[The ContrarianMember@the-contrarianJoin Date: 2005Post Count: 97]

November 14, 2006 - 1:14 pm

Hi Katie,

Firstly good on you for thinking about the future… From what I gather you’re 22 and looking to purchase your first property.
At the moment, I’m not sure how financially literate you are so for now I can only assume.
(Atleast you sound like you’ve got your head screwed on)

Now, you mentioned that you have around $22-25K to play with. The FHOG will also come in handy for you and I assume a stamp duty exemption also is available in NT (Actually I think you’ll find it will cost $20)
If you were looking to purchase a PPOR (Principle Place of Residence), then the first question I would ask is
“How much rent are you paying now?”

Otherwise an IP may be the way to go ie. you can still claim the FHOG plus stamp duty exemption if you live in the property for 6 consecutive mths commencing anytime within the first 12 mths. Ie. You could move in on day 364 for 6 mths (perhaps you already knew this). You see the year-to-year advantage of have an investment property is that you get tax advantages… You’ve probably heard this before, but it basically means that in your situation, you will probably get a few thousand dollars each year in your tax return if you do it this way.
(I can explain this if you like, but a tax accountant may do a better job)

Anyways, as for studio investment…
Ten years ago people use to say things like land appreciates, buildings depreciate, which from a tax point of view does make sense, but in regards to capital gains, you can still make money on a studio. Investing comes down to supply, demand, uniqueness & creating win-win situations.
Basically the most important thing is… do you like it? If you do, than chances are the next person would… therefore you have created a market. Believe me! I’ve seen 12sqm studios selling for near $200K (I live in sydney)
The thing I already like about the investment is that you say that the view is “to die for”.
That would indicate to me that unless it’s going to be built out, it should hold onto it’s value reasonably well and even in choppy conditions, due to the uniqueness, appreciate a little over time.

In regards to the property, it’s good to ask:
How old is this building?
If it’s brand new, that ofcourse would be ideal,
not just for aesthetic purposes but also great come tax time.
Is it in a good area?
Always better to invest $20K more if it means the area is worth $30K more.
How many square metres?
You may find some lenders will only lend you 80% of the value unless it’s over say 40sqm internal.

In regards to the finances, how much is the property?
Can you pull together 20%?
You see one of the biggest costs when you purchase without equity is what’s called LMI (or Lender’s Mortgage Insurance). Please forgive me if you already knew this.
It’s basically an insurance cost to cover the bank incase things goes wrong…
Basically the more deposit you have the less you pay and after 20%, you don’t pay anything.]

This is roughly how LMI is worked out:
For eg. on a purchase of $220,000…
If you had:
$5,000 LMI might cost you 1.40% of $215,000 = $ 3,010
$10,000 LMI might cost you 1.24% of $210,000 = $ 2,604
$20,000 LMI might cost you 1.11% of $200,000 = $ 2,220
$44,000 LMI would not be applicable ie. $0

Personal level:
Now I would say… if you’re renting at the mmt, and you really like the place… then go for it

However if you’re living at home, then perhaps save as much cash as you can and when something comes up
start and start small. Don’t ever outstretch yourself. Remember (as you hate to hear it)… there are always
good deals out there. A wealthy friend of mine use to say “the deal of a lifetime comes around every month”
You see if you absorb yourself in investing books and material, then I guarentee you will become a wealth of information.
Warren Buffet (Second richest man in world) states “money changes hands”…
that’s especially important to note in socalled uncertain times (as the media portrays).
You see when interest rates go up, 9 out of 10 people think this is a bad thing…
But you see, money does not just dissapear, it simply changes hands.
To make money in a market that is going up or down; that is where the true investor lies.

You have struck a chord with me somewhat…
Which is why I would genuinely love to help.
I think especially because it’s rare to find someone young who’s seriously thinking about financial independance already.
Do you know how much just $2,000 invested in Westfield Holdings in 1960 would equate to in today’s dollars if all dividends were re-invested into the company? I’m not kidding…. $300 million dollars. That’s the power of compound. I’m serious… $300 MIO.
Now imagine today were 2046…. what would you have like to invested in when you were young?
Imagine it were 2016 so on, so on….

I would be more than happy to help out if you have any further questions.

All the best…

Regards,
Anthony.

“There is nothing scarier than ignorance in action”

[The ContrarianMember@the-contrarianJoin Date: 2005Post Count: 97]

November 14, 2006 - 6:36 am

I have looked at some statistics from the ABS.
Basically it indicated that judging by past performance from 1976… we have a few years before things will pick up in Sydney.
The last cycles were 7 years & 11 years… We are now 2 years since the last peak and counting. Having said that, it’s always good to note that these are general figures. I’ve seen 25% cap growth on property bought this year where statistically the growth has been around 4% for that city for the year.

Given affordability also… I can’t see general Sydney prices moving anytime soon. Personally I would rent cheap in Sydney and invest elsewhere (PS. I’ve had a great year) Earn Sydney dollars and invest outside the city. If you do have a great deposit (ie. over 20%)… then for sydney I would start small. You could easily pick up a studio for around $180K and rent furnished for $290pw.

