Hi Neil,
I have tried this – they are great investments. firstly they are commercial leases, so no body corporate, they as the tenant pay for all of the outgoings, except for the rates and water rates – though they pay for excess usage. The annual increases are pretty good, usually 3% per annum. The banks love them – solidly built, guaranteed…[Read more]

quote:
Hello

I am looking for some feedback as to the following scenario. A room/ apartment in a hotel ( fairly large group) , guaranteed lease back by hotel , net return last year 655 per month. Cost approx mid 150’s

Are there any pitfalls with this type of investment , ie what happens if Hotel goes broke, problems with the hotel owners whom…

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Fudge, Steve concentrates on cash on cash return, and he includes principal repayments as simply part of your cash outflow. I’m sure if you look carefully (Its been a few weeks since I read it, and I’ve loaned it to a friend {sssh don’t tell Steve!}) you will see that he never implies that principal is deductable. He may be simplifying the details…[Read more]

Fudge, you are forgetting tax in your plan 2. You don’t have the interest deductions to counter rent, as you’ve paid off the loan so quickly.
Don’t forget, also, about time value of money. The figures over 25 years disguise the huge effect of inflation. In plan 2 you are investing a lot of dollars from today, next year and the year after that, as…[Read more]

Definitely not Fudge, only your interest is deductible. It’s an expense incurred in earining income. Principal is just paying back what the bank has loaned you to do this.
Jim.

EDIT: I can spell definitely, but I can’t spell deductable. Go figure!

F&B, as C2 says, you can change tack whenever you wish. Just do it, and develop strategies and goals as you go, but let them be dynamic, depending on how your equity and income progress.
My comment on the inflation issue is based on the simple fact that your interest costs just 51.5% of 6% after tax, which would be close to inflation.

As a…[Read more]

Thanks for your replies Mel and Terry. Yes I was going to buy shares but now this new development has finally come close to reality. It’s only been ten years of similar maybes! BIL has made such a hash up of the current loan, with the original ratios being mucked up because they paid bits of theirs off. It’s a real pita maths wise. He doesn’t care…[Read more]

Hi Nats,

Please e-mail me before you do anything. I have experienced as you describe and would be happy to share what I have learnt from my past week.

All of the advice in the other posts is correct to your situation. Mine is one of very recent expeience.

Kind regards, Phil

OK, the question has been posted for a while .. so here goes.

Worst job .. at age 14 .. assisting in the kill of my positive cash flow chooks on the farm!!

I had helped Dad (RIP), in slaughtering sheep. (The first one is always the worst, especially if Dad accidentally pierced the sheep’s gut.) I trapped, shot, skinned and gutted rabbits with…[Read more]

Hi,

It brings us back to reality and down to earth doesn’t it? What’s life all about?

Arty, you may not believe just words on a screen, but I do think of those kids near every day. I use it as my reminder that life ain’t so bad. To be born into poverty and sickness with little hope seems so wrong. I dont want to get too deep here guys, but you…[Read more]

Hi again C2 and Neil,

Human nature can be amazing. This thread started from your question Neil. I’m not even looking at DHA props myself, but do you realise where this has lead us? Info is valuable, and I’m sure that you see that no-one here wants to see anyone else make a mistake. Fantastic, proactive and success oriented.

I’m still amazed that…[Read more]

Hi Shirley,

I believe that speculative costs are not tax deductible.

Costs directly associated to investment after transfer of ownership are. Else we all could claim holidays on the whim of finding an investment without proving effort.

I was about to suggest the obvious .. check with your accountant .. but perhaps a change might be as good as a…[Read more]

C2 and Neil,

Thanks for the clarification on DHA homes C2.

I was unaware of the break clauses. My suggestion was to ask DHA of their requirements, then buy and modify a prop to suit. I’m aware that DHA own and release their rentals for sale. But I’m talking about buying your own privately to avoid an over-inflated DHA reserve price.

I’d be…[Read more]

Hi everyone,

Thanks for the reply Andrew. Yep, I hope my suggestion of Olim’s is OK, as I figured it not too much of an arduous travelling task for our Southside friends. It’s a good venue.

Should we tee up another meet, us Northsiders may be enticed to cross the bridge to say Weston Creek.

Anyway, I think you were looking at November on the…[Read more]

*passing muppet a valuim* Lay down hun…..its gonna be OoooooKaaaaaaaaaay []

Amit….aint I allowed to have a good weekend? LOLOL

All of ya…..I AM GOING FOR GOLD!!!!! So eat my modem dust!! lmao

~ If at first you dont succeed…destroy ALL evidence you ever tried to begin with! ~ :þ

Fudge it’s alwasy feasible if you have enough income. 4 properties in 5 years sounds pretty optimistic to me, but I’m only on a 5 figure income. It all depends on your numbers.
One other point about paying principal, I can show you mathematically that there is very little difference between IO and P&I if you are in the top tax bracket, when you…[Read more]

No answer was the stern reply!
Anyway I just had a quick chat to a Westpac home loans consultant who tells me that you can’t use a loc loan to purchase commercial property, even if it is securitised with residential property. I was under the impression that once the loc is established, we could use it for whatever we wish, but apparently it is in…[Read more]

Hi Mosquito,

This is one major problem with positive and negative cash flow when you are paying child maintenance.

You have probably already experienced the calculation for every extra dollar you earn. $1 at the marginal tax rate (say 50% with Medicare), then 18% of gross paid from nett for the first child leaves you with 32 cents in your…[Read more]

Hi Skeeta, welcome to the forum! Renting vs buying must always be a personal choice, depending on how much you value the feeling of owning the place you live in, and being able to hang whaterver you want wherever you want. My wife would certainly never have it any other way, but I wouldn’t care if I were renting my home. I would take comfort in…[Read more]

There’s a big difference in the depreciation allowance for different floor coverings, eg tiles are 2.5%. How do cork tiles and floating timber floors go wrt depreciation?

I would like to avoid carpet as much as possible in my next IP, so it would be more pet friendly and disgruntled tenant proof. I had a tenant evicted, but only found out much…[Read more]