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When property will work – and when it won’t! Quick tips to help when investing in property
Finance & Fury Podcast
English - June 10, 2018 05:06 - 14 minutes - 12.9 MB - ★★★★ - 4 ratingsInvesting Business Education wealthhappinessfinance Homepage Download Apple Podcasts Google Podcasts Overcast Castro Pocket Casts RSS feed
Welcome to Finance and Fury
Quick tips to help with making successful investments in property When property will work – and when it won’t! It is two-fold – How well the property works, and then what your own personal situation is like as wellSituations that will work – essentially, doing well in property compared to not doing well
Property
Paying fair value or undervalue for the property - The first step is making sure that you don’t lose from the get go Don’t overpay – New builds can have the FHOG built in Or at least pay the fair value in an area that will grow Remember for a place where land values will go up – The property price will technically go down (remember to watch out for maintenance costs) Potential zoning and subdivision – future capabilities of the property What is the ability to increase prices? Zoning – growth of land value from high density zoning What are the limits on your ability to change the property? What is the ability to increase yields? Sub division – 2 incomes for one Duel occupancyYour situation
Stable cash flows – Don’t get caught out The ability to have long term ownership and maintain payments is important Can hold for the long term Future plans are important – Property is great for growth – But you have to wait Limit your outgoing – $50 or $100 p/w – Don’t get in a hole The worst case is to be in a position you are paying more than you earn long termSituation that won’t work!
The property
The hidden costs – the things that kill the profitability of property Sinking Funds/Body corporates – Seen $6,000 on a place renting for $28,600 Leveraging too high Price declines can lead to banks increasing your repayments – LVR too high Interest rate rises – too much debt against value = Bad yields Repayments may be unaffordable if too much debt and rent declinesYour situation
Family/income situation changing Maternity leave or starting a family – Additional costs plus lower incomes Needing to buy a new home for yourself – bank may not lend if existing investment debt Property is a wealth trap Worst property in best street is a good buy – but not if it is going to cost $300,000 to make it habitable Title searches – Flood zones, major highways (Moving to Brisbane, places in Kenmore) Negatively geared – with no income to offset or low marginal tax rates MTR of 21% means that 79% is being lost Loan or ownership structure incorrect Joint owned but one person has no assessable income – bad for deductibilityThanks for listening!