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November 19, 2013 - 6:27 am

I think NRAS is like any government schemes. The developers get the first biggest bite of the cherry and if they chose to sell you can bet that the price you pay has a premium for the NRAS allocation.  We are trying to get a number of our new properties being built next year onto nras because of the benefits. That's not to say it is not ineffective buying off a larger development. I have a mate who is having built a brand new 3 bed 3 bath in a new subdivision in Adelaide and his net rental return (after the Nras 20 percent deduction on market rental and subsequent tax offset and cash back) gives him a net return of over $100 a week. (not including deprecation)

And so it should his house is going to be of the first couple of houses in this new subdivision and most likely wont see much growth for at least the first 5 years whilst the rest of the development is completed but i expect the next 5 years after that will be quite profitable for him once the subdivision matures.

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November 18, 2013 - 10:03 pm

@ Qlds007 

Richard have you ever used deeds of assignment on larger commercial property to buy below market price and then have the bank lend on the valuation price.

are these the exceptions to the rule. Or are there other cases? 

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November 18, 2013 - 11:51 am

I personally don't think polished concrete would look or function that well in a unit. For starters, usually a polished concrete floor (not always, but most of the time) has stones thrown on top and tinting put into when it Is being laid, so that when it gets polished up it. Gives it that sparkly, interesting look.

also it is leveled to finer scale then normal concrete. Which you might find is the case with the concrete underneath your carpet. It could require a lot of concrete Sanding.

you also would have issues of access getting the machines up to the second story unless you have a lift. 

from a cost to value add perspective. Concrete in a unit would come across a bit cold and clinically, timber flooring and carpet are much softer in a smaller area. Your replacement cost for timber, laminate and especially carpet is going to be less then polishing the concrete 

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November 18, 2013 - 11:39 am

1) a deposit bond. Is just the representation of your cash in a bank or equity in a property or shares. Identifying that you have that money available upon settlement. It's basically like a big cheque that the bank write out out on a piece of paper and say this is worth eg 30k. Whilst you keep your actual money in the bank and your cheque doesn't clear until settlement. It's just a piece of paper representing money/cash/security you have elsewhere but cannot or might not want to access immediately. 

there are not that many advantages with using them besides long settlements or when you have a inability to release cash or other assets to pay for deposit. 

2) PPOR = principal place of residence, where you live or reside. (You can rent elsewhere for work and still own a PPOR eleswhere)

3) 100 % financing – with a personal and secured component 

or a Guarantor loan by a family member, parent or spouse. Which could achieve 105% finance. 

If you struggling to save a deposit though already, do you think your cashflow will be better with a mortgage ? Or is it for investment purposes 

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November 18, 2013 - 5:00 am

Sounds pretty standard. Unless you wish to go back to the PM and negotiate for example he's only been in the property 6 months (signed for a year) you paid the 2 weeks letting fee at the beginning. Perhaps you could negotiate a payment as a prorata of the time he has been gone ie rent $500.

 Your 1 year renewal would of been $500. But you could say to the manager look $250 because he's been in there 6 months or I go to another agency. And make sure you don't get charged advertising (putting on Internet). 

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November 18, 2013 - 1:14 am

Qlds007 has access to a product that can provide 100% financing with a secured and unsecured component. 

Lenders are fine lending to 95% even for investment purposes. Such as subdivision, splitting titles. Provided you pay your LMI and that you have enough security at the end of the transaction. 

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November 16, 2013 - 4:55 pm

Unless i completely missed everything and you are in fact renting somewhere different. With 2 investment properties

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November 16, 2013 - 4:53 pm

did you ever live in the property that was 10 mins out from Sydney?

if so you might want to consider the 6 year exemption rule on capital gains tax if you plan to sell in 5 years time. Perhaps selling in 4 years time… (if you moved from there into your current PPOR of 2 years) that way any capital gains made in the last 2 years and next 4 years would be exempt along with any years that it was deemed your ppor prior.

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November 16, 2013 - 4:49 pm

Just reading it my first thought is

why do you have a mortgage on the property that you are living in ? and why do you have no mortgage on the investment property ?

I think you should swap your loans around because as catalyst was talking about there is non deductible debt. and dedeuctible debt 

That means that the interest you are paying on your current PPOR (Principle place of residence) is Non tax deductible against your current incomes and rental income of the other property…

I would ask the financial planner if only for this one piece of advice. That you should take out a mortgage against the investment property. and you should repay your homeloan debt on your current PPOR.

