Episode 13

When property will work – and when it won’t! Quick tips for property investment

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 well

Situations that will work – essentially, doing well in property compared to not doing well

Property

  1. 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)
  2. 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?
  3. What is the ability to increase yields?
    • Sub division – 2 incomes for one
    • Duel occupancy

Your situation

  1. Stable cash flows – Don’t get caught out
    • The ability to have long term ownership and maintain payments is important
  2. Can hold for the long term
    • Future plans are important – Property is great for growth – But you have to wait
  3. 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 term

Situation that won’t work!

The property

  1. 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
  2. Leveraging too high
    1. Price declines can lead to banks increasing your repayments – LVR too high
    2. Interest rate rises – too much debt against value = Bad yields
      • Repayments may be unaffordable if too much debt and rent declines

Your situation

  1. 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
  2. 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)
  3. Negatively geared – with no income to offset or low marginal tax rates
    • MTR of 21% means that 79% is being lost
  4. Loan or ownership structure incorrect
    • Joint owned but one person has no assessable income – bad for deductibility

Thanks for listening!

Say What Wednesdays: Petrol Prices are going up – why this is and what to do about it!

Say What Wednesdays Petrol Prices are going up – why this is and what to do about it! Australian motorists are suffering the biggest annual increase in petrol prices in 9.5 years as global factors combine to slug drivers at the bowser. ACCC - 2017-2018 financial year...

8 Tax Loopholes, Trump’s tax losses, and thoughts on progressive taxation

Episode 3 8 Tax Loopholes, Trump's tax losses, and thoughts on progressive taxation Welcome to Finance & Fury! Today we're talking about increasing your net income …and the way to do that is reducing tax. So, in today's episode we'll run through why we pay tax, where...

Do you need a family trust?

Say What Wednesdays Do you need a family trust? This week’s question is, ‘do I need a family trust?’. I have had a few questions about this over the past weeks, however in order to avoid making this ‘personal advice’, I thought I’d just talk about it in more general...

Furious Fridays: Elon Musk, Tesla and how CEOs affect share price

Furious Fridays Elon Musk, Tesla and how CEOs affect share price Today we’re talking about the markets, how CEOs affect share price and how public perceptions can make or break. We look at Elon Musk. Musk is a business magnate, investor and engineer. He is the...

Furious Fridays: The Holocaust, famine in the Ukraine, and how we just keep repeating the same mistakes, Rick and Morty style

Furious Fridays The Holocaust, famine in the Ukraine, and how we just keep repeating the same mistakes, Rick and Morty style Welcome to Finance and Fury, Furious Friday Have a think about how much you know about history? Are you familiar with the big events, like WW1...

Property Boom, or Doom and Gloom? Understand property bubbles and crashes so you can stop being freaked out by the media

Say 'What' Wednesday Property Boom, or Doom and Gloom? Understand property bubbles and crashes so you can stop being freaked out by the media This week’s Say ‘What’ Wednesday is from my friend Adam. We were talking on the weekend about Harry Dent’s recent visit He...

Furious Friday: Is cheaper better, or do you get what you pay for?

Furious Friday Is cheaper better, or do you get what you pay for? Welcome to Finance & Fury’s ‘Furious Friday’! Today’s misconception – Is cheaper better, or do you get what you pay for? Met with a client this week for an initial appointment – He had been reading ‘The...

Why work your whole life, just to have nothing left over at the end?

Episode 8 Why work your whole life, just to have nothing left over? Pay yourself first! Keep your own money – why work for others, then have nothing left to show for it? You earn more over your lifetime with this strategy – you save more and get rich right? Regular...

Say What Wednesday: The relationship between shares and property in Australia

Say What Wednesday The relationship between shares and property in Australia Welcome to Finance and Fury’s ‘Say What Wednesday’. Today’s question is from John. John asks, “What is the relationship (if any) between shares and property in Australia? Should we expect the...

Furious Fridays: The price of free is freedom – Taking a look at Lenin’s reign of terror

Furious Fridays The price of free is freedom: Taking a look at Lenin's reign of terror Today we’re going to run through the very first implementation of Communism on a mass scale. Our last few Furious Friday episodes are a lead up to this. If you didn’t catch those...

Pin It on Pinterest

Share This