[Ryan McLeanParticipant@ryan-mcleanJoin Date: 2010Post Count: 547]

September 21, 2010 - 11:40 am

Are you talking about getting a tax deduction on your income?

You only get a tax deduction on your regular income if the property makes a loss. That is if your expenses are higher than your income.

Generally this happens when you have a mortgage and your mortgage payments (and other expenses) are higher than the rent coming in. Say mortgage+expenses = $500/week rent=$400/week. You would then be able to claim $100/week as a tax deduction. Plus you can add in capital expenditure and depreciation.

Don't take this as financial advice though, every situation is different and this isn't the case for every property. See a financial advisor.

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September 21, 2010 - 11:35 am

Few guidelines I have when selecting a successful investment property

A) Structurally sound – Structural problems tend to cost a lot to fix and as they are often unseen can fail to add much value to the home
Something you can increase the value of – I don't want to just rely on the market to make money, if I can renovate to add value or turn it into dual occupancy that can make me more money, even if the market stands still
C) Towns with 8,000+ and a growing population – Small towns can be risky and if a tenant moves out sometimes hard to re-rent. Declining population is a red flag but not a stop sign. Look into WHY the town is declining. It might just be short term
D) Motivated Buyer – A buyer who wants/needs to sell desperately and will sell below value or give me favorable terms
E) Demand in the area – If the investment goes south I was to have a way out. If I need to sell I want to be able to sell fairly quickly, if a tenant moves out I want it rented immediately.

Hope that helps, it is just a few things but it is a start to what I really hope will be a helpful thread for a lot of people.

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September 21, 2010 - 11:29 am

I think that a lot of the things you mentioned are stock standard and to not have them would be an insult to modern day living. So you are right, you need to pay attention to that detail.

I must say I have only seen a couple of bathrooms without towel rails and I was not impressed.

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September 21, 2010 - 11:27 am

Shivers, this thread turned into something massive. Never in a million years did I think this thread would have the quality of conversation that it has had. Good on you propertyinvesting.com.

Just a question. Did you ever sell the DVDs?

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September 21, 2010 - 11:24 am

Yeh you can get lino that looks like wood…technically not floating floorboards but people call them that anyway. It's pretty cheap to do that.

The floating floorboards you are after slot together and will just sit on top of your chipboard.

Personally I think carpet is better for bedrooms (and rentals), and carpet is generally cheaper. Best idea (to find out price) is to get a quote, or are you going to install the floating floorboards yourself.

Can't really recommend a local builder because it probably won't suit, and prices always vary. Sorry if that's not what you were looking for.

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September 21, 2010 - 9:04 am

I have heard both really good things and really bad things about Mark Rolton. I question whether his methods are able to be implemented by the non-savvy everyday investor.

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September 21, 2010 - 8:50 am

I have this situation. My wife doesn't care about investing or business or anything to do with money really (except maybe spending it).
Luckily she is supportive of me and lets me invest our money.

It's much harder doing it by yourself, but maybe with the support of your partner (but maybe you the help of your partner) you could achieve great things. Then once you get started and start seeing some results I am sure he will want to join in.

When money is being made and you are having a great time, people can't help but want to get in on the action

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September 21, 2010 - 8:47 am

The only problem with jumping into a property so negatively geared is that you may be limiting the potential to buy other properties.
A) You can't save money because you are outlaying all your money into the property
Even if you get awesome capital gains it may be hard to buy another property (if it were negatively geared) because you are outlaying so much money on the property.

But a property just for the sake of it isn't the best idea. Learn more and buy a property you think will make you money. Have a strategy to get from where you are now to where you want to be. I am guessing forking out $300/week isn't what you would consider ideal

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September 21, 2010 - 8:38 am

What kind of advice are you after? What suburbs to look in? What houses to look for?
What investment strategy to use?

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September 16, 2010 - 11:51 am

Western Union do money transfers. Don't know about their fees

You can do straight bank transfers from different countries. You need a few bank codes and stuff but it is very do-able, there is a fee but it isn't crazy I don't think.

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September 15, 2010 - 12:05 pm

5% is a massive rate if you are selling your home. Generally commissions range between 1.1%-3%. The lower commissions are generally smaller agencies, but you should be able to easily get around 2% just by asking for a discount and saying you will go with someone else if they don't lower it (and be willing to go with someone else).

