Taffyowen Posted January 24, 2014 Share Posted January 24, 2014 We are hoping to move over to SA later this year on a 190 VISA. The idea is to sell our home and buy in Australia. We are lucky to have a decent amount of equity in our UK home and with exchange rates improving hope to have a decent amount to spend when we get there. Our ideal scenario would to buy a family home in Adelaide and an investment property (in Queensland). We would hope to purchase the holiday home outright (if this is the best thing to do?) and get a mortgage on our family home. Has anyone any experience of doing this? Is it easy to buy and get a mortgage if you've just moved over? Are there issues purchasing in a state if you are not living there? Any tip and advice would be appreciated. Taffyowen Link to comment Share on other sites More sharing options...
silencio Posted January 24, 2014 Share Posted January 24, 2014 Hi there, for my knowledge you're allowed to purchase just 1 property anyway as a PR. Only Australian Citizens can buy more than 1 house. That's what I've been told. So might not have that problem living in another state than in the purchasing one... Usually new arrivals don't have any Australian credit history, so it'll be hard to get a loan/mortgage straight away. Link to comment Share on other sites More sharing options...
Blade17 Posted January 24, 2014 Share Posted January 24, 2014 Our ideal scenario would to buy a family home in Adelaide and an investment property (in Queensland). We would hope to purchase the holiday home outright (if this is the best thing to do?) and get a mortgage on our family home. I would do it the other way round, that way interest on loan for investment property would be tax deductible against income. Interest on your home loan would not be tax deductible. Link to comment Share on other sites More sharing options...
Taffyowen Posted January 24, 2014 Author Share Posted January 24, 2014 That makes sense - so is it possible as newly arrived PR? Link to comment Share on other sites More sharing options...
boganbear Posted January 24, 2014 Share Posted January 24, 2014 Why on earth would you live in SA and have an investment property in QLD? Not very practical if anything goes wrong...bad tenants, natural disasters, fire, flooding. You are also assuming that despite getting PR you will actually like Australia and settle. Many don't. Link to comment Share on other sites More sharing options...
Taffyowen Posted January 24, 2014 Author Share Posted January 24, 2014 Ive been there half a dozen times and sure its where we want to be. We would rent for the first six months to find out where we want to be though. Even in a worst case scenario (if we had to come back) we could always sell the property - no point keeping money in the bank with current rates. The bad tenants is a concern of course, however the plan would be to move there possible in future...its good to get the feedback and appreciate the challenge of distance. Link to comment Share on other sites More sharing options...
Keith and Linda Posted January 24, 2014 Share Posted January 24, 2014 From experience there is not much you can do about bad tenants, even if your are nearby, nor can you stop natural disasters, floods or fire. Many people have interstate investment properties, gives you a chance to visit other parts of Aus and the tax man helps with the travel! A little research into the area could reduce the risk of bad tenants, and council web sites will show the flood risk area's. Good luck to you Taffyowen Cheers Keith Link to comment Share on other sites More sharing options...
Taffyowen Posted January 24, 2014 Author Share Posted January 24, 2014 Thanks Keith, that was our intention - we would be looking at something that could be rented out in an area such as the Sunshine Coast which we have visited in the past and like. I suppose like the UK you can get an agency to manage it along with marketing it to holiday makers through the appropriate channels. Taffyowen Link to comment Share on other sites More sharing options...
Keith and Linda Posted January 24, 2014 Share Posted January 24, 2014 Yes we like the Sunshine coast, often have a trip up on a Sunday, Caloundra mainly and Mooloolabah, though we do prefer the beach's of the Gold coast. Yes you appoint agents to look after it, for a normal rental home they charge about 8% of the rent +GST, they also take the 1st weeks rent for every new (tenant)lease, and half for a lease renewal, you will also need to take out 'landlords insurance' a must for bad tenants (I have needed this twice now) you will need to check out building and contents insurance needed on a holiday let. Sorry but I do not know the agents charges/fees on holiday rentals. Remember you would have to furnish a holiday let, do not know how you can do that initially from a distance, maybe a friend or an agent could help on that. Cheers Keith Link to comment Share on other sites More sharing options...
prozac Posted February 4, 2014 Share Posted February 4, 2014 Why on earth would you want to buy an investment property that you cannot keep an eye on? I have owned a number of rental properties over may decades. My advice buying an investment property is if you cannot get in your car and be there in an hour or so then don't buy it. You will not have much control over your investment if all your contact with agent or tenants is by phone or email only. If things go wrong, and they do, you want to be able to go bang your fist on the agents desk and ask why. You can drive past and see if the property is being looked after, that there isn't a bikie gang in residence, or the tenant's aren't using the fence palings as BBQ fuel. Keep your money close. There will be many good investment opportunities in SA. Link to comment Share on other sites More sharing options...
