Property Strategies

www.renos.com.au | info@renos.com.au | 1300 550 656

We’ve identified 22 different residential property strategies

Introduction

Property Strategies

• Buying land• Land banking• Positive gearing• Strata Titling

Negative Gearing

Negative Gearing• Brand new• Paid $155k in 1993 and renting for

$190pw• 6.3% gross rent (interest was 8%

pa)• Lots of depreciation

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)

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

Property Strategies

• Buy, Develop, Sell• Paper Developments• Joint Ventures• Individual Units/Apartments

Buy, Renovate, Hold

Buy, Renovate, Hold

• $295,000 in 2001• Reno Kings Style Reno…$6k• Polish floors, paint and turned from

3 to 4 bed

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…

Buy, Develop, Hold

Buy, Develop, Hold

• The buy, renovate, hold was also on a double block.

• It is also a buy, develop, hold!

Buy, Develop, Hold

• The proposal:• 2 x 5 bed, 5 bath houses

(Artist’s illustration indicative only)

Buy, Develop, Hold

• Total development costs $800k• Plus original purchase of $295k• Rent 2 x $1000pw• 9.5% pa• Plus huge depreciation

Property Strategies

• Niche Markets• Unit blocks• House & Land Packages• New Houses

PPOR = Principal Place of Residence

Principal Place of Residence

$514k November 2008

Principal Place of Residence

• Why not make it an investment too?

• Investment components:– Location– High land value– Renovation

Principal Place of Residence

• Renovation cost $120k• Current value $750k

Principal Place of Residence

Pros:• No capital gains tax• Reduced buy costsCons:• No depreciation• Interest/costs aren’t tax deductible• Easy to spend too much

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

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