pommie bastard

Its a boom and bust way of life the banks lend way over what people can afford then push for higher interest rates to force the inflation down that it causes and the wheel turns again.
Last meeting with my bank manager he tried to give me more cash than I can afford to pay back to buy an investment home , a few weeks without rent would have seen me in deep crap its the road to hell.

Ceri

That's not a bad business
We were thinking of renting out our house (with furnishings) with a car on a short lease contract basis for business men etc visiting Brisbane( when we return to the UK). Basically something similar to what your doing. I'm a bit reluctant to sell up my property here when we return, so thought about doing something like what you are doing - but using an estate agent to do it.
I do not think property is going to go bust here (just my opinion) - but unlike the UK, Australia is trying to attract people to migrate here as it's not up to it's ideal population numbers.

Can I ask a nosy question? Does that rent cover the whole of the mortgage with cash left over? or does it just cover the mortgage repayments?(I don't want to know the exact amount etc)
Why I'm asking is when we go back (we own our - soon to be completed built home- and not the bank) I was thinking of re mortgaging the home - taking the cash with me back to Britain to use for a house over there- and let the renters pay the mortgage on the aussie house here, but of course the rent also needs to cover things like renters insurance, and repairs over the years, plus estate agents fees.

Anyway I can not see the house market here going bust, interest rates yes I can see rising as it's the lowest it's been in what 30 years (?) besides the point really, if interest rates go up - you put your rent up to cover the rise which is easy to do in a short lease contract, unlike if you were renting out to long time tenants where the rent is fixed for that year

Cheers

renth

Doesn't ANYONE remember when interest rates were 13% or so?

I'll never forget selling my house and still owing 10 grand on the mortgage.

But, no, it will never happen again will it.

pommie bastard

You start talking sense and the rabble will drive you out , highest interest rate in Australia was 17% , as Mr Keating said the recession Australia had to have and will again.
Had friends try this get rich quick investment home thing before and pull out after less than 2 years , there is a glut of rentals coming on line.

Kath

There's too much over in Australia about 'how to become a property millionaire' and 'increase your property portfolio by using existing property equity' - as with all investments there are risks. Property is usually a safer bet but property markets do fall and rental yields fluctuate - if it was that easy we'd all be rich!

I think it's risky taking on many properties relying "soley" on the rental income to pay off the mortgage - what about maintenance costs on the property(ies)? Even new properties need maintenance.

I think you can make money but you need to research thoroughly and be smart, constantly looking ahead and trying to predict the next boom area PLUS selling up when an area starts to show signs of deterioration ie. crime, negative development etc.

Kiwipaul

This is a very complicated subject. If you were planning on taking out a mortgage on this new house with the intension of renting it and using the money to buy another house in Australia to live in, you'd get no tax allowance for mortage payments because you are using the money for personnel use instead of investment use. If you used the money to buy another investment property you would be ok.

Because you are taking the money abroad you might get away with it claiming you were going to use it to invest in the UK, I doubt they would check.

Kath

Yes, we paid 15% interest rates in 1990 on our small starter home in the UK, we then saw the value of that home drop by £10,000 and then we were in negative equity.

The only way we got out of it was saving (extra jobs) and buy our way out of the debt. We stayed with the housing market and bought a complete dump, renovating it over 5 years, the market eventually turned around and we did OK. But thanks to our hard work, you don't usually get something for nothing.

renth

Wise words.

Personally, I have a natural disinclination to invest in anything, stocks, property, tulip bulbs where there is a "get in now or miss the boat for ever" sort of mentality.

So many people here are mini property moguls it reminds me of the time I had nearly a million quids worth of share options in the dot.com I worked for. My colleague used to comment on how his trophy wife had just got bigger tits each time the price went up.

I'd love to buy in Ocean Reef but the fact that they've gone up 25% in a year puts me off. I hope for many people's sakes that there isn't a crash, but if there is, that's when I'll buy. Otherwise I'll rent on and continue having all that extra disposable income.

Kiwipaul

PB ideas of investments is to feed the pokies at his local and celebrate when he hits the $50 jackpot by buying everyone and their dog a round.

DianeOZ

I know what you mean, hubby thinks we should get a mortgage & go the rental route. I think we would make money in the long term but I don't want all the agrro to go with it. It's bad enough trying to get him to do jobs in our house, never mind a rental!!

No, I'm happy with my lot for now.

Diane (AKA Mrs easily pleased)

Kath

I can't see you would have any problems. You are in a good position, at least you own your property outright, so risks are much lower. You can check mortgage repayments (go for a fixed rate) and make sure the rent covers your outgoings, plus make allowances for maintenance.

pommie bastard

You judge not had a few wins on the share market but paid the tax too , now what did I say about keeping you.
Love CGT the 48% paid was worth it not.

Kiwipaul

If you paid 48% CGT in Australia you've been had big time.

pommie bastard

Yes my accountant was less than helpful too , now I deal without informing the taxman .
You can half tax if you keep hold of shares for over a year but then gains are made over a month or a week , shares are a gamble and time scales are not linked to profits buy today and sell tomorrow before the heard sell out.

The Tooth Fairy

Trading outside a company (30% -> 15% CGT) or super fund (15% -> 10% CGT) is not tax effective unless you have a very low income (< $6,000 pa).