Xenon4017 Posted February 4, 2014 Share Posted February 4, 2014 Our ideal scenario would to buy a family home in Adelaide and an investment property (in Queensland). We would hope to purchase the holiday home outright (if this is the best thing to do?) and get a mortgage on our family home. Doesn't sound ideal to me. Even, as has been pointed out, you do it the opposite way round to take advantage of the tax breaks, what sort of return on your investment are you expecting? If you talk to an Aussie under 40 years old, all they can remember is a property boom, but in Qld especially, things have leveled off, meaning the capital growth just isn't there any more. And the rental yield, even with the tax breaks is marginal. Factor in the stress of potential toxic tenants (literally) and the whole thing becomes much less attractive. But as you say, you're going to be renting for a while to get the lay of the land, so there's no hurry. Link to comment Share on other sites More sharing options...
Keith and Linda Posted February 4, 2014 Share Posted February 4, 2014 Why on earth would you want to buy an investment property that you cannot keep an eye on? I have owned a number of rental properties over may decades. My advice buying an investment property is if you cannot get in your car and be there in an hour or so then don't buy it. You will not have much control over your investment if all your contact with agent or tenants is by phone or email only. If things go wrong, and they do, you want to be able to go bang your fist on the agents desk and ask why. You can drive past and see if the property is being looked after, that there isn't a bikie gang in residence, or the tenant's aren't using the fence palings as BBQ fuel. Keep your money close. There will be many good investment opportunities in SA. I am a referral partner for a large bank and able to arrange an introduction for a property loan or business lending in any region of Australia. PM me if you are interested. May I ask how near to hand and how close an eye you keep on your super? Could you let us know which bank? so we can avoid it due to such short sighted opinions and advice and in not reading/understanding the op's post. Link to comment Share on other sites More sharing options...
rammygirl Posted February 4, 2014 Share Posted February 4, 2014 Well we bought our property in the Adelaide hills when we were in the UK we have had it for 5 years plus and are only now back in SA. we had a good agent who we trusted and a good insurance agent we had met them both personally when we lived in SA previously. Only 2 issues so far A large limb of neighbours tree fell on the roof and did quite a bit of damage whilst the tenants were in bed! By the time I knew about it the agent and insurance agent had approved repairs, soothed the tenants ( their little one was sleeping in the bedroom it fell on) and booked repairs. They even notified the council and neighbour so that other overhanging limbs were removed. Weirdly that week the same happened to our house in the UK but the tree didn't fall on the house. It was more hassle to deal with though, another tenant fell behind with rent, that too was dealt with well and when they left everything was fine and monies owing we're taken from the deposit. It can go wrong but it can be done. Plenty of people do this from the UK with homes in Spain. A similar distance away but often harder as language and legal stuff more complicated, plus the currency issues. by the way if you are PR you can buy as many houses as you like, only temp residents are restricted. Link to comment Share on other sites More sharing options...
Xenon4017 Posted February 4, 2014 Share Posted February 4, 2014 May I ask how near to hand and how close an eye you keep on your super? Could you let us know which bank? so we can avoid it due to such short sighted opinions and advice and in not reading/understanding the op's post. That's a bit harsh. Super funds have much more regulation than house investments. Your super fund can't literally go up in smoke. It's a good idea to consider alternative investment options if you're cash rich. The problem in Australia is that most people (not just laymen) tend to regard RE investments as a win-win no brainer. During the 2000-2008 period it was just that. And there are bargains to be had in all markets. But it's no longer money for jam wherever you look. And there's really no justification for deliberately buying a house that's far away from where you live, unless you're planning to get tax relief for your annual inspection flights to the Gold Coast. Link to comment Share on other sites More sharing options...
