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  • Profile photo of bjsaustbjsaust
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    September 2, 2009 - 12:10 am

    So noones had experience with it? Looks interesting, but at $1300 its not cheap.

    Profile photo of bjsaustbjsaust
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    August 26, 2009 - 4:37 am

    Basically it gives a 10% yeild (roughly speaking).

    So lets say a place rents for $200pw, if you multiply that by 50 (weeks), you get $10,000. If you bought the house for $100,000 then you get a 10% yield.  If you factor in about 7% interest, 1% costs, some maintenance or whatever, then you still should make positive cashflow. So in the above:
     $200/2 = 100
    $100 x 1000 = $100,000.

    Now obviously you get 52 weeks in the year, and 10% isn't the exact amount of yeild you need to be +VE cashflow, but its a quick rough guide. For instance if the property above was for sale for $180,000 then its not even close (unless you can see some other way to get more than $200 pw rent). If it was $125,000 then maybe its worth taking a closer look at.

    Bare in mind even Steve says the days of finding residential property that meet the 11second solution are basically gone now.

    Profile photo of bjsaustbjsaust
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    August 26, 2009 - 2:52 am

    Thanks Kenny.

    Planning Permit was granted in March 2006, so its almost 3.5 years old now. Planning department said its dead and we'd need to redo a new approval. Thats why theres no more accurate quote, there isnt an actual plan to quote from now. Plan would be to ask the designer to create a design thats on the cheaper side of that quote.

    I've basically just used the old planning permit as a guide for the kinds of issues council will have/conditions they'd impose.

    Getting a valuation done on the PPoR today, but even a conservative estimate should leave me with much more than the $15k contingency available, its just that obviously the more of that I spend the more interest I pay on top of the cut into profits.

    Appreciate the advice :)

    Profile photo of bjsaustbjsaust
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    August 26, 2009 - 1:52 am

    Havnt factored in borrowing expenses yet, I do intend to once I have a better idea. One option I'm looking at is JV with the builder (he's just out on his own and looking to get into development himself) with him covering all construction costs, which means I'd just need to buy the land and cover consultants/etc without needing a construction loan. Or if I do it by myself I would need a construction loan. Once I have a better idea of costs I can try to work out which works out better taking into account the borrowing expenses.

    "Other Consultants" is me not knowing what else I might need, so I guess its an extra contingency allocated just to the consultants area.

    $175k does seem a lot. One builder I spoke to (different one) estimated around 150k for a 12-13 sq house. The builder I'm thinking about JV with spoke to a designer and got told

    Quote:
    A town house averages 13 to 15sqs including 3 bedrooms, 2 living, double garage and would cost $10,000-$15,000 per sq, depending on the fit off

    So I guess a 13sq by 12k is 160k, so if we can keep down close to the 10k mark its more like 130k. 155k was somewhere near the middle. If I could be confident of 130k that obviously makes a big difference. Cost for the road may change. A planning permit approved 3 years ago required the owner to seal the road, put in concrete gutters, etc. I spoke to their planning department now and he seemed to think it was unlikely we'd need to fund the whole cost of the road. $6k was an estimate of $3.5k to seal the road from a road constuction company and a guess on my behalf as to additional cost for guttering. Landscaping, driveways, fences, etc are all guesses. I dunno, they may come in cheaper I guess…

    $15k was 10% of construction costs, which I thought was a recommended amount. Should it be more like $20k? More?

    I'm not experienced, this would be my first one. Thats why I'm unsure of so many numbers and hoping to get some pointers.

    I am considering just getting the permits done and on-selling. If I decide not to JV with the builder thats a definate possibility. Will probably come down to what the construction costs end up at if he's a partner instead of a contractor.

    Thanks for feedback :).

    Profile photo of bjsaustbjsaust
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    August 24, 2009 - 12:35 am

    On an old property of mine the BC fees were low, but any time substantial maintenance was required they always had to raise an additional levy to cover it.

    Profile photo of bjsaustbjsaust
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    August 24, 2009 - 12:32 am

    That example was per hour of effort, not time elapsed. From memory it was something like $80k profit on a deal where he only put in 40hrs of effort. On the other hand the deal took a number of months to do, its just most of the work was done by consultants/contractors.

    Profile photo of bjsaustbjsaust
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    August 24, 2009 - 12:24 am

    Is there any reason you cant just pull $10k off the homeloan and pay off the credit card and then cancel it?

    That way you're paying the 6% on the $10k rather than whatever your CC rate is.

    It also then means you have $220k equity and no CC debt which is better than $230k equity and $10k CC debt from a lenders point of view.

    Profile photo of bjsaustbjsaust
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    August 23, 2009 - 5:51 am

    I would call the agent and tell him if he cant deliver the contracts to sign then you're walking away. Give him a deadline. He loses his commission if he doesn't.

    Profile photo of bjsaustbjsaust
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    August 21, 2009 - 9:28 pm

    I'd knock down the $10k CC debt first. Not only do you actually need to service it, but even if you paid it off the banks will still assume you need to service a fair portion of it. Cancelling or at least greatly reducing your credit limit would help a lot.

