Ok, here goes. I bought my 1st house 12 mths ago, (in Belmont WA) a 2 bedroom fibro on 330 sq m for $118,000. Have done little bits and pieces, mainly cosmetic. Had the house appraised this morning to go on the market for $150,000-$160,000.
My gf bought a unit in Mt Lawley for $115,000 5 mths ago. Another in the same complex just sold for $145,000. Appraisel this arvo.
We both gross $50,000 p.a. and want to buy a place together still close to the city. I’m thinking about $250,000 to $300,000.
I pay $150 ft maintenance.
Do we
A) Rent both out mine @$130, her’s @$150
Sell mine (say $140,000), and rent hers.How will banks view our situation? How much would be able to borrow? I definately don’t want to over extend.
Appreciate any feedback…[
]at rent $130 and value $150+, the yield is around 4.8%, I would sell and find better opportunity elsewhere. wont be any CGT, take advantage of that.
the unit, rent $150 worth $145k, yield just over 5% probably negative cashflow, positive geared, dont be in a hurry to sell.banks wont have any problems giving you $300k+
Hi Tryst
Your borrowing capacity is approx:
Serviceability
a) $650,000 – $780,000
b) $630,000 – $730,000Security?
Depends on how much your mortgages are.As you can see borrowing capacity is unlikely to be an issue.
I would just focus on the assets (as Crashy alludes too).
What is future cash flow like? As Crashy calculated… not that great.
What is capital growth going to be like?In my opinion, I would sell them if I thought there was not going to be much capital growth in the medium term (becuase you should want the capital growth to make up for the lack of cash flow). You are better off to buy better quality assets.
Yes, no CGT so the profit is straight in your pockets.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auQuote:Depends on how much your mortgages are.Mine is $111,000 pay $420ft.
Gf is $108,000 pay $400ft.I think the capital gain on gf’s can only get better, mine would be at its peak if its where the agent alluded.
I also have a capital loss of $70,000 to claim against in the future.
Thanks so much for the feedback! [8D]
Try to use your capital loss to offset short term gain ie <12 months if you can. It seems such a waste when you offset it against long term gain, ie > 12 months, which is taxed at half the rate. eg 70k loss offset against 70k short term gain saves $33950 tax (@48.5%) but if it’s offset against 70k long term gain, it saves $16975 tax. (half of 48.5%). Easier said than done of course!
Just a bit of trivia (as usual for me)
JHad a 2nd opinion on my place today, from my area’s number one Agent. $150,000 and should get $140 /week rent. He actually advised holding on to it, refinancing and using the equity to buy another property etc etc.
Asked what he considered the best buy around, and he suggested an 1131 sqm block down the road. Its got a 3 x 1 on it, which the present owner wants to rent at $150 /wk for 5 yrs. It’s presently zoned as single res, but he feels if it’s zoning changed, it would add $40 – 50,000 on it.
My questions are:
Whadya reckon?
And how do zoning changes take place?Tryst darling,
ring the BElmont council and find out what the plans for zoning are in your area. It is the only way to be certain. There is not point buying something that MAY have its zoning changed…A friend of mine bought in Dianella assuming the zoning on her place would change from a duplex to triplex site but Stirling council changed their minds at the last moment. She is now, well… really cheesed off.
Don’t let your investments go to chance. Be a good scout and be prepared and find out the information for yourself. Don’t trust a real estate agent, they just want the business..
Hope my two cents helps.
Steph.Here for a good time not a long time, just do it!.
Good advice Cremin – sounds like the agents keen to do the old one-two upsell shuffle. Don’t knock it on the head though, but be suspicious about why he’d want to sell you that one instead of taking sale commission on yours – if it’s a genuinely good option then there should be investors crawling all over it and keen to pay a premium.
Cheers,
Mel
Sell mine (say $140,000), and rent hers.
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