Investment House Advice

[turbomuz]

  pelican said:

on the finance side of things.......

We have 50 properties, and they are all positively geared.......  if you make $$$ you have to be prepared to pay tax on it.......

Crikey. 50 properties, that's pretty impressive Scott.

[stang]

firstly type of property and how much you want to spend.

unit/flats are generally easier to rent than houses as well as cheaper to buy.

Flats often have concrete walls instead of plaster so if you get a tenant with raging hormones he wont put holes in every wall.I know people who have rented houses only to have to evict the tenant and be up for thousands of dollars in repairs.

Flats are generally better than units for this reason,depending on where you are find a block of 6 to 10 flats.Also area is very important avoid slummy but try for inner suburbs and not to far from transport.Don`t spend to much I have a friend that purchased a house for $450000 and only had $50k deposit.Start of small don`t know where you are but if you look at a flat you can start of with a one bedroom instead of a 2 bedroom if you need too..

Old people and gay people are good tennants, the only prob with old people is if they already have a foot in the grave your turn over of tenants will be high.

As its your first investment don`t over commit find something of good value get it checked out structually etc,even though you are negative gearing it pay it off as quick as ou can use the rent and say $100 or$200 of your money a week.

This will allow you to start on a 2nd property if you choose.

I`m a wog and the biggest mistake alot of aussies make is they take the loan over 30 years and do nothing about getting rid of the loan.

Also do your own research on the property and area you are buying in Do not TRUST real estate agents no matter how sexy she is or how innocent he looks and stick to your guns on what you want to spend.

I found something anhad set my price to $97500 this was 8 years ago the real estate agent tells me that theres beeen an offer of $110,000 do I want to counter it,nope I told him $97500 I thought was a fair price and iwasn`t going to budge anyway log story short according to the realestate agent I got the property because the other buyer had conditions ,wanted new carpet etc,BULLsh*t

[Eugene]

<{POST_SNAPBACK}>

That's about the best advice you could get Dazza. Although this place is in no way short of "experts", everyone’s financial situation is different and what may work for someone else could be the worst steep in your scenario.

<{POST_SNAPBACK}>

I agree Tab, good advice, but ensure you find an adviser who doesn’t have Vested interest in Selling you a deal/property/insurance/finance, as they will want the commission more than they want to look out for you.

House and Land is Number one, find an area where the projected growth for the area is more than 10% per annum, find out what the "Median house" is for the area, be it 3 or 4 bed, brick and tile 600-700m yard etc, and stick to that formula, if 85% of the houses in that area are 4 bed brick with two car garage and a big yard, that is what people will want to rent, and later on Buy, don’t try and re-invent the wheel.

I have a few contacts that will do the area research for you, and for a small fee, find a house in your price range in the area you want.

Rules to follow:

1. Buy in a + growth area, 10% rep annum projected minimum, I can give you details of who to talk to get this info, don’t use an agent for this info.

2. Buy the median house for the area, just like all the others.

3. Buy a house you would like to live in, not a sh*t hole, but not a mansion.

4. Buy a house which construction started after 1987, this will allow you to depreciate the building at 2.5%, there was also a 2 year window in the mid 1980’s when you can get 4% depreciation, I will find the dates for you.

5. Get a “quantity Surveyor” to inspect the property and value the depressible fittings and fixtures, he will know what they are, this can be worth many thousands to you, so do it, he will cost about $500. For an inspection and what he says goes, if he values a 10 year old dishwasher at $1000. Then that’s is it value as far as the taxman is concerned. He is tax deductable.

6. DON’T GO TO A PROPERTY SEMINAR AND BUY ANYTHING, they only want to sell you over inflated unit’s etc on which they make money, do your own research.

7. Once you have found an area, get smart, ring a few agents and try and rent a house like the one you want to buy, in the area you want to buy in, how many are available, what sort of cost etc. the agent will give you two different stories depending on wether you are buying or renting, be smart.

8. Buy Houses, not units, it is the land value that goes up, not the building, they are not making any more land, there will be thousands of units built every year, simple supply and demand.

I am no expert, but have a lot of info from guys who own lots of properties and have made many millions from them, happy to give contacts and info, right from getting the right loan, finding an agent in an area, finding the right area with the right growth rates etc. it’s a good time now to buy, the market has cooled a bit, and sellers are getting a little edgy, I just bought a block for myself, on the market for 10 months, I got it $40K under asking.

[turtle33]

make sure u have all the correct insurance on the property. Rent protection,tennant damage and houshold insurance. If you need repairs to the property make sure the agent contacts you first before they send ther repairman. I once got a bill for $450 to clear a blocked loo, it was lucky because the plumber that did the job was one of my subbies and told me that the tennants kid put a stuffed toy down there, the agent sent the bill to me even though the plumber said it was the tennants fault ( and he charged $250)

So be cautious about the managing agents.

[gassit]

There are all sorts of reasons to invest in property and the financial issues have been covered in the post's above.

Do not buy a property you can't do a drive by at least once a week as when it looks shabby on the outside, it's looking that and more on the inside.

Steve

I invest in land as tennants can't *beep* it up but the investment time is longer.

