gottogo

We are looking to emigrate sometime this year (probably!) but in addition to buying our own home, we are interested in buying a second property to rent out to achieve an income. Does anyone have any idiot guides or pros and cons? For an outlay of say £100,000 what sort of rental income would you expect (in say Melbourne) and what deductions would need to be taken off this figure, eg; agent fees etc.

Thanks


Geoff

owieb

Most people buy a second property for investment and not to achieve an income. They run the property at a loss so that they can claim tax deductions on their main income. Then when the market is good they sell the property and take the profit.

Not sure that there is much to be made in renting as the market (certainly in Perth) is over-saturated and rental prices are very low. Though it maybe different in Melbourne.

bondipom

if you want income you are probably better off putting that money in the bank. As Owieb says people here are investing for the capital gains and tax write offs rather than the incomes. The Melbourne inner city apartment market is overloaded and falling in price but there might be opportunities elsewhere.

If you are not already a permanent resident you will have to meet the FIRB requirments which basically means a new place. Good luck but the industry is full of sharks.

ABCDiamond

Have a look at this website www.somersoft.com
Plenty of useful info, and warnings.

Melbourne may not be the place to start for property investment.

Agents fees can be about 10% of the rent.
Rent returns can be around the 4% mark these days, or less.
And the owner/landlord pays the Rates etc. maybe about $2,000pa. Plus of course repairs and often pest control costs.

adelaidegirl

Get yourself a copy of "The Real Estate Rookie - practical advice for the first-time property investor" which you can get from the Choice website (Aussie equivalent of Which). I believe they will post to the UK.

www.choice.com.au

loads of good advice on getting into the investment game in Oz.

I'm sure others on this forum will have books they can recommend too.

cheers, adelaidegirl

gottogo

Thanks for this guys - looks like I may need to re-think this idea!

Geoff

walaj

you should have a look at these current articles in the SMH

http://www.smh.com.au/articles/2004/...939852029.html
http://www.smh.com.au/articles/2004/...939852034.html

wmoore

I also understand the government is looking at CGT to see if they can close the loophole because every man and his wallaby is now renting property for this reason.

ABCDiamond

A couple of extracts from some reports, for you to consider:

Bill Fatouras, associate director of independent property advisers and valuers, LandMark White, said studios, one bedders and small two-bedroom apartments in areas where there was a significant number of similar product were the hardest hit


However, not everyone is filled with pessimism. Rod Cornish, head of property research at Macquarie Bank, remains cautious but says quality properties in good locations will remain in demand.
"It is the older-style apartments with no lifts and few amenities that will suffer. Prices for 40-year-old apartments are flat and rental income is very low," he said.

In other words, if you are considering this, do your homework, and do not just jump in.

kaz101

Try this website http://www.theinvestorsclub.com.au

we're free members based in the UK and we get regular newsletters. They sound pretty good and have answered several our questions on buying property in Oz. Once we're out there permanently we intend to join.

TTFN,
Karen

Kiwipaul

BEWARE the local tv station has blasted this company in Brisbane for overchargeing investors for properety that they have been sold.

Seem to remember they were running a number of scams mostly barely legal. The one that made the TV was the one based in Carrina so by all means take as much free advise as you can get but be very wary of any too good to miss deals they offer.

bondipom

The spruikers have been sussed by the Aussies and are moving onto gullible pommies. I wouldn't trust any Aussie going to London running seminars and selling Australian property. Wack Henry Kay in google news search and you can find out for yourself.

Kiwipaul

Totally agree, a lot of these punters who bought through this scheme are happy with their profits, but you would have to be a total idiot NOT to have made money in the QLD property market over the last couple of years.

Heres one of the article s about the The property club

Quote
The Investors Club, a lucrative business run by a Gold Coast real estate mogul who travels Australia signing up mum-and-dad investors for multiple properties, is under intense investigation by both the Australian Securities and Investment Commission and the Office of Fair Trading.
.....
The Brisbane-based club is in reality a highly profitable nationally syndicated business with an average of about $11,000 on each property purchase going to Lisson Pty Ltd, a company controlled by Kevin and Kathy Young.

ASIC and the Queensland Office of Fair Trading have been separately investigating alleged unconscionable conduct, selling at grossly inflated prices and unlicensed trading.

anya4oz

FWIW, I've been a buy-to-let-er here in Uk. We are also moving to Melbourne form Sunny Cambridgeshire this summer (in fact, Geoff, I used to live over your way, near St Neots!).

I've been looking at the Melbourne market (4% returns seem common). Citibank have a straight bank a/c that offers 5.25% interest on the straight cash (with no agent/tenant hassles to deal with), so I know which one I'll go for to provide investment income (in the short/med term anyay).

Anya.

ABCDiamond

Consider Brisbane

http://www.quartile.com.au/Market%20Data/brisbane.htm
Our research indicates there is still plenty of growth left to be achieved in this market (Brisbane) due to strong population growth and relatively low levels of construction which will ensure pressure remains on the rental and owner-occupier markets for a few years yet.

and

http://www.propertyinvestorplanning.com.au/brisbane.htm
The strong demand for Brisbane property investment is not over yet, " says Robert Mellor, the face of property at economic forecaster BIS Shrapnel. There's another 36 percent of price growth before 3 years is out (from early 2004 to end of 2006), Mellor told the Brisbane audience at the latest round of BIS Shrapnel economic forecasting conferences.
" There is more upside than downside in this scenario ...


I got these from a google search on "brisbane property market".

But it just confirms everything else I have been reading about this area.

Fingers crossed they get it right