Guest The Pom Queen Posted February 4, 2014 Share Posted February 4, 2014 Why on earth would you want to buy an investment property that you cannot keep an eye on? I have owned a number of rental properties over may decades. My advice buying an investment property is if you cannot get in your car and be there in an hour or so then don't buy it. You will not have much control over your investment if all your contact with agent or tenants is by phone or email only. If things go wrong, and they do, you want to be able to go bang your fist on the agents desk and ask why. You can drive past and see if the property is being looked after, that there isn't a bikie gang in residence, or the tenant's aren't using the fence palings as BBQ fuel. Keep your money close. There will be many good investment opportunities in SA. Sorry but I disagree. Just because you live close to an investment property it doesn't mean you can do anything about it if you get the wrong tenants in. If you lived right next door to the tenants and they were partying all night or a bikie gang had moved in do you know how hard it is to actually get them to leave if they don't want to. Plus for an investment property to be within an hour of your own home is probably going to be impossible in some states, depending on your budget. Flights interstate can be cheap. We can fly from Melbourne to cairns for $99 so if there is something wrong you can get there in a few hours plus claim it back as a business expense. To the OP I agree with blade you need the mortgage on your investment property to reduce your tax liability Link to comment Share on other sites More sharing options...
Paul1Perth Posted February 4, 2014 Share Posted February 4, 2014 We have friends who have investment properties in Queensland and live in WA. Because they have units in holiday accommodation it works very well. They get more than your usual rental, the units are looked after by an agent and get cleaned every week and they get a couple of trips over there a year paid for by the tax man. They think it's a really good investment. They've had it a few years though and got it at a good price as it was the display unit for the whole site, before the rest of the site was finished. It was a risky investment too as it could all have gone bad and the site not finished off, like happened to a few in the downturn. It's on the beach though so a bit less prone to failure. Link to comment Share on other sites More sharing options...
Xenon4017 Posted February 4, 2014 Share Posted February 4, 2014 they get a couple of trips over there a year paid for by the tax man. That might be what they tell you, but it's simply not true. But it's a very common misconception. The taxman doesn't "pay for your trip". All you can do is reduce your tax liability by subtracting a legitimate expense from your gross earnings. So, if the flights cost 200$, you reduce your tax liability by that amount. If you were in the top tier, then effectively you save 40% of the cost. But you still pay 120$ for your flight. If you were going to go for a holiday anyway, then you get something of a saving. But if you were making the trip just to inspect the property then you've just lost 120$ of your disposable income. Yes there are lots of grey area deductions that people claim, but these come under the microscope now and then. The real payback for real estate investment over the past 2 decades has been capital growth, at an astounding rate. The rental return and the deductions were just the cherry on the cake. Link to comment Share on other sites More sharing options...
Paul1Perth Posted February 4, 2014 Share Posted February 4, 2014 That might be what they tell you, but it's simply not true. But it's a very common misconception. The taxman doesn't "pay for your trip". All you can do is reduce your tax liability by subtracting a legitimate expense from your gross earnings. So, if the flights cost 200$, you reduce your tax liability by that amount. If you were in the top tier, then effectively you save 40% of the cost. But you still pay 120$ for your flight. If you were going to go for a holiday anyway, then you get something of a saving. But if you were making the trip just to inspect the property then you've just lost 120$ of your disposable income. Yes there are lots of grey area deductions that people claim, but these come under the microscope now and then. The real payback for real estate investment over the past 2 decades has been capital growth, at an astounding rate. The rental return and the deductions were just the cherry on the cake. The capital growth hasn't been that good, a lot of competition for new apartments over there, but the rental has worked well and they say it's a great place for a holiday. I guess a saving of 40% of a cost of a flight would be worth doing. He has some business over there too so he may be checking that out whilst he's there. Link to comment Share on other sites More sharing options...
Xenon4017 Posted February 4, 2014 Share Posted February 4, 2014 The capital growth hasn't been that good, a lot of competition for new apartments over there, but the rental has worked well and they say it's a great place for a holiday. I guess a saving of 40% of a cost of a flight would be worth doing. He has some business over there too so he may be checking that out whilst he's there. I'm not trying to criticize either you or him. The thread is really a discussion about investing. I think when it comes to finance you have to dissect everything on the table. "The taxman paid for it" it one of my pet hates. Tax men (and women) never pay for anything. Link to comment Share on other sites More sharing options...
