Forum Replies Created
Thanks for the feedback, definitely thinking about going ahead with these, there are quite a few units in the complex that are available, I can’t buy them all though. As I said, I’ve put together an info pack on these, so if anyone else is keen on having a look, more than happy to share my investigations with you.
D.
Gary,
I can recommend our mortgage broker, his name is Graham Evans, he’s been an investment banker so has a good understanding of what banks are looking for when analysing investments, helped us out when putting some deals to the banks to get finance, also dealt with many other property investors from the banks side and from the investors side so has seen a lot of different strategies so has broadened our horizons with what is possible.
Give him a buzz on Mobile: 0400 083 337 OR 03 9383 3188, tell him Dave Robb gave you his details and I’m sure he’ll be happy to help you out (not just because I sent you, but because he’s a nice guy and good at his job [biggrin])
Good luck.
Dave.
Sounds good Dave, I’m definitely keen.
Mate,
A very broad question, different strokes for different folks.
All my ties are silk, patterns vary including plain colors, stripes, dots, zig zags, pinks, blues, whites, etc. I’ve got a heap of them.
I think that your type of business is going to be at the mercy of the ever changing fashion industry, the ties that I bought last year aren’t in fashion this year, and I’m sure the ones that I bought this year won’t be in fashion next year. Best get a subscription to GQ and keep up with the trends.
There are quite a few tie distributors around, the Tie Rack is one that springs to mind, seem to sell a pretty good quality tie at a reasonable price, and of couse you can always go and buy yourself a gucci or versace etc from one of the boutiques or larger department store.
Then you’ve got the ebay avenue where you can get almost any design at a pretty cheap price.
Wondering what your angle is to differentiate yourself from these players?
D.
I suppose that Carrum has leveled out with most of Melbourne after the big peak, the benefit that I see with the suburb is the water, they aren’t making anymore ocean.
Milly,
my step dad put in a timber deck, more a floating floor over a concrete area next to his spa, the area is probably 5m by 5m, from memory it cost him more than $5k and we did all the labour.
It will vary depending on the decking area, the height of the deck, the type of timber you use, roof/covering, hand rails, etc.
If you’re in Vic, my brother may be able to help you out to construct the deck for a reasonable rate.
D.
Perhaps I missed something that Sue didn’t, but the deal looks pretty good to me. Assuming the following is correct:
Purchase Price: $17,000
Deposit: 20% (3400)
Loan: $13,600
Interest Rate: 7.65% P&I for 15 years
Property Management: 7%
Rent: $100 per weekAnnual Outgoings
Annual Loan Repayments: $1526.88 (roughly)
Annual Property Management: $350
Rates/Maintenance/etc: $1000
TOTAL: 2876.88Annual Incomings
Rent: 5200Summary:
Annual Cashflow: $2323.12 (rough)
Yield: 30.59% (Annual rent / Purchase price * 100)Change this to an interest only loan and your annual cashflow increases to $2809.60.
My only concerns are that I don’t know the Phillippines so there may be hidden costs, vacancy rates, etc etc.
Sue, I may have missed something, but if you outlayed 20% as a deposit, just your first years rent would be a cash on cash return of 60% (2323.12 / 3400 * 100), this is pretty darned good if you can get it.
I await the blatantly obvious to be pointed out to me, but looks like a good deal.
SG,
Some other things that you should consider are:
* Duration of the subdivision process, these will vary greatly from council to council. For example, I’ve just had one be approved in 3 months, but another council I looked in the waiting time was 12 months. So I could potentially get 4 subdivisions one after the other through the first council before the second got through. This can do wonders for your development budget and cashflow, remember that you’re going to have to cover the costs of holding the property while you wait for the plans to be approved.
* Generally the plans will be drawn by an architect/draftsman, however there will also be surveyors, civil engineers, etc who may/will get involved. The costing for this process can vary depending on how problematic or simple the site is, we budgeted $15,000 to get plans and permits drawn and a building certificate issued for a sub-division with a 3 br unit on the back.
* Watch out for the hidden costs, generally you’ll get stuck with costs for subdividing a block by the council, the water provider, etc for their numerous bits and pieces, you’ll probably find you shell out a few grand to line the pockets of these organisations.
* Get to know an architect, use architects/draftsmen who are working in the area, before you buy anything, talk to them about what you want to do and have them inspect your site BEFORE YOU BUY. Theres no point you buying a big block of land if its unsuitable to build on, you’ll be left holding it wondering what happened.
* You will pay CGT on the sales of the rear block of land when you sell, however if you’re planning on holding the front property, have a chat to your accountant about how you can roll as much of the profit into the front dwelling such that you can pay less tax. Of course you’ll have to pay this tax when/if you sell the front property, however if you’re planning on holding for a long time, this can be a way of freeing up that cash now.
* Go and see the councils you’re dealing with, I’ve found these people to be most friendly. Basically you need to find out what the council is after, are they they looking for dense housing in the area, if you can meet their requirements, you’ll find you have less headaches with your submissions/approvals.
For example, there are a number of suburbs around melbourne which have been flagged for more dense housing, in addition to your zoning, therefore you can fit more dwellings on the blocks (sometimes down to 250m or less per unit site), whereas others require larger blocks. This can be the difference between the same size block of land being a 3 unit site or a 4 unit site. Something to think about when selling land.* Neighbours and other developments in the area should be considered, during your approval process, the local residents will be informed about your intention to subdivide your block and, if you go down that path, build an additional dwelling. Even if you follow the letter of the law and do everything correctly, the local residents will still be in their rights to contest your submission and hold up your submission. If you’ve done everything right, you will probably get through without issue, however you may end up in VCAT (tribunal) to argue your case which just costs you more time and consequently money.