My parents and their next door neighbours recently used the same agency to sell their home. My parents paid .2% more than their neighbours just because they didn't push for a discount.

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September 15, 2010 - 12:02 pm

What about Hire A Hubby? There are heaps on them in Sydney and I presume there would be lots in Melbourne also.

They have the advantage of being a big company, so if one builder is unavailable when you want him you could get another one from the same company. Haven't used them before but I see their vans around all the time.

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September 15, 2010 - 12:01 pm

I don't have any builders for you, but just some experience to give you some ideas.

If there is already a house on the block you might just be able to build up a story and turn that into dual occupancy. Generally this is pretty cheap as all the plumbing/sewerage/electricity is already there all the have to do is mimic it upstairs. Just make separate entrances and you could have dual occupancy for a fraction of the cost of building a completely new dwelling (plus later down the track you could sell it as one home, rather than trying to sell a dual occupancy block with two homes.)

Just an idea because my mother in law has done this and I know it was pretty cheap compared to building a new dwelling. Depends on what house is already there though. Good luck with it.

Wait, my wife just told me the company that adds stories is call raise-a-roof (or maybe raise-the-roof). You could have a look at them.

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September 15, 2010 - 11:56 am

Your website doesn't have anything on it? It is just a crazy domains page????
Why direct us to this?

ps. Good luck in your search for financiers, but I doubt you will find them on this forum if you haven't had any previous experience or success. I wish it was that easy. I wish you the best of luck though.

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September 15, 2010 - 11:50 am

Glad to hear you are getting your head around it. Hard to put a figure on 'risk' though.
The more you know about investing the more you can be aware of and the lower the risk it. Some of that comes from reading books etc. some of it comes from life experience.

I don't know anyone who got rich by sticking their money in a term deposit though.

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September 15, 2010 - 11:47 am

My friends have this same problem. The wife's parents gave them a deposit but wanted it so that if they divorced their daughter would keep all the money and the husband wouldn't get any of it. I can see where they are coming from (divorce is so ripe these days).

What they did is put a caveat on the property that they bought. Don't think they have any ownership in it though. Only problem with a caveat is that if they ever want to do anything to the house (renovations, extensions etc) they have to get the parents permission. It has it's positives and it's negatives.

This is tricky though so you should probably see a lawyer about it. But the caveat could be an option? Don't know what happens because he is a non-resident though.

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September 14, 2010 - 12:38 pm

Just a note. Discretionary trusts are great but they don't allow you to negatively gear. So positive gearing is a (near) must if you are wanting to invest using a trust.
Using a trust gives you much better asset protection and if you are looking to buy a lot of properties then this will become important down the track.

Good work buying your second property though. Most people get stuck at one and never move forward from there. Good on you taking the leap.

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September 14, 2010 - 12:36 pm

@ Daniel – Ahhhh yes, now I remember. Now I can put a face to that email
I also vote for Richard to be elevated to MOD status (that is if he wants to be)

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September 14, 2010 - 12:30 pm

Hey Eric,

Discretionary Family Trusts do tend to offer the best asset protection, especially when they have a non-trading company as the trustee. But like Richard said you can't negatively gear them.

You can always restructure the title of the home later down the track, when you are becoming successful as an investor, but it can cost a lot of money. It is good to get things right first.

With the amount your wife is getting paid it looks like you guys probably have a fair chunk of disposable income, but it still might be an idea to look for positive cash flow properties to balance out your negative gearing so you aren't too out of pocket.

There are so many strategies such as wraps, renovations, positive and negatively geared, subdivisions etc. None is the be all and end all of investing. Learn as much as you can about the different strategies and choose the one that seems right for you.

ps. This is not financial advice, always seek the counsel of a professional financial advisor.

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September 14, 2010 - 12:25 pm

As far as "general contracts" are concerned there is rarely a clause that will say if there is structural damage you get a discount. Because how can you evaluate the effective worth of particular structural damage.

You should get your inspections done before paying your 10% deposit, or create a clause saying 'contract subject to inspection" (get a solicitor to write it up in legal terms.

As far as negotiating power, you have as much as the seller gives you. In a hot market you might try to negotiate and they just tell you to rack off because there are 3 other buyers wanting to pay full price despite the damage. In a slower market with no other buyers around you might have more negotiating power…but it all depends on the vendor.

I agree with terry, get a professional to draft your special conditions

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