You would save thousands in tax, depending on the values and how much debt you have on your current 2 year old ppor in brighton it could be 10s of thousands.

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November 16, 2013 - 4:38 pm

I've done a few simultaneous settlements and odd things like what you are proposing where i thought i would have money received by a certain period of time and ready to apply for the new loans. In the end I don't think its worth putting excess pressure on yourself. Playing devils advocate; what if in the 6 months whilst you are busily saving. What if you lose your job… You miss one of those 5k deposit payments and You lose the others because you would of defaulted on your contract. You run the risk of not getting finance at the end of 5 months … Its not going to take you any longer at all to save for 6 months and then buy a house. You could take 6 months and save, buy a house and be settled in 1 month and in reality you where only delayed 1 month…. Plus a 1 month settlement and you obtaining pre approval at this stage would give you a greater power of negotiation. A 1 month settlement and no conditions or just subject to finance will look far more appealing in a sellers mind then a 6 month contract, unless they have a reason for staying as well. You would be able to negotiate a lower sale price just on a 1 month settlement and cash unconditionally that could save you 10-20 to 30k off the asking price just because you have the money are willing to settle there and then in 1 month over other buyers.

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November 16, 2013 - 4:25 pm

That is that case in New Zealand, following that,  a lot of their legislation is similar to ours it could very well be the case.

Rental insurance should cover you if you wish to make a claim on a vacating Tennant. Just list the property up for rent as soon as you can and if the guy is leaving he shouldn't mine if you have open inspections on whilst he is still living there. Annoying though about the lack of communication surely he knew he was being relocated a bit sooner.  But they are doing a service to our country and all you can do is try to minimize your lost time in lieu of rent. 

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November 10, 2013 - 4:19 am

Just find the property and have the Investor pay you a spotters fee if they are successful in purchasing any property that you introduce them to. Might find though in some states you have to be a registered real estate agent to act like this. (course can be completed in a couple months of external study)

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November 8, 2013 - 9:04 am

My experiences with financial advisors is that you wouldn't ask them for advice on property related issues or solutions unless they are a property investor with a decent portfolio or have been in the past . Just like I wouldn't ask my accountant or solicitor or conveyancer or my builder on what I should do with property. Unless they are involved as a property investor themselves and that means owning multiple properties not just 1 or 2.

If you sit down and actually look at the material that's study in level 1,2,3 etc of financial courses that give a person the qualification of financial advisor. It's very broad and limited. That's not to say that there are some exceptional advisors out there. But the majority are trained on a generic syllabus that promotes shares or managed funds or another investment that offers commissions. Financial advisors get very limited commissions (if any) from a property transaction so you can see that they could have a conflict of interest between investment pathways.

– mortgage broker is your best bet for discussing offset accounts. Which are pretty basic and most loans (should ) come set up with them or the option to have one.

My thoughts are similar to yours Jamie. The majority of financial advisors are sales persons

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November 5, 2013 - 10:38 am

and be wary of the court cases where contamination of  redraw funds have been spent on personal items and investment loan has occurred. You could lose the Whole deductions that you claim, It does happen.

the cheapest product doesn't always have the best features. Sometimes its worth paying 0.001 or 0.002 % more then your budget home loan. Because that is honestly all it is to get a offset account against a loan product that doesn't feature a offset account.

You could always fix a portion of loan at a low interest rate like 4.79 % for a couple years and leave the other portion Unfixed so you can still have your offset account.

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November 5, 2013 - 10:08 am

My biggest problem is to remain profitable in property developing is that I have to put in non complying development applications in to council and then have to spend thousands more hiring consultants just to prove the council wrong when they should just make it a lot easier and acknowledge that overall in Australia dwelling size and private backyards have decreased in size since the standard 1/4 acre block was around.  

And I'd say the biggest problem that general investors are facing today is that as a whole (due to media, the Internet, renovating shows on tv, a near unlimited supply of resources on any topic you can think of) I believe the investing population is generally become more intelligent which means more competition thus higher prices on good properties and less margin. 

Take the fact that now days EVERYone knows that if you can get a property that pays for itself/ pays you a net return, even if it has debt, it is good debt. Otherwise known as positive cashflow. 

