So will they be your PM now?
We've done it!
- Thread starter Rixter
- Start date
exciting!!!
Progress report ....
Property Manager phoned to tell me the current tenant is staying on post settlement. She was originally going to leave because she found a place some where else to rent. The current LL ( vendor) was renting the place to her at $310/w. Rental appraisals I had done suggested market rent to be around $370-$380/w.
I said to the tenant she is welcome to stay on however she will have to pay market rents as I will not be subsidizing her rent like her current LL. She agreed and asked for a 5 year lease.....I said no problems, the longer the better for me however the lease will have 12 monthly rental review clause which allows me to adjust the rent to prevailing market rate if necessary. She didnt like this because she was expecting the same rent fixed for the full 5 year lease.
I said well the best thing for her was I would offer a 12 month lease at $370/w and at the end of the lease I will review the rent then....she would then have the option to renew or move on if she wished.... a win/win for both of us.
Because she needs to be given sufficient written notice to increase rent under NSW law the PM has got the current LL to issue this notice, there by maximising my yield sooner, post settlement.
Keep you posted.
Property Manager phoned to tell me the current tenant is staying on post settlement. She was originally going to leave because she found a place some where else to rent. The current LL ( vendor) was renting the place to her at $310/w. Rental appraisals I had done suggested market rent to be around $370-$380/w.
I said to the tenant she is welcome to stay on however she will have to pay market rents as I will not be subsidizing her rent like her current LL. She agreed and asked for a 5 year lease.....I said no problems, the longer the better for me however the lease will have 12 monthly rental review clause which allows me to adjust the rent to prevailing market rate if necessary. She didnt like this because she was expecting the same rent fixed for the full 5 year lease.
I said well the best thing for her was I would offer a 12 month lease at $370/w and at the end of the lease I will review the rent then....she would then have the option to renew or move on if she wished.... a win/win for both of us.
Because she needs to be given sufficient written notice to increase rent under NSW law the PM has got the current LL to issue this notice, there by maximising my yield sooner, post settlement.
Keep you posted.
Well done Rixter!
Just wondering did you consider the 12 month lease with the fixed increase @ 6 months? This is one of the beasts that i have been using lately. Issue the notice of rent increase @ the start of the lease (dated 6 months ahead), legislation doesn't dictate a maxium time frame to give notice of rent increase in NSW.
Rixter could you just give a little insight into your experience purchasing interstate? I'm a little bit hesitent to pull the trigger
Regards,
RH
Just wondering did you consider the 12 month lease with the fixed increase @ 6 months? This is one of the beasts that i have been using lately. Issue the notice of rent increase @ the start of the lease (dated 6 months ahead), legislation doesn't dictate a maxium time frame to give notice of rent increase in NSW.
Rixter could you just give a little insight into your experience purchasing interstate? I'm a little bit hesitent to pull the trigger
Regards,
RH
I've never thought of doing it that way. I usually increase rent (if market dictates so) at the start of a 12 month lease with a 6 month review clause.
I book air fares, accommodation & hire car online then fly over usually for a period anywhere from 7 to 10 days.
In that time I get out & about in my chosen areas identified by my previous Macro DD. Then inspect everything that meets my purchasing criteria at the Micro DD level.
If I see a property that exceptional I will put in an offer there and then, otherwise I will bring all my micro dd, inspection notes & digital photo's back to Perth, then over the next weeks pick the best of the crop and make an offer remotely from here.
The offer/contract process I conduct by phone, fax, email & registered express post. Once an offer is accepted a signed contract copy is forwarded to my mortgage broker to get the loans process under way. We have used number of different brokers located in various states in the past. This current Sydney purchase we used our broker here in Perth. Geographically it doesn't matter where your broker is based. We do prefer to spread our banks/lenders too.
I also immediately forward a copy of the signed contract to our Solicitor to start their side of the conveyancing process. We always use a Solicitor / Conveyancer that is located locally in the state where the property purchase is in because they are familiar with the settlement process system for that locality.
I usually organise the relevant contractors / agencies required in relation to fulfilling our contract conditions / requirements , such as independent valuers, building inspections, pest inspections etc etc. Once these requirements have been met satisfactory to myself I then notify my solicitor of such and the solicitor liaises with my mortgage broker to take the contract through to settlement.
