Bought block in Mandurah WA for $17,000 cash when 17 in father’s name (his name, my dough)and transferred title when 18 and built first house for $55,000. My first home loan.

Clive

Best Move – Investing in property from the age of 17 even though I didn’t really know what I was doing and made a lot of mistakes.

Worst Mistake – Not understanding the huge difference location makes to capital growth.

Key advice – Do your research, work out the worst case then go ahead and do something.

Best book – Noel Whittaker’s…[Read more]

Clive

Regarding this Waroona property

Located in fast growing community of Waroona is this great investment. Currently tenanted as commercial laundry depot @ appox: $1800.00 per month. Leased until 2006, with 5 year option over 400sqm of floor space.

This place is a commercial laundry that is very positive cashflow. 11 second rule:
$415 /…[Read more]

Personally I use Devfeas 5.0 (now superseded by Devfeas 6.0) to carry out my feasibility studies.
The software is created by the Andrews chaps in South Australia. I don’t remember the website, maybe http://www.devfeas.com.au?
It is not cheap, mine cost $500 but new version is probably more, but a good package.
As with all software, it is…[Read more]

I used to dislike Bunbury. It was a town planning disaster but I have changed my opinion now.
The town centre is alive and vibrant and there are some really nice older houses in the back streets on large blocks.
It’s handy to the wine region also.

I think you could do much worse.

Clive

Yes it stinks here in Mandurah, it’s horrid, it’s awful, whatever you do don’t come here!

Seriously though the only smell these days is the smell of car fumes when the traffic gridlocks.
Mandurah has had astonishing growth in the last 4 years. I believe that it is grossly overvalued however I have been saying that for 2 years so what would I…[Read more]

Yes Dale Alcock is one of the Directors of the group that comprises APG, Webb Brown etc.

When I finally parted company with APG I was then faced with the dilemma you described, get plans drawn up, get approvals, find another builder etc. I decided at the time that with the additional delays that the risk of being caught in a down market…[Read more]

Have a gander at this http://www.afsd.com.au/article/aip/aip31a.htm

Regards

Clive

I couldn’t agree with you more. It becomes a major burden as it increases exponentially. I was bitching about paying 10K last year but 36K is murder.

The solution you mentioned is one, or else you get into setting up a Trust for every property (expensive and a lot of paperwork) or spreading your investments across different…[Read more]

I am assuming you are self managing?

Your Lease Agreement should spell out the notice period required to be given by either party prior to expiry of 3 year term and the details pertaining to renewal as well.

Regards
Clive

I have been through a similar situation last year. I had engaged APG to design 3 townhouses for a lot I wished to develop. Based on their conceptual drawings (after $1000 deposit) I paid another $3000 per unit for PPA. They estimated 160K each for construction but later came back at between 180K and 200K.
I signed building contracts but…[Read more]

The situation you refer to can occur when you have a negatively geared property before taking into account the non – cash deductions (ie depreciation) which in new shiny apartments with all the trimmings can be quite substantial in the early years. This is how some marketing groups sell apartments as “cashflow positive”.
It is important to…[Read more]

Capital growth next 12 months, who knows but I believe your selections are good ones. That corridor is only going to keep growing.

Clive

Based on your numbers you would be better off spending your deposit on shares in a large Australian telecommunications company or bank.
Not that I am recommending any shares but it pays to compare what else you can get for your money.

Clive

If both partners work and are in the top tax bracket, how does a discretionary family trust improve the tax position?
We are in that position. We have a Trust but I really set that up to provide another entity in which to hold property because of Land Tax. Our income tax situation has not changed.

Regards

Clive

We do own commercial property but do not profess to know everything about it.
1. Yield – there is no “norm”. The rate of return will almost always reflect the risk involved. For example a building with McDonalds in a premium location could yield only 6% because investors are prepared to pay more for the security of a tenant like that. On…[Read more]

I would not have the confidence to buy property sight unseen.
In the last fortnight I have looked at 2 properties in my hometown and both times the agents had made serious mistakes with the property details.
First one the agent says that block can be subdivided into 4 green title street front lots hence the 299K price. I think hang on I am…[Read more]

SMTM

I thought the $50K level was the point at which it was compulsory to register for GST.
All enterprises (as determined by ATO) should have an ABN, even if income is less than $50K.

SMTM

50% liquidated damages is standard on REIWA Residential Lease Agreements where the owner terminates the agreement prior to expiration. Clause 15 from memory?
Is it different in other states?

SMTM

I would suggest visiting the ATO website. Basically if you are operating an enterprise then you need an ABN.

Regards

SMTM

Recently changed a PM. Gave a months notice in writing and had to pay 50% of the management fees that would have been due had the agreement run it’s full term.
The new agent picked up the bill for this.
This was in WA

Regards

SMTM

Commercial property yields can appear tempting, especially alongside the average residential yield at the moment.
However you need to be aware that investing in commercial property is a different proposition to investing in residential real estate.
For starters your tenant will be a business and if you are a small investor then most…[Read more]

Landtax what a rip off! This year our land tax bill reached over $10,000. This is due to the exponential increase in rate as the number and hence aggregate value of all properties held increases.
We cannot afford to hold any longer and so are forced to sell down. Sure the capital values have increased but the cashflow does not support this…[Read more]

Just as the others have said, do not sign with this woman. You owe her nothing and she is not your friend.
Get a proper valuation. It will cost you a little but save you a lot.
Then find another agent. He or she should be able to substantiate their suggested listing price with comparable sales evidence.
Remember it is your money.