“There is nothing scarier than ignorance in action”

[The ContrarianMember@the-contrarianJoin Date: 2005Post Count: 97]

September 19, 2006 - 7:38 am

I’m also keen for the Sydney group.
Please kindly PM me.

Great idea guys!

Cheers,
[medieval]

“There is nothing scarier than ignorance in action”

[The ContrarianMember@the-contrarianJoin Date: 2005Post Count: 97]

September 13, 2006 - 5:50 am

Hi Lena,

That sounds great on paper! Good work to find it.
A few things I would consider:
* What sort of area is it? Rental supply / demand? Demographic?
Would you live there yourself? Is there a good infrastructure?
* Have a look at the strata report?
Any thing wrong with it structurally?
Cosmetic problems are fine… ie paint, lights, etc.
How old is the building? Can u depreciate some building costs (if it’s a little newer)
* Also check with the council for developments in the area,
sometimes good to call local police station ask about crime in the area (they are the best people to ask)…
One neighbourhood I know… One family is responsible for about 90% of the crime in the area… What do you know… the property next door is very cheap….. Ding ding ding.

Other than that it sounds great..
It sounds like it may be ur first or second property.
Rememer the starting costs LMI costs, stamp duty, legals, dispersements, strata etc etc…

If you need any more advice, pls feel free to PM me.

Good luck.
Regards,
AC[exhappy]

[The ContrarianMember@the-contrarianJoin Date: 2005Post Count: 97]

September 12, 2006 - 11:30 am

Hi Daniel…
$200K is too much if you are looking at a small size house.

I am building a standard 3 br, 2 bathroom, double garage brick home from Beechwood for $112,000 (plus carpets etc). For reference sake, it’s called a Vogue 2001… and it looks great!

Generally for investment properties, you are better off getting a “kit home”… (ie. the ones they build all the time).. from reputable builders. Beechwood, AV Jennings, Masterton, Allworth homes are the way to go.

I can tell you that their prices normally include standard fittings…
ie. laminate bench tops, tiles (in wet areas – bathroom and kitchen splashback), all windows, neutral paints, sometimes door handles and light fittings, etc…

Normally you will have to pay for carpet, tiles and blinds…
For a three bedroom house, u can do this for under $8K or better if you negotiate.

the more research you do, the more you will $ave…
Always ask for a few quotes for similar building works / services…
they can differ several hundred.

Call those companies and ask for brochures and prices on their kit homes… Good way to start.

I hope that this has been helpful.

All the best…[exhappy]
Anthony.

[The ContrarianMember@the-contrarianJoin Date: 2005Post Count: 97]

August 23, 2006 - 11:30 am

Firstly ask yourself are you looking to :
a. build equity through valuation?
b. increase the rent (and perhaps increase equity also)
c. improve the property because your living in it
d. add value to the property so you can sell it

I have found that “sometimes” structural improvements
don’t neccesarily add a great deal of value vs. money invested.
For eg. $14K for new bathroom, may improve the property $12K

Personally I would try a cosmetic makeover
As some say
“a bit of lipstick and makeup and put her back on the street”
For $1000, a fresh two tone coat of neutral coloured paint, new handles, replica designer light fittings (similar style, half the price), steam cleaning, a little gardening if possible… you get the idea.
Whenever someone inspects your place… but some fresh flowers to give it a fragrant touch… (You can give them to your gf / mother afterwards — they won’t know) [biggrin]

You may find the “buyer / tenant” enjoys the idea of a large laundry.

Remember if this were an IP and you were to sell it,
you would loose roughly 25% (50% of 50%) in CGT.
So whatever you decide to do, make sure the profit well outweighs the money invested.[thumbsupanim]

Good luck.

“There is nothing scarier than ignorance in action”

[The ContrarianMember@the-contrarianJoin Date: 2005Post Count: 97]

August 1, 2006 - 8:33 am

Robert Kiyosaki measures financial freedom by asking the following question:
“If you were to quit your job today, how long could you survive?”

Perhaps she should ask, does she have enough income to support herself for the rest of her life (perhaps from rental properties) without a job.

If so, then go for it.
If you are fortunate to be in that position, then she can afford to have any job she likes. Perhaps it’s time to write that book she’s been dreaming about, take singing lessons or dare I say, give something back to the community.

Why not go to work, make good use of the company telephone, internet, email, scanning, faxing, photocopying services and enjoy the renovating on the weekend — Double edge sword.

Regards,
AC

“There is nothing scarier than ignorance in action”

[The ContrarianMember@the-contrarianJoin Date: 2005Post Count: 97]

March 17, 2006 - 12:34 pm

All securities come with a risk.
However if you wanna take a risk and find 9% or 10%
then here’s an example

http://www.realestate.com.au/cgi-bin/rsearch?a=o&s=nsw&cc=&c=54870149&tm=1142591348&id=102732220&f=0&p=10&t=res&ty=&snf=ras&ag=&cu=&fmt=&header=

Sorry guys, but this one’s taken.

BTW, my personal opinion would be to balance your portfolio with a mixture of eggs… (ie. not just CF properties) Steve does… He must of forgot to mention [cigar]

[email protected]

“There is nothing scarier than ignorance in action”