[biggrin]
Gday fellow forumsters
I am looking for a way in to PI without taking on too much. Idea is to locate older 2 bedroom apartments around Melbourne that are a little run down and selling below median. With an appropriate refurb and then back on market. Could this work?
The simple answer is..YES..But some things to take into account….
1. Choice of suburb – long term growth prospects?
2. Choice of apartments block ie how many units/apartments, how many 1, 2 or even 3 br apts
3. Current condition of the both apt and block
4. Size & floor plan design of apartment
5. Who runs body corporate and the balance of the sinking fund
6. Very preferable to be strata title (some are stratum and banks are more reluctant to lend you higher LVR’s)
7. Car space(s) on title?
8. Do the numbers stack up? Comparable prices of unrenovated and renovated apartments
9. Have you identified the team for reno’s
10. Structuring ie purchase in individual name, trust etc
11. Tax adviceGiven the state of the market, the ability to find a rough diamond and then be able to put back on the market after renovations might be limited. If you allowed yourself some more time before re-selling might allow you to get a better price.
James
[biggrin]
Hello fellow PI’s
Thank you for rapid response. Plane is for quick exit stratergies using industry contacts for efficient reno’s. Ideally quick turn over and move to the next. Approach is local and potential
for several project. Not sure just trying to get something started. Thoughts?Originally posted by workfree:[biggrin]
Hello fellow PI’s
Thank you for rapid response. Plane is for quick exit stratergies using industry contacts for efficient reno’s. Ideally quick turn over and move to the next. Approach is local and potential
for several project. Not sure just trying to get something started. Thoughts?The concept definately works. We buy exactly this type of property for our clients (to see examples subscribe to our newsletter – http://www.metropole.com.au
But there is not sufficient profit in these to turn over for a quick trading profit. Not in today’s market and especially when you take stamp duty into account.
Last month we bought 3 individual apartments in great suburbs for clients who paid around $280 – $290,000.
In general they will spend $10- $12,000 doing up their apartment. This could add $25-$30,000 value and increase the rent by $20 – $40 per week.
The technique builds equity and inreases return, but there is not enough profit in the current market to trade these properties.
And why would you want to. Property is a long term investment.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.au[biggrin]
Thank you for your reply Michael
How do you think this approach compares to chasing the HOT NZ scene.
Anyone?
Originally posted by workfree:[biggrin]
Thank you for your reply Michael
How do you think this approach compares to chasing the HOT NZ scene.
Anyone?
What do you mean by hot NZ property?
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.au[biggrin]
Well all the discourse on Aussies investing in NZ property on the forum. That is, positive cashflow properties in the poorer socio economic towns of NZ. The towns that sound like the Ballart of old that the Administrator wrote about in his first book. They say no CG tax and no stamp duty and potentially an extinct phenomemon so get in quick before there’re all gone.
Originally posted by workfree:[biggrin]
Well all the discourse on Aussies investing in NZ property on the forum. That is, positive cashflow properties in the poorer socio economic towns of NZ. The towns that sound like the Ballart of old that the Administrator wrote about in his first book. They say no CG tax and no stamp duty and potentially an extinct phenomemon so get in quick before there’re all gone.
One of my duaghters lives in NZ and so I have developed a fair understanding of their property market.
Most Aussies buying there are overpaing heaps at present (but think they are getting bargains becuase the compare ther prices to Melb or Sydney)
They will get little or no capital growth for many years.
I firmly believe you become wealthy in property through capital growth, not by earning $10 a week +ve cashflow (taxable)
I am sure that most investors would make more in the long term by purchasing a good established property in a major capital city in Australia at below market price and adding value through refurbishment.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.au[biggrin]
Thank you for your response Michael. It reads like sound advice. What does that mean for rural PI here? How does one avoid -ve CF investing in a major city? My idea of on selling in short period is to try and generate +ve CF then reinvest. That is a multiplication by division approach to wealth creation through IP’s. However you’re saying that this approach to turn over will not work in current enviro but perhaps in the next upward cycle – so I should purchase IP with the view to hold on 1-4 years.
I would much prefer a portfolio with quality IP, a stratergy advocated by independent advisers like the Wakelin couple (Streets Ahead 2002) but it takes so long. This also means my financial independance is strapped to PAYG for a lot longer than I want.Originally posted by workfree:[biggrin]
Thank you for your response Michael. It reads like sound advice. What does that mean for rural PI here? How does one avoid -ve CF investing in a major city? My idea of on selling in short period is to try and generate +ve CF then reinvest. That is a multiplication by division approach to wealth creation through IP’s. However you’re saying that this approach to turn over will not work in current enviro but perhaps in the next upward cycle – so I should purchase IP with the view to hold on 1-4 years.
I would much prefer a portfolio with quality IP, a stratergy advocated by independent advisers like the Wakelin couple (Streets Ahead 2002) but it takes so long. This also means my financial independance is strapped to PAYG for a lot longer than I want.You are right
Property investing is a long term strategy. I know Richard Waklein well, we are good friends. I agree wholehearedly with his strategy.Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.au
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