Sydney neutrally geared apartments? 400-500K

[menty]

I know the Sydney market is really hot right now, but I have some equity (probably about 100K) and would like to look into something which ends up neutrally geared to slightly negative.

I am considering apartments around the 400K mark, and getting a 95% no LMI loan (professional)

Income is approx 100K (self employed) and my current property is slightly cashflow positive.

Would a newish unit around Blacktown/ Fairfield/ Parramatta/ Granville be a good choice, as I can take into account some depriciation of the building? I could even consider Campbelltown as it really is its own little CBD.

I am currently about 50-70K off this year's land tax threshold, and would like to keep it under if I can. Do units contribute to a large land tax value?

 

[superAndrew]

Why would you invest in Sydney when it's hot?

Have you considered Brisbane? There is still some growth left in Brisbane.

Units contribute to land tax. The amount depends on the value of the land and the number of units.

Cheers
Andrew

 

[neK]

How do you get 95% lend with no LMI?

 

[superAndrew]

How do you get 95% lend with no LMI?

Let me know how if someone finds out.

 

[menty]

Healthcare professional? I'm not too sure actually . I'll need to look into it further

 

[Shahin_Afarin]

I think you mean 90% no lmi.

 

[neK]

How does one get 90% no LMI?
(Other than being staff for the actual lender).

 

[Shahin_Afarin]

Most lenders have a medico package (several medical professions - not all), St George extends this to more professionals like solicitors, accountants, etc, Westpac extends this to sports and entertainment people.

Fair bit of professionals and employment types eligible for this.

 

[neK]

The rest of us working folk get stuck with 80%....

 

[nhg]

Engineers with CPE's, Accountants with CPA's etc.

90-95% no LMI with St George.

 

[menty]

Keeping this thread on topic, these are my following options in terms of what the bank will lend me after speaking to my broker
270K (low)
410K
580K (high)

I know I will likely get nothing from the 270K.

So now I have 2 options really to consider. (High income earner 110-150K after investments and income from property)

1. Continue what I have done before. Buy large block of land and build granny flat.
This way I can also claim some form of depreciation on the granny flat also. Then again, the house value has risen only because of market forces too. (Buy price 513k 2012, Granny flat build 120K 2013. Last valuation 1 year ago at 640K). However, will have even more tax to pay as this method will end up CF+ and have to deal with land tax.

2. Look for a relatively new apartment/house that is slightly negative to neutral geared and ride it out.

Unsure what to do at the moment.

 

[mumbai]

(Buy price 513k 2012, Granny flat build 120K 2013. Last valuation 1 year ago at 640K). However, will have even more tax to pay as this method will end up CF+ and have to deal with land tax.

2. Look for a relatively new apartment/house that is slightly negative to neutral geared and ride it out.

Unsure what to do at the moment.

Congrats on the valuation.
I am not sure how the Land Tax comes into picture as the land value remains same irrespective of you building a granny flat

You should be happy to have a CF+ property. Why would want 30c-40c back for every 1 dollar you spend??

Do the above as it has clearly worked for you. I would not buy a negatively geared new apartment just for the sake of tax benefits.

 

[menty]

The value of the land (on my current 1 property) is edging very close to the land tax threshold.

 

[mumbai]

The land tax threshold for 2014 is $412k.
Are you sure you are very close to the threshold with just one property?

 

[menty]

The land value (2013) is close to 390K

 

[menty]

After reviewing a few things, it looks like I am in a position to buy a property in the range of 400-500 for Capital gains in the future with an 'okay' rental yield.

My current CF+ property can support this one for a little and so Im on the hunt for locations.

The Brisbane market may boom, and I am willing to consider it however know nothing about Brisbane.

If I stay in Sydney, Ill be subject to land tax and am considering the following areas:
Homebush West
Blacktown
Campbelltown
Westmead
Regional NSW (Newcastle/wollongong)

Thoughts?

 

[mumbai]

Menty,

I am from Sydney and took the plunge this month to buy in Brissie. It (is)was simpler than thought. You will struggle to get a good house in the 400-500k range in the areas you have mentioned (maybe except Newcastle/Gong, I have no ideas re those suburbs)

 

[menty]

Menty,

I am from Sydney and took the plunge this month to buy in Brissie. It (is)was simpler than thought. You will struggle to get a good house in the 400-500k range in the areas you have mentioned (maybe except Newcastle/Gong, I have no ideas re those suburbs)

Happy to consider apartments too as Iv been watching the market and apartments are rising also.

 

[danwatto]

For apartments be careful and research how many new development approvals there are.
Many have marketed and sold to overseas buyers which is demand that is surplus to our normal level for sales of established non OTP apartments. So if you buy fairly new the supply matches the demand now, but later when they are a few years older supply may be higher than demand as foreign buyers only buy new..

Ok for now, but be careful and research the area.

Houses don't have the same issue, can't make more land..
But then the government will gouge you with land tax..

So easy to be over the threshold, and the sellers market we have here means interstate is very attractive.