[yarposMember@yarposJoin Date: 2004Post Count: 247]

July 21, 2008 - 9:08 pm

I beleive the holding costs while in construction phase are part of the cost base of the house.   Happy to be corrected but thats what we experienced only we built to rent.   If its not so its off to the ATO I go….

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July 21, 2008 - 12:33 pm

CHIS wrote:

I like the analogy with the hole. I think it would be smart to stop digging. It's a shitter when you like the real estate

yep , as soon as you become emotionally attached its becomes difficult.  But your plan has some merit if the place is marketable and you really , really want to be there long term.   If its worth it to you then keep going……its not all about the money (as long as you arent sending yourself broke).  We recently did an extension on our PPOR and we knew it was overcapitalising the place,  but on the other hand we like the location and wanted to have a nice existence for the next 5-10 years so we went ahead.

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July 21, 2008 - 12:23 pm

Hi simple

commentators are starting to see more +ve (less -ve?) signs ….or saying that perhaps we have been overdoing the gloom and doom.   This thread started mid 2006 and has been feeding the gloom since then.
 
re the 3-4 times wage rule,  its quite possible to by a modest home for 3-4 times a reasonable non minimum wage.   The other side of that is that we can try and improve ourselves so that equation is better for us.  So far over 30 years over ownership in 2 states, I have never lived in a house that cost more than three times my income.  Houses have gone up and my income has gone up.  Waiting for the market to come back to meet my salary has never entered my mind until I started reading these forums.

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July 21, 2008 - 12:01 pm

your thinking and learning so its not all bad.

If the block owes you $280k now and you build a house, thats something like $420-480k of debt (havent said you have other cash).   Is that a marketable property in that area? What sought of rent could you get in the area? and is there much demand?  Is your taxable income high enough to get max benefit from -ve gearing? Really need more numbers to make sense of the situation.

They say once you are in a hole the first thing to do is stop digging,  do the numbers unemotionally and if the remaining costs are acceptable for you to hold (assume you want to live there eventually) then do it…….otherwise bale ASAP and spend your $2k+ a month on something more productive.

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July 21, 2008 - 11:20 am

ahhhh…..the plot thickens ,  I thought you may be putting more down but wondered why you just didnt split the deposit if you wanted to get another property (and wear the morttgage insurance I guess).  The contract is different from the source of funding,  you didnt contract to pay 20% deposit did you?

If your finance organisation lets you do the draw down,  and you have no other funds ,  you are well into fully extended with mortgage insurance territory.  That is a risky place to be especially at the moment…..but that may not worry you.   If things are that tight I wonder of you would be able to fund all the buying costs for property 2 and still satisfy the finance parameters (broker types here may want to comment).    Sounds like to big a stretch to me (until you create more equity or more deposit) but if you post some actual numbers maybe they could give you a hand.

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July 21, 2008 - 6:28 am

there is nothing wrong with proceeding with the next deal if it stacks up and you have assessed the risks…..however….where will the equity (difference between value and debt) come from if you have just bought on 5% deposit?     Also consider how far you can stretch your self and can you survive if things go pear shaped for a few months  (loss of tenants, lose of job, illness, more interest rate hikes etc)

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July 20, 2008 - 10:58 am

steveknobel26026  why do you feel the need to cross post 4 times in different forums, and twice in one of them, with the same post………………………..

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July 20, 2008 - 10:50 am

The General wrote:

Hello

Am humming and harring about whether to purchase Landlords Protection insurance for one of my ip's.
What would you gurus out there recommend? Purchase or not? I haven't had any issue thus far
but then again, that is what insurance is for isn't it?

Your help with this issue would be greatly appreciated.

Regards

Nathan

 
Generally I would say yes its the default setting.  Having said that I will contradict myself and say that on one of our properties we dont have it.   The others are standard places ,  McMansion and  a reltively nice unit each of which its easy enough to do significant damage to.  

