Hi All, I'm Tim, and I'm from Brisbane. I joined a while back and got carried away with life, but here I am making a proper introduction now My wife and I own a townhouse in Carindale, our first property. We've been here for.. jeez, just gone 4 years now! I'm hoping to find my way into some information about getting into investment properties, converting a owner-occupied into an IP, buying one outright and the best ways to quickly improve value / increase rent... from an admittedly naive point of view I have no issues with getting dirty and doing certain jobs myself. I've prepped an owner occupied house for rental before with my father in law, which was a fair bit of work but quite rewarding. Painting isn't a joy but it is something I can actually do pretty well (I love how great 'a lick of paint here and there' sounds until you have to actually put paint on the walls!). Ideally what I'd REALLY like to find is a quick spreadsheet that can be used when window shopping for IP's, to see whether or not the property is worth taking a closer look at given the asking price vs current or estimated rental rate. I have a rough idea of what some expenses of owning an IP might be but having never done it before I really don't want to overlook anything and either get into strife, or waste our time. If such a spreadsheet or an app isn't currently available then I wouldn't mind gathering that info and having a go myself. Anyway that's me, thanks for reading!
Gday @Teh_Cactus , welcome aboard. Converting from PPoR to IP is pretty straight forward. You should change the loan to interest only. Buying an IP outright is not recommended, as if you're paying interest only, it's deductible. Simple formula for working out yield is weekly rent x 52 / purchase price / 100. Yield doesn't necessarily determine if it's a good investment or not.
@Teh_Cactus - For your cashflow analysis, look at: % deposit you are putting in Stamp Duty Solicitors Fee Renovation to be done The above would give you the total outlay for the purchase. Holding costs for the property would include: Interest re-payments [Look at the balance loan amount to calculate this] Annual Borrowing Costs Council Rates Water Rates Property Management Fee (typically 8.8% inc GST in Brisbane) Building Insurance / Body Corporate [depending on the type of property you purchase] Landlord's Insurance The above is of course ball park and assuming that you do 80% LVR. Anything above 80% will incur Lenders Mortgage Insurance (LMI) and that needs to be added to your balance loan amount Make note of the tax benefits the property may offer: Depreciation for the property LMI (which is deductible for 5 years) We look at how much an IP will cost on a weekly, monthly and yearly basis before tax and after tax based on your tax rate. The above will give you the ball park holding costs for the property. This should give you a decent idea of whether to proceed with a given purchase or not. Good luck!
Assuming you have had it for 4 years, it would have seen good growth: Free Suburb Profile report for Carindale QLD (4152) Some good advice above re: cashflow analysis.
