All Topics / Help Needed! / Sell or not to sell Ipswich property

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  • Profile photo of EJ2006EJ2006
    Member
    @ej2006
    Join Date: 2006
    Post Count: 5

    We have a property in Ipswich. We bought it in July 2003 in my name for tax reasons and to specifically renovate and sell.

    After the reno the market really died down. We decided to rent it out and has been rented since 2003.

    It is a small house that was built in the 1960’s and not of any historical value.

    We owe about $125,000 and if sold would get about $180,000.
    There are very few houses left in Ipswich under $200,000 but Id rather put my money elsewhere now.

    The rent isnt fantastic $180 per week. The property is managed and has no trouble getting tenants but we are not getting any tax benefits.

    Regards
    Ella

    Profile photo of AmandaBSAmandaBS
    Participant
    @amandabs
    Join Date: 2005
    Post Count: 549

    Considering Ipswich is reported to more than double in size in the next 20 years from 135500 to 318000 people why would you sell ? We have been investing in Ipswich over the past 18 months and see great potential in the area. If the property is not giving you any grief why not borrow the equity to use as a deposit on another property.

    Amanda
    “It is better to be inconspicuously wealthy, than to be ostentatiously poor…”

    Profile photo of EJ2006EJ2006
    Member
    @ej2006
    Join Date: 2006
    Post Count: 5

    Hi Amanda

    We have two properties in Ipswich. One is a Queenslander in Eastern Heights which as you know is a great suburb. Its in the prestige section of EH.

    The other property is in East Ipswich a 1960’s cladded house. The problem with this house is we get no tax benefits and we were advised by a financial advisor to sell and put the profit into my husbands super. Rent is $175 pw and repayments are $180pw plus rates +insurance so negatively geared.

    Its on Brisbane Rd which is a busy Rd

    Profile photo of AmandaBSAmandaBS
    Participant
    @amandabs
    Join Date: 2005
    Post Count: 549

    East Ipswich is an area we’ve been looking at lately as its very close to the train line and Brisbane. However being on Brisbane Road is perhaps a bit too close to public transport and will only get busier. However given the position is it possible to rezone the land for Commercial Business Use ? If you were to sell why did the investment advisor suggest putting the money into your husbands super ? Nothing wrong with that but unless he’s self employed you’ll get no tax deduction for the contributions. I wonder if the financial advisor is in fact looking at then selling you a super poilcy and pocketing the commission ?

    PS. Eastern Heights is a lovely area, keep that one !

    Amanda
    “It is better to be inconspicuously wealthy, than to be ostentatiously poor…”

    Profile photo of EJ2006EJ2006
    Member
    @ej2006
    Join Date: 2006
    Post Count: 5

    Now that you have mentioned it I think it is Zoned mixed use I will check that. The house was on a larger block that was sub divided in the 1960’s

    Maybe the house could be bull dozed one day for a shop!

    I dont know if you are aware the Council changed the boundary of Eastern Heights and included the cheaper parts of Raceview I think it is. So I now say we are in the good part of Eastern Heights ! The original prestige part.

    So some people may not be aware of the boundary change.

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi Ella,

    It seems to me your focus is all wrong.

    Taxation benefits are great but they should not be the sole for purpose of an investment. I suspect that you have met your FP and unwittingly mentioned the lack of tax benefits and he/she is using this as leverage against you.

    Let’s consider what you have – an asset worth $180K that is ‘costing’ you approximately $2.5K per year (allowing $1400 for rates, $260 net difference between rent and interest and a further $840 for insurance) I appreciate that the numbers are not correct but bear with me for a moment.

    So you are effectively holding this $180K asset for $48/week.

    Assume the asset doubles in 10 years it is now worth $360K and for this you have outlayed $25K with no additional rent or costs.

    Now lets consider the options sell the property and walk away with a ‘profit’ of $55K (less CGT and agent’s fees – assume $10K) leaving $45K to put into a super account.