The non LL insured place is a one bedroom unit which is really just a besser brick box,  which cost us about $7k to reno from a cess pit to a nice rentable place (not costing our part time labour).   With this place the structure is insured by the body corporate,  we can fix anything inside the place(we know because we have) and with a decent property manager we are unlikely to get a really bad tenent.   At this stage we feel OK leaving this one without LL insurance.   We are also lucky enough to be able to carry the rental foregone if it was vacant for a while.   

Having said all this the tenant will probably now roast a goat on the lounge room floor to celebrate some deity ,  but at the moment we feel OK with the small risk (as we see it)

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July 20, 2008 - 4:31 am

"Investors now make up about 20% of tax payers but unfortunately, some are not paying any tax at all. All because of a rort called NG:" ……..and some pay heaps of tax,  like me for instance….whats your point/……you seriously beleive people -vely gear to the point they pay no tax?…..thats very naieve.

"NG is like sugar coated poison or a floating mine in the harbor of peaceful co-existence. It is dividing society into 2 groups – investors and renters.  "  actually there are 3 groups ,  quite a few people own their homes as well.  My kids for example have somehow (magically and against the forces of NG evil) managed to get into their own places.   I thought they had just shown a bit of spine and got on with things,  but I must congratulate them on defeating the forces of evil.   Parts of Europe where there is no -ve gearing far more resemble the 2 class system you describe.   I seriously doubt removing NG is the panacea you want it to be ,  but I guess anything is worth a try ,  and it will at least remove one more excuse for why some people get no where and others progress.   Thats just me though ,  I have always thought that my problems are for me to sort out ,  and if (for example) I cant afford to by a house the thing for me to do is improve my situation and do the things I can control,  rather than waiting for the government to "fix" it for me.

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July 19, 2008 - 10:04 pm

judging an idea by considering two extremes ("rich' people and then an entry level person) isnt really logical,  as the bulk of people are in the middle.

mpertile,  your idea is quite valid and is in fact how things work in many parts of the world.   It is often balanced with other taxation measures to stop the very wealthy benefiting excessively.   Oz is one of the few places that encourages investors and not owners with tax deductions.   I lived in Europe until recently and where I was rents where 2-3 times the levels here, salaries about double and interest rates less than half .  Investors got no breaks and mortgages where tax deductible.  Many people still chose to rent for life.  

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July 19, 2008 - 5:17 am

that costing is pretty much gibberish and doesnt really elaborate your point

there are benefits to those that take risks,  they will come via tax, capital gains or rents.

if you by your own place the only risk is your ability to make the mortgage payments you sign up for and you pay no CGT.

really just sounds like the politocs of envy,  they have something and I dont,  so rather than me stepping up , they should be pulled down.    With the Labor social engineers in power you will probably get what you wish for in due course.   Once those undeserving investors are out of the way things will be much better,

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July 16, 2008 - 2:39 pm

home price is only 8 times if you wont compromise and want everything now,  its much less if you are prepared to do that.  Still tough at 8.5-9.5% starting out….and via perverse bank logic you will probably pay the higher rates if you are just starting out.

I'm sitting in Europe at the moment and looking around here it doesnt seem out of kilter with Oz,  which I guess only invites the usual comments from global house price crash fans.

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July 15, 2008 - 1:01 pm

mrkueh80 wrote:

so do you think Reservior good? compare to west heidelberg…

I am still finding the property about 300-350k range and preferably house or unit (not apartment) as i think it will hole the value even market crash or recession.

and i aslo believe with those range of price, it is achievalbe to get double in 7 -10 years. (as you see lots of houses now is about 500k) inner city might up to 700k-1M now… for the houses..

if i buy something 500k today let say 3 beds room….it is pretty hard to get 1M in 7 years.  unless they double up the salary as well….or new migrant.

I would suggest you that dont sell your property, if all of your property is positive cash or litter out of pocket money (unless your property hits very high value like 3 beds room (approx 600-700k) then is okey.

like one of my friend who bought a very big house in clayton and nice area fro 350k.(approx 5/2) .many years ago..now they sold for 800k last year.  

