Forum Replies Created
- TheFinanceShop wrote:Other than the flooring – everything else seems to be overcapitalising to me.
Regards
Shahin
I don't agree, but you do need to be very careful not to spend money on things that won't give you a return on your money.
I also agree $50K is a LOT of money. You'd need to get $100-150K increase in equity to make it viable. Do not GUESS an amount. It quickly gets away from you. You need to allocate money to different areas. In order to do that you need to KNOW the cost of things.
Buy things on Ebay. As soon as we see a property hubby gets on Ebay and starts buying. If you are going to do this regularly buy things for later. If things are really cheap we stockpile. For eg we bought 3 showers for $150 as they were demolishing the house. Find places where you can get quality ,materials at a good price. Eg vanities can cost $1000 but a $300 still looks good. Kitchen can vary by $15K.
Bifold doors, fence? Will they give you a better sell price? If not don't do it. Landscaping can make a big difference but you don't have to go overboard with big plants etc. Don't renovate because you think it will look nice. Find out who your target market is and cater to them. Find out what prospective buyers MUST have and what doesn't matter. This is critical.
We typically spend $15K on new kitchen, bathroom, paint, carpet. And we usually raise the equity by over $50K. This is on lower priced properties (which we keep as they are then CF+).
Starting our next one next week. Yeehah!!! We love it.
As Scott said- do your research. You can';t make a decision on rent alone.
Do not buy it outright. You then tie up all your funds and you may not be able to draw the money out later. Remember interest is tax deductable. If you have no interest you will pay tax on the rent. It will be added to your income. If you earn a decent wage you'll pay over 40% tax on it.
You need to do more reasearch into rental vacancies, demand for both rent and sales, capital growth, etc.
Save your money.
Type this into google for lots of posts on Positive Real Estate
site:somersoft.com "positive real estate"
I wouldn't have thought the body corp would be that expensive with only 3 units. Don't forget it covers insurance so you'd still have to pay that. What is the managing firm charging? That would be a saving. You'd have to look up the laws regarding self managing. But as they are strata'd you'd have 3 lots of rates etc.
LeonR wrote:I am not writing this to knock Nathan Birch, as I do admire what he and his team have achieved in such a short time.I guess that $200k could give you a property portfolio worth about $1 million, but with it comes a $800k loan.
The 8.9% yield mentioned above is impressive, but after all the expenses are paid that rental net yield is more likely to be around the 5.5% to 6%? Maybe a bit higher if depreciation, tax deductions are allowed.
What I do not understand is, isn't it dangerous to have so many properties carrying such large loans? Especially when considering the current world's economic situation
You are making wild assumptions. Knowing the types of properties Nathan buys his clients would not have a $1m portfolio with $800K loans. He typically buys under market and with reno there is built in equity.
I can't believe you are criticizing 8.9% yield. If you can do better, go for it. Most people are ecstatic to get 7%. A net yield of 6% is cash flow neutral. Nothing to sneeze at (especially if you have built in equity and CG potential). I'll take a few of those.
As you said- you don't understand so why criticise?
It is definitely worth pursuing.
But you really need to make sure you get your numbers right. Choose 2 suburbs (3 max) and REALLY know them like the back of your hand.
Many people come unstuck because they under estimate time and cost of reno's and over estimate sell price, AND forget to factor in buy, sell costs, holding costs, stamp duty etc.
I think $350-400K price bracket is a good start. It's difficult to make enough on lower priced properties. You can make huge money in the higher brackets but it takes more cash and you need to do structural reno's to make the big money.
You need to cut your reno time in half for any reno that's not structural. We do a complete reno (new kitchen, bathroom, paint, carpet, sometimes remove a wall) in 4 weeks. We do a fair bit ourselves so with tradies, if you coordinate properly it should be even quicker. At $350K each month means losing $2,000.
Sorry thought you meant 4 month reno. Including sales period is feasible.
In your suburb research you need to see a big price gap between unrenovated and renovated profit. Those are the good suburbs to choose. Research is the key to success.
There are loads of groups in Sydney. I went to a great meetup the other week. Just casual. Lots of investors, chatting about their experiences. Some newby's wanting to get started. http://www.meetup.com/sydney-investor/
There are other groups as well. There are also regular meetings in different parts of Sydney. Some are free or cost as little as $10. You then get to meet "real" people and hear about their journeys.
Or go here and read about peoples property investment journeys.
There are loads of DVD's seminars that focus on one strategy but only overviews of differing strategies.
Best to decide which strategy you wish to pursue and THEN get DVD's or go to seminars relating to that.
Do you have ANY idea what you want to do? There are WAY too many ways to make money in property.
Reno, development, options, subdivide, flip etc etc.
GoldenPearl wrote:I have not waited till I amass a large amount of material wealth to do the things I want to do.Whether it be purchasing properties, helping people in the community, buying objects, or traveling the world. All of this can be done if you really want it. Where there is a will – there is a way, so they say.
