[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

August 6, 2012 - 11:20 am

Hi Smartcube. A daunting time number 1 is, but great to see you making a move. Perhaps thinking about some more specifics, including what you want to achieve med to long term, how many properties you would like to have (and why) and you are correct in saying in this climate especially that you want something easy to tennant. I would want a better reason than knowing someone that lives in an area to want to buy there. I would strongly suggest making sure that in this price range that your rental income goes a long way to wards covering your loan interest costs as a minimum, and deciding how conservative you want to be before zeroing on an area. Many prefer to buy where they live, others could not care less. A new house and land package at the right price can offer good long term steady growth if in the right place. Have you had a look at the 'top 100' article in the latest Your investment property mag to give you an idea on what can be bought in what area for what price and the growth and rental prospects. Not a bad guide to start with.

All the best with the journey.

Cheers

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

July 13, 2012 - 1:35 pm

Toss in the following and see what you think…….although everyone differs on their interpretation of positive, neutral and negative.
* Property Management at say 7 – 9 %
*Council Rates $1200 and Water rates $750
* Also interest on the deposit and closing costs if you have had to borrow them as well via redraw, a line of credit, or a separate loan

Cheers

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

July 13, 2012 - 1:29 pm

Terryw wrote:

I don't know if that is correct v8. Bank fees – I assume monthly or yearly fees – these wouldn't be a borrowing expense but a general running expense such as rates, insurance etc. I am not sure where on the form you claim them, but it would be the same as rates.

THanks Terry – I have just gone through the 2012 ATO guidelines for rental property deductions and I am not as confident with my original info now. Etax itself seemed to allude to that, in that borrowing expenses were anything relating to the loan other than interest,  but even though not mentioned in the 2012 specifically bank fees, the definition of borrowing expenses does only cover on expenses and bank charges on taking out the original loan, including LMI (as mentioned deductible over 5 years) any valuation costs, etc 
SO……the sundry expenses may be a better option. I have pasted the definition from the publication of borrowing expense below, and while it will in no way affect the outcome of the claim, I do apologise if I have mislead anyone.

QUOTE -BORROWING EXPENSES
These are expenses directly incurred in taking out a loan
for the property. They include loan establishment fees, title
search fees and costs for preparing and filing mortgage
documents, including mortgage broker fees and stamp
duty charged on the mortgage.
Borrowing expenses also include other costs that the
lender requires you to incur as a condition of them lending
you the money for the property, such as the costs of
obtaining a valuation or lender’s mortgage insurance if you
borrow more than a certain percentage of the purchase
price of the property.
The following are not borrowing expenses:
n insurance policy premiums on a policy that provides for
your loan on the property to be paid out in the event that
you die or become disabled or unemployed
n interest expenses.
If your total borrowing expenses are more than $100,
the deduction is spread over five years or the term of the
loan, whichever is less. If the total deductible borrowing
expenses are $100 or less, they are fully deductible in the
income year they are incurred.

Cheers

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

July 11, 2012 - 1:03 pm

Yep…I'm thinking the same! Brings a whole new meaning tho the words creativity & gearing!

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

July 11, 2012 - 12:41 pm

Hi Emma,

You are correct – it does go under F – Borrowing Expenses. (Bank fees, as well as LMI if you were claiming over five years)

Cheers

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

July 11, 2012 - 12:38 pm

Qlds007 wrote:

I am doing a number of investor nights in both Sydney, Melbourne and a few regional areas where i will run thru how i built up my portfolio and then looking at how i can help individual investor structure their portfolios to meet their own investment objectives. Let me know if you like me to add you to email list for an invite to the Sydney investor night. Cheers Yours in Finance

Hi Richard,
I would be really keen to attend one of these events with the hope of seeing how you have achieved what you have and tap into your experience. any chance of posting (I would be surprised if any moderators would consider it advertising with the time you have contribued to the forum) the date you would be in Melbourne or if nay any VIC regional areas or PM'ing me? Cheers

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

July 11, 2012 - 12:32 pm

Just had to read your post couple of times to get the full gist of it………and with the double employment changes, going to contracting/self employed, and on probation all while buying property I'm actually thinking your broker (and the lender) deserve some sort of award! Glad it all worked out.
Cheers, and enjoy!