I dont believe that property will up to 1.6M in 7 years as the afforbility so it is good time to sell.

I dont know much about west heidelberg so I cant really comment.  Reservoir I got to know as we spent a lot of time there and about due to reno sourcing and related actvities.  It seems a solid place to invest to me.

Appreciate you comments re holding but ity really depends on your stage of life.  In the end everything isnt about monety and eventually its time to get out.  With the job change its now seems opportune to exit , do the work and come back to a simpler life

Good luck with your research, you seems to be on a good path

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July 15, 2008 - 12:55 pm

maree_bradross wrote:

Hi Yarpos,

Just out of interest whereabouts in South East (we are in Aspendale). Cheers

Hi,  that one is Frankston , off Skye Road toward the Mclleland Road end. 

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July 13, 2008 - 4:46 pm

I dont know that much but am happy to share experiences +ve and -ve.

I have 4 properties at the moment , all in the east and south east , except for a little unit in Thornbury

350k and 350 week , is readily achievable in many areas,  so you shouldnt have a problem.    I guess looking to manage from afar you will be looking at a newer development to reduce maintenance headaches ,  or get some recommendations for professional property managers.  

I was about to sell a couple of the places in the outer burbs to do more renos around Thornbury,  but I found out this week I will be going overseas to work again for a few years , so that is the end of property for me for a while.  Just arguing with myself now whether to hold and manage from OS or sell up the lot …..not including Thornbury,  thats reserved for one of the kids to buy when ready. 

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July 13, 2008 - 8:50 am

i have a property in an adjacent suburb

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July 9, 2008 - 5:39 am

dixonhomesarescum:

"Before I log off, I should also say that by mistake, Dixons emailed me a 2 page list of homes under construction with major building defects, and locations of each property.. This was pretty scary knowing that so many homes could be built so poorly.
I will post this list on my website when it is online."

You need to get advice before you do that.   Accidentally recieving material and then publishing it not to the intended audience could leave you open to legal action.  Understand you are angry,  just dont do yourself more damage.

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July 9, 2008 - 5:28 am

reddy wrote:

HI EVERYONE,

I NEED HELP REGARDING MY PROPERTY , IN OCT 07 I BOUGHT A PROPERTY IN HOPERS CROSSING IN MELBOURNE WHICH IS MY FIRST PROPERTY. THE RENTAL MARKET IS GOOD IN HOPPERS CROSSING BUT CAPITAL GAINS ARE LESS I CAUGHT UP IN A SITUATION WHERE  WETHER TO KEEP THIS PROPERTY OR  SELL THIS PROPERTY AND BUY IN GOOD AREA WHERE CAPTIAL GAINS ARE GUD.IT WILL BE GOOD IDEA TO KEEP THE PROPERTY OR SELL? CAN SOME ONE SUGGEST ON THIS ISSUE.

REGARDS
REDDY

You havent provided enough info for anyone to help (apart from hijacking someone elses thread and not starting your own).

Are you $ stressed in holding the property?  If not , then hold it and buy as you propose,  but for heavens sake do some better research.   Have you looked at adding value to the property,  sometimes it just doesnt happen you have to create it.

If you are stressed but can afford the selling expenses then sell and take the probable loss and lesson from the exercise.

You dont seem to view property as a long term venture , so it may not be good for you.   There are scenarios where quick buy/sell works ,  but oops it not really what I thought isnt one of them.

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July 8, 2008 - 3:46 pm

you have a great attitude,  the sooner you get away from  the phoney money machines and start building for yourself (again) the better.   Good luck and keep posting/questioning.

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July 8, 2008 - 5:06 am

Sav wrote:

Scamp wrote:

You're asking the wrong question. The right question is "How much should I borrow to be able to safely survive a depression ?"
The answer is well-known : maximum 3 times your gross wages. So if you earn 50.000, you should borrow MAXIMUM 150.000$, and make a deposit of 15.000$ cash.

What can you buy with 150k?

wasnt the whole point that there is a group of you?  using scamps logic thats $150k each if you are earning about $50k each