Newbie in need of help!!!

[possum]

Hi there! Am ready to buy my 2nd and/or 3rd ip and not sure where to buy?? Can spend up to $700k (am increasing my loc from 1st ip's cg for deposits). Wanted to buy in WA and was looking in the Perth/Mandurah area. Do I go one more expensive ip and a cheapie or two midrange etc?

Also have an opportunity to buy a highset, older style 5bdrm, 1bth with rumpus underneath, house in Kenmore, Brisbane for $350-$375k. It's in a great location - opp parkland, quiet street, cls to shops/tavern/public trans. but in need of tlc (and I'm in WA). Does it sound like a good idea or should I stick with WA? Any help greatly appreciated!!

[Rolf Latham]

Hiya

Spread your risk

there are some great management agents in Brissie and the deal you have described sounds quite good.
ta

rolf

[willair]

Possum,
imho,
that price for a house in Kenmore sounds like it might be worth a second look,
but it would depend on the tlc factor,what is the land area for this property
and is this property on the high side of the Tavern and shops..
good luck
willair..

[Rixter]

Hi there! Am ready to buy my 2nd and/or 3rd ip and not sure where to buy?? Can spend up to $700k (am increasing my loc from 1st ip's cg for deposits). Wanted to buy in WA and was looking in the Perth/Mandurah area. Do I go one more expensive ip and a cheapie or two midrange etc?

Also have an opportunity to buy a highset, older style 5bdrm, 1bth with rumpus underneath, house in Kenmore, Brisbane for $350-$375k. It's in a great location - opp parkland, quiet street, cls to shops/tavern/public trans. but in need of tlc (and I'm in WA). Does it sound like a good idea or should I stick with WA? Any help greatly appreciated!!

Hi Possum,

First off let me welcome you as a fellow Perthite to the SS forum.

As Rolf has already said I also think you should spread your risk both within a local market and into different markets.

Due to my bigger objective picture (Goals) I have properties spread around the Perth metro areas & also the Interstate metro areas mainly for risk management & diversification with tax minimisation issues as an added bonus.

If you are buying for long term I personally believe you should target the middle range marketplace for a couple reasons -

1/ this is where the majority of the population demand comes from....and as we all know when demand exceeds supply that increases the capital growth.

2/ maximises your rental yields and therefore increases your cashflow across your portfolio.

Some people dont like the idea of having property at distance from where they live. Its way outside of their comfort zones. But thats just the way people are. Theres no right or wrong way, just a way that fits comfortably with our individual risk profiles.

Me personally I think those people who do elect to be able to drive past a local property at any time do limit themselves in terms of CG diversification opportunities .

Controlling an interstate portfolio from an arms length is not very hard at all if you employ a good manager locally to look after it for you.

But as I have previously said it depends on your personal objectives and goals - Its basically horses for courses.

Hope this helps.

[stretchy]

Hi Rixter,

What kind of tax minimisation advantages do you get from buying interstate? I always thought the tax laws were a federal issue, hence identical australia-wide.

Regards,
Steve

[skater]

What kind of tax minimisation advantages do you get from buying interstate? I always thought the tax laws were a federal issue, hence identical australia-wide.



Stretchy, you are right most taxes are a federal issue. However, Land Tax is a State Tax and it can be a huge burden. Most States have a tax-free threshold so you only pay tax once you reach your threshold therefore if you split your portfolio accross more than one State you decrease you exposure to Land Tax. I think this is what Rixter was referring to.

[Rixter]

Stretchy, you are right most taxes are a federal issue. However, Land Tax is a State Tax and it can be a huge burden. Most States have a tax-free threshold so you only pay tax once you reach your threshold therefore if you split your portfolio accross more than one State you decrease you exposure to Land Tax. I think this is what Rixter was referring to.

Skater,

You are correct. That is what I was referring to, along with a portion of interstate travel & accomodation deductions each & every year for the purposes of inspecting & tending my portfolio :)