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

July 11, 2012 - 12:26 pm

Great points/discussion. We are in unchartered territory again – not since after the GFC have I seen fixed rates start with a 5.
I think IF you have no plans to sell your property, and are looking long term if you can get a 3 year rate that is in the 5's and you want some certainty there is nothing wrong with that. The lowest they have ever been for 3 years is the mid to high 5's and plenty have been crying since then that they missed the boat last time. Plenty fixed in rate at the 8+ % though and have been crying ever since too!

All the best with what you decide. ONE WARNING though……………many lenders (ah, lets just say it, pretty much all) when your loan comes of a fixed rate will put it back to their 'standard variable rate' meaning you may habe to reapply to get a discounted variable rate loan then…..and if your work or personal circumstances have changed and you may not qualify for the loan you have been paying off merrily for the last 3 years, you may be stuck in a higher rate variable loan that will erode any savings you had over the coupdl of years prior.
All the best with what you decide. …but yes, 2 or 3 years starting with a 5 is hard to say no to at the moment I agree.

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

July 11, 2012 - 12:19 pm

Back in 2002 you would have had to either change the loan ownership name/entity, or have singe a guarantee and indemnity. So if you did neither, (or worse failed to notify then bank!!!) then they are well within their rights so it is no use being obstinate about it. THat said, normally, a lot of this stuff only gets pick up if you are trying to get another loan, or an increase or somehow changin something with your facilities.
What is your sore point? Are their cost involved? Or is it that abruptnes of a generic letter (some can be sutble as a sledgehammer) Why not contact your banker to discuss and get clarification.

Cheers

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

July 11, 2012 - 11:48 am

Hi , sorry about your situation. Make sure you get a solicitor involved. They will assist with preparing a transfer that will need to be signed by your ex to put i into your name only, and in conjunction with this you will need to apply with the bank for a new loan just in your name to pay out the joint one you had together. The bank will then pay out the old loan, register the transfer and mortgage in your name with the land title office, and it will be then just yours. IF you have a joint loan on a property, you can't change the ownership structure without changing the loan.

All the best.

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

July 11, 2012 - 11:42 am

Couple of things need clarifying here I am afraid………so I will just pop a couple of F a c t s below that may clear up some of the confusion.
1) If the bank orders and pays for the valuation……um…..Yes – the valuer IS working for the bank.
2) Valuations are based on COMPARABLE sales only, and they have to 'get it right' or get into trouble. What many peple cannot grasp, is that if they go and buy a house for $300,000, then in most cases (some come in lower ) the value IS $300,00 – because that is what you just paid for it!!! Most lenders will not revalue in a timeframe less than 12 mths also for this reason – so other comparable sales can be used to gauge the value. Just had someone SPEW when their house was valued by a 'bank valuer' at $285k – it was definitely worth $320-$350k on their mothers grave et etc and all valuers were evil etc etc etc ……guess what? They just sold it 4 mths after the rant for $280k!!! Looks like the bank valuer over estimated by $5000!
3) A valuer will always ask you the purpose, as the valuation DOES come in different depending on the purpose. Classic example is for 'family law matters' (ie separations, estate, divorces etc) when generally it will come in higher than a valution for borrowing purpose….should not be too hard to work that one out!
4) I have recnelty had a clients house valued by a bank 'panel valuer' as a short form (ie more detailed) one where they were building a house on land purchased recently, and it cam in $110,00 LESS than the building contract and price they paid for the land. Why? Comparable sales – admittedly price over a mill, but the only stuff in the area that had sold recently anywhere near that price was considered superior and or on larger land areas – so it is the comparable sales that are used to base the end valuation price on.

It really is quite simple, but it can be made to appear 'over complicated'. BIt differnet (and more time consuming) than the old 'market appraisal)
Finally, if YOU sold your house at a higher price than the valuer gave………..you have just put up the value of your neighbors property.

