Gee you really set off a hornets nest didnt you. Some interesting advice / ideas from many angles but I would consider just a couple of things. Firstly you are going to be paying about 6.9% interest on the money you borrow (or there abouts depending on how good your bank manager is). So work out how much interest you are going to pay for the year, then add on your Rates, insurances etc. That is the pigure (roughly) you need to come up with just to cover your expenses. Work out how much rent you can get for the year. Does the rent cover the expenses???
DONT FORGET…IF ITS SHORT YOU WILL BE PAYING THE DIFFERENCE OUT OF YOUR OWN POCKET. Loosley this is whats known as negative gearing because there are some tax deductions to be had in the difference between what the property brings in and what you pay out. Now unless you are on a fairly good income and paying Tax in the highest bracket you need to have a think about wheter the tax deductions are worth it.Even in the highest tax bracket you have to spend 100 to get back 48.Now if the property will support itself or you can value add in some way to improve the income then you are well on your way to investing well.
Now I am no accountant but have had a few properties over the years. I have converted some of my units into holiday accomodation which turns a $150 PW property into a $400 pw property. I spruce it up, add furniture and cuttlery and all the things you would expect in a holiday place and list it with the local tourist bureau.
There is more work in it of course because it has to be cleaned and have linnen changed each time your guests leave. It is also empty more often but mine are near the beach so theyre full about 70%of the time.
What I particularly like about this way of doing things is that I get to be far more hands on. I get to see, clean and garden my property regularly and I dont have ‘Tennants’ I have ‘Guests’. There is a legal difference.You may not be in a position to do it that way, Im just saying that there are many ways of Value adding. This is only one of them.
The most important thing is affordability. As some wise people have pointed out we are now on the downward trend and if you got financially stuck the likelyhood of being able to sell in a hurry for a capital gain, is going to be substantially lower in the current environment.
I believe that if you choose your rental property well there is still good money to be had in investment properties and long term ( a few years) we will eventually have an upturn again which is where your capital gain comes in.
The sectret is buy in downtime…never sell in the same part of the cycle.Now someone will probably prove me wrong!!!!
Hi Nads,
I know how you must be feeling, It is so hard to take the first step, I was exactly the same, I bought my first IP 2 yrs ago and because my husbands works away I had to renovate it all by my self, by the time I finished it I wished I had never bought it, I hated it, After only a week of finishing we had a tenant, who just so happened to be a painter/handyman,(where was he when I needed him) Then things started running pretty smooth so I decided to go again, this time my tennant (fromPI1)done all the reno’s for me and in return he gets cheap rent, My original goal was 4 houses before I was 40, I am in the process of looking at my fourth house, I am only 32, My new goal is 40 houses before I am 40…. If I can do it ,,, so can you, don’t let anyone talk you down and remember,,, If you do nothing,,, you get nothing..
[cap]cheers Rayls
Nike it… Just do it!
Seriously, do your research and go for it, anyway the banks won’t lend you the money if it’s not worth the buying.
Roy H.
L.R.E.A., Dip FS (FP)
Guardian Property Specialists (GPS)
http://www.gpsnetwork.com.auJust wanted to add that something that is great for your confidence is to sit down and review what you have actually achieved.
You may be surprised at what you have done!!!.
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Originally posted by blueboys:thanks for the positive feed back calvin.just trying to give nads a helping hand.
foundation, not sure what your getting at. are u saying that anyone and everyone should have cashed in over the last 6 years?
go get em nads!!!!!!!g. granland
Hi Calvin,
We learn a lot from our parents, eh? And not always the way we expect – hope they’re OK anyway.
They were going to do it in partnership with some friends who pulled out; and even-though my parents had the money to BUY IT OUTRIGHT, they let it go………..What can you do? This has become one of the driving forces for me now.
Benny
hi, this is my first time some be gentle, I have also come across the same negitive ideas but I have found they mostly spring from ignorance. so learn and see if you can find a local mentor. I am still getting my money together for my first try but have some who has done it helping me along the way. don’t let them stop you. you can do it.[thumbsup2]
I just wanted to add, for those people who take the time to write there personal stories in threads like this, thankyou..the lift and enthusiasm it can restore in someone starting out is tremendous..
it really is like reprogramming your brain from everything you’ve been raised to believe and that takes repetition and time i feel.I for one liked reading foundation’s comments, having a rush of positives can sometimes stop you judging each post for yourself and get carried away, having two sides make you take from each argument what you want and keep a level, educated hat on.. I say thanks to EVERYONE who adds there 2 cents
just my take[cap]
still don’t know what i don’t know
Hi Mabbott,
don’t get us wrong – Foundation is a very clever person, well educated! there were, how-ever, some issues about how that knowledge was presented, mainly confrontational. It is this that most of us have objected to.Now, foundation still presents a view point that isn’t always ‘mainstream’ but in a way that doesn’t rub every-one up the wrong way, and the information given is received much much better. We are all the richer for foundations contributions.
I have learned a lot from foundation and enjoy reading the posts as they are often a ‘reality-check’.Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas EdisonOriginally posted by calvin@thirty4:Hi Mabbott,
don’t get us wrong – Foundation is a very clever person, well educated! there were, how-ever, some issues about how that knowledge was presented, mainly confrontational. It is this that most of us have objected to.Now, foundation still presents a view point that isn’t always ‘mainstream’ but in a way that doesn’t rub every-one up the wrong way, and the information given is received much much better. We are all the richer for foundations contributions.
I have learned a lot from foundation and enjoy reading the posts as they are often a ‘reality-check’.Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas EdisonI forgot to wish you all a VERY MERRY CHRISTMAS AND A HAPPY NEW YEAR! Should I not post between now and New Years.
Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas EdisonHi All,
First of all THANK YOU to everyone who has contributed. After taking a few hours (whilst at work and ALT-TABing) I have managed to go through ALL the replies. This information is invaluable as it comes from people WHO HAVE PUT MONEY WHERE THEIR MOUTH IS as the expression goes. Over 2 years ago (May ’03) I purchased a 2-bedroom unit in bayside suburb in Melbourne (Mordialloc). All I was thinking then was I have to get into the game (YOU GOTTA BE IN TO WIN IT) as they say (I like a lot of sayings as you may have gathered by now). In hindsight it was THE BEST DECISION that I’ve made, although I had NO KNOWLEDGE what so ever! Given the opportunity to start over again would I have chosen that unit? Not sure. So Nads, as long as the numbers add up go for it and remember to KEEP EMOTION OUT OF THE DECISION PROCESS. Well that’s my 2 cents. Wish everyone a MERRY CHRISTMAS and a VERY PROSPEROUS ’06!Ram.
Regards,
Ram Vemula
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