and just like permanent full time except less hours. Casual, as you say, is not secure whether its part time or full time hours.
I can see how being permanent, whether it’s full time or part time, is fine for borrowing money, but I don’t know about casual.
Maybe one of the mortgage brokers can clarify.
Hi Kit Kat
Is your boyfriend Mitcheos? Check this thread in any case: https://www.propertyinvesting.com/forum/topic/18280.htmlHi Mitcheos
There are some lenders from whom you can borrow on a lo doc basis and have it revert to a full doc situation when you are able to meet the criteria.
Macquarie, for one, do this but i’m not sure about borrowing 90%.
Thanks Ozi
I don’t actually mind if she moves out. I’m just concerned about not asking something unreasonable of a person. I manage the duplex myself and rented out the other side recently for $125 (which is standard in the area for a duplex) I had so many phone calls about it, someone even offered to pay $150 with a $900 deposit, and a fake reference thrown in for free!This other one is rented to a pensioner at $100 per week. Hence I’m not too concerned if she moves out rather than pay $115.
I just want to know if a 15% rise is considered reasonable by reasonable people.
Thanks
Hi Jaypee
Yes, if you want to eventually own the house, you just pay off the principle.
Investors don’t tend to do that though as they are interested in getting the best returns from their money. That’s why you borrow in the first place.
Think about the return you would get from owning a house outright. If it’s your $300,000 in the house, your return might be 3% or so. If you only have $60,000 then your return could be 8 or 9% plus you have $240,000 invested elswhere at another 8 or 9%.
So, compare a passive income of $9000 with $24,000pa before you decide whether or not to pay out investment loans.
Someone feel free to correct my math if I’ve completely stuffed that up. I’m a bit tired.
With regard to the notion of “owning” a house, I’m not sure that ever happens. Just stop paying the rates for a couple of years and you’ll find out who really owns “your” house.
Investment properties and loans are simply a vehicle to make money, that’s all. For peace of mind and security pay off your PPOR by all means, but paying off an investment property is sort of defeating the purpose. That’s providing it is not heavily negatively geared.
Hi Jewel
How about an update? Did you give a one dollar deposit?
Hi Ninie
Consider this. Say you bought a house 20 years ago for say $60,000, you borrowed 80% or $48,000. You only pay the interest on the loan, not the pricipal. Today, you still owe $48,000 but the house is worth $300,000 and you get $350 a week in rent. Although you haven’t paid anything off the principal, it has decreased relative to the value of the home, and, as you have mentioned you’ve had the extra cash flow for other investments and all repayments are tax deductible.
If you’ve picked up on the difference between “good debt” and “bad debt” and can see the benefits of leveraging your money, you can see why investors are trying to maximise their loans (getting equity loans when a property goes up in value) rather than minimising their loans by paying off the principle.
Generally with an IO loan, if it’s not fixed interest, you can make extra repayments which come off the principle, thereby reducing your interest payments. You can then redraw those extra payments as needed (for investment purposes only).
Or again, you have an offset account to reduce the interest repayments, then there are no tax issues if you use the money for non investment purposes.
What I mean by leveraging your money is if you have loan of 80% on a house and that house goes up in value by 20% in a given time period, you have effectively doubled your invested capital (ie, house costs $100,000, you have $20,000 of your own money in it and the bank has $80,000). Value goes up by 20% to $120,000. You still only owe the bank $80k so you now have $40k in equity.
If you used all your own money and bought a house for $20,000 and it went up by 20%, you’ve only increased your equity by $4,000
I hope that’s no thoroughly confusing.
Is Rich Dad really a fictional character? I saw RK in an interview one time talking about him. That’s a little disturbing.
Santa’s still real though right?[eh]
I had a strange situation recently on a contract where I didn’t want to put down a huge deposit. The REA wrote down that I would pay $500 or whatever deposit on exchange of contracts and 10% deposit payable at settlement. Apparently this would make the vendor feel better about it since they are getting a 10% deposit. Maybe they’re supposed to not notice that it isn’t payable until settlement? I thought it was all a bit strange myself. This happened in QLD.
A standard contract is always “subject to building and pest inspection”, so if you haven’t already, you might consider signing a contract on the property and then negotiating the price or pulling out after you get the building report. This will a) stop you spending $300 on an inspection only to have someone else buy it in the meantime, and b) put you in a stronger bargaining position. You still can’t get away from the fact that due diligence costs money. It sounds from your post like you will be living in the property? In that case, I would definitely be having a look myself before buying. $800 travelling costs sounds like a lot. What about the free train travel that pensioners are entitled to? Maybe you don’t both need to go.
Dazzling, what an inspired post. How truly intelligent you are! [grad]
Hi Winterpeg
I just did a quick search and found these 2 forums which may be a place for you to start.
http://www.servenet.com/reforum/
http://www.realestatediscuss.com/
This forum was started by an Australian which is probably why most of the posts are from Australia. I’m sure you’ll find something similar for Americans.
But now that you’re here and have been reading the info on this forum, can you give us some local insight into the differences with the real estate market in the States? For example, I;ve noticed that the rental yield in the US seems to be much higher than here but what is the capital growth like?
Thanks
Thanks Coasty
If you’re buying, try Lance Baxter at Baxter’s real estate. IMO, he seems to underprice properties. If you’re selling, Paul Markwell at Realway seems to be very professional and relatively ethical.
Depends a lot on what your goals are. What do you hope to acheive by buying this property? Is it an IP or PPOR? With that in mind, you’ll be better able to work out whether or not it’s a good one. Look at the rental return, BC fees for a flat, rates, location (is it inner city or further out). How long do you expect to keep it? Give us some more info and maybe someone can give you some more specific advice.
Another option is to find a good property for around $100,000 that’s cash flow +ve or neutral. $25,000 for deposit plus costs. Leave it with a good PM. Put $15,000 in a redraw or offset account to reduce the interest you’re paying, and go overseas with $10,000. I spent about about that much during 6 months in Europe (backpacking). Keep in touch with the PM via email and set up internet banking. When you get back, you’ll have $15,000 more or less cash on hand and hopefully a bit of equity.
But whatever you do, do it soon before you spend all that money.
You can try http://www.diyhomesell.com.au and/or http://www.privatelisting.com.au to start with. Also do a search on this forum under “private sale” for some tips.
You might find that a good REA will get a better price than you could yourself that will cover his/her own commission. The trick is to find a good one. You can also sign on an agent as “sole agency”, this means you can still sell it yourself without having to pay the REA.
Go to the site below and you’ll find you can do a search based on the address of the property. You’ll need to pay (about $12 or so).
http://www.confirm.com.au/citecConfirm/index.shtml
I used this site when I did my own conveyancing on a property I bought.
