renting out PPOR after 6 months

Hi all,

I am about to purchase a newly constructed 3bdrm Unit in Victoria for $230k. The property is regional and I am a FHB which means I qualify for the full $29,500 grant providing I sign the contract before the end of December.

Because all my money is tied up in shares at the moment, I am giving the builder a 7% deposit bond with the balance due on completion (August 2010). With the LVR at 90%, my lender has agreed to use the FHOG to cover my deposit on consideration of my share portfolio.

After living in the property for 6 months, I plan to rent it out. Can anyone outline the potential costs involved with renting the property along with other costs of being a property owner?

 

I believe the agent will charge you minimum 7% management fees and will take 1 weeks rent for finding you a tenant.

After that you'll need to pay
strata fees, (1.5-2K could be more if it's high rise, so ask how much it is)
landlord insurance $300?
council rates, $1200?
water rates $1000
and maintenance, $500?
so I am guessing $5-6K pa ??

 

Thanks Billv.

How does Landlord Insurance compare to Home Insurance? Are they mutually exclusive or do I need both?

I think the Body Corporate fees will be minimal >$1k but have to check on that. Is there anyway to find out? The builder doesn't seem to know yet as construction has not yet begun.

What maintenance costs could I expect on a newly constructed property?

 

If it's strata titled the strata will pay for the building insurance
and you'll have the option to get your own home contents and/or landlord insurance.

Body corp fees can be very high
I've heard of stories where the builder is in bed with the strata company so he signs a contract for his mate to strata manage the place and they charge some increadible amounts...
maintenance costs will vary depending on what facilities are available
is there a lift, a pool?, a garden? sporting grounds?
Gardening and cleaning are usually the most common expenses

 

Garden maintenance will be the only expense that I can foresee and body corp is covering that. Trying to find out now how much body corp fees are.

I'm not very good on the insurance side of things. What is the difference between building insurance and home insurance?

 

Just to clarify:

The units are separate buildings. There is 7 on the block. 5 x 2bdrm & 2 x 3bdrm (both with own d/way and street frontage).

The builder has just advised me the body corp fees will be between $800 - $1000 per annum which covers House Insurance & Common Property.

 

Regional Unit

I have a number of clients who have done that to start their property portfolio and take advantage of the Vic Gov't State bonuses.
They live in them for 6 months (it is possible they live in Melbourne for work during the week and move back on the weekend, or less) and then 'convert' into a IP.
The cash costs are more like $2.5k to $3k pa plus property mgmt fees however they arrange them. Regional Vic is generally cheaper than metro areas in terms of rates etc. Add the benefits of a new property for depreciation and building allowance, it can be a smart move to get into the property market depending on marginal tax rates.

Once you convert to an IP, get an independent valuation and a quantity surveyor in to do a depreciation report for you.

Body corp will cover the building insurance, you would look at landlord insurance to cover tenant risk, about $300 pa.
Greg

 

While this is an old thread, it includes some excellent advice for anyone starting out with an IP. Also worth keeping in mind is:

Strata companies can be replaced if they are too expensive (plenty of fish in the sea) or removed if the body corporate/owners corporation is small and simple enough to be run by one member. Here is some handy info on BC/OCs: Body Corporates: The Basics | Rentwise – DIY Property Management

And landlords insurance is an important way to protect against unexpected and expensive losses. Some more basic info on insurance can be found here: A Brief Word About Insurance | Rentwise – DIY Property Management

 

This thread might be a bit old, but covers exactly what I'm looking to do - rent out my first purchase after having lived in it for 6 months.

Have noted the advice regarding insurance. I'd like to find out more about valuation & quantity surveyors - do I need both? How much is that likely to cost? And are there any other preparations I need to do prior to renting?

 

Hello all,

This is my first time posting this site.

My question is almost nothing to do with Robmillion's topic/post but I didn't want to spam more Threads with my simple question. I read some posts but make me even more confusing.

Now, my question is that I've bough a Unit in VIC last year, early July. I moved in and received my FHOG.

I'm planning to move back with my parents and want to rent out my property. I've lived over 6 months now since the minimum requirement is continuous period of at least 6 months.

So what steps do I need to take before I can rent it out? As in, do I need to let SRO know that I'm moving out or show them I've lived there over 6 months?

Or do I just go straight to real estate agent and say I want to rent out? My concern is SRO part.


Thanks

Alex

 

That's what you need to do.

As long as you've lived in it and have proof of that using electricity or gas bills etc the SRO wouldn't be interested in what you do with your property.

But keep those records in case one day they contact you and ask to see proof.

 

Hey Billv,

Thank you for your answer.

I will do keep my records just in case if SRO do ask me.


Alex

 

It won't hurt.
I think you're obliged to keep them for a number of years. I don't know if all states have the same rules but I've read somewhere that the NSW OSR was still doing audits several years later

 

Wow, even several years later and the SRO was still doing audits.

Geez, I hope I don't misplace/throw out my utility bills when I'm moving out.

I some time hate those rules/policy when it comes to grabbing advantage and there is always a catch at the end.