Hi there
I am 20 years old and just bought my first property which settled on June this year. It is a 3 bedroom unit, with 3 garages, a swimming pool and tennis court and it's off the street where a primary school is, shops, medical centre, 5 min drive to a high school, 2 mins from the M1 and 3 mins from the train station.
It was originally $225k but I brought it down to $218 and qualified for the FHOG of $14k. I had the full deposit in hand, so I only got a loan for $174K and 6 months later, It is down to $159K owing. I have been paying double my repayments to try and smash this loan down as fast as I can (normally only $1020 minimum repayments a month are required but I'm putting in $2000). My mother moved in with me and I've only asked that she pays $150 a week into my mortgage to cover the body corporate (around $440-500 per quarter) and rates which is about the same.
I don't like living there as the kitchen and bathroom could do with a cosmetic lift, but then again, i dont want to get too emotionally attached because i think i will be outlaying more capital then i would ever recieve in rent. I want to move out ASAP and start renting. Other units in this complex are getting about $240 in rent.
I have a few questions:
Is this property worth holding onto long term for capital gains (i've been told this area is going to go up 15% in value)
should i renovate the kitchen and bathroom or just leave it and use the money for other investments?
can i move out now that its been 6 months (will i have to pay back some stamp duty for moving out before 12 months)
should i buy a big house with my partner who earns 70k a year and i earn 50k.. or just buy more properties on my own that are much cheaper? or buy cheaper ones together so we have more borrowing power?
where's a good place to buy positive gearing places?
where can i find a mentor to help me so i don't make mistakes.
I'm also welcome to any feedback – i want to learn as much as possible.Thanks for you help!
Hi,
i have bought cashflow positive properties in large regional areas, some investors prefer to only buy in cities, but I am happy wih the returns I am getting on my properties.
Perhaps get a property manager in to have a look at your property and to give you some information regrading how much it would rent for as is. Is the property 3 mins walk or 3 mins drive to the train station? The reason I am asking is with so many garages if it is only 3mins walk perhaps you could rent one or two of the garages to people who commute and want somewhere secure to park their car. That is if the garages have their own entrances, may even work if they have a common entrance.
With regards to the stamp duty question I don't know the answer to this question, however I aim to always buy and hold property. you lsoe too much money in stamp duty, agent's fees, capital gains taxes etc when you sell and buy again.
good luck
Sonya
Hi Rachie,
For Stamp Duty, I don't know what state you are in, but I can tell you what happens in QLD. This may be similar to other states.
If you gain the SD concession for a Principle Place of Residence (PPOR), then one of the conditions of this concession is to live in the place for 12 months. If you break this condition, then you are required to pay the pro-rata difference in SD.
An example may help. You buy a place for around $270,000 as a PPOR and pay $2,700 instead of the $7,700 you would pay for an investment (therefore you get the concession). You sell in six months, notify the Office of State Revenue, they reassess your contract, then you pay the pro-rata SD. In this case, it's the $7,700 minus the $2,700, which is $5,000. This difference is then divided 12 months of the year, then multiplied by the number of months you did not live in the unit in that year. E.g. $5,000/12 = $416, multiplied by the 6 months not living in the property = $2,500 you have to repay (a rough figure, but usually close).
You usually have a period of time from selling the property to notify the Office of State Revenue (28 days in QLD).
I tried to make this simple, but reading it back may sound more complicated than it is – someone else may be able to pitch in here.
Best thing to do is to find the website for the Office of State Revenue (or a variation of this name) in your state and read the guidelines. http://www.osr.qld.gov.au/ for QLD.
As to whether you should hold, sell, or buy more properties, that would be decided by the strategy you have chosen for your investing. Do you want to gain a cash base now to provide capital for larger works, do you want to develop a portfolio over a longer period of time for retirement, do you have short term and/or long term objectives you must meet? Many different variations and there is no one-size-fits-all strategy.
Hope this provides some light.
Graham
Thanks Sonya
The property is 3 mins drive from the train station. I was thinking of renting out a garage, but wouldn't know how to? i.e. in the local paper, a flyer in my complex mail boxes? and if there would be any insurance policy I would be liable if anything happened to thier things. There is building insurance from Body corporate. Also, what would be a reasonable price to charge?
Each garage has it's own doorThanks Graham
Yes I live in QLD
My goal is to be "financially free" within 5 years with a weekly portfolio income of at least $950 for myself as I will start planning to have children around that time. Before I have children, i want to travel the world to get it out of my system, so I'm ready to settle down.
I want to be able to fully own my own house that is big enough for my partner and one that has a granny flat/or downstairs area where my mother could live (so we have privacy) and ideally where she could retire without paying rent – OR – have enough wealth to purchase a separate home for her… My mum has no assets or savings and is getting to an age where she wont be able to work soon….I want to be able to fund her lifestyle and travel expenses as well – to give back what she missed out on when she was raising me.
HI rachie, Another idea that I have seen is people renting out a room, or in your case their garage to people who need storage, perhaps while travelling overseas for 3 or 6 months. I know if you have a self storage unit that the person who rents the unit gets their own contents insurance as insurance for their property. They hen have a lock and the only access to the contents of the garage. This may be an option for someone you know. YOu could make enquiries with self storage places to find out what they would charge if you wanted to store your possessions and then chrage a slightly cheaper rate.
As far as advertising goes you could put notices up at local shopping centres, the railway like you suggested as well as letting friends and family know that you have the space available if they are planning to travel etc.
Just a thought to increase your cashflow
cheers
Sonya
hi Rachie
Sounds like you are doing well. Since you intend to move out I would look at using a IO loan with a 100% offset account and keep the loan payments to a minimum. This will result in the same interest. If you pay all your cash into the loan it is trapped and you may need it later on. Using the offset avoids this.
As for the renos work out what the increased rent will be and see how long it will take for the extra rent to pay for the reno. If you won't get much more it may not be worth doing.
Generally I think it is best to buy on your own as you can generally qualify for more loans. Invest with your partner too, but just keep things separate – but also consider the effects of a split up too.
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
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