Forum Replies Created
The trial and tribulations of being a broker.
First requirement – being masochistic
Second requirement – being prepared to wrinkle and grey quicker than the average populous.
Purpose built student accommodation can be harder to finance than 'standard residential' and, if this is the case with this particular property, cit an explain the price differential.
What you are seeing could be the result of the financing difficulties with purpose built properties which can have an impact on capital prices.
Now all I need is a broker to come along and say things have changed
Deppro do QS work anywhere in Perth. Give them a call and they'll be able to help out.
My accountant is based in Herdsman Business Park – not sure why your accountant has to be south of the river. I live 400 kms away and still use my Perth accountant.
Cashflow positive are still available in WA with pretty good entry level prices and in well established towns with good long term prospects. Rent returns ~15%. Just have to do things differently.
I am sure a broker will be along here shortly.
Development funding is still a little hard to secure. Banks often like to see pre-sales and given your in-laws seem to be 'stretched' these two factors may make the banks run for the hills.
Certainly owning the land outright will be advantageous – provicded it is sin't used as security for one/both of the other properties.
I would also counsel against your in-laws makign decisions based on best case scenarios. It would appear as if the Melbourne market is starting to tank. Typically small scale developers (mums and dads) get caught having trying to do developments, make a killing at the end of the boom or, even worse, when the peak has passed.
We are seeing a number of mum and dad type developers havign to sell their sub-dividable blocks through an inability to secure development finance. Typically these people bought at the peak and are now caught with a property they are stuck with. Caught betwix and between.
But do you really want to be inexorably linked togerth on LOCs 'forever' – sometimes a clean up first (if possible) might be in order.
Hi Andrew,
We are doing something similar at the moment and a common question we are often asked is 'what epxerience does your team have'
When we explain our development managers have 15+ yrs in the industry and can show significant commercial & residential projects already constructed a lot of the obvious anxieties are resolved. Having said that numerous other questions do come up and being able to quickly address these issues is of paramount importance. Any stumbling at the hurdles and you will lose credibility.
From my perspective I would like to see you having more experience – the only way to do this is by involving yourself in a project.
Start small. Get some runs on the board and work from there.
A mentor perhaps?
Jamie M wrote:when plants die it's usually a result of my neglect rather than their quality.A new marketing initiative 'Jamie Proof Plants'
Hi Kate and Tony,
No property should be bought because it 'maximises depreciation' – it should be bought becuase it meets your end goal of providing capital growth and/or cashflow depending upon your aims.
Depreciation is the icing on the cake and not the cake itself.
I mean if your goal really is to maximise depreciation – buy a unit where depreciation, as a percentage of purchase price, is greater.
An update on plans for Karratha.
http://au.news.yahoo.com/thewest/a/-/wa/11743828/1-5b-plan-aims-to-make-karratha-city-of-50-000/
Looks like our Karratha investors will time things right.
Old building & minor cracks probably not a lot to worry about.
Just my opinion.
Responsibility of body corporate = your responsibility.
As an owner of s atrata titled property you should be involved in the body corporate wither as an elector, a position on the committee. If the problems are more serious additional levies may be required to which you will also contribute.
Builders warranty may not apply if teh property is more than four storeys or if there is a underground carpark in the complex.
Having said that minor cracks often occur through settling so the problem may not be 'serious'
The decision to inspect or not is your call – and not teh agents.
Looking at this 'deal' – too tight for my liking.
Not a lot of leeway in your finaces, looking at with LMI involved lend and OTP to boot.
Mortgage insurers may find themselves to be 'over exposed' in the development and thus your finance may be declined at the end after having gone 'unconditional' approximately 2 yrs from completion. Throw in moving back home, an unknown property market in two years time, potential for valuation problems OTP with limited cash/equity reserves would make this deal not worth it in my opnion.
I reckon I'd be knocking on Terry's door.
Purchsing property is more than well………………just purchasing property.
Structuring, inheritance, asset protection are equally important. If you can grab a 'rounded lawyer' (as in legal sense Terry) and they know their stuff they should be on your team.
Handling the transaction is almost small bananas in the scheme of things.
For another opinion check out Anz Property Report at the link below.
Hi Adam,
Haven;t seen such a calculation tool around the place. I expect the 'risks' are not readily quantifiable and thus a calculation would be 'rough maths' anyway.
