[swampy30Member@swampy30Join Date: 2003Post Count: 85]

November 20, 2011 - 6:36 am

Well, this is the interesting thing, working out your strategy! are you youngish? (not a mature student?)

Part of the problem for me, and others, I suspect, is there are too many choices and options!

Personally, I would buy own home first, pay off ASAP, then invest, purely cos CGT exemption on PPoR is use it or lose it. Also if given choice, I would rather have 2 units rather than one house. But…!! Also buy as much as you can without over stretching yourself. But that’s just my opinion

What are your plans after study finishes?

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

November 20, 2011 - 5:30 am

Hi,

Have you checked with lenders whether you can get the $50k loan with just Austudy as income? How are you paying for stamp duty?
or are you getting the $50k from a non bank source?
Just askin’, cos without finance the other questions don’t matter.

Cheers

swampy

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

November 16, 2011 - 10:11 am

Well your investment path will start where your budget, goals and the current market intersect.

Why are you investing? Long term capital gain? Short term cash flow? The answers to these questions will determine the type of property you invest in.

You don’t have to invest where you live. Where does a home of your own fit in – principal place of residence (PPoR)?

If I was starting out again, I’d say make sure you have an exit plan as well as an entry plan, and a good sized buffer for peace of mind.

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

November 16, 2011 - 9:34 am

No, the other property fell thru. $40k difference between my best offer and what the vendor would sell for.

The cracks are at least 5mm wide. Oh well, scratch potential property number 2. I wonder what the average number of houses people reject before buying?

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

October 25, 2011 - 5:53 am

The answer to this (how painful), is about $ 150k and 2 months, including plans!

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

October 23, 2011 - 7:34 am

Absolutely you will need body Corp approval – which state is the property in? Is it strata or torrens title?

Below from NSW (strata schemes)

http://www.fairtrading.nsw.gov.au/Tenants_and_home_owners/Strata_schemes/Common_property_and_the_lot.html

“Other responsibilities under Section 116 and 117
You must not interfere with any support or shelter provided by your lot for another lot or the common property. You must give the owners corporation at least 14 days written notice before altering the structure of your lot. The notice must describe the alterations. The owners corporation can stop alterations to a lot if it interferes with the common property or any support to the rest of the building.”

I’d have an informal chat with the relevant contact to see if what you’re contemplating is possible, if I were you

Let everyone know the outcome!

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

October 16, 2011 - 12:11 pm

Hi Mick,

As an investor (in any asset), you are taking a risk. Yes, there is a risk that in the short term, some property prices might slide.
So if you’re sure property is the way to go, you pick the right property, you make sure you can ride out all the bumps along the way – like renovation costs, interest rate rises, vacancies, tax, even property price falls. Ask yourself what your timeframe is, what your goal is, what your best case, worst case and exit strategies are.

You’re already 75% geared on your own home, with only $50k cash. To buy a property around $450k, you’d need a $90k deposit to avoid lenders mortgage insurance, and then there’s costs as well.
Sorry to be blunt but I think you would be over extending yourself if you go for another one at $450k. But that’s not the only strategy to use.

If you even think you can try to time the market, you’re in the wrong game. Yes, for capital growth alone (if thats your only strategy), it is time in the market, not timing the market, that will make you dollars. If you genuinely believe property prices are going to fall in the next year or two, then obviously now is not the time for you to buy another property. Use this time to educate yourself, build a bigger financial buffer, decide your strategies and structures, ready for the next upturn.

Also weigh up the cost of doing nothing, too.

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

October 9, 2011 - 2:59 am

@ Anthony K

What’s the current annual limit to contribute to super?

Swampy

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

October 8, 2011 - 5:49 am

Hi John,

It’s a nice “problem” for your parents to have!

What would they be trying to achieve, apart from tax minimisation? As you seem to be aware, transferring properties into a trust would trigger CGT, so that would be a big price to pay.

Do they want to develop their land? How many years until they want to retire?

I’m sure someone more knowledgable than myself will reply soon.

Swampy

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

October 6, 2011 - 9:28 am

Considered opinion is…maybe.

Although “crash” is an emotive word. 5 to 10% declines, worst case scenario, possible.

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

October 6, 2011 - 8:10 am

Hi Aussieguy2000,

Each state looks only at the land owned by you with it’s own borders e.g. Qld does not care that I pay land tax in
NSW, only that I own land less than the threshold for Qld

Re q3, do not confuse capital gains tax exemption with land tax exemption, they are 2 different taxes with their own separate rules
If you are not living in a property, it is not your PPoR for land tax purposes (in NSW anyway). I had to pay land tax on my PPOR whilst overseas, but still am claiming CGT exemption under the 6 year rule.

Cheers

Swampy

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

October 6, 2011 - 6:42 am

Hi aussieguy2000

In answer to your questions;

1) thresholds are per individual
2) tax free thresholds vary per state – and the Northern Territory has NO land tax
3) you can check with the relevant state revenue office; and you prove your PPoR status by proving utility bills in your name at the relevant address

Check out http://www.land tax.com.au (found by Googling in 2 seconds) for thresholds and rates!

