Hi i am wanting to be independent from my govt job i don’t like answering to bosses!
Should i buy reno and sell or buy reno and hold? What is the best way to have cashflow so that i may work for myself!
any ideas[blink]
Hi,
i am also new to PI but what i have learnt so far is it depends on personal circumstances, time and money (equity) you have and last but not least your stretegy what you want to achieve and the timeframe you have set yourself for that. it needs to be well thought before jumping into the PI and determine what are your strenghts and then use them to max you can.
i hope it helps.
[specool]I like to think i have built a reasonable portfolio over the years so am happy to offer a bit of advice.
Certainly there is no right or wrong to property investing and as PE mentions everybodys circumstances are individual.
All i would say is imagine that you make $100K on a reno over a period of 3 months. Not only will you need to deduct the selling agents fees but also will be liable for CGT on the profit.
You might end up doing 2 deals just to make the same amount as the available equity you have in the one deal you buy and hold.
Remember if you never sell you never pay CGT.
Building up a portfolio takes time and cash flow can be your lever but it is pointless in doing so if all you are going to do is end up paying it in Tax.
Structure yourself correctly and make sure you deal with an investment savy Mortgage Broker who can show you ways to establish your loan accounts to benefit you both now and in your future goals.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
I know someone with over $1mil in equity and finance has become difficult because they’re low income earners.
Hate to say they are not talking to the right MB.
If you have $1M in equity you would always be able to obtain finance through a Nodoc style loan.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Richard,
this seems to be an issue where you and Steve are miles apart. I am trying to sort through this myself.Steve says at several occasions (especially book 2 pages 114-115) that he believes selling is a very important part of his strategy and he believes that it helped him grow so quickly.
Steve calls it multiplication by division and he list several advantages for it.
Dean Parker in the renovation toolbox has a similar approach. He list 3 approaches:
1. buy, reno and live in
2. buy, reno and rent out
3. buy, reno and sell
He list the danger for no. 1 as overcapitilasation as you are doing it for yourself rather than for profit.
Danger in no.2 is that tenant may not look after your property as you would like him to.
So he prefers no.3 as giving him the most control.What does MB mean? And Nodoc style loan?
Hi, MB means mortgage broker and nodoc means no documents required, ie: you usually dont have to show assets or liabilities and dont have to sign a stat dec on your income. However this loan is only suitable if you have the required deposit (or equity elsewhere) These loans are usually around a 70%LVR, so you need 30% from elsewhere as well as your costs to buy.
A lodoc is slighlty similar, the lend is up to 95% from some lenders, usually around 80% however you need to submit assests & liabilities and sign a stat dec on your declared income. You also must be self employed.
If your friend has $1Mill in equity they certainly will be able to restructure to get additional finance for further investments.
kind regards
kylie
Mortgage Consultant
[email protected]Perhaps as a suggestion you can roughly work through the numbers as they would be if you were say 5 deals further along. Do the sums for your first reno, work out your profit after doing the reno based on selling into a stagnant market, and then work out the cost to sell and the tax you will pay, remembering that you will pay off the mortgage also. Provided you have chosen a suitable property and done a suitable renovation, you would expected to have a net profit.
Then add this profit to the funds you started with and go through the exercise again. And again, and again, and again, simulating your first 5 deals.
Right, now you can go through the entire exercise again with the focus on not selling, but on redrawing the funds, presumably up to 80% of final market value (the selling price you used above). Work out the annual profit for each property by adding up the rent you will be receiving and subtracting all of your annual expenses. You may find that you cannot even do 5 deals without running out of funds, or you may find that you have a feasible plan to work with.
This is something you have to decide for yourself and the outcome depends on your starting position, your renovating experience, the market you intend to specialise in etc…
This doesn’t have to be a complicated thing to work out, I would suggest that you don’t get too hung up on depreciaton etc, unless you’re a calculation whizz, the intention is to work out for yourself which type of strategy suits you.
Personally I’m working on the buy-reno-sell strategy right now because I have low equity at present and am attempting to build up sufficient equity to be able to leave it in a deal like a commercial property returning a healthy annual income.
I hope this helps.
All the best,
[happy3]Greetings!!!
You need a more compelling argument than “I don’t want to answer to bosses anymore” otherwise you will remain a wage slave. You will need to earn some sort of income (if you flick the govt job) so that is what should drive your property strategy. “Buy and hold” tends to be capital gains related so what else does that leave you?Originally posted by PosEnterprises:Hi i am wanting to be independent from my govt job i don’t like answering to bosses!
Should i buy reno and sell or buy reno and hold? What is the best way to have cashflow so that i may work for myself!
any ideas[blink]
If you have a govt job never, never, never leave! –
Until you have built up enough assets that pay you an income you can live off.The perks from govt jobs in Aus are too good to pass up. You don’t know how lucky you are.
Try working at Walmart in Crenshaw, Los Angeles for $6.50 per hour – no holiday pay, no sick pay, no superannuation, can be sacked on the spot, slave wages, dealing with the worst element of society, your boss is an 18 year old who didn’t graduate high school and can hardly speak English, weekend and public holiday wage rates have no penalties.
This is just one example of what I see every day in this city in hundreds of businesses.As Robert Kiyosaki says: “your bosses’ job is to give you a job; not to make you rich”.
On a more productive note, my .002 worth;
keep working hard, put up and shut up, and keep buying income producing assets with every spare cent you can.
Every tax return -put it into an asset, not a plasma like 90% of the world.
This can be a property or a business, or shares – as long as it keeps making money, and (hopefully) increases in value.There endeth thy lecture.
Happy New Year All.Cheers,
Marc.
[email protected]Here Here
I second that.
Your seem like a novice investor so making a living out of renos in a post boom market will be tough.
If your bosses are truly a## h#$el then look for a side ways move but dont leave the govt just yet.
Look at it a different way. Your giving it up as a way of boulstering your self esteem when in fact it will do the opposite. Staying and dealing with the issues and reaping the many benefits of the job will make your investing so much more powerful
You can use the wages to invest. The flexi-time to visit accountants, agents etc. The long service leave youve accumulated is worth a motza as its untaxed when you take it and use the time pofitably for renovating, subdividing or finding properties in non local markets.
Really think this one through as your govt job is a great tool to build an investment empire. If you use it correctly.
One of my bosses used to really tick me off, but in hindsight he/she (who may be reading this) was the motivator for me to invest and i continually appreciate that persons lack of people skills for being the driiving force for me to invest. Its marvellous how much changing my attitude has given me pure enjoyment from my job. I now use my spare time at work to invest where as i used to use it to please some tool above m, that never appreciated it.I agree with the above statements.
I have my own business with 12 employees, which gives me a different kind of perks.
I do not intend to give it up, but rather spent my after hour time to build a nice portfolio.
Thanks everyone i just needed a kick in the butt! Great motivation to keep working until i build up enough equity. I have already made crossroads into looking at a part time business while working full time.
Thanks again i am more focussed now![aacool]
I sort of agree with the others but dont give up on your dreams even if your job is ‘safe with perks’ – – YUCK!
Work out what you want and move forward with focus.[specool]
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