    Btw, thats nice equity built up on that income. Nice work :).

    Profile photo of bjsaustbjsaust
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    August 21, 2009 - 12:09 pm

    Sounds interesting. Signed up for September one.

    Profile photo of bjsaustbjsaust
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    August 21, 2009 - 6:57 am

    Any reviews/comments about this one? I see its not sold here anymore but still for sale on its homepage.

    Profile photo of bjsaustbjsaust
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    August 21, 2009 - 6:34 am

    Anyone got thoughts on this course or any others?

    Profile photo of bjsaustbjsaust
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    August 19, 2009 - 12:51 pm

    I think I'm paying 5.09% atm on my PPoR. If rates go up 2% (people seem to be forcasting 1% by end of 2010), then I'm still only on 7.09%, which is around where it was a few years ago when I took the loan, and historically speaking still a low rate. If I fixed it would be for 3 years but I doubt I will.

    Interestingly I saw a sign at St George today offering 5year fixed term deposits at 6.5%, I think thats a fair indication of where they expect rates to move over the next few years.

    Profile photo of bjsaustbjsaust
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    August 18, 2009 - 8:05 pm

    I'm no expert, but the first thing I'd do is flip this on its head. If you bought an investment property and a few years later decided to move in as your PPoR would the ATO continue to allow tax deductions on the interests/costs because "for tax purposes a property cannot be 're-classified'". They obviously wouldnt (and definately dont), so my assumption is your accountant is wrong. As duckster says, maybe they're just confused about what you were talking about, but if not I'd say its time to find a new accountant.

    Profile photo of bjsaustbjsaust
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    August 18, 2009 - 10:36 am

    I keep thinking thats a good idea, then get distracted by bigger deals :p

    Profile photo of bjsaustbjsaust
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    August 18, 2009 - 8:43 am

    Good stuff :)

    Profile photo of bjsaustbjsaust
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    August 18, 2009 - 8:41 am

    Just got this warning:

    What is the current listing status for realestatedevelopmentclub.com?

    Site is listed as suspicious – visiting this web site may harm your computer.

    Part of this site was listed for suspicious activity 1 time(s) over the past 90 days.

    What happened when Google visited this site?

    Of the 5 pages we tested on the site over the past 90 days, 4 page(s) resulted in malicious software being downloaded and installed without user consent. The last time Google visited this site was on 2009-08-15, and the last time suspicious content was found on this site was on 2009-08-15.

    Malicious software includes 1 trojan(s).

    Malicious software is hosted on 1 domain(s), including c6y.at/.

    This site was hosted on 1 network(s) including AS21844 (THEPLANET).

    Has this site acted as an intermediary resulting in further distribution of malware?

    Over the past 90 days, realestatedevelopmentclub.com did not appear to function as an intermediary for the infection of any sites.

    Has this site hosted malware?

    No, this site has not hosted malicious software over the past 90 days.

    How did this happen?

    In some cases, third parties can add malicious code to legitimate sites, which would cause us to show the warning message.

    Next steps:

    Updated 4 hours ag

    Profile photo of bjsaustbjsaust
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    August 17, 2009 - 8:44 pm

    If an agent doesn't come back to you an negotiate he's not doing the right thing by the vendor.

    Its been a while since I bought my last property, but I had an agent do this to me and in the end I think he took back 3-4 different offers to them after negotiating per normal. I had a friend get the same spiel about 2 buyers interested so just put in best offer and they'll pick that, I told him BS put in the offer you want and if its not the best they'll let you know and negotiate. Exactly what happened.

    As far as I'm aware its just a negotiating ploy. Maybe theres some agents who really do that, but it seems pretty lazy and I cant see how they're doing their job right if thats how they operate.

    Profile photo of bjsaustbjsaust
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    August 17, 2009 - 12:43 am

    Ahh ok. I think I get it. I spoke to my Uncle over the weekend who has done a fair bit of investing (passively) about Trusts/etc. Apparantly the way to get money into the trust is to 'gift' it. Therefore if I refinanced my PPOR to release equity, I need to gift that to the trust, and therefore since its a gift and not an investment I cant claim the interest as a deduction? Not only that, but I'm assuming if I make a good return and want to repay the money, I need to distribute it and actually pay tax on that distribution.

    Is that the basic thinking? So I need to weigh up the benefit of 'selling' my PPOR to the trust and paying new stamp duty on it, v's the extra repayments on my PPOR which are non-tax deductible if I keep the PPoR in my name?

    I'm currently with St George, looked at their new Portfolio loan product. It mentions being able to have each sub-account in a different entity name. Does that mean I could create a sub-account under the name of my trust and when I draw down on it (its a line of credit) that interest becomes tax deductible for the trust?

    I'll obviously talk this stuff over with an accountant, just trying to understand the issues a bit.

    Profile photo of bjsaustbjsaust
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    August 17, 2009 - 12:24 am

    Got a meeting with council this afternoon, will see what they say.

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