Hey Peoples, Currently we are selling our house I have a feeling it's going to fall through due to us having a Shed that doesn't have council approval or the approvals were never finalised still trying to get to the bottom of it looks like our solicitor who has now flown the coop stuffed up ten years ago. Anyway was thinking that maybe we could keep it as an investment property instead, It is something our loan manager talked to us about at the start but we were kind of against it as we have probably had a negative mindset due to the horror stories we have seen on TV. What are the costs involved in renting a property, approx rent would be $400 a week we owe approx 170k valued at $400k by the bank. We can service both loans on the new house we have purchased as well as the one we may rent out. Anyway any idea on costs etc involved, and how to handle this
Welcome to the forum. For me, it is a no brainer. Interest at 2.5% on $170k loan is about $80 per week in interest, whilst you might get $400 in rent less costs. You probably won't be paying interest only, so your repayments will not just be $80 per week, but you could refinance if your loan was higher and you want to pay only what is required for a $170k loan. You will have rates, QUU (but tenant should pay for water used), house and landlord insurance (super important that you choose a good landlord insurer if you are worried about horror stories), agent fees (maybe 7.5%). You may find you creep into land tax territory, but it is just another cost of doing business. Perhaps think about renting it to see how you go whilst getting those approvals so you can sell if you decide to. I'd also pay for a valuation because if this is your main residence, and you've lived there the ten years you've had it, it would be good to get a valuation of what it is worth now, before you rent it out so you have some way of working out how much capital gain you will have earned from now, not from the start of your ownership. That's my understanding of it anyway. Check with your accountant to confirm this. And probably you could get three appraisals from agents if you don't want to pay for a valuation. Obviously don't take my advice. These are just my thoughts. Is the property in Ipswich?
Firstly, depending on your Council, the shed might not even be an issue, so don't stress on this. Find out what the rules are, and then make your decision. Secondly, like @wylie I'd have no qualms whatsoever in renting it out. Many people are scared off by some of the stories that are portrayed in the media, but often you don't get the full story and many times the properties involved have not been managed properly, so if going down that path, be educated and know what you are doing. You need good insurance. I like EBM as they have great Landlord Insurance. Sure you can get cheaper, like from Woolworths or similar, but if you do need to claim, you may find out why they are cheaper. You need a good property manager. Again, you can save money and do it yourself, but many times that proves to be false economy. People here can give you recommendations of good PMs in the area of the IP. Land tax shouldn't be an issue with only the one IP, but you will have all the usual expenses, and of course you need to keep the property well maintained.
Yes Redbank plains, I am still waiting to hear back from the couple that has taken a contract out on the property will see how it goes over the next week if it ends up falling through no big deal I can last start down the rental track etc. Thankyou both for making me feel more positive about this
I've always found it odd that people get so scared off by unapproved structures/additions, (unless there's a good reason they're not approved). I think a lot of the time people don't like the uncertainty, even if it's not really that big of a problem (absolute worst case, shed has to come down?). I'm assuming your shed is well built to standard but someone stuffed up the process of formal approve, which shouldn't be a huge deal for you to sort... but you might not be able to get it done in time to save the sale? For what it's worth, rents are going WILD up here at the moment (Some areas up 20%+!) and everyone LOVES a shed, so the house will probably rent in a heartbeat. Chances are your rent will be higher than $400.00wk with the shed, though I haven't seen it so I can't say for sure. Here's some thoughts on costs: - Rates and building insurance won't be dramatically different. - Landlords Insurance between $315.00-$372p.a depending on choice of insurer. - Tenants pay the "Water Usage" charges on the second page of the Urban Utilities notice, average family around $150-$200 per quarter? - $35.00wk Management Fee (based on $400wk). - $440.00 Let Fee (One off to secure new tenant, based on $400wk). - Budget approx 2wks vacancy in the current market to rent first time (likely to be less). - Budget 1wk per annum in vacancy (also, likely to be less). - I won't comment on maintenance costs, it can vary dramatically depending on the house, etc. - $460.00 Tax Depreciation Schedule. - $500.00 Smoke Alarm Upgrade (Interlinked alarms in each room, need to be in place by 2022). - $150.00 WELS Certificate (Big topic, but in summary, confirms ability to charge full water usage) - $170.00p.a. Termite Inspection (optional). - Extra cost with the tax accountant? Did I miss anything guys? Also, to allay your fears, a good Property Manager will help to avoid 99% of dramas, and a good Landlords Insurance policy will fill the cracks in the rare event that something does go wrong.
Hey @Tom Rivera LL insurance is $315 - $370 per annum. Our new guest will have a heart attack if it costs that much per week
