Forum Replies Created
Hi Leisha,
Thanks for update. A lot has definitely changed since 2014.
I will look into giving you a call next week for more information.
Would Monday, say around 4:30PM suit you?
Cheers,
David
Hi Adam,
Based on the information from the Sciacci Course, income earned from an Instalment contract is treated as ‘Income from a Business’ and is taxable at the time you receive it.
Hope that helps,
Cheers,
David
I did one with ANZ – new valuation done at the day of settlement which come in $20k higher. But many lenders want the borrower to wait 3 to 6 months between valuations and/or increases.
Also note that giving an option on the property would probably be a breach of the mortgage agreement with the bank.Wow.. That’s quite impressive Terryw!
What did you to to add value to your property prior to settlement?
Interesting point about the ‘Option’ being a breach of mortgage agreement with the bank.
Are there any ways the owner of the property is still able to provide the seller with an Option to Buy their property at an agreed price, and within a certain date without breaching their agreement with the bank?
I’d say you’ve probably been reading too many books from ‘property experts’ which are overcomplicating your strategy and for what ‘benefit’ you may believe you might gain, you will restrict yourself in every other way limiting your ability long term to grow.
If you try to do a val immediately after renovation/settlement you will find the valuers will only note a nominal increase in value, short changing yourself potentially 10’s of thousands.
If you’re thinking you can renovate prior to settling and use the higher valuation for the purchase to reduce your deposit – think again. The lenders all have rules that they take the lower of the purchase price OR valuation – so they will just revert to the contract price.Sure have! :) I’ve been going through the Sciacci System for Vendor Finance, watching Mark Rolton Videos, and now going through Cherie Barber’s Renovation course.
So what you are saying is there is no point in renovating prior to settlement because the valuation will be based on purchase price.
But what about if you buy the property under a 6 month lease option agreement for say $250,000, renovate during that period and then onsell that option agreement for $330,000 – would that work?
Thanks Corey… That’s a very helpful article…
With my next property purchase I am thinking of purchasing run down property, having early access to it prior to settlement for renovation, and then having the property revalued once renovations is completed…
Ideally I’d like to be able to achieve this via a ‘Lease Option’ strategy to minimise upfront costs of the deposit, the holding costs of the loan, and stamp duty costs.
Are there any financiers you would recommend over others to achieve this re-evaluation upon completing renovation? Last I heard NAB was the go to bank for this…
P.S. The above is obtaining control of the property via an ‘Option’, then ‘subdividing’ and ‘renovating’ the blocks of units before the expiry
One strategy Mark Rolton mentions in his video is ‘Strata Titling’ and ‘Renovating’.
The reason this works really well in a ‘Down Market’ is because you can bring a product to the market that is 30-40% cheaper than everything else.
- Example Block of 5 Units:
Purchase Price $470,000
Stamp Duty $15,980 (3.4%)
Strata Titling $11,270 (2.4%)
Basic Renovation $46,700 (9.9%)Total: $543,950
Gross Realisation
5 x $155,000 = $775,000
Less Commission = $23,875 (3.1%)
Less Total Costs = $543,950Total Profit: $207,715
Sure thing Terryw…
I don’t have much assets at this stage.
Was just asking out of sheer curiosity.
But I definitely know who to go to in the future for Asset Protection Advice ;)
No worries Jaxon
Cherie mentions there are two types of renovations:
1) Cosmetic
2) StructuralWith Cosmetic Renovations you want to spend 10% of Purchase Price and Sell for 135%.
With Structural Renovations you want to spend 40% of Purchase Price and Sell for 185%.
RP Data is probably the best source of information to see what similar properties have sold for in the area in the past 6 months.
If you are interested, I could hook you up to a copy of her course…
So how exactly does this Dual Exclusive Agency Agreement work?
The agent that sells gets paid the commission and the agent that doesn’t gets nothing?
Or is it 50/50 regardless of who sells?
P.S. The formula is based on spending 10% of Property value on Renovations
Seems like pretty awesome numbers there Jaxon
I am just going through some videos by Cherie Barber, and she mentions that before any renovations you should obtain an Asbestos Report.
Furthermore, with renovations you should aim to be able to sell for 135% of property value, so in your case $121,000 x 1.35 = $163,350
Have you looked on RP Data to see what similar properties are selling for in the area?
I thought it was the other way around…
The agents would put more effort in if they know there is competition.
How does Dual Exclusive Agreement work anyways?
Is it 50% split in commission between the agencies regardless of who sells it, or are you able to structure it so that it gives the agent more incentive to sell?
E.g. 25% for both agencies, and then 50% for the agent that sells?
Interesting point you’ve brought up Terry
I assume the owner of the property would own the shares, or maybe a relative of the owner…
But then instead of your Equity being exposed, your shares in the company would be exposed…
Thanks Terry, that makes things a bit clearer. Does the entity need to be a Trust, or can it be a Company?
It was from one of Mark Rolton’s Videos, and his adviser is a qualified and licensed lawyer based in Brisbane…
Basically he mentioned that if you had a property worth $1M, a bank might have a loan of $400K, and then you would have $600k exposed equity, which you could somehow protect using an Irrevocable loan…
Hi Greg,
Have you thought about ‘Staging’ the property to maximise the perceived value?
Or maybe offering ‘Vendor Financing’ for +20% of the purchase price?
Just my two cents…
David
Offset accounts might be worth looking into. Money placed in this account will reduce the amount of interest on your loan and you can withdraw the funds as you wish. I did some calculations for my dad and he needed to have $7,000 kept in this account to break even with the fees charged by the bank.
Hi Craig,
Yes! Definitely still interested! :)
Do you have the program available?
Regards,
David
Just something that came to mind…
Why not ask the real estate agents around that area?
They’d probably know your target demographic a lot better, and can advise on what’s sought after, and what will give you the biggest bang for your buck…
Hey guys,
Just want to let you know I’ve managed to get a copy of the Siacci System.
Thanks Shane! :)
David