Hope that helps

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

June 15, 2012 - 10:52 am

I'll come to the rescue………
IF you choose to break your agreed contract and 'exit' from a fixed rate term homeloan, you are liable to pay a 'break cost'. You get this whether your lender has no 'exit fee charges' or not, and you don't get break costs on a variable rate loan.
This is specified seperately in the loan contracts, and there is numerous literature available from both lenders and other sources that explain in very simple language what a 'break cost' is.
A discharge fee is considered a cost incurred for services, a break cost on a fixed rate loan is a cost incurred. An exit fee is not.
You still pay a 'break cost' to stay with the same lender if you were to switch to a variable rate loan – which of course shows it can hardly be classified as an 'exit cost'.
To play on words rather than reading a contract and reasonableness is political rather than financial I'm afraid.

Now off to crack open a new Cab Sav……..

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

June 15, 2012 - 10:35 am

My thoughts are that IF you own you own home outright and have no other non tax deductable debt then by all means go for a P&I loan as the idea to building wealth is made up of three key items; reducing debt, increasing income, and selling/locking in a capital gain or profit which in this case you can do the first two – any other situation I/0 loans make much more sense 99.999% of the time, both for tax reasons and flexiblity, as who knows what may change in your personal circumstances or property plans.
All the best

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

June 15, 2012 - 10:30 am

There is plenty of info available now – the main thing is working out what you are actually trying to achieve and want to achieve.
Are you doing it becuase you have heard someone say it is a good idea, are you cashed up with super, and do you have other investment properties?????
If you have cash in the SMSF to buy the property outright as opposed to borrowing to purchase that also makes a difference.
You need to make sure your SMSF is 'able to borrow' and for each property purchased you have to set up an additional 'bare trust' or security trust with a company as trustee – so if you had an accountant or organization charge you 'retail' to do this you are talking thousands of dollars to set up and administer as well as some charging you thousands for auditing each year.
If you can get a good deal on property and have long term plans it can be a great idea…….but it's all relative.
Deal with professionals that have experience with this and don't be a guinea pig for a crusty old accountant doing there 1st SMSF and if borrowing there is plenty of other stuff to think of.
All the best with your journey

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

June 15, 2012 - 10:12 am

Hi Lila,

AAMI, NRMA (RACV) and Allianz are all ok for basic Land lord policies. I use AAMI mostly, but if y ou want all the bells and whistles Terri Scheer seem to be the pick if premiums are no option and you want better cover. It's all relative.
Just make sure you have (some charge extra) rental income/default protection and check the major differences.
The main issue with the basic ones I find is that there is a maximum of $10,000 cover for intentional damage by the tennant…..which lets face it would be no good if you ever got a tennant with vandalistic tendencies. THat is the main issue with the cheaper cover, and of course any 'flood' cover, as it varies. I am noticing premiums are well up this year especially in 'flood areas'.

Cheers

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

May 29, 2012 - 1:21 pm

Hey Jim,
BIG congratulations if you have had success with a 1st National branded agency!
Back on track though, how long have you had the property in Naracoorte?

Cheers

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

May 29, 2012 - 1:17 pm

Hi dbomber,

Just to clarify, and at a bit of balance to a couple of the comments……
A fixed rate loan is different to a variable in that is it a fixed contract between you and the lender at an AGREED amount – that you entered into by choice.  A variable rat loan, is a 'floating' rate.
When you get a fixed rate loan, essentially by way of example, you say "MR Banker, I want to borrow $200,000 for X amount of time for 7% and I promise I will pay you back at this amount. The Bank/lender does NOT have the funds for this type of loan – it is sourced from 'the money markets' rather than customer deposits. SO……Mr Bank says to all the rich people……..'Who wants to lend me $200,000 at a guaranteed return of 6% for x amount of time?' THey get this, and then make their 1% in this example. If you decide to break your promise/contract before it is due (the X bit) the bank then in turn has to break theirs' Obviously if rates went up to 8% you would not want to break your contract *unless you are selling or due to unforseen circumstances)  So if in the above example, both rates were 1% less, the bank still has to pay it's agreed amount to where it got the money from, and naturally so do you.
Hope that makes sense. SInce the GFC inparticular, you would be hard pressed to find any lender (including non bank lenders, who are much more restricted with this type of funding ) that will not ensure you have full disclosure of this, including information, brochures etc explaining how break costs work.
Trust me, if your loan is just over 7% it would only be recently that rates have dropped below that. How much money have you saved in the meantime?
Theoretically now is a good time to fix a loan for a few years for buy and hold properties as historically they are getting as low as they have been in 5 or 6 years. Then again……..

