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OK You could get a LOC on the older property that will be your PPOR. Use that for legals and deposits. But make sure you do not contaminate it by using for private use AND investments. Keep private money separate.
Then each IP you buy get an 80% loan against that Do not cross them. Have each one as stand alone. You could get 85-90% loans but you will pay LMI. Some people say it's worth it to increase borrowing power. I don't but I haven't had the need.
Keep asking questions. You're on your way.
PrimePropertyInvestor wrote:I recently read an article on RLA how heart les some landlords has become with all of no kids, no cats, no couples, no cocking, no games in garden, no, no, no….As a landlords from experience I can say that most problems are made by landlords them selves dishonoring tenants and treating them worse than animals. As better you treat your tenant – better they will treat your property, if you help them feel as at home and welcomed and do your best for them, they will treat your house as good as possible.
This might be interesting but NOTHING to do with the topic.
Great work so far.
Was the first house built to live in originally? What about the second? Are you going to live in that? If not why are you paying down the loan? If you borrowed the full purchase price (100%) does that mean it's crossed with the other loan?
So the sell price would be $440K so you'd have $250K cash after sale? So if you don't sell the first one, you'll live in that?
If you pay off the second property what are you using for deposits and legals?
It's not totally clear how things are structured. More info please.
We wouldn't just "attempt" to do something if we weren't sure of the correct procedures. I've seen some bad renos and that's where you get into trouble. Nothing looks worse, for example, a bad tiling job. We only do splashbacks. Always get a professional for the bathroom. Lots of stuff is pretty easy though if you have common sense and can measure.
Also don't attempt electrical and plumbing. Not only is it illegal but you are opening yourself up for litigation if something goes wrong.
Call in anytime. We are actually living in our reno now. It was supposed to be finished but had delays with council (we are splitting the house to make a granny flat) so we have a stud wall bare through our living area. Next year we will buy again for buy/reno/sell.
My hubby has always been handy with most stuff. He made me do stuff so I learnt from him and youtube is great too. He wouldn't do cornice so I looked it up. Then we had an argument about how to cut it. He cut it and it was wrong so now that's my job. LOL
We learnt something new with each reno. Different things go wrong with each one so you pick up tips. Especially what NOT to do. I wish we knew someone doing renos before to give us hints then. But we did OK. Funny I thought everyone would love to see a reno so when we did a big one last year I posted asking if anyone wanted to have a look while we were doing the reno to just message me. Didn't get anyone interested.
Then I noticed Nathan charging $299 to see his reno and got loads of takers. He's done it a few times now. Limit 20 people. Not a bad way to make a quick $6K.
I was interested in property but my husband was not interested (he just signed where I asked him to). LOL
We did a minor reno on one unit, then on a house.
THEN we found a place that needed a full reno. He got very interested and worked out the costs, started looking on Ebay for stuff etc. After that one he was keen and started looking for the next project. I'm hands on as well and we love it.
As you said it's very rewarding seeing a property that no one would live in then turn it into a lovely home.
Our last 4 properties have been full reno houses. As I said- we love doing it and the great increase in equity is fantastic as is the great yield. It's worked for us and we have made great gains with this strategy in the last 3 years. Our portfolio is CF+ and we have a good equity base.
scha9799 wrote:All the above points people mentioned are mainly focus on the rent and revaluation.I would also look into how much the holding cost for un-renovated and renovated property ? and what's the projection in 5 years time ( of course it's hard to estimated)
Because rent greatly affects holding costs. Holding costs of an unrenovated and renovated is what was discussed.
And there's no point in doing a reno if it doesn't change the rent and reval (which is why all the above people mentioned it)..
My comments still stand. Do the numbers.
If you can't borrow the money cash is fine but it's not free money. You are forgoing the money in your offset so you are paying tax on that. BUT it's actually costing you more as it's not deductable.
I'd do it now. You may not even sell in 5 years time and the reno would have paid itself off in that time (with increased rent and depreciation). If it's in bad shape it will get worse over the next 5 years and you may have trouble getting a tenant.
If you get $60pw extra that's say $50pw clear = $2600pa
The reno will cost $1300 in interest per year. So you will be $1300pa in front + depreciation.
In a few years will it be bad enough to restrict rental increases? With a newly renovated property I would expect rents to rise with inflation (at least). So in 5 years time the unrenovated property may be further behind than the $60.
Why are you planning on selling in 5 years? Of course the reno will be 5 years older. How good are the things in it now? Will you need to spend money fixing things (dead money)?
Also with the increased equity from the start you could revalue and access the equity to buy further.
Some people love the Reno Kings. Me- A can't stand people who are loud and yell all the time. I went to a 2 hour workshop and that was enough for me.
Can i ask- Why reno's if you are not particularly handy?
There are lots of ways to make money in real estate- just curious.
Scott- where is it "mandatory" to do an owner builders course?
Where are you located?
Cherie Barbers course is great. Not cheap though.
Do you have any skills or just looking to manage the reno and not do any of the work yourself?
Are you looking for buy/reno/hold or buy /reno and sell for profit?
Try meetup.com and type in property or investment Perth. I'm sure they'll have something.
You don't. They will not sell it to you.
The bank will send it to auction. It is the only way to prove they sold it at market value.
My bank was stuffing me around on a fire damaged home that was $15K over land value.
They came around eventually, a week before settlement.
Why not paint them white with tile paint?
You won't get smashed by CGT unless it have MASSIVE growth in the next 12 months.
You get a valuation done before you make it a rental and you pay CGT on the growth from then.
Hard to answer as you've given very little detail. What is the house worth? Is there deductable debt, is it likely to experience CG in the next few years etc etc.
Where did you get the "property expert"? What makes them a property expert?
Where are you located (Damn I get sick of asking that- wish they'd fix that on everyone's name. It's so annoying.
There are lots of places you can go without paying high fees.
Do you intend on buying the new house tio live in?
As Terry said- do the numbers. That will tell you whether it's viable.
Getting to the exciting bit now!!! Good luck.
When renovating IP's you need to remember the ONLY reason to renovate is to make money, in the form of equity and/or yield.
If it doesn't increase one of those don't do it.
Scrub your "nice to do" things off, especially for a first reno. It's too easy to go over budget. I had the opposite problem with my current reno as it will be our new PPOR. Hubby wanted to to the same reno quality. Hubby couldn't understand why I couldn't run to the light shop and buy ALL the house lights in an hour (like I normally do). It's been fun but more challenging.
We aim for $3 gain for every dollar we spend as we do most of the work ourselves. If we were not doing the work I'd be happy with $2 for every dollar.
You are on a property forum so I'm guessing you want to invest in property. Yes?
There are many different areas to property investing. Do you know what you are interested in? Do you have goals?
Maybe read a few property books to see what some of the strategies are and what interests you.
I found financial advisers to be useless. They just push managed funds.
Start with how much capital you have, borrowing power, your risk profile. Where do you live and if buying property do you prefer to buy close to home? There are many investment groups and meetups where you can chat to people without paying high mentoring fees. Maybe go to a few free courses. eg Think and Grow Rich in Property.
