Hi Bullen -in the spirit of sharing I would suggest to stay clear of relocating a home for a first project. There a too many potential problems to list. Once the building arrives there is usually a lot more renovation work than expected.

An alternative would be to buy a property below bank valuation and renovate. It will be much easier to finance. Budgeting the renovation will be more accurate as well.

The valuation question is fairly easy to answer. We do them upfront to determine the on completion valuation. I regularly see these value up. In some cases it will be difficult for a valuer if there a few comparable sales but if there are they will have no trouble at all.

There are so many variables. The projects are really just micro property developments. Some are done well and some are done very poorly and value accordingly.

The strategy is very sound.

The granny flat strategy is a tool to balance cash flow across your portfolio so that you can continue to invest.

Kieran – api magazine ( I am pretty sure it was them ) did a compilation of case studies on small developments. The numbers will be old by now but the percentages spent on certain items should be fairly consistent.

Also, on my desk right now, Australian Residential Property Development – Ron Forlee and Real Estate Development Principles and Process Mike E Miles. Both a good read with case studies.

Honestly, I think it really depends on your personality and mindset. Sorry if a non technical answer is not what you where after.

Some people will be able to remotely invest and others just won’t be able to cope with the lack of control and the additional complexities. To others it will be a breeze.

I was just looking a facebook page that nigel runs just yesterday. He has a lot of information and you can see the types of deals they are putting together.

I’ll add just one other thing that is also just an opinion. Unless you are planning to build a portfolio it is probably not worth while. If you are going to build a portfolio start as soon as you a certain that you know enough to ask the right questions of the people you are working with.

Yes Griffo you can ( and well done for knowing what to look for as Terry said). I agree with all above but want to add why would you? If you broker is an investor it is going to be gut instinct for them to avoid cross collateralization and also avoid a one bank trap.

Absolutely not! I would look for an aspirational suburb next to and similar in price to your so called “dodgy area”. Some areas are just not great. Find your dodgy area and then look at places where people who live there aspire to live in (realistic people).Price will be similar and yields will be the same if you work hard and finding the right property.

Lets face it some areas are in decline. They have problems that can’t be fixed. Avoid and avoid. Some area’s a set to change with concrete plans for change.

Long story short, your spreadsheet is going to tell you around 10% of why you should invest in an area.The other 90% will come from contact with actual human people and research. Dig and talk.

You will win if the area people think is dodgy turns out to be a “hidden gem”. The only trick is you have to trust your gut and do it before the herd.

• This reply was modified 9 years, 6 months ago by  Don Nicolussi.

Strange formatting issue mods please delete.

As always I try to keep things simple in my own head.

Start with:

What is the idea behind buying the property. Will it grow in value and why. What has your personal reading a research told you.

Then:

Is money coming in each month greater than money going out pre tax.

If not – what is happening after tax.

If still cash flow negative how long will it be in years before the property is neutral or paying for itself based in growth in rental income.

Then:

How much of your available capital (potential money to invest) is being used up.

Then:

How will buying it get you closer to your financial goal.

BM 17 – your question seems really just double checking your gut instinct – which is correct. Yes you can keep your loans separate at the one lender. No problem. However, with the structure you have now I am guessing that the reason you want to move is price or rate. Serviceability (or the way banks calculate what you can afford) will be slightly different across a panel of lenders. With multiple properties a consideration is whether the bank will use your actual repayments to calculate your affordability for a new purchase (or the refinance) or their assessment rate.

No problem guys. Good luck.