Cheers

swampy

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

October 1, 2011 - 12:49 am

I think first port of call is to contact the local council to see if you can get planning approval; because without approval, the whole process won’t get off the ground, and you won’t need to worry about insurance etc

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

September 30, 2011 - 7:14 am

Hi El,

Well, if one uses the lower price of your current estimated price, the property has increased in value from $32K to $460K, roughly 40% in about 5 years. At about 8% per year, I’d say that wasn’t too shabby.

Gross rental of $375 per week is 4% – again, not too bad.

Be very careful about selling and re buying. If you sell, you’ll be up for CGT, which takes up a massive chunk out of your equity.
Or looking at it another way, by selling, you would be eroding your capital base. Using *very* rough figures, you’d be up for around $30k CGT, plus costs of selling, plus costs of buying.

Sale price $460k
Less CGT $30k
Less commission $10K
Legal etc $3k
Net value $417k

Re buying another property
Purchase price $400k
Stamp duty $20k (check that!)
Legals $3k
Total costs $423k

Can you see how the new property would have to grow by 15 % just to get you back where you started (property value of $460k)
Think very carefully, does it make sense to sell an asset that has generated 8% capital growth for the last 5 years, to find an asset that will have to grow by 15% to break even.

Do you really *need* to sell? Or are you just wanting to fiddle with your portfolio? Only you can answer these questions

My perspective, anyway. Hope it helps

Swampy30

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

September 29, 2011 - 11:48 pm

Ben,

I think dual key apartments are meant to appeal to owners who want convenient city living, with control over additional income. If I was a dual apartment owner living in Sydney CBD, I would have no problem letting out a studio to a student or executive. (Did you see that story about a foreign student who paid $140 per week to live on someone’s balcony?!). However the studio is completely separate, so no queues for the bathroom! So shared living without the hassle. Also that additional income would mean I could afford to buy in the city whereas without it I couldn’t. But because I am the key holder of the common entry, presumably I can dictate terms to the tenant more so than if it was truly a separate apartment.

Or it could be a solution to shared living for families with teenagers or in-laws.

Not sure how tenancy laws come into play in this arrangement. I imagine each dual key development would need to be zoned for short term lets as well as long term/owner occupancy.

I think this is an idea that is great in theory, not so good in practice, yet. As I said, banks don’t like lending on them, and who wants to live in a building comprised of 50% short term lets, with all the issues that brings?

Swampy30

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

September 29, 2011 - 11:16 pm

Hi Ben,

A dual key apartment is one which (usually) has a self contained studio accessed by a door, inside the main apartment. There is a common hallway, but separate lockable doors to each section. So the title belongs to one owner, but they can let the each portion separately, or live in one and let the other.

The advantage is higher yield and/or income. You could live in the main part and let the smaller part out, so you get income to help with the mortgage. Or let both parts out separately. I’m not sure whether banks like them or not – I can imagine scenarios where perhaps the owner defaults on the mortgage but the paying tenant has a lease, so that would be messy and banks don’t like mess.

I visited the marketing office of a dual key block in Sydney years ago. I liked the idea, and overhead one man who said he was going to buy two, but the price was quite high (900k back in 20040, and I didn’t pursue it any further.

Swampy30

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

September 29, 2011 - 9:47 am

Hi Denny Crane,

“Is it better to use cash as a deposit or save it for reno costs?”

Save it for reno costs, in my opinion. And also, speaking as an experienced property investor, I’d highly recommend that you have a decent additional, cash buffer for contingencies – minimum 3 months mortgage/expenses.

“Can you include the reno budget in the borrowing of the property?” Not exactly – banks will usually only lend max 80% of a property’s unimproved value. If you have additional equity/capacity in your PPoR, you could draw that down.

Going by what you say, if your PPor is valued at roughly $500k, then the max 80% lending against that property is $400k, but you only already have $320k loan, so only an extra $80K available (without Lenders Mortgage Insurance – LMII). Check with a broker how much additional capacity you have based on your salary/financial circumstances.

Yes, basic renos can be worth it, depending…how good are your skills? You got any builder/carpenter friends in the family? Or will you be paying tradies to do everything?

Congratulations on starting the property investing journey!

Cheers

Swampy30

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

August 5, 2011 - 12:06 pm

Jamie M wrote:

It is quite a broad question but if it's high yielding type stock you're after – I'm thinking you'll have to start your search way out west.

Pick up a copy of API or YIP mag and scan the back pages that contain suburb specific data such as growth rates, rental yields, vacancy rates, etc. This should help you narrow down your search.

Cheers

Jamie

I like the original poster's terminology – we're all 'team members" in the investing game!
Thanks for your more constructive reply, team member!<br /;-)” title=”>;-)” class=”bbcode_smiley” />

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

August 5, 2011 - 11:37 am

Wow, that is a bit of an open ended question.  There are over 600 suburbs in Sydney, NSW.

And past performance is not necessarily indicative of future results – which means just because someone has made a gain in the past, doesn't mean they'll make the same gain in the future.

Me thinks you are really asking, "please someone tell me (for free and in one sentence), where I can make money".  It doesn't work like that.  First you have to be alot more specific, about your budget, investing strategy, property preference, etc etc.  Second, if we knew for sure, we'd all be there – property is a calculated gamble.

 

 

 

[swampy30Member@swampy30Join Date: 2003Post Count: 85]

July 9, 2011 - 9:41 am

Drew, so really, if we were just looking after our our own interests, then owners of +ve property * should* campaign for NG to be abolished?