Over the years we have found the whole process to run fairly smoothly. With each subsequent purchase you learn from the previous ones so you can fine tune the way you do things along the way. This kind of stuff you don't learn form text books. Its hands on practical experience where the nuts & bolts learning is really acquired.
The biggest obstacle that needs to be conquered is your own thinking. Basically its having the courage to over come the fear of stepping out of your comfort zone to things that are all new and foreign to you. Are you doing things right, what do you need to do next and the fear of losing are all thoughts you will have to move through to succeed.
At the end of the day once you have moved through these barriers that stop the majority of people you will think to yourself that it wasn't as bad as you thought it was going to be. Chances are you will be revved up wanting to do it all again.
As per my signature - You don't have to get it right you just have to get it going!
Hope this helps.
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Hi Leandro,
Yes, the majority of the times (apart from a couple) I have been flying east I have made offers whilst still on the ground there.
I forgot to add in the previous post these trips usually cost around $1800 inclusive of everything already mentioned as well as food & petrol too. I use a LOC to cover these costs so in real cash flow terms, working on 7% IR, its costs me approx $126 for the trip.
I hope this helps.
Even less once you file your tax returns and get a tax refund based on your tax rate. Correct?
Cheers,
Oracle.
Why does it have to cost anything ? Wh bother making the $126 repayment on the LOC at all ?
(I'm not suggesting, I am asking in case I have missed something in my attempts to understand this)
Thats very impressive. Do you know the agents on the ground or have properties already ear marked from the web?
No. Expenses incurred in searching for property are not deductible. They need to be directly related to your assessable income - there is no income earned from searching for property. Of course if you also inspected some of your existing portfolio while you are there then an apportionment could take place. Also, if you don't have any taxable income at all then it doesn't matter whether the expenses are deductible or not.
Of course I'm not an accountant so I'm likely completely wrong! Hopefully someone will correct me in that case.
Rixter - Thanks for posting all this - it's great. I just wanted to say though that I'm not a fan of your treatment of capitalising expenses. You could treat every expense in your life that way and in my view that would lead me to a skewed view of how much they are really costing me. If I spend $1 on non-deductible expenses such as this then it costs me $1, regardless of whether it's capitalised in a LOC or not. Deductible expenses are another matter of course but only if I have taxable income to offset them against...
What about if you are in the business of property investing? Especially since Rixter holds a large portfolio, purchases regularly, with repitition in a systematic business like manner. I would argue in this case anything to do with property purchase is deductible as it relates to the business of property investing rather than one particular purchase where it would be considered 'too soon'. Be careful of this though as you could potentially lose the CGT discount if you decided to start selling.
Which would mean that to the normal average joe (or John), that they could not claim this....... Rixter would be able to tell us more, my guess, based onthe previous discussions where I gfot quit eintereted, is that it might apply to somene see as runnnig a buisness (like a "professional share trader" can be treated differently tyo the average punter) ...
hmm interesting read, interesting to learn from, includign learning that this is probably somethign that I cannot do (for some time at least)
Sorry I will rephrase what I was meaning, it increases my expenses by $126.
I dont know any agents or have any properties ear marked prior to hitting the ground. I do have an idea on what asking prices are like and how the market is moving prior to hitting the ground due to macro dd Ive been conducting starting from around 6 months out.
Yes this is correct, the interest for searching purpose drawings (if not trust related) are not tax deductable. - But having said that, sometimes some people can get too carried away with whats deductible & whats not, that they forget one's not paying tax in the first instance anyway as you also point out.
In the overall big scheme of things however does it really matter (providing one's bought good quality well located assets that are appreciating at a rate faster than one's redrawing), if you have a portfolio Debt of $2M & over $4M of portfolio assets appreciating?? I dont think so! Unfortunately (for them) most people lose sight of the forest for the trees.
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Agreed. The big picture is always worth keeping in mind to keep the context. In order to make money we have to spend money - stamp duty always reminds me of that!
I think I at least got confused and thought you suggested the expenses incurred to serach for the propery/properties were being funded by an LOC which was used for deductable purposes, meaning the interest charges would be claimable... At the end of the day it's $1 - 2k well spent, whether you get the $30-$0 odd cak in tax or not, I agree I know I've spent that in smaller amounts on much more frivolous things in the past, but it never literally occured to me use an LOC of rnon deductable, even though property related expenses.
