Forum Replies Created
- Originally posted by jamiedellam:
Hi I live in perth w.a . I make money in real estate by building new houses in the first stage of new estates.
Hi Jamie,
I agree with Mel – if it aint broke why fix it.
Cashflow is but one of many ways of making money in real estate – it is not the only way.
It seems to me you are successful at what you are currently doing and would already have a few tips and tricks up your sleeve that suit you. As time progresses you will become evenmore skilled at what you are currently doing thereby enhancing your profit margins and success rates.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by FALCON:p.s by the way the propertys in question are in the 100-140 price range with equity of 60k being on a $110000 home
Hi Falcom,
Assuming your property is bank valued at $110K as stated and you currently owe $50K.
An 80% lend will realise $88K less the $50K owing which gives a line of credit of $38K. At 90% (with LMI to be paid) you realise security of $99K less $50K owing and could extend your line of credit to $49K.
If you pass the serviceability test it seems as if you have the capacity to buy another property valued at $140K and using an 80% lend – this would soak up $28K for deposits and a further $7K for purchasing and borrowing costs.
According to my calculations (I am not a broker) it would appear that you could do it.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Kiwi,
I would not be paying full price for property until it is finished for the very reasons you alluded to.
Check to see the builder is a registered builder – owner builders (in WA) are restricted in the on-selling of property (not sure why as it has never been an issue for me)
Definately find a good solicitor for this one to see what the conditions of the sale are.
At worst your deposit would be held in trust by a solicitor subject to satisfactory completion of the home as determined by yourself and a building inspector of your choice.
Settlement to be only effected when the property is completed as required above – the difficulty you may have is that the builder may expect progress payments – although it sounds like he is building a ‘spec home’ and as such may not need these.
Ensure conditions with respect to the fencing etc are clearly spelt out in accordance with your desires.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Setmefree,
Australian Financial Planners Association surveys show most people want to retire on 75% of their working life incomes.
I would suggest that most people (in general terms) are ‘happy’ with a continuation of their existing lifestyle and this income level seems to sustain it at the level they were used to.
Whether or not this is sufficient for you is an individual thing.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Helen,
I suggest you are better off spending your time looking for property so that you can spot a deal when you see one – afterall this is where you will make your money.
At the end of the day a saving of less than $1000 is not a lot in the grand scheme of things. This is especially the case when a settlement mistake could cost thousands. For me I prefer to pay experts to do those tasks that require a constant awareness of changing rules, namely tax and conveyancing.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by lifeX:I’d also like to do credit checks and maybe even police checks on potential tenants.
Hi LifeX,
Don’t forget that little piece of legislation called the Privacy Act will make you job very difficult.
For me a good property manager is a sound expenditure of your money – while the tenant may fall behind in their rent they do have access to the tenant’s database and know the legalities involved in retrieving lost rent money.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
HI Robert,
In addition to I/O loans I woudl recommend you get a depreciation report completed and then, if appropriate, complete a PAYG Income Tax Variation advice. This way you’ll get your lump sum tax refund during your regular pay periods.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Kiwi,
A point of clarification – are you buying the property off the builder directly?
Or are you buying it off a third party who is paying the builder?
There are different potential issues and as such this may be of assistance to the forum. Nonetheless a good solicitor will be of paramount importance to ensure your contract is ‘watertight’
As a starting point a satisfactory building inspection report would be essential as would progressive inspections as the building reaches the various stages of completion (payment stages) as outlined in the contract.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Boardy,
As Brahms has said be prepared to do some market research so you know the true value of the property.
Be aware you more than likely won’t get the property at a ‘steal’ as I understand there is a little clause somewhere in the credit code (or similar) that prevents a lending institution from selling at such an undervalued price and thereby creating some distress for the vendor.
Finally the bank isn’t permitted to divulge the amount oustanding to anyone else – a little thing called the privacy act comes into play.
I am sure someone else can clarify this.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Apples,
I hope you worded the clause a little tighter than that.
