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From: Anonymous
Our first investment property
From: Richard
Date: 10/19/99
Time: 10:55:09 PM
Just under 5 years ago I read Building Wealth through investment property and was convinced of the merit of this strategy. I have subsequently read the following two books.
We bought our first home 3 years ago. My original intention was to pay it off completely prior to embarking on building a portfolio. However, with approximately 50% equity in our home now - I couldn't wait any longer!! I figured that the opportunity cost of waiting until our own home was paid off was too great - with prices rising in that time.
After all I calculated the after tax cost of an investment property could be as low as $40-50 per week and wouldn't extend the pay-out of own home too much.
We live in Campbelltown in outer Sydney. When looking for an investment we firstly spent a couple of months researching the inner city (older terraces etc) as we figured the capital growth would be best. We found most sold by auction (always well above the REA's estimate!). This meant going to the expense of building inspections, contract checks etc only to find the property would sell beyond our price range. This was too much stress for us!!
In addition the older properties did not benefit from depreciation tax relief and this made our contribution higher than we would feel comfortable with. Feeling a little disheartened I went back to Jan's advice and started looking in our own 'backyard'. I had previously assumed that everyone lived out here so they could afford to buy and as such the rental market would be weak. After some research (speaking to local agents and checking what type of property was most 'in demand' I was surprised to learn there was a strong demand for new larger homes. It seems that many people with high incomes do not want to commit to a mortgage preferring to rent a nice new home, lease a new car and borrow money for new furniture.
We have settled on buying land and building an investment property. Although the interest on the building loan (which I am capitalising until the property is tennantable) will be non-deductible for the six month period of construction, I only pay stamp duty on the unimproved land value (saving over $5000). I am under no illusions that the capital growth will be as strong as the inner city -but the rental returns are good and the itemised breakdown of building and fitting costs will make tax returns so simple! Most importantly, as I know the area well I feel far more comfortable.
Our first investment property
From: Richard
Date: 10/19/99
Time: 10:55:09 PM
Just under 5 years ago I read Building Wealth through investment property and was convinced of the merit of this strategy. I have subsequently read the following two books.
We bought our first home 3 years ago. My original intention was to pay it off completely prior to embarking on building a portfolio. However, with approximately 50% equity in our home now - I couldn't wait any longer!! I figured that the opportunity cost of waiting until our own home was paid off was too great - with prices rising in that time.
After all I calculated the after tax cost of an investment property could be as low as $40-50 per week and wouldn't extend the pay-out of own home too much.
We live in Campbelltown in outer Sydney. When looking for an investment we firstly spent a couple of months researching the inner city (older terraces etc) as we figured the capital growth would be best. We found most sold by auction (always well above the REA's estimate!). This meant going to the expense of building inspections, contract checks etc only to find the property would sell beyond our price range. This was too much stress for us!!
In addition the older properties did not benefit from depreciation tax relief and this made our contribution higher than we would feel comfortable with. Feeling a little disheartened I went back to Jan's advice and started looking in our own 'backyard'. I had previously assumed that everyone lived out here so they could afford to buy and as such the rental market would be weak. After some research (speaking to local agents and checking what type of property was most 'in demand' I was surprised to learn there was a strong demand for new larger homes. It seems that many people with high incomes do not want to commit to a mortgage preferring to rent a nice new home, lease a new car and borrow money for new furniture.
We have settled on buying land and building an investment property. Although the interest on the building loan (which I am capitalising until the property is tennantable) will be non-deductible for the six month period of construction, I only pay stamp duty on the unimproved land value (saving over $5000). I am under no illusions that the capital growth will be as strong as the inner city -but the rental returns are good and the itemised breakdown of building and fitting costs will make tax returns so simple! Most importantly, as I know the area well I feel far more comfortable.
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