Forum Replies Created
Telstra shares and some listed property trusts will give you those returns. You can also gear them at about 70%.
IMHO the above options would be far far safer than trying to get that return out of direct residential Australian property, which at this stage of the cycle, is going to entail you taking a big big risk on future capital growth. FWIW, think a funished unit in a mining town.
210m2 says it all. Why buy a such a property when you can get another one for the same price with 700m2. Remember, land appreciates, buildings depreciate.
Neighbours will be very close and there will be a tiny backyard. Who is going to demand this sort of property in an outer suburb, especially in 10 years time after the house is not so new anymore?
Which property would you rather own?
Property A: $85 pw out of pocket, but increases in value by 8% pa.
Property B: $30 pw cash flow positive, but increases in value by 3% pa.Just focusing on holding costs for an investment misses the bigger picture.
I would (and have) only bought a property sight unseen if buying through a trusted buyers advocate.
I “locked in a profit” when I sold a unit in Sydney 9 years ago. Today it would be worth 250k more than what I sold it for.
I would either
1) sell, upgrade to a nicer PPOR in Sydney and then buy an IP if possible. This keeps non-deducable debt low(er) than keeping the unit.
2) rent out unit, rent a place in Brissy for a year (dont buy) and see how you like. If you do like it, sell and buy a PPOR in Brissy (and perhaps an IP afterwards). If not sell, move back to Sydney and buy a PPOR in Sydney (and perhaps an IP afterwards).It means you have a “cash flow positive” investment. Postively geared is if it makes a profit before depreciation. Either way a great result.
Here’s some things to think about
1) First, you’ve chosen great areas in Melbourne
2) You are paying the rental guarantee, it is built into the purchase price.
3) You make it sound like being on a main road is a positive, it isn’t, it a negative.
4) Off the plan (OTP) has numerous problems, most importantly the problem of likely low land content and the likely large developer margin built into the price
5) 1.5% for those services is highway robbery.
– finance can be arranged for $0, and probably far more competantly by a broker from this forum. By them arranging it they are first charging you to take out finance and then pocketing a nice trail fee on the interest
– buyers advocate – what the?? They are the developer aren’t they, so this is completely bogus.
– solicitors fees are worth ~$900 per property
– depreciation schedule – normally provided for free by a developer of an OTP.
– financial planning – what the?? Horse has sort of bolted don’t you think. This must be a way for them to screw you in yet another way or to give you a nice warm feeling about linnig their pockets.OK, the 1.5% is ridiculous but in the big picture it is the least of your concerns. Your major risk/issue is buying OTP, with low land content, that shows every sign of having a nicely padded price.
IMHO you would do better by doing any of the following
1) turning up to an auction of a random established house in either of those suburbs and simply pinning your ears back and buying it. Yes I’m not kidding, that would be better than the deal you’ve outlined.
2) Pay a real buyers advocate (eg Wakelin) to buy an established property in that area
3) Look at 10 to 20 houses in that suburb and buy one you like and that is within 10% of the median priceThis comes across as harsh, but really with very minimal effort you could get yourself a great investment rather than a dud.
Good luck.
I have a 6 room share house. Insurance is difficult but I successfully got landlord insurance with CGU. I even got malicious damage included, although the excess for it is $1000.
On utilities, Simon is right; electricity, gas and water is paid by the landlord. In fact competition in the area I have student accommodation has meant I pay internet connection charges as well.
As for rules, well rules vary state to state.
In Victoria the rules are
– 1 to 5 people on individual leases: no requirements
– 6 or more people on individual rents inside a house requires the house to be registered as “prescribed accommodation” with the local council. To be registered it must meet various requirements such as sufficient hot water capacity (ie the normal sized h/w service is not sufficient, I had to install a second one), minimum hygiene requirements, minimum people/bathroom ratio, the landlord must keep a register of the tenants etc.
– Once it gets more than 10 habitable rooms (which includes bedrooms and living rooms) you must have a “Planning permit”. A planning permit is much more onerous to get than a prescribed accommodation permit. I could be wrong but I think at this point various fire regulation scome into force that require each room to be a fire cell (?) and for sprinkler systems to be installed. Basically you want to avoid ever getting this big as you will be up for tens of thousands of dollars.Note that having 2 * 5 bedroom units on one title avoids even having to be registered as prescribed accommodation as it applies per structure, not per title.
Something else to think about before diving into providing student accommodation:
1) banks will consider it to be a commercial lend with all the associated LVR and interest rate implications, not a residential lend. Yes you can just keep quiet about your intension when you apply for the initial loan, but refinancing may be tricky
2) insurance companies also consider it a commercial premises and see high risk in having many lessees, and so landlord insurance gets pricy and cover for malicious damage very difficult.Going guarantor is not a trivial matter. As others have said ….