Regards
SMTM

Thanks for that.

SMTM

My opinion of Perth residential in general is that it is not a place to invest in the next couple of years. I feel there are too many investors and too few tenants and that there will be downward pressure on sale prices in the short to medium term.
Of course there will be localised exceptions and isolated hotspots but overall I am…[Read more]

Yes I thought I had done my homework but as with many things the devil is in the detail.

Regards

SMTM

Thanks for the reply. Well spelled out and concurs with what I have since read minus the legal babble.

Regards

SMTM

Derek’s link will give you precise figures but for a quick estimate when out on the road I use a figure of 5% of purchase price.

Regards
SMTM

Yes have read all those books and many more. A discretionary trust and a “family trust” are not the same thing, although a discretionary trust will often be called a family trust. Once a family trust election has been made treatment of losses, franked dividends etc changes. The range of beneficiaries is limited also and any distribution to a…[Read more]

We recently set up a discretionary trust through my accountant with a corporate trustee, wife and I as directors.
I was feeling quite the professional until my wife’s accountant asked why we had done it. I explained about asset protection and flexibility to distribute income down the track etc. He was quite blunt and suggested we had…[Read more]

Recently paid $2200 for a house of approx 160m2 to have all the walls patched, ceilings and walls painted.
Considering how long it took the bloke I think it was good value.

SMTM

I had a similar situation last year. I wanted an extra $20 pw on top of $240 pw rent for ducted evap system however we ended up agreeing on $10 pw. System cost $3399 so a 14.7% return on money spent and the tenants stayed on.

SMTM

Haven’t been to his workshop but met him on the Hanna Development course a few years back. Seems a genuine no frills kind of bloke so I imagine he would deal in facts and not pizzaz.
He has done his own developments, over 40 I think, so shhould be worthwhile to learn from.

Regards
SMTM

I am not sure whether to buy a block of land which I can build two townhouses or start with buying something under $100,000 and renting out for about $150.00.

If your intention was to buy the land, build the townhouses then keep the dwellings and rent out then the answer would be that you are better off buying something already…[Read more]

Old saying, “To take no action is in itself an action”.

Yes with the neg gearing one tends to run out of cashflow at some stage, but with (most of) the pos stuff you want to be putting regular money into the loan else you run out of equity. I know this has not been strictly true in recent years but I think this has been an abboration and…[Read more]

The example you gave does highlight the downside of a negative gearing strategy. Success with negative gearing is contingent upon astute selection of property among other things. The example you gave would be typical of a poor investment, be it due to poor location, lack of desirability etc. In fact it sounds like one of my early…[Read more]

Ultimately only you can decide this. It sounds to me as though you are not clear on what you want to achieve from investing in property, what your timeframe is and what your strategy is and hence the analysis paralysis.
Do you aim to replace your income with passive income in a short (as possible) timeframe or build a substantial asset…[Read more]

Your predicament sounds rather similar to what I just went through.
I have an IP in WA which had been rented to the same people for 2 years. As I was considering selling I wanted to take a look first hand to see what needed doing and whether it could be done with house occupied.
The tenants lease agreement had expired and had now reverted…[Read more]

I am 38 and I definitely agree with Postie about the apparent need in the younger people to have everything now. Delayed gratification is a rare commodity it would seem. Many of the young first home buyers we know are getting a nice new 200 sqm plus 4bed 2bath brick tile home with all the trimmings from day one. No small houses…[Read more]

I thought an option wasn’t an option, so to speak.
Yours is a very bold plan. I hate to dampen your obvious enthusiasm but it is a big project for your first development. My advice would be to try something smaller to begin with like a triplex or similar. You will be surprised at what can go wrong and how the costs can get away from…[Read more]

Just an idea.
What about using an option on this site you have located? Set the expiry at 6 or 12 months, long enough to arrange plans and secure your DA then sell with DA approval.
I have never used an option before but I am sure others on the forum have so they would know how they are structured etc.

Regards
SMTM

If you are looking for CF+ property then yes you are looking for a high cap rate.
There is a reason why properties have different cap rates though. As an example when McDonalds sold some stores here (WA) they sold at a price which represented a cap rate of 8.5 because purchasers were prepared to pay more for a quality tenant. In…[Read more]

Websites and books specifically pertaining to commercial property investment are scarce indeed. I have not yet found one of either that impressed me. I read a book by Chris Lang and Martin Roth but it was extremely basic.
Sorry I can’t help.

SMTM

I am no commercial guru but we do have commercial property.

Because I am a bit of a sceptic, whenever I see a tenanted commercial property for sale I immediately think, why?
Of course the reason could be anything but in many of the deals we have looked at it has become apparent (after digging around) that the tenant is not going to take…[Read more]