Maybe give that guy from the 'Numbers' TV show a call and see what he has:)
Mosqui wrote:I think this is not a real fair comment. You can not compare Ravensthorpe (where all this happened) with Karratha and Port Hedland. This is a clear difference with a mining town and a future mining town. The Ravensthorpe mine never worked. I can only talk for WA because is where I have all my experience and the pilbara and mid west is full of mines which will be here for many years. Two weeks ago BHP announced that they are investing 7 billions in WA, so Port Hedland has construction for the next 5 years and operations for another 10 to 15 easy. Karratha has Rio Tinto, Woodside, Dampier Salt and Burrup Fertalizers, so if all these industries go down, don't worry because all Australia stops anyway. I think it's fair to say that the risk on the north of WA is very low and the returns are very high, very uncommon, but real. I have a house in Karratha and looking into my second IP in Port Hedland at the moment. Also the people up there go for work, so the houses are usually kept pretty well. I was also looking into the Qld mining towns, very interesting as the properties are a lot cheaper. This is my point of view. Happy investing to everyone MosquiWhile a lot of discussion is centred on Qld – ignore WA at your own peril.
As Mosqui has previously stated Hedland and Karratha are anchored by big companies such as BHP, Rio, FMG, Shell, Chevron, Woodside et al. Alongside these companies are a number of smaller, yet significant operations working in the same area. Each of these companies is making major investment decisions in the area and all have long term contracts in place with ambitious plans to ramp up operations.
For example BHP want to triple output through Hedland in the next 4 years or so and FMG want to increase their operations by 5 times over the next five years. To complement BHPs plans they are now looking at constructing an outer port as the inner facility is at capacity.
In a previous post someone asked about investing in the Pilbara – rent returns in both are ~10%+ with significant capital growth to boot. Port Hedland has averaged 20.2%/annum over the last 10 yrs, Bulgarra (central Karratha) has averaged 16%/annum growth over the last 10 years and South Hedland has achieved 21.1%/annum over the last 10yrs.
Median HOUSE prices are very expensive and you wont get a lot of change out of $1.1m in Port Hedland and $750K in Bulgarra & South Hedland.
The State Government, through its Royalties for Regions policy is setting out to make Hedland and Karratha into NW cities with populations of 50,000 (big by WA standards) by 2030 (exact date escapes me atm) and some large scale developers are moving into Port Hedland and Karratha. The state government is working 'hard' (is that an oxymoron?) to release land in both towns to aid the growth process and supporting this initiative by building 'lifestyle features' in an effort to attract more people north.
There are zoning restrictions many parts of South Hedland but we have managed to locate a couple of blocks suitable for small scale, but highly profitable, developments in both South Hedland and Karratha which will realise great profits and high rent returns for our clients.
All in all – neglect WA at your own peril.
PS – noticed someone had a bad experience in Ravensthorpe. Ravensthorpe and the Pilbara are totally different and the surge in Ravensthorpe and neighbouring Hopetoun was always going to end in tears. Do a search on Hopetoun in the archives.
Not sure if this is of use but I use Geoff Carslake of Shreeve and Carslake- They are based in Herdsman Business Park.
Can get the contact details of another accountant more central through a third party if required – this accountant has been helping us with a number of tax issues associated with small scale developments, partitioning, SMSF, GST and CGT..
Hi All,
An update on this mob.
ABC Financial (or their agents) recently visited our home town (WA Country) and did some door knocking & home visits in an effort to convince local people to fly to Melbourne and buy property there.
A local couple have recently returned from one such trip with property in back pocket.
Turns out the property is a motel unit (Quest ? or similar)
Spiel went something like this – we wont take out a loan against this hotel/motel unit because it is commercial rates and that is expensive. We will set up line of credit and you can pay for motel unit outright from LOC funds secured against your own home.
Don't worry about growth on these small units as the important thing is cashflow and this property will only cost $15/week (I assume after depreciation, tax variations etc etc). Projected rental increases of 4%/annum.
Scary stuff – indeed.
Where do I start?
Try Shreeve and Carlsake in Osborne Business Centre.
I use them for my tax work.
From memory tax payers can review their last two tax returns. Might be wrong.