Re other costs ANZ and NAB don't have early exit fees, but all lendere will have discharge fees – it is an expense, and generally around $350, or more than that for credit unions etc. (attending settlement, paperwork, registration etc)

Cheers

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

May 26, 2012 - 1:16 pm

I too would highly recommend esuperfund. As long as you are reasonably savvy and no how to use the internet, do internet banking, buy shares on line etc you will be laughing. When you look at the thousands you would spend between planners, accountants , bankers, bankers planners, etc etc to set up a SMSf the 'traditional way' it makes great sense.
If you want someone to hold your hand and don't know muchg about investing then a bad move – but then so is an SMSF regardless in most cases.
There are some conditions – and fair enough too for the cost. THe deed allows you to purchase real estate as an investment – and to borrow to do so, but only if it is with St.George (they have one lender picked out for ease of audit and application process.
However, if you open asn SMSF with them, and dont invest in shares or real estate but use an on lone savings account (UBank comes to mind) you are guaranteed better returns than the last 5 year rolling average for 'balanced growth' industry or other super funds so if you genuinely want to take some control a great idea.
Not for everyone, but you can use esuperfund with as little as 30 or 40 grand and not soak up thousands in annual fees and 'management' from your accountant.
Regardless, something I have found very interesting, is that the SMSF path while many 'professionals' advise against ( and there is no way your financail planner planner, accountant or otherwisw is going to suggest you use esuperfund especially !!) is that it is terrific to see so many people take an active interest in their future when they have some control over their investments – whereas when you don't have the same level of active involvement with your super, it seems to make it 'less real' . Anyway I won't digress but have seen benefits of a low cost on line SMSF like esuperfund – with the proviso being you go in with 'eyes wide open' and read everything info wise on their website first before you decide if it is right for you.

All the best!
Cheers

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

May 9, 2012 - 1:26 pm

Here's some more tips for choosing a selling agent based on experience……..
1) If they want to charge you anything other than the negotiated commission for you to let them sell your house – don't use them.
2) If they want you to pay for advertising  – as well as charge the commission…..don't use them.
3) Do not trust the actual staff member or listing agent if when you question the contract conditions they say ' dont worry about that' ot 'that only applies if……'
4) ABSOLUTELY ensure that if they have not sold your property during the exclusive sale period (say 3 mths) that you do not pay a zot if you list elswhere, or decide not to renew the sale agreement.
5) Read all the above again, and then focus on point 6
6) If they are a First National Franchise take extreme care if you have no other options, especially with the ambiguous wording of their 'exclusive sale authority (gag)' – do your due diligence thorougly in this case – any show your solicitor the contract befire signing if you see no other option than to use these guys.

All the best.

[v8ghiaMember@v8ghiaJoin Date: 2005Post Count: 871]

May 9, 2012 - 1:17 pm

As long as you don't overcapitalize. Spending 10k on fancy stuff, overpriced plants, pergolas etc is unlikely.
But………….$800 for levelling and dirt removal if required, $500 for nice topsoil, $900 for premium Sir Walter Lawn for say 70m sq, $300 to road base the drive and part of the bakc yard, and a few old bricks/pavers to make a path or 'stepping stones' to the shed or clothesline while costing  2 or 3 grand if you do the work yourself, will triple or quadruple your investment (ie add $10k min) but more importantly may just be the thing tha makes the difference between selling or not selling, or getting a good tennant or not getting a good tennant,

Cheers