Some are smart, some are lucky, some work hard, and some have passion, persistence and determination.
When we desire lots of money, a big property portfolio, the latest cars or luxury holidays – what are we actually trying to find in them?
I believe the answer is happiness. It could also be security, validation, a feeling of success. All these things can be achieved if we look within and find inner contentment. Then the external activities of owning that portfolio, cars, and luxury items don't seem as important.
It is wonderful to achieve things in life and make yourself , your family and community prosperous, but if you begin with a sense of already feeling content, happy and fulfilled with what you have, then I believe this is a solid foundation for tremendous wealth to prosper.
Great points Pearl! I agree. I travel a lot as that's my passion (and property). It's surprising how many people say they will travel the world if they were a millionaire. Well you don't need anywhere near a million dollars to do that. Some places are DIRT cheap to live in. My son works his butt off for 7-9 months then travels the world for the rest of the year. He's young. Good luck to him. Why wait until you're old to enjoy your life?
My wakeup call was when a friend had always planned to travel Europe when she was 50. Unfortunately she got breast cancer and never made it that far. Very tragic. I used to say the same thing. Not anymore. I travel, spend my money on enjoying life. Luckily I'm not into material possessions (except houses LOL)
renel wrote:Ok so $10k on hand is ok then. Cheers everyoneHow big is your portfolio? If you have one property rented at say $400 a week. Yeah it "should" be enough.
I agree with streamline about stress. I put a lot of faith in SANF (sleep at night factor) in all my dealings. If I'm not sleeping something has to change. I'm a worrier and play pretty safe (compared to all the investors I know).
I like cash in the redraws and a low LVR (but I'm getting close to retirement). The things is to know what to worry about and what not too.
For example my first IP was going up like crazy (bought at the beginning of the massive boom). Uneducated, I listened to media hype (interest rates will go to 14%, vacancies will rise etc) and I sold. Made a nice profit but "if only" haha.
Took me years to decide to try again.
You have to do what's comfortable for you and your situation.
Are you looking at units or houses and how much do you want to spend?
Are you expecting to just purchase something that is CF+ or do you have a strategy to make it CF+ (eg reno). Do you mean "really" CF+ or CF+ on an 80% lend?
What has you research told you so far about these areas? Why them?
JacM wrote:I'm definitely a landlord that does xmas gifts. Interested to see gift ideas other people have (for tenants). The more thoughtful or unusual the better!Last year I did a package of their favourite beverage, some chocolates, and a ticket to go on a scenic 40min cruise. I gave this to each tenant in a unit block and it worked out a bit like their own personal xmas party.
All ideas welcome on this thread !
How many of these Christmas presents are we talking about? that certainly adds up in a hurry.
Always remember the Real Estate Agent is not working for you (or necessarily in your best interests). Their loyalty lies with the client (the vendor).
So yours is worth $306K with a mortgage of $194K? It is easier to just say that if I've interpreted correctly.
So yes you have $50K + $20K to spend. When you say you've paid it off do you mean you have directly paid down the loan or put it in an offset account? For future reference always put money in an offset account that way you can do what you want with it. Paying down a loan also makes a big difference if you wish to purchase a PPOR one day. If you pull the money out of the IP it won't be tax deductible.
So how do you buy another after this one? you buy well and reval (as I mentioned) or add equity in some way (reno/subdivide etc) or wait for CG.
Have you considered buying cheaper properties. That way you could buy 2 and usually the yeild is higher. A low yield will slow you down too as banks look at your serviceability.
Can you give figures of IP worth and loans as your figures are not clear.
Have you paid an extra $50K off the loan or is it elsewhere? Where are your partners funds?
Do you have a PPOR or are you renting?
You also need to find out how much you can borrow.
If you buy under market then reval (do a reno etc) then you can withdraw that equity of the next one.
A friend of mine who has multiple properties uses them.
I am going to look into them as soon as I have some time.
There's no difference in the process. The owner has a contract of sale either way.
The only thing you need to be sure of is the price. Is it a fair market price? If you know your area you will know what it is worth. Some vendors are unrealistic about the sell price. Some just don't like forking out %15-20K when they know their house will easily sell). Ask why they are selling privately.
Ask for agent appraisals first (they would have had agents out I'm assuming) then get a bank valuation.
I don't buy in large complexes. Small complexes are easier to change things. You only need a few disgruntled people. Give them someone who is willing to solve their problem and they'll let you.
mulderbauer wrote:HiI purchased a unit in a hotel complex a few years ago, bookings have been consistent and pretty much cover the mortgage and utilities, downside is that due to current market forces the value has gone down like most investments
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Really? None of mine have gone down.
Hotel complexes are always risky. I'm guessing you bought off the plan?
Sorry to hear about your situation. Maybe try for a personal loan. At least the interest rate is manageable. If the price has dropped you may need to pay back some of the loan also. Difficult situation to be in.
Good luck.