* Crunch your numbers before you go ahead and buy/divide a block, depending on where you buy, the activity may or may not be profitable once you factor in purchasing costs, stamp duty, architect/planning fees, interest, etc etc.
Hope this helps.
D.
Hi guys,
Apologies for the delay, I’ve been traveling with work and have been offline. Heres a link to the calculator:
http://www.brdpropertygroup.com.au/buyandholdcalculator.htm
This will calculate yields, cashflow potential, etc.
Please note that this is still a beta version of the calculator, I’m pretty happy with the results so far, but if you find a problem let me know so I can fix it for everyone. Any feedback on the look and feel would be greatly appreciated also.
Anything else, let me know.
Cheers
Dave.
Hi Chris,
I’ve got a few calculators on my website that do these sorts of things, I’ve got one for renovations (buy, reno, sell), one for cashflow (buy, rent, hold), one for development (buy, plan, build, sell) and some others.
If you can let me know which one you’d like, I will gladly send you a link.
Dave.
Melbourne apartments are a bit of a roll of the dice at the moment, a lot of people got burnt buying the apartments off the plan and then realising that they weren’t worth as much as they thought once completed. Primarily due to the sheer number of inner city apartments being built (Eureka, Freshwater, Docklands, Tribecca, etc), plus it doesn’t look like slowing down, with Grollo announcing more residential in place of the old brewery, plus the south bank development, I’m steering clear.
That is not to say that there isn’t capital growth or opportunity, but the areas a bit grey as to exactly how many apartments there are going to be available over the next 3-5 years and what that is going to do to the market, also. Although I did read a report that stated that waterside/view apartments always grew at a good rate, however as to when you should buy into these types of apartments, not sure.Do your DD and see what you think.
D
I can’t say that I’ve looked into this sort of investment, my first question would be “Why are you investing”? One of my main concerns with this sort of investing is the lack of capital growth, sure you get 7.5% net return, but are you also going to get capital growth?
Wouldn’t it be better to find a property that can return you 6% return on rent, but also grow (assuming property doubles in value every 10 years or so).
Obviously its your investment strategy, so I guess if it fits in with what you’re trying to achieve go for it.
D.
Paulusi,
I suppose the question is what are you trying to achieve, if your goal when you started investing in property was to generate $100 k, then congratulations you’ve achieved your goal, take your cash and relax in the knowledge that you’ve achieved what you wanted to achieve, however if your goal is to generate $1 million, then maybe you need to look at what the next step is.
The problem with many investors is that they do not start out with a goal or exit strategy, therefore its hard to quantify any decisions that are made along the investing track (i.e. like the one that you’re asking yourself now). I’d say you need to go back and evaluate what you want to achieve and then make a decision as to whether to sell out or not.
Also, have you considered the actual numbers with these properties with regards to CGT, interest that you’ve spent on the properties, stamp duty that you paid, deposits that you paid etc, perhaps the $100 grand that you think you’ve made is not actually $100,000. Recrunch your numbers, set your goals and then make your decision.
Good luck
D
Leila,
My brother may be interested in this, I’m just around the corner in Heathmont. Could you drop me an email with some details on the property and also if you’ve got a budget set, and you contact details so he can get in touch with you.
D.
If anyone has access to a copy of this article, it’d be greatly appreciated if you could please post it on the forum, or otherwise email me a scanned copy.
Thanks in advance.
Dave.
I agree with Terry on this one, plus you should also factor in the costs on your time and the inconvenience. If you sell it yourself you’re going to have to find buyers, advertise, have open houses, make/return phone calls, draw up a contract, negotiate, etc etc.
I usually stick with the rule of pay professionals to do what they do best, I don’t sell houses for a living so I leave it to the people that do, same as I don’t draw building plans so I leave it to the people that do.
I think that the real estate agents fees seem quite reasonable if you compare this with the factors that Terry mentioned, plus your own time.
Up to you though, if you already have some buyers on the line (i.e. people you know), may be a way to save a $ or 2.
D.
Interesting Dr X, the agent told me that legislation passed in June 05 (in VIC) allows them to pay a 20% referral fee to any person, previously they were only permitted to pay this referral fee to another again.
Not 100% on the date the legislation was passed, but in Vic this is the case.
I suppose its a case of do your DD in your state and check what you can and can’t do
Hi Novo,
Check out this forum post, https://www.propertyinvesting.com/forum/topic/18300.html.
My advice, steer clear, do your own research and find yourself a good deal, but it is an easy way to invest, but most of the cream has been taken out of the deal.
D.
This has been a topic of much discussion on these forums, one thing that I did find out is that you can be paid a reference fee from a RE Agent for finding them a buyer, speaking with a local agent here, the fee is generally 20% of their commission, so on a $300,000 property, assuming the agents fee is 3% ($9000) then you’d get paid $1800, not a heap of money but nothing to be sneezed at and certainly legal.
D.
Hi Dragon,
Your requirements are going to be very much dictated by what your goals are. I’d suggest that you talk to a solicitor regarding your requirements and also your accountant. You need to be careful how you go about things. For example if you set up a certain type of trust/company, you may not be able to distribute losses (if you’re planning on negative gearing), etc etc.
If you’re concerned about a fallout between your friend and yourself, draft an agreement between you and have it looked over by a solicitor, that way you’ve got what you need in the letter, and let the solicitor worry about any legalities.
D.