20 years ago. That was less well known then today. Technology is increasing the efficiency of every bodies investing. Real estate.com search is a prime example. 20 years ago. Could you search low to high of properties in your area. Could you compare as well these days having access to RP data and other websites that record sold prices. You can now look on apple maps, google maps. Measure distances of backyards of block sizes from you iphone or tablet, you don't have to visit a site a hour away to see if you could subdivide it. 

Council development plans are all freely available on the Internet. 

To stay ahead of the general investing pack you have to now be able to do the maths on a property asap as next week if you leave it it'll be under contract. 

20 years ago. That wasn't possible. 

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November 4, 2013 - 1:06 pm

Not many people learn to ride a bike on their first go.

Property investing can be similar. Your first deal will never be your best deal, so just accept that. Envisage to make a profit or buy in a good area, try to buy the right property. But when you buy your 10th or 100th property, the knowledge you gained along the way will help you to make better choices.

But if you never start you will never get there. So be prepared to make mistakes as a lot of people are afraid to make mistakes. Don't make a huge mistake though that your sent broke and be sensible about slowly increasing the size and scope of your investing to match your level of expertise.

When you ask a property investor about their most valuable lesson that they would of learnt, Invariable it would of been a lesson that cost them some money. But those are the lessons that you remember and wont make again.

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November 4, 2013 - 8:46 am

The short answer to your question is No. You won't save money on tax really by using a bond not much anyway. 

– a deposit bond is given on behalf of either cash or equity .

In this case As a first home buyer. If you were to get a deposit bond from a bank.

lets say you have 40k in cash. 

They assume your cash as security (a promise that your deposit bond is actually worth 40k) the bank then charge you a percentage fee. Sometimes it's a percentage some times it's a set fee say $400. 

They give you a piece of paper saying its worth 40k and when you purchase a property the agent takes this. Your deposit money is then redeemable by him on settlement. 

This type of arrangement only really works well if you are negotiating long settlements. Ie 6 months or a year whereby having your cash in a offset account say if you had a existing loan would be saving you 5% a year. Whilst a once off set fee for a deposit bond for a year might be less then the cost savings made by having the money in the offset account. 

Keep it simple. Save a minimum of 10-25 % of the value of your first home before purchasing it . If you can save 15% – the LMI costs under 90% of the properties value can make a significant difference. And as usual no LMI (lenders mortgage insurance) on purchasers at 80% LVR (loan to value ratio) house worth 500k loan at 400k would be a 80% LVR. (except for self employed borrowers) 

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November 2, 2013 - 1:58 am

1) Your choice, work out your numbers for if the deposit bond % charge costs more or less then the amount of interest your cash would earn (minus tax) in your own bank acccount.

2) Depends what state you are in. But usually 0, Some agents take $500 which is completely refunded if you are unsuccessful. If you are really really interested in the property tell the agent you wish to go straight onto a contract. They will usually accept and if they deny its for these reasons, A) they want to play your offer onto other people and get a higher offer. Your offer is to low and they know it wont be accepted or C) they want to try and hold your offer while collecting other offers to present to the vendor all at once.

3) If you are ripping out and dumping any material its good to get a scrapping report schedule done before the reno. (which identifies any residual value in ie blinds, floor coverings, stove etc and you get a instant tax write off) And then after the reno get a full depreciation schedule.. Tip for the depreciation schedule is that if your Products you use in your renovation are really cheap. Just mention that you installed new blinds to the quantitiy surveyor and they will put on their value. Ie if you paid $500 for all the blinds dont mention it. They will take a assumed value which could be higher then that. Mention big ticket items, Stove, dishwasher etc.

4) Once a property is under offer. (Not under contract) You should just put in your best and only offer. Cash and unconditional can help if you are certain of finance.

Another clause to include that is less "damaging in a vendors eyes, ie less chance you'll pull out or the contract is void" is offering subject to a satisfactory valuation.

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October 31, 2013 - 6:09 am

Record auction prices and clearance rates might have something to do with the record low interest rates we are experiencing in the last 25 years 

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October 31, 2013 - 3:42 am

The first home owners grant just inflates the marketplace making it more unaffordable for first home owners to get into the market. Sure it gives them some extra capital but it just makes emotional first home buyers over pay for properties and create a hype.

It would be better to see the grant reduce or cancel the stamp duty payable on a First Home instead of a cash payment.