Once you buy one you can then keep on saving and wait for equity to build up to buy the next. As a property increases in value, you can increase your loan on the property. This extra money can then be used as deposit for the next one.

You can also do things to increase the value quicker (= more equity = more deposits = more properties) such as renovating.

Terryw
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There is another one called TICA apparently. I am not sure how you can check, but if you know a realestate agent, you could get them to run your name through.

They are becoming a bit of a problem as people can be unfairly listed, and have not idea they are on there, and therefore cannot dispute the listing.

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I have the same concerns as Art. What if there was a fire or similar and someone was killed. The owner would be sued, and the insurance probably wouldn’t cover this sort of thing.

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What sort of return are you getting on your managed funds? There is one that returned 76%pa last year.

Pulling your money out for tax reasons only may not be wise. You will end up paying more tax on the property anyway.

If you have personal debt, then it is a different story. Maybe better to pull the money out, pay the personal debt down, and then reborrow it and put back into the managed funds/shares.

Terryw
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Companies do not get the 50% CGT reduction after 12 months of ownership.

Look into trusts

Terryw
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I’ve done it, many years ago.

It was very cheap then, and worth the money.

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Hi Sven, here’s my take on your questions.

1) It may be a good time now as prices are cheap. But they may drop further too. You just have to do research in your area, and make an educated guess.

2) I think any unit is not a very good investment. Land is what goes up in value, buildings depreciate. So you need something with land content. These units also may be worse than your average unit is they are inner city and often small in size = difficult to get finance, = difficult to sell = low capital growth. Often have high management fees too.

3) There are many calculations you can do, but one I like is rental yield. This is annual rent divided by purchase price. Properties in Sydney range from around 2-5%. That means you would be only getting 2-5% if you had cash equivalent and placed it in the bank. At the same time you have to pay around 7.3% in interest. Need something around a 9-10% yield to break even.

4) I think Bridgebuff is correct in that you only have to live there for 6 months in the first 12 to get the grant. Renting out rooms is good, but if you declare it you may lose the CGT free status on the portion you rent out. This can be extremely valuable as time ticks over, so be careful in doing this.

Terryw
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I think the LMI companies will only accept loans based on valuations if there has been 12months or more between signing contract and settlement.

If the value at settlement comes in at less than 80% LVR, then LMI is able to be bypassed. I have done a few loans like this will Bankwest. 2 to be exact. Haven’t seen anyone, other than these two clients, able to pull this off.

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Hi

Tools, thats an unusual condition isn’t it!

These scammers could be after people’s personal information for identity theft, but they are likely to suggest the loan is approved, subject to a small application fee. Once you have paid the fee, they may announce more fees to try to milk some more money, then they disappear, never to be heard of again.

Terryw
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that is nothing special. You could find your own property and possibly save thousands.

Terryw
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