    If this super fund doubles in the same 10 year time frame and you include the $2500 ‘lost’ each year the ASIC super calculator suggest you will realise $101K in the same 10 year time frame.

    Now let is consider Amanda’s suggestion.

    Refinance this property to 95% and you will release $37K (less LMI) which could assist you to purchase another property using a 97% lend with LMI valued at over $200K (a broker will come along and give a figure).

    Using the power of leverage you are able to hold considerably more assets thus enhancing your overall position. And if tax is still an issue make this one a newer property – provided it also has good fundamentals.

    Now obviously you would need to check this scenario with someone appropriately qualified – just go to someone different to the one you are seeing now.

    And finally as Amanda said Ipswich was teh fastes growing area in SEQ in 2004/05 period and there is a looming undersupply of the market and as a consequence rental vacancy rates are at 17 year low in Brisbane.

    Derek
    [email protected]
    http://www.pis.theinvestorsclub.com.au
    0409 882 958
    Skype – derekjones2113

    Profile photo of AmandaBSAmandaBS
    Participant
    @amandabs
    Join Date: 2005
    Post Count: 549

    Well said Derek.
    I’d like to add given the location of the property that you visit Ipswich City Council and obtain a copy of the Integrated Planning Scheme CD and review the requirements needed for a commercial use property. Perhaps the next best buy is in fact the house next door so that the land is of sufficient size to allow for business car parking.
    In the meantime I’m off to finish renovating our property in the not so “prestige” area of Raceview.

    Amanda
    “It is better to be inconspicuously wealthy, than to be ostentatiously poor…”

    Profile photo of Stuart MilneStuart Milne
    Member
    @stuart-milne
    Join Date: 2006
    Post Count: 196

    I love Financial Planners! Did you know the course to be one can be fast tracked and completed in only 10 Days? I was astounded considering they deal with a lot of other peoples cash and “set them up” for retirement.

    Now this investment? If you could find a way to retain the property AND reap taxation benefits from Negative Gearing would you do it if it was what you were wanting? Would you then also be in a position to purchase another property and continue on with the increased benefits? Now I’m not a psychic, nor am I finacial planner I took the slow study at home course instead of the Fast-Tracked one and am still studying it, but I’m thinking I may have an idea that doesn’t involve rezoning.

    <For someone who understood the no advertising rules you have struggled with your other, since deleted, posts – derek>

    Stuart Milne
    Non-Conforming Specialist
    READY Mortgages
    http://www.readymortgages.com.au
    [email protected]
    Mob: 0404 056 055

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    10 days study and training wow that can be a whole 9 1/2 days more than some mortgage brokers i have come across.

    Amazing all the so called experts in their 20’s have spent the last 5 years as a plumber and are now a mortgage broker all of a sudden.

    Oh and by the way when this fails we shall be moving on again.

    Yes you get good and bad in all Professions and i must admit i think the regulations in Qld for Mortgage Broking are a joke. At least in the UK the Financial Services Act 1986 regulated the whole industry and now 5 minutes attending a non confmers presentation is not sufficient to be accreditated with them.

    Richard Taylor
    Residential & Commercial Finance Broker
    **Lodoc Commercial loans from 7.19%**
    Licensed Financial Planner
    http://www.yourstatefinance.com
    [email protected]
    Ph: 07-3720 1888

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of EJ2006EJ2006
    Member
    @ej2006
    Join Date: 2006
    Post Count: 5

    Hi Amanda
    No offence intended re Raceview
    Thanks to all contributors. My husband and I are going over all the info posted

    Profile photo of Stuart MilneStuart Milne
    Member
    @stuart-milne
    Join Date: 2006
    Post Count: 196

    I haven’t heard of a Plumber turning to Mortgage Broking myself personally, but I do know of a few similar occurences. As for the Whole Industry being Shoddy, well the rules were an attempt by Legislators who didn’t understand the industry to attempt to protect the consumers. I still know of a Broker who charges $5k Brokerage to his clients, and then another $5k referral fees to the builders/estate agents to whom he refers them. Now how ethical is that?

