Yes, that’s right. There is no ‘agreed’ industry-wide protocol for what expenses are included, and what are excluded, so the calculation cannot be applied comparatively with accuracy.

Heck – that’s a lot of big words in one sentence. Just had my morning coffee and it shows.

:-)

– Steve

Thanks for posting the question.

It is an interesting one and, without being a lawyer or offering advice, seems to be a matter of providing a safe place for your tenant to reside. If the asbestos is unsafe in its current condition, then I it would seem logical that the owner has responsibility for removing it safely.

Of course, if the tenant was responsible for putting it there, or ‘disturbing it’ so as to now make it unsafe (whereas before it was safe), it might be a different issue.

And then there is the humanity aspect to this. Would I want anything in my property that was a known risk to someone renting it? No. I’d quickly and promptly and safely get it gone.

All that said, if you are in any doubt then a call to the relevant tenancy dispute helpline in your State would be worthwhile to see what the protocol is. You might also want to have an ‘informal’ chat with your insurance company.

Regards,

– Steve

Properties in regional areas tend to be more income orientated than growth orientated, but of course that is a generality, not a rule. Student accommodation is definitely an income maximisation strategy though.

Some questions I would work through:

a. Who is going to manage it, and at what cost?
b. Who is going to buy it off you? It will need to be another investor? How will you add value or create a compelling investment opportunity to achieve your exit?
c. With a 10 year horizon, and with a growth focus and a passive mindset, might you be better off with the classic “worst house, in the best street, in the best suburb you can afford” approach?

The approach I advocate today is this:

a. Spend less than you earn to create savings (or cash surplus)
b. Use the surplus as capital to invest
c. Invest for growth – either active and quick turn, or passive and generic growth
d. Once you have accumulated enough capital, redeploy to income (commercial property)

Regards,

– Steve

• This reply was modified 6 years, 4 months ago by  Steve McKnight.

Hi Flynn,

In the US there is what is called a 1031 like kind exchange, where you can roll a property’s realised gain in to another purchase. Australia does not have such laws, although there is capital gains tax rollover relief if you sell a business (in some circumstances).

To answer your other questions…

Is now a good time?

Well, it depends on your approach, in addition to your level of skill and experience. Now is a poor time if you are speculating and low on skill, but if you are educated and experienced, then there are always opportunities to make money.

1% rule

Once you find a property that meets the 1% rule then you need to do further due diligence on the property to make sure the information you’ve been given, and you discover, supports the purchase. I have a resource called STEPS that walks you though the 12 STEPS process for how I recommend you complete due diligence on a property acquisition.

Utilities

Different jurisdictions have different rules. Make sure you know what the rules are in your investing area.

Offer Price

You should offer a price that is commensurate with the risk, and allows you to make your required return.

Bye,

– Steve

• This reply was modified 6 years, 4 months ago by  Steve McKnight.

Kade wrote:

I have been advised that the best option would be to invest in my personal name as it is easier to borrow and trusts do not necessarily have any tax benefits.

An accounting structure summarises the way you own and control your wealth. The two options, from a high level, are: in your own name, in another entity (that you control).

The right structure is one that allows you to minimise your tax, maximise your asset protection, within the budget you have available to set it up and run it, and appropriate for your wealth creation plans.

As you can imagine, that last paragraph permits a variety of scenarios to all be both right and wrong, depending on the individual.

Owning real estate in your own name is definitely the cheapest option as far as set up and ongoing costs, but it comes with the lowest tax minimisation and asset protection options, and it also makes it very hard to scale. That said, if you want to negatively gear, then it is the best option available so you can offset the property net rental loss against your salary income (and with the Libs now returned there is no risk of this changing in the next few years).

Hope this has helped.

– Steve

Heck, this IS quite a story. It’s definitely one to get some legal advice on, but being a cowboy, will you be able to recover and collect anything even if you get a judgement? Is there any kind of insurance you can claim on? Government building scheme?

– Steve

Hey Mark,

Thanks for the post. Wow. There was a bit in there!

Ive wanted to get involved in property ventures over the years but I cant borrow money because of my employment status and what most people at property seminars dont understand is that in order to play capitalism you need CAPITAL.

Very true! You need money to deploy – either yours (equity, savings) or someone else’s (JV, money partner, lender). Otherwise, the best way I know to create capital is to use the internet to monetise knowledge.

I have only one asset my apartment on the gold coast where I live with my family.

Hmmmm. This has me worried. Smart investors don’t use their homes as collateral unless absolutely necessary. It sounds like with a wife and young family, you need this home and you shouldn’t invest with assets and capital you can ill afford to lose.

You listed various options, but I am worried that options 1, 2 & 3 will be too capital intensive for you given you available cash and borrowing capacity. That said, perhaps scope some projects and see for yourself. As for tax liens, that boat has sailed – with the AUD lower and yielding assets in demand, the opportunity that was there re: tax liens in 2009 is not the same as the opportunity there in 2019.
Side note: you may find your ITIN has expired, or is about to, expire. They are only good for a finite period of time and have to be renewed.

It sounds to me that if you want to deploy your capital in real estate, then I would consider being someone else’s money or JV partner (noting what you said about not relating well, and hence the legal agreement will be important), or else buying in to some kind of listed / unlisted REIT structure.

All the best,

– Steve

Hi Jun,

It does sound like it is not a building defect, but rather improper waste being put down the sewer.

I suggest your friend get some legal advice, but as a starting point, if the blockage was caused on pipes in common property, then it would be a body corporate problem. If the blockage was in a unit’s premises, then it would be their problem. Ascertaining where the blockage occurred, and if possible who caused it, will help to work out who should compensate your friend for their damage.

Furthermore, does your friend have insurance? If so, I would be looking to see if I could make an insurance claim and leave it up to the insurer to seek recompense.

Finally, now it has happened once, what needs to happen in respect to maintenance and prevention to stop it happening again?

Bye,

– Steve

(And a point on due diligence for all – when buying a unit that is part of a complex, make sure you get a plumbing opinion on the impact of your unit if there is a blockage caused by a unit above or nearby).