Hello Everyone,
I am newbie to this and my question is very generalised.. Lets say you have enough cash to buy positively geared investment property still
How would you handle ongoing cost on property? (Assuming your repayments are Principal and Interest)List of Ongoing cost:
Rental Management
Real Estate Agent fees
LMI
Building & Content Ins
Council Rates & Strata fees
Land Tax
Body Corp feesCan someone explain with hypothetical calculation?
Thanks in advance…
If it’s positively geared the rent covers ALL the costs.
Not the P&I though. Pay Interest Only.
If you need the extra tax you will be getting you can sign a tax variation form (used to be called 221D) and then you get your tax lowered each week instead of waiting until the end of the year.
Is that what you are asking?
@mushirkhan have a look at https://property-analyser.com.au.
It does all the calcs and shows you all the cash flows. You can vary between Interest Only and Principal and Interest and see how it affects your cash flow. It also take into account your tax rate given your income level.
Cheers
AndrewsuperAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auHello Catalyst,
Thanks for your reply..
Lets say Property value is $180,000 and Deposit you have is $18,000… You still come up with all the savings for Establishment cost such as Stampt duty, Pest and Building Inspec, Real Estate Agent fees, Conveyancing and Borrowing cost.
Weekly Rent is $300 and Repayments $240… Interest is $130
So apart from all this you still have to worry about Rental Management (9%) $1,057.68, LMI $6,000.00 (plz check if this is right), Building Ins $_____, Council Rates & Strata fees $1,700.00, Land Tax $200.00, Body Corp fees $1,500.00…. Total comes up to $10,457 yearly ongoing cost.
Given the above example how can you tackle on going cost????????
Lets say Property value is $180,000 and Deposit you have is $18,000… You still come up with all the savings for Establishment cost such as Stampt duty, Pest and Building Inspec, Real Estate Agent fees, Conveyancing and Borrowing cost.
Why are you paying RE fees?
Given the above example how can you tackle on going cost????????
What do you mean by “tackle”?
You need to calculate all you cash outflows and inflows like you did above. If outflows are greater then inflows then it will come out of your pocket. Not sure what you mean by tackle?
Cheers
AndrewsuperAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auIf you have any other debt which isn’t tied to an investment purpose, keep your future IP debt as interest only and instead pay the ‘extra’ amount you would otherwise be paying into that debt. This will result in the same amount of debt reduction with your total liabilities whilst ALSO providing greater tax benefits.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Lets say Property value is $180,000 and Deposit you have is $18,000… You still come up with all the savings for Establishment cost such as Stampt duty, Pest and Building Inspec, Real Estate Agent fees, Conveyancing and Borrowing cost.
Why are you paying RE fees?
Given the above example how can you tackle on going cost????????
What do you mean by “tackle”?
You need to calculate all you cash outflows and inflows like you did above. If outflows are greater then inflows then it will come out of your pocket. Not sure what you mean by tackle?
Cheers
AndrewHello SuperAndrew,
RE fees if I have agent who look after it…
And “Tackle” I am just trying to figure it out that how can I buy one property I am looking for with all these Ongoing cost… Yes you are right that if Outflows are more then Inflows, its a NO GO… But then that should be with any other property people buy as IP.
If you have any other debt which isn’t tied to an investment purpose, keep your future IP debt as interest only and instead pay the ‘extra’ amount you would otherwise be paying into that debt. This will result in the same amount of debt reduction with your total liabilities whilst ALSO providing greater tax benefits.
Hello Corey Batt,
That’s a good Call mate, Thanks….
Hello Everyone,
I have read couple of Steve’s books as well and I see those calculations he made, ofcourse those calculation are from when he made his fortune. In today’s reality we have all these cost that comes with buying IP. Can anyone provide an example of Positive Cash flow Investment they have with the Ongoing cost I have listed… How does your calculation stack?
Thanks,
Hello Everyone,
I have read couple of Steve’s books as well and I see those calculations he made, ofcourse those calculation are from when he made his fortune. In today’s reality we have all these cost that comes with buying IP. Can anyone provide an example of Positive Cash flow Investment they have with the Ongoing cost I have listed… How does your calculation stack?
Thanks,
Heya,
I have a few that stack up in the way that you mention.
A 250k purchase renting for 400/wk, a 147k purchase renting for 250/wk.
Also a 425k development that’ll rent for 580/wk on completion.
Several others.
Most of these are in Adelaide.Comes down to what you’re aiming for and how good you are at searching :)
D.T. | DT Property Management
http://www.dtproperty.com.au
Email Me | Phone MeAdelaide Property Management - whole Adelaide metro
Yes there are a lot of costs associated with property investing. When the costs are higher than the rent it’s a negatively geared property. You can claim the loss as a tax deduction.
If the property is near new or has had a major reno you will have good depreciation, which will lessen the costs out of your pocket.
Calculate carefully what the costs will be BEFORE you purchase anything. This is the reason 99% of property investors only own 1 property. Too many negatively geared properties drains your pockets very quickly.
By increasing your yield you won’t have as much drain on your pocket. You may be able to do this by renovating the property so you can put the rent up or put a granny flat in the backyard.
Keep reading and asking questions. There’s a lot to consider.
Heya,
I have a few that stack up in the way that you mention.
A 250k purchase renting for 400/wk, a 147k purchase renting for 250/wk.
Also a 425k development that’ll rent for 580/wk on completion.
Several others.
Most of these are in Adelaide.Comes down to what you’re aiming for and how good you are at searching :)
Hello D.T.
What is ongoing cost on your $400/week property and same for $250/week…. (don’t need exact figure just hypothetical)
Thanks,
Just the usual stuff we all have to pay like $550 insurance, $1200 council rates, Property Management, Water, etc.
D.T. | DT Property Management
http://www.dtproperty.com.au
Email Me | Phone MeAdelaide Property Management - whole Adelaide metro
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