    As for training – I haven’t come across anyone in the industry who couldn’t use some more (myself included). The five minute course would be fantastic can you point me towards one or two please.

    The funniest thing I have found in the industry is that if you apply for a job as a broker they do a criminal rercord check and yet if you aply to a bank direct they don’t. I’m not so sure how that works? Perhaps you could explain it to me.

    But this is off the topic well and truly. I would think most of us here enjoy the taxation benefits we can apply to our investment portfolios, but we also subscribe to the buy and hold CG sector which is a long term investment event, as opposed to attempting to try and make high CG in a short time frame. Some do, but you can generally earn more the longer you hold. Have you got a copy of the S.E. Qld Growth Plan? This may make your decision easier as long as you can stay awake reading it. It details the growth planning for the entire region and makes a valuable resource when deciding what to do in relation to investing in property in the region.

    Stuart Milne
    Non-Conforming Specialist
    READY Mortgages
    http://www.readymortgages.com.au
    [email protected]
    Mob: 0404 056 055

    Profile photo of EJ2006EJ2006
    Member
    @ej2006
    Join Date: 2006
    Post Count: 5

    We have re-done some figures and taking into account all expenses, the property costs us $95 per week.
    We have to decide whether the $95 per week is better invested in our property or in Super. The house is on 541sq m block on a main rd.
    It does not need any renovations. It is a fibro house cladded in aluminium which is in good condition but locality not so great.

    The zoning is CMU12 – Character Mixed Use. Its not feasible to buy land either side because of the way the land was subdivided.

    A possibly use could be commercial, but house would have to be pulled down due to lack of parking.

    Our property would most likely not increase a lot in value compared to others in Ipswich.

    Ella and William

    Profile photo of FREDDIE2SHOESFREDDIE2SHOES
    Member
    @freddie2shoes
    Join Date: 2005
    Post Count: 9

    Forum why would anyone consider buying in Ipswich. I did some years ago 1991 and watched a 20% loss materialize over the next 10 years.Property doubles every 7 years they tell me.If i am going to invest these days 10K rad of Most major capitals is where i will risk my money.
    Everybody seems to be caught up in the hype these days without taking historical data into account you only need to look at the facts.
    Ipswich still has the same problems it had 20 years ago low employment low socio-economic status?

    Regards Freddie

    Profile photo of brahmsbrahms
    Participant
    @brahms
    Join Date: 2004
    Post Count: 485
    Originally posted by EJ2006:

    We have re-done some figures and taking into account all expenses, the property costs us $95 per week.
    We have to decide whether the $95 per week is better invested in our property or in Super. The house is on 541sq m block on a main rd.
    It does not need any renovations. It is a fibro house cladded in aluminium which is in good condition but locality not so great.

    The zoning is CMU12 – Character Mixed Use. Its not feasible to buy land either side because of the way the land was subdivided.

    A possibly use could be commercial, but house would have to be pulled down due to lack of parking.

    Our property would most likely not increase a lot in value compared to others in Ipswich.

    Ella and William

    how good is your super?

    off topic, FREDDIE2SHOES – interesting points – its nice if you start a new thread, then people who want to discuss know where to go.

    cheers

    brahms
    Purveyor of Fine Finances
    aka Mortgage Broker Brisbane

    Profile photo of MillyMilly
    Member
    @milly
    Join Date: 2004
    Post Count: 288

    I realise Ipswich is earmarked for  great things. It's a gorgeous city  but lets face it the weather is crap. I dunno how ppl function outside of aircon.  Yes it's a  growing city but that is because it has hte land to support the new developments and state govt is releasing land and encouraging  development. I'm not convinced the price of houses will go up that much, it will be a place where new housing  estates can be built at affordable prices.
    just my 2 cents worth

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