Guest The Pom Queen Posted February 4, 2014 Share Posted February 4, 2014 I'm not trying to criticize either you or him. The thread is really a discussion about investing. I think when it comes to finance you have to dissect everything on the table. "The taxman paid for it" it one of my pet hates. Tax men (and women) never pay for anything. I was talking to a friend last night and she is in the process of purchasing three rentals, because she says she is currently paying too much tax. I have to admit its something we have considered, we had an investment property in Melbourne but sold it to buy this place. Link to comment Share on other sites More sharing options...
Paul1Perth Posted February 4, 2014 Share Posted February 4, 2014 I was talking to a friend last night and she is in the process of purchasing three rentals, because she says she is currently paying too much tax. I have to admit its something we have considered, we had an investment property in Melbourne but sold it to buy this place. All sounds great in theory but I had a friend who I went to uni with, did really well in the UK, emigrated and paid cash for his house, went out buying investment properties, land, deals, joined an investment club and had a notion that he would retire at 50. Looked like he was going to make it for a while. Used to brag about how little tax he was paying. His degree is in economics and he works on the principal of cash flow. Doesn't matter what you owe as long as you can meet the repayments. Along came the GFC, he lost his well paid job and company car at the same time, lots of outgoings, nothing coming in. Tried to sell off a few properties fast, lots of other people trying to do the same thing, prices were down, he was paying land tax on some land he had bought and couldn't get development approval for. Ended up nearly losing his own house and now has a massive mortgage on his home and a couple of rentals he couldn't get rid of. He nearly talked my wife into we should be doing the same thing but I said it was too risky and I would be glad just to pay our mortgage off. He thought I was a fool but a few years down the track and we're better off than they are by a long shot. It can and does go wrong. Link to comment Share on other sites More sharing options...
Keith and Linda Posted February 4, 2014 Share Posted February 4, 2014 All sounds great in theory but I had a friend who I went to uni with, did really well in the UK, emigrated and paid cash for his house, went out buying investment properties, land, deals, joined an investment club and had a notion that he would retire at 50. Looked like he was going to make it for a while. Used to brag about how little tax he was paying.His degree is in economics and he works on the principal of cash flow. Doesn't matter what you owe as long as you can meet the repayments. Along came the GFC, he lost his well paid job and company car at the same time, lots of outgoings, nothing coming in. Tried to sell off a few properties fast, lots of other people trying to do the same thing, prices were down, he was paying land tax on some land he had bought and couldn't get development approval for. Ended up nearly losing his own house and now has a massive mortgage on his home and a couple of rentals he couldn't get rid of. He nearly talked my wife into we should be doing the same thing but I said it was too risky and I would be glad just to pay our mortgage off. He thought I was a fool but a few years down the track and we're better off than they are by a long shot. It can and does go wrong. And the morals are:- slowly slowly catchee monkey; fools rush in where angels fear to tread Link to comment Share on other sites More sharing options...
Xenon4017 Posted February 4, 2014 Share Posted February 4, 2014 I was talking to a friend last night and she is in the process of purchasing three rentals, because she says she is currently paying too much tax. I have to admit its something we have considered, we had an investment property in Melbourne but sold it to buy this place. I get very uncomfortable with those conversations. The last thing you want to do is to upset your friend by pointing out they're talking a crock. Usually, when you dig into the numbers you can see that they haven't really thought it through. Buying a house as a deliberately loss-making investment just to reduce your tax liability just doesn't make sense. Link to comment Share on other sites More sharing options...
Guest The Pom Queen Posted February 4, 2014 Share Posted February 4, 2014 And the morals are:- slowly slowly catchee monkey; fools rush in where angels fear to tread I wouldn't call Paul an angel :tongue: only joking Paul Link to comment Share on other sites More sharing options...
Xenon4017 Posted February 4, 2014 Share Posted February 4, 2014 And the morals are:- slowly slowly catchee monkey; fools rush in where angels fear to tread Why would they fear to tread? After all, they're backed up by the man upstairs, aren't they? And why would they tread at all? They've got wings. Link to comment Share on other sites More sharing options...
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