How do I know if a property will be positive or negative?
It is really a case of crunching numbers, and making sure you have somebody to help you with those numbers. Don't believe a real estate agent or land developer.
The people who get into difficulty get the wrong information.
If you think you are going to pay $300k for a unit and get positive gearing because the rent is $300 a week, it is not even close. If someone tells you that you will get 5% return on investment, that’s not true either. You are going to make a loss on the property.
Are real estate agents misleading people to make them purchase a property?
Well what they say is true based on the way they do the figures, but 5% is not positively geared. If you find a property that is between 7-10%, then you are getting close to positive gearing.
What investors need help with is working out every expense, including buying costs, ongoing costs and the interest you are paying. Ideally you should have, say $8k going into your bank account with only $6k going out. That is positive gearing.
What questions should I be asking myself before investing in property?
We have a free checklist
“7 Critical questions you need to ask yourself before buying and investment property”
A checklist you should go through before you think about buying a property. It helps client to workout whether their super is going to be enough for their retirement. It does not do the calculation but it makes you aware “Is my super going to work for me?”
For most people, the answer to that question is pretty much ‘No’.
The checklist gives you an idea on how to look for positive properties as well as whether or not you have ‘serviceability’ for the bank. Some people will actually exchange the contract on a promise from a phone call they had with the bank telling them verbally that they can get a loan. They put a deposit on the property and later find they have no money when it comes to settlement and they lose their deposit.
The checklist will give client’s clarity on your current situation and what your next step should be.
To gain the confidence to take action start by visiting www.positiveproperties.biz to opt-in for our Free: 7 Critical questions you need to ask yourself before buying and investment property.
What is the 50% discount for the capital gains?
You buy a property for one hundred thousand and in five years time you sell for two hundred thousand. So you made a profit or a gain of a hundred thousand. Now currently, you can get a 50% discount on that capital gain and that 50% is in tax. So your 50,000 as being your 50% discount and the remaining 50K added to your taxable income and then you get taxed on that. So what the proposed changes is to reduce that discount to 25%. So you'll have to pay 75 taxes on that 75%.