Comments for Property Investment Blog

Comment on Average 233% return on investment property in Sydney 1993-2010 by Roscoe

Roscoe — Tue, 24 Jan 2012 12:01:30 +0000

The percentage increase does not include the cost of renovation/upgrades.
Sometimes these cost are in excess of 100-300K

Comment on Find out where most people in Sydney want to live? by Patrick Shi

Patrick Shi — Mon, 16 Jan 2012 04:03:54 +0000

Melbourne homes have lost $200 in value every day for the past nine months to September 2011.

The value of property sold in Victoria in the past financial year plummeted almost 20 per cent – the biggest drop in a decade.

Melbourne’s median house price is now about $551,000, down $50,000 from its peak last December.

This makes sense that to buy an established proeprty in Melbourne as investment.

Comment on Find out where most people in Sydney want to live? by apartments hawthorn

apartments hawthorn — Mon, 16 Jan 2012 03:40:44 +0000

It's really a lot more practical to just buy an established property than to build your own from the scratch. But of course if you have the budget, you shouldn't hesitate to build a good property investment that would satisfy you.

Comment on Term deposits or property investment? by oracle

oracle — Mon, 09 Jan 2012 11:37:14 +0000

I just sold my home in south east suburbs for 595000 june last year.bought it for 135000 in 1992..i rented it since day one…had a top run for 10 years then the garbage came in (tenants)..over 20 years after everything including renovations…i reckon i walked away with 100grand…thats 5000 a year…for me it was right time to buy and sell..but i plonked the lot in a fixed term deposit (have other properties)..at 6.3 percent maturing june 2012..if i listened and took a risk.. gold was 1000 an ounce now 1700…only 30percent tax if kept for a year…but i wasnt willing to risk it..my friends its all about timing and research…i was lucky …but i remember having some money in pyramid at 18 percent and we all know what happened there!!!…i never touch shares ever ..i play as safe as i can…just use your head and dont be greedy!!!

Comment on Term deposits or property investment? by KMitchell

KMitchell — Sat, 07 Jan 2012 11:52:08 +0000

There are a couple of issues missed by a few comments here, on the point of interest earned in a term deposit, you will be taxed on that income, on the point of investing in a property, correct, you would pay capitol gains, but only on 50% of the earnings at YOUR current tax rate, also…a term deposit has nothing to claim on so you paying tax ourtright where as a property has tax deductable items such as depreciation, especially if you caused the house to be built new, additionally you would rent the house out and while yes that too is an income, that would be offset by claiming the interest paid on a 2 or 5 year interest only loan, so no, you would not have paid all that interest as mentioned in this forum, the person that rented (needed a house to live in would have, in fact every capitol expense involved with establishing the new investment property would be claimed including travel for inspections, ground maintenance, depreciation of dishwashers, ovens, airconditioners, structure etc, any improvments that increase sale price etc etc…..my opinion is there is a definite advantage to investment properties….all the best KM

Comment on Do you think investors are stupid to buy a property bubble? by Kevin

Kevin — Mon, 02 Jan 2012 19:43:20 +0000

Canberra house and unit prices are at an unsustainable level. Only households with 2 incomes can afford to buy in the city. New properties have poor quality. Local government inspections are superficial because of cutbacks. The main employer, the Federal government, may soon freeze recruitment. Prices must soon fall.

Comment on RBA cut cash rate by 25 basis points to 4.25 per cent by Patrick Shi

Patrick Shi — Tue, 06 Dec 2011 23:24:52 +0000

Money market pricing yesterday predicted the Reserve Bank’s cash rate would fall to about 3 per cent by September, which would require a further 1.25 percentage points in interest rate cuts from the Reserve Bank.

Comment on What investment property expenses can I claim as TAX deductions? by Patrick Shi

Patrick Shi — Fri, 28 Oct 2011 01:52:41 +0000

Hi Carol,

I don’t think you can claim tax deduction on the demolition cost as when you demolish the home it is NOT a rental property.

Cheers,

Patrick

Comment on What investment property expenses can I claim as TAX deductions? by carol

carol — Fri, 28 Oct 2011 00:51:36 +0000

We are demolishing a mobile home that will no longer be rented out after Nov. 2011. If we demolish it in Dec. 2011, can we deduct the demolition charges from income earned for the 2011 year even though we do not plan to replace the rental unit at this time?

Comment on House prices to rise up to 20% by 2014 by Matthew Frost

Matthew Frost — Tue, 11 Oct 2011 12:40:33 +0000

Pretty general and I think way off the mark. Their is too much emphasis on percentages, economy, new dwellings. It is too short term to predict 2014 prices. New dwellings are certainly down but this does not mean there is a shortage of stock. Yes it is a buyers market and yes their are plenty of buyers in the marketplace at the moment. Many are sitting on their hands or are well below the sellers expectations. The buyer sentiment of factoring percentage falls for example 20% of the purchase price is again is no way justified compared to alternative methods.

Yes interest rates are somewhat stable (despite economists riding the wave and keeping consumers on the edge of their seat with will it go up or will it go down). Over the past 6 months interest rates have been on hold but hype in the media of uncertainty has exactly done just that.

Buyers Market for a few key reasons:
-Massive oversupply of stock especially in CBD/ metropolitan areas
-Days on market for properties for sale have stretched on average over 120 days (that is 4 months plus settlement- 5 or 6 months). And they are just the ones selling
- Economists state interest rates are traditionally low but have a great impact in terms of borrowing capacity- perhaps 10% less borrowings compared to 18 months ago
- Financiers have tightened their reigns and lending criteria on various styles of properties and geographical locations
- Financiers are demanding more security/deposit for property
- ING does not touch Brisbane CDB apartments at the moment
- For a self managed super fund, no major banks are lending for single unit dwellings that amass 7.2% returns due to the fact that it is deemed share accommodation (each room leased individually)- Well they do finance but go on what the value the true market rent which is half in some instances.
- No banks atm are doing 95%loans unless significant guarantor.
- Interest on properties is their but in general, far below sellers expectations.

I guess the question now on propective buyers minds is… Are we at the bottom of the property cycle or market correction? I’m sure the media will certainly have a play on this too.

If interest rates remain around 7.0% variable (I know 6.39% is possible) it is a simple equation for savvy investors to enter the market. The gross yield or income better better exceed or come close to the rate at which we are borrowing money.

With Short term guessing out of the equation and assessing investment opportunities based the numbers then market sentiment I am sure it certainly seems to be a low risk option.

I will leave the hot topics, or catastrophic ideas of the so-called builders grant, foreign investment, increased stamp duty for owner occupiers and the lowsy first home buyers grant for a rainy day.