DO NOT DO IT
Yes there are antivirus programs. No there are no OS X viruses. Why so? Companies are not producing products for the public good, they have an obligation to their shareholders to make profits, even if that means selling useless products.
Fact: in the 5 years that OS X has been out, there has not been a single OSX virus “in the wild”. It is bizaar how some windows users get all riled up on this point. It is fact, accept it and move on.
You still need an antivirus product for macs (yes some virus’s target macs), fortunately I think iLife comes with an antivirus product.Macs look awesome, but I dont believe they are very upgradeable.
I recently spent 2800 on a rather nice AMD 4000+ Sli graphics beast with 2 gig of ram. (put together myself) I can at least continually upgrade as technologoy comes outs (even replace the main board if I wanted to). With Macs you would have to buy a whole new unit wouldnt you?
More stuff on the voigtstr at http://users.bigpond.net.au/voigtstr
It’s a myth that Macs need anti-virus software, they don’t. iLife doesn’t have anti-virus software.
Sounds like a nice PC you put together.
PowerMacs are fully upgradable, the others aren’t except for RAM. Doesn’t bother me, as an example I still have a 4 year old laptop that runs all the latest software with ease, each OS X release has been faster than the previous. This is a nice change from the bloat of windows, I bet not too many 4 year old PC Laptops could claim the same.
You should talk to your accountant, it doesn’t matter what we say, what matters is what your accountant says.
FWIW, you might be able to claim any expenses that relate to the period it was rented out, if that is 5 months then interest etc for those 5 months.
Originally posted by lifeX:It will also recommend that you get
ANTIVIRUS program
Firewall program (the default windows one is crap)
Spyware program
Anti adware and popups blocker
Trojan Killer (only way to stop trojans and worms.I managed to get all of these without spending a cent.
Or buy a Mac Mini for less than $1,000. Not only do you not need to worry about any of that crap (except firewall which is included and is good), but you get a really nice stable computer & ad free computer that gets out of your way and lets you do what you want to do.
I know I sound like an ad for apple, but hey, I like their products.
Wow, you are having this much trouble before a sod has been turned and you still want to proceed.
I’m unclear though whether you have a title to the land?
Are you obliged to use these guys as your builder?
Is the $2k refundable?
Do you only have a verbal that the $2k will be creditted towards the total price?
Is there a committed completion date with penalties?
What have you signed?
Can you contact other buyers in the same situation as you?Personally I would run away, but not without trying to get the $2k back. If I couldn’t then I still would not sign up for a, say, $200k contract to recoup $2k.
Ditto …
Take responsibility, learn from it and move on. This is a cheap lesson IMHO.
Think long and hard before going into a deal with a sibbling, especially at your age. I guarantee that one of you will want to sell the property within 5 years. At ages 22 and 24, 5 years is going to see massive changes in your life circumstances for both of you.
One option to consider is to spend 2+ years saving up your own deposit, then buy a slightly cheaper place in your own right. IMHO there is no hurry to get into property ownership now after the huge upswing we’ve had.
Yes. Sell the IP, use the proceeds to pay off your PPOR mortgage and then re-borrow to buy another IP. This will ensure all debt is deductable, but it comes at a considerable cost (stamp, CGT, agent fees, legals). You need to do the sums to see if it is worthwhile but here’s a start.
On the plus side $275k/yr @ 6.5% = ~$18k. If you are on the top tax bracket then the potential benefit is $9k/yr.
On the cost side, CGT = ?, Stamp on new property is ~$25k, agent fees = ~$8k, legals = ~$1k.
IMHO Frankston (esp. south) has a lot more potential for capital growth than the areas you mention. It’s close on the bay, is an area with a fair bit of development and has the new motorway going in.
I can think of several good reasons people use low/no doc loans, and it doesn’t have to be because they are hiding income from the ATO.
Banks servicability calculations for full-doc loans can make a number of assumptions that can mean someone doesn’t qualify for a loan for servicability reasons when in reality they could easily afford it. For example
1) Some banks make no allowance for negative gearing tax benefits
2) Some (all?) banks will not take into account the real rent you receive if you rent a house by the room to students if you have financed it under a residential loan, instead they use in their calculations the much lower rent you would recieve by renting it as a whole
3) Some (all?) banks don’t take into account that a car lease can be tax deductable
4) Some peoples circumstances dictate that they can’t have their spouse on either the title or the loan as their spouse may earn great income but be in a proffession with a high risk of being sued.Combine some or all of those for a couple investing in IPs and before long they will have to do low-docs.
