I just recently purchased my first Investment property in Ipswich, it is negative gearing pretty badly. After reading Steve’s newsletter I’m pretty worried about it. Just wondering if anyone has some good ideas on how to turn a -geared property into a +geared?
You must increase the rent and/or decrease the costs.
You could do this by changing to IO (if not already), and adding value, adding another room, wrapping, lease optioning etc,
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
You might want to ask some questions
Here’s the due dilligence list:
1. I assume you plan to rent out the property. What do properties typically rent for in that area?
2. What is the vacancy rate for the area? Ask the realtor how long properties take to rent in that area.
3. What are the real estate taxes?
4. How much will it cost to insure the home?
5. What do average homes sell for in that area?
6. Can you make captical improvements to the property to increase its value immediately? For example, is there a walk-up attic that can be turned into another bedroom for only a few thousand dollars?
7. How fast are properties appreciating in that area?
8. What is the condition of the house, ESPECIALLY the roof? Older than 10 years and you could be in for a huge, sudden expense.
9. Do you have enough of a slush fund to support you in the event sudden expenses or vacancies occur?
10 You can try to find out some ways to raise your rent.Good luck.
Passive income:
http://www.unitoday.net/healthyjack/mystory_en.cfmOriginally posted by JackHu:10 You can try to find out some ways to raise your rent.
Errrr – that was the essence of the question.
In addition to Terry’s comments I would add have you competed a 15.15 to assist with your pay period cashflow?
Is the property at maximum rent?
Can you throw in an airconditioner or similar to increase the weekly rent?And..finally negative gearing is not necessarily the devil you believe. It all depends on what your investment goals and strategies are – there are successful investor who use negative gearing as their core strategy.
Remember a well researched property shouldn’t be ‘negative’ for all of its life.
Derek
[email protected]
0409 882 958
Property investment advice and researched property in quality locations available.As long as you can handle the negative gearing, I wouldn’t worry about it. I assume it will bring your tax rate down. We’ve been in this position with each IP we have bought over 20 or so years. Only one property was positively geared from the outset.
We like to buy and hold, however three boys tend to make a dint in the expenses (and I don’t work outside the home – and as little as I can get away with in the home!) – and we have sold a couple of times to fund the needs of our family. Each time, we have reluctantly made the decision to sell, but the profits have gone into our family home, never wasted on “fluff”. The last time we sold we renovated our PPOR and reduced our housing loan. We could have hung on but with three children, costs do start to escalate as they get into high school.
If you can hold on, make cheap improvements to gain more rent and still live fairly well, time will take care of the rest.
Ok guys thanx for the replies[suave2]
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