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Discussion in 'Investment Strategy' started by laser, 23rd Apr, 2017.

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  1. laser

    laser New Member

    Joined:
    23rd Apr, 2017
    Posts:
    1
    Location:
    NSW
    Hi, I'm just starting on the "I own an investment property" learning experience, so lots of questions and no answers at the moment ;)

    I know it's a huge case of "your mileage may vary", but this is what I've heard recently (in no particular order)

    1. You're better off buying your first investment property in your own name, then all the others in an SMSF

    2. ROI is King (but how do I calculate it properly ?) .. is it simply Rent, Rates, Mortgage, etc... How do I take vacancy into account ?

    3. Buy it fully in your name

    4. Buy it in both names (wife & I), but make it a 99:1 share to maximise tax benefits on my side

    I'm reading through the forum posts now, but any linkts/tips/etc would be great :)
     
    HUGH72 likes this.
  2. Zoolander

    Zoolander Well-Known Member

    Joined:
    15th Dec, 2016
    Posts:
    668
    Location:
    Sydney
    Welcome to the forum @laser. Good on you taking the first steps and asking the questions to help you on your way to investing. It's a massive world and there's plenty of folks on here with experience and sage advice to boot.

    I'm no dedicated property professional so take the post as a guide only - it's general advice and you should consult professionals and seasoned property vets on here before making decisions.

    The goverment is about to take a scalpel to SMSFs, so the benefits of starting your own super fund and buying property that way may not exist in a little while. If you haven't bought any properties or own any in your name, you might be eligible for government support via first home owner grants which vary by state. It's worth chatting to a financial professional on the best way you should structure your finances based on your own personal needs.

    ROI, I don't hear it used often in the context of property - more of a business term. Yield and cashflow, and capital gains tend to sit better as measurements.

    There's two general approaches:
    1. Aiming for high yield and cashflow, which is getting high rental income compared to how big your loan is. It's your rental income per year as a proportion of the price you paid (or loan size, can't recall which one). Generally the yield range you'll come across is between 3-5%.
    2. Capital gains. This is a focus on betting on the value of your property increasing in value over the years. If you see articles about homeowners making $10,000 a year by "doing nothing", that's capital gains at work. This approach means you might feel the pain of losing money in the short terms if the rental income doesn't fully cover your loan repayments and property expenses.

    All the best in your journey!
     
  3. Tony Fleming

    Tony Fleming Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    717
    Location:
    Sydney
    Welcome to the forum. A lot of the questions are hard to answer as they are a bit vague with your strategy and current situation. I'd suggest having a look at @terryw investment tips scattered throughout the forum.

    As for number 2 that's pretty much it calculate all the costs against the income generated. I'd have two weeks blank in case or vacancies or reletting fees. Also don't forgot to add in potential repairs into your figures.
     
  4. BuyersAgent

    BuyersAgent Well-Known Member Business Member

    Joined:
    20th Jun, 2015
    Posts:
    1,401
    Location:
    Oz
    Hi @laser welcome. There is a heap you can learn by just reading what has already been written about structuring. For specific structuring questions for your own situation I advise people pay for good advice from a property savvy accountant as the best setup for you varies heaps by risk level, business income/paye, likelihood of being sued, industry of employment etc etc.

    Also depending on your income and situation, seek to balance cash flow and growth. Growth is what builds wealth but lack of cashflow will send you broke so you need both. Best of luck!
     
  5. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    3,977
    Location:
    Canberra, Brisbane and Sunshine Coast
    Welcome aboard :)

    I agree with mr knight above - for taxation/ownership type questions hit up a decent accountant. Plenty on here if you need to find one.

    Cheers

    Jamie
     

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