Good FP in Perth - or have a crack?

[porp_e]

Hi all,

Just wondering if anyone can recommend a good financial planner in Perth? I found some threads about this but latest was a couple years old, bascially just needing a more educated opinion on where to go from here...I will post details below for anyone wanting to have a crack in offering advice or observations/opinions through the forum.

property #1 - Newcastle
loan 220k
value (last bank valuation) 250k
(IP until recently however will be home as of January)

property #2 - Sth Hedland WA
loan 555k
value (based on comparable sales) 950k+
(due for completion in about a month, rental potential $2000-2200/wk)

Basically that's it on the property side, however just not sure what to do with property#2? Originally the plan was to sell & pay off prop#1 as both myself and my partner are moving back to Newcastle in January so the idea of living in a home with no mortgage was beyond our initial dream. However now (and admittedly as I educate myself more and more about PI) I'm thinking about the long term picture and not sure sellng is the right move, then again I get a little voice telling me not to be greedy! lol I have come up with a bunch of scenarios and but I've started to think I need an outside opinion to help me work through the pros and cons....and seeing as my other isn't financially inclined at all I'm feeling a bit out on a limb at the moment...

 

[JIT]

Could try Travis Morien.

 

[Kent Cliffe]

Financial planners aren't licensed to give direct property advice. This is more of a tax/accounting question.

Selling:
If for example you sold it, you would be hit pretty hard with exit costs/tax. ie
- Sell for $900k (being pessimistic)
- CGT on about $300k Adjusted = ~($100k)
- Agent fees: ($23k)
- Other: ($5K)

So cash at end: $900k-$550k-$100k-$23k-$5k = $222k (after taxes and transaction costs.

Holding:
Rent: $100,000 = $2000pw * 50wks.
Interest: ($45,000) = $550k + $50k (costs) @ 7.5%
PM fees: ($15k)
Maintenance + Other costs: ($7k)
Depreciation: ~$27.5k *30% = $8.25k

Total = $33k p.a.
Less tax = $23k


*These calculations above are absolute generalisations and you would have to speak to your accountant regarding specific advice.

As long as we don't see large devaluations in price/rent than I would keep this property as it's turning a $23k return p.a. No one has a crystal ball so your guess is as good as mine, but I think the government would be silly to erode values up there significantly.

Personally, I would keep my eye on: http://www.planning.wa.gov.au/ and just watch for any large scale subdivisions which could have an impact on price. Once you get wind of this, it would be time to start thinking about selling.

 

[porp_e]

If for example you sold it, you would be hit pretty hard with exit costs/tax. ie
- Sell for $900k (being pessimistic)
- CGT on about $300k Adjusted = ~($100k)
- Agent fees: ($23k)
- Other: ($5K)

Well that's definately put it into perspective my understanding of CGT was clearly incorrect, I assumed that the value of the property (eg a bank valuation) once build is complete would be used to determine any future capital gains or losses at sale, not the cost to build? If the latter is true then selling is definately not an option at this point - I could have saved myself a lot of time spent pondering if I'd consulted the good people of the forum earlier

 

[Kent Cliffe]

Feel free to have a look at this free CGT calculator:

http://www.yourmortgage.com.au/calculators/capital_gains_tax/

 

[Buzz]

Just out of interest, the new FOFA ( Future of Financial Advice) legislation in its current state requires Financial Planners to compare, under the new Duty to Analyse requirement, any financial product with direct property investment.

The legislation is due to be endorsed by the end of the year - so keep your eye on this.

I recently attended a seminar on the planned FOFA legislation and next week I will summarise the main points in the Your Property Success Toolbox http://yourpropertysuccess.com.au/your-property-success-toolbox/

So if this interests you go or you just want a summary of the articles from all the property magazines for the month then signup to get notified.

This new FOFA legislation is going to be a can of worms.

Jane