Steve

[turb06]

  hiddeous said:

I'l probably get flamed for this but...I negative gear because of the tax benefits.e other 20% out of my pocket. I suppose it depends on why you have the investment 1. as another source of income or 2. as an appreciating assest.

good luck with it

<{POST_SNAPBACK}>

Yeah we want to build upto at least 15 propertires as assets to help toward the retirement days, I am only 27 and my wife is 23 but we have the money to start doing it now and we can live easier in the future.

  Quote

I would be surprised if you could buy any property these days that is not negative geared unless you paid a substantial amount upfront with a deposit.

We are finding that to be the case also, I think we are going to have to negative gear about 33% of the loan to be able to do it, we live in toowoomba and there is still some good, 3 bedroom brick homes here for around 200k and we ahave a large uni up here, lots of asians who dont party much so it is a good strong renters market.

  Quote

Rules to follow:

1. Buy in a + growth area, 10% rep annum projected minimum, I can give you details of who to talk to get this info, don’t use an agent for this info.

2. Buy the median house for the area, just like all the others.

3. Buy a house you would like to live in, not a sh*t hole, but not a mansion.

4. Buy a house which construction started after 1987, this will allow you to depreciate the building at 2.5%, there was also a 2 year window in the mid 1980’s when you can get 4% depreciation, I will find the dates for you.

5. Get a “quantity Surveyor” to inspect the property and value the depressible fittings and fixtures, he will know what they are, this can be worth many thousands to you, so do it, he will cost about $500. For an inspection and what he says goes, if he values a 10 year old dishwasher at $1000. Then that’s is it value as far as the taxman is concerned. He is tax deductable.

6. DON’T GO TO A PROPERTY SEMINAR AND BUY ANYTHING, they only want to sell you over inflated unit’s etc on which they make money, do your own research.

7. Once you have found an area, get smart, ring a few agents and try and rent a house like the one you want to buy, in the area you want to buy in, how many are available, what sort of cost etc. the agent will give you two different stories depending on wether you are buying or renting, be smart.

8. Buy Houses, not units, it is the land value that goes up, not the building, they are not making any more land, there will be thousands of units built every year, simple supply and demand.

Thanks for those tips Eugene, surprisingly we were doing alot of them already, at least its good to hear we are on the right track, but I didnt know about the whole depreciation thing, so thanks for that and we will add this to the checklist the house needs to have.

  Quote

Do not buy a property you can't do a drive by at least once a week as when it looks shabby on the outside, it's looking that and more on the inside.

Yes definatley something we want to be able to do, we are considering maintaing the land and gardens/landscaping ourselves as part of the lease agreement, so we give them the 24 hours notice and then rock up to mow the lawns and weed the gardens, might be able to charge a little extra rent that way also, only discussed this with the wife so far so I dont know if there is anything in the tennancy laws stating we cant.

Thanks for all the replies guys this is really helping heaps.

Dazza.

[pelican]

DAZZA,

If you want to get 15 properties,

1) TALK TO AN ACCOUNTANT

2) SETUP A COMPANY or a TRUST..... DO NOT DO THIS UNDER YOUR PERSONAL TAXATION......

As mentioned, NEVER EVER EVER EVER attend ANY talks or seminars and sign up for a high priced course, or a property that they may have available.... its all Bullcrap......

We've gone thru a lot over the last few years getting to 50, so, more than happy to share any info you'd like...... We by now means are experts, and our goals are different to yours, so, DO YOUR HOMEWORK !!!

But, ask the questions you need to have answered !!!

We don't bite on this forum ( not that I know of yet anyway !!! )

Cheers

Scott

[pelican]

  turbomuz said:

  pelican said:

on the finance side of things.......

We have 50 properties, and they are all positively geared.......  if you make $$$ you have to be prepared to pay tax on it.......

Crikey. 50 properties, that's pretty impressive Scott.

<{POST_SNAPBACK}>

Thanks Muz.... been a lot of hard work, but now have "retired" from normal job, and do this for a living......

Work 2-3 days a week if I feel like it......

The thing I like about it the most are times, like when I walked into Ford Dealer, test drove a T, came back, and said, I'll take it...... without having to think about it.....

End of the year, my T will go back and I'll have a Phoon......

Cheers

Scott

[markxr6t]

Impressive Scott - well done!

A question - once a fair number of properties are positive geared and you want to create a company to own them to reduce tax(if they've been personally owned prior) wouldn't that trigger a capital event and result in serious CGT issues? ie Can you transfer ownership from an individual to a company without adverse effects?

Thanks

Mark

[pelican]

Hi Mark,

Thanks... dont like to brag, but am quite proud of how well we've been.... it's been hard.....

Now, onto your question.... The main issue you will have is a transfer of title, meaning a whole new round of stamp duty on every single property.... as well as probable fees from the banks to re-assign the loans to your company...... IT GETS VERY MESSY !!!!

CGT would also be an issue if you had any......

Best for you to buy under a company or trust structure as soon as you can....

The above is one of the biggest downfalls of many property investors......

Get your "holding vehicle" sorted out earlier, then you will have fewer hassles.....

Cheers

Scott