Property Strategies

1. Property Strategies www.renos.com.au | info@renos.com.au | 1300 550 656

2. Introduction We’ve identified 22 different residential property strategies

3. Property Strategies • Buying land • Land banking • Positive gearing • Strata Titling

4. Negative Gearing

5. Negative Gearing • Brand new • Paid $155k in 1993 and renting for $190pw • 6.3% gross rent (interest was 8% pa) • Lots of depreciation

6. Negative Gearing • The best thing about holding a negatively geared property… • Eventually it becomes positively geared! • Eventually it becomes a renovator! • Now valued at $650,000 and rents for $450 pw (15% return on purchase)

7. Negative Gearing Cons of negative gearing: • Potential for ‘negative equity’ in the short term if prices fall • Costs may become unmanageable • Can become a liability if only purchased for tax advantages

8. Property Strategies • Buy, Develop, Sell • Paper Developments • Joint Ventures • Individual Units/Apartments

9. Buy, Renovate, Hold

10. Buy, Renovate, Hold • $295,000 in 2001 • Reno Kings Style Reno…$6k • Polish floors, paint and turned from 3 to 4 bed

11. Buy, Renovate, Hold • Rent went from $220pw to $320pw • That’s $5,200pa extra rent for a $6,000 reno! • Now worth $750k and rents for $475pw • But wait, there’s more…

12. Buy, Develop, Hold

13. Buy, Develop, Hold • The buy, renovate, hold was also on a double block. • It is also a buy, develop, hold!

14. Buy, Develop, Hold • The proposal: • 2 x 5 bed, 5 bath houses (Artist’s illustration indicative only)

15. Buy, Develop, Hold • Total development costs $800k • Plus original purchase of $295k • Rent 2 x $1000pw • 9.5% pa • Plus huge depreciation

16. Property Strategies • Niche Markets • Unit blocks • House & Land Packages • New Houses

17. PPOR = Principal Place of Residence

18. Principal Place of Residence $514k November 2008

19. Principal Place of Residence • Why not make it an investment too? • Investment components: • Location • High land value • Renovation

20. Principal Place of Residence • Renovation cost $120k • Current value $750k

21. Principal Place of Residence Pros: • No capital gains tax • Reduced buy costs Cons: • No depreciation • Interest/costs aren’t tax deductible • Easy to spend too much

22. Property Strategies • Property Options • Vendor Finance/Rent to Buy/Rent to Own/Wrapping/Lease Options • Lease-back • Overseas Property • Granny Flats / Secondary Dwelling / Dual Income / Rent by the Room • Holiday letting

23. Summary • There are at least 22 residential property strategies • All have pros and cons • Don’t take our or anyone else’s advice on which to do – pick the right one for you! • Get educated