Assuming you did then you can go back to the vendor and say ‘it failed the building inspection and as such I won’t be proceeding with the purchase unless’ then either renegotiate the asking price and/or get the vendor to pay for the work to be done.
Handle these discussions carefully and you may be able to realise a better deal.
Ultimately if there are significant issues you may well be better off walking away and looking elsewhere.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by FALCON:will have a look at thing with a financial advisor although its sounds like i need to raise a bit more equity first.
Hi Falcon,
You are better off speaking to a broker – they are familiar with varying products and options that will suit your circumstances from a ‘borrowing’ perspective.
My experience with financial advisers is they tend to sell an investment product – often share funds.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Kay,
Would be interested in the Gottliebsen article – can you provide the link as you have inadvertently repeated the Jenman link.
Ta muchly.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
HI PK,
Property & Strata managers I work with have no difficulty working with each other.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
See a broker (there are a few around here) who will find a lender to suit your situation. There are a range of low doc and no doc products and options available for people in your situation.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Falcon,
In general terms lenders will only lend to 80% of te value of the purchase. You, as the buyer, have to find the other 20% + costs.
This can either be done using cash (not recommended) or a line of credit set up against the value of an existing property.
Eg you own a property worth $200K with a debt of $100K. The bank will recognise 80% of the property ($160K) – given you already owe $100K effectively this means you have $60K available for use as deposits. Set this up in an line of credit and get your borker to arrange finance to suit.
Note you can go over 80% – in some cases up to 97% – but the higher you go the stiffer the insurance premium.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by Baloo:I believe that they are only liable for the outstanding rent as long as the asking price is the same. If they pay $200 per week now, you can ask them to pay the remaining rent/advertising costs as long as you are advertising for the same amount or less.
Hi Baloo,
In WA the same law applies – a tenant breaks a lease and the landlord is only able to advertise the vacancy at the same rate as before. If there is a rental increase the requirements for the departing tenant to pay advertising and lost rent are null and void.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by Baloo:
No, I was stating that I assumed that the mgmt (Admins, Moderators) of this site were infact CF+ investors.
[/quote]Hi Baloo,
I speak as a moderator and there is no cashflow investor here – I guess what I bring (in my eyes anyway) is a reasonable open mind to different investment strategies and some general knowlegde about a range of investment ‘issues’ that may be of use to others in their journey.
As moderator my role is to make sure we ‘talk nice’ and don’t advertise.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Jarred,
Everything seems too hard in the beginning – ever watched a baby try to walk for the first time?
Having a desposit is one of the hardest first steps to accomplish – the temptations of life and the apparent slowly growing deposit can be a little disheartening in the beginning – you are well and truly ahead of the bulk of the population already.
Given you are studying in the immediate future you will have to see if you can locate something (you may have to look far and wide) that is positively geared if you do really want to start investing now.
I suggest you use conservative numbers to see if the deal will stack up so you have some cashflow up your sleeve should maintenance be required or you are without a tenant for a while.
The option is to use you study time to further study ‘property investment’ so that when you have a steady income you are in a position to maximise the enforced ‘time out’.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Elika,
I like the definition Margaret Lomas uses – ultimately there is a bit of a little personal slant people put on the terms.
Positively geared – income exceeds all costs including rates, taxes, interest, repairs, body corporate (if appropriate), insurance, management fees and so on. Depreciation allowances are not required to provide a positive income flow.
Positive Cashflow – income exceeds all costs as above but only after tax deductions for depreciation are factored into the equation.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
Originally posted by MortgageHunter:Can you change immediately and pay her the equivalent of three months fees? Is this an option?
Hi Simon,
This is also part of the standard agreement and based on Milly’s ‘3 month’ comment in the first post it is highly likely this clause remains – but – as you said pay the three month fees and cut your losses and move on is an option worthy of consideration.
Derek
derekjones1@bigpond.comProperty Investment Support Available. Ongoing and never stopping. PM welcome.
