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Hi Pental,
Sorry i should've been clearer with my description of this deal. The estimate of $20-$25K in repairs was fairly accuate but to date i've only had to spend $120.00 on a leaking water pipe and a sticky door handle. The repairs were not things that needed to be attended to immediately. And yes, when you include things like stamp duty, legals etc the net return would be substantially less. So the 49% return i quoted is Gross. And I should also mention that the rent is Gross too…minus rates, water, insurance and management fees. I apologise if my first post was misleading to anyone.
CheersHi jamjam,
check out http://www.vendorfinancelawyer.com.auHi neilvs,
Re- "So my point here is in Australia, with the banks only recognising 65% of rental income, HOW on earth can one build up a large property investment portfolio with cashflow (+) properties???" …Mate, as Richard said, find another broker how can put you onto lenders with less stringent criteria. On top of this, find/create a deal with a high enough yield so the % of rent the bank factors in will cover the mortgage payments. An example is a deal im considering at the moment- they're asking $149,500 and it's currently rented at $175pw. Your not going to pay that but let's say you paid $145K and borrowed the full amount at 5.3% (very do-able in the current climate). Your interest committment on an IO basis is only $147.80pw. Now all you need to do is find a lender who'll consider 85% of the rent as contribution to servicability and your laughing (85% of $175 is $148.75). And this deals straight off the shelf with very little tweeking so far. A bit more would need to be done to make it worth buying and obviously there's alot more involved on the funding side but im just trying to make a point. All you need to do is find deals that you think have the potential to be turned into great deals and then get to work on them. You know all this neilvs, you've read Steves books.Good luck, I hope this was helpful
Hi 14281239,
Here's a bit of a success story to hopefully get you pumped to get out there and find one of your own.I live on the Gold Coast and a couple of years ago became interested in a little coastal town in SA after reading an article in API. After a bit of research and making a few offers i jagged one. I offered the asking price ($105K) because the market there was on the boil at the time. The offer was accepted so i arranged a flight down there the following weekend. In the meantime i contacted a local builder and arranged for him to meet me at the house so we could go through it together. When we got there we dicovered that the house would need quite a bit of work done on it to bring it back to it's former glory but other wise it was still quite liveable. The current tennant was happily paying $90pw on a month-to-month basis and had no intentions of leaving.
The builder estimated that it would need $10K put back into it based on what he could see but after a bit more discussion agreed with me that the figure would likely blow out to $20-$25K once he got stuck into it. Based on the revised repair figures i withdrew my offer of $105K and told the agent I'd only be prepared to pay $85K and asked him if he had any other listings he'd like to show me. We looked at a few more that he had but none really suited me.
Later that day the agent phoned to tell me he'd presented my new offer and that the vendors would sell at $87K. I accepted on the condition the tennant sign a 6 month lease at $120pw and he did without batting an eye lid.9 months later i needed some cash for a reno on the Goldie so I had the SA deal valued and it came in at $130K, 49% more than what i originally paid. I still own it today and it's currently rented at $140pw.
Hope that story's helpful.
Happy house huntingG'day jaglions,
There are few things you could do if you aren't happy with your val…
1 get another val. But before you do spend a weekend spruicing up the place eg. mow lawns, new mulch on garden beds, water blast drive way, wash marks off the walls, vacuum, etc. Present your house as if you were selling it
2 do your own CMA and give this to the valuer. RP Data's great but always a couple of months old so back it up by talking to a few local agents aswell and see if they'll give you some more recent comparitive sales to work with. They should be more than happy to help
3 get your banker or broker on your side and have them talk to the valuer to persuade them to be a bit more leanient. I did this with my last val and got an extra $10K out of em
4 was your REA appraisal in writing? If not get it in writing on their office letter head and give that to the Valuer.
At the end of the day a val is really just an opinion and opinions are flexible. The banks are clamping down at the moment so it's now alot more important to ease their minds as to the risk they'd be taking by lending you more money. Having your finances in good order can also help with your val as it helps to limit their risk. You need to look at it from the valuers point of view aswell as the banks and then look at how you can solve their proplem with giving you the val you want.
If anyone's got some other suggestions id love to hear from you for my own valuation purposes, cheersGood luck jaglions
Gday skuz,
Termites are funny little critters. Ive ripped out walls before and discovered that the termites have eaten a few studs then left a few and continued eating out studs further along the wall, so even if you find damage in one area it wont necessarily be contained there.
What i usually do at inspections is give the walls a good thump with my fist every meter or so and listen for the termite mud falling inside the wall. If it sounds like theres mud falling then theres reason to suspect possible damage. With brick veneered houses though you'll sometimes hear the excess mortar falling off the noggings on external walls so this can be a little deceiving.
If you can get under the house with a torch check all the stumps for mud trails and check around the ant capping aswell for mud and rust. Also take a ladder to the next inspection and get up in the roof space for a good look around. I do this at every inspection-you might get a few looks from other prospective buyers and the agent would propably prefer you weren't so thorough but hey, it's your money you're about to spend not their's.
I'd also recommend getting a builder to quote on the damage but realise that he's only able to quote you on repairing the VISIBLE damage. There's really no way (apart from getting in imaging equipment but you'll have to pay for that) to know the full extent of the damage without pulling wall sheets off and floor boards up.
But with all that said, the way i look at it skuz, if the house looks and feels solid after you've had a good thorough look at it, it propably is. And if there are termites present get a treatment done and you'll have peace of mind knowing that any damage that they have caused isn't going to get any worse.
It's a bit hard with your situation because of the auction but next time use the termites to your advantage and negotiate a better deal. I did this with my last purchase and we knocked 17% off the asking price. I haven't had to spend a cent on it since.
Embrace the critters!
Good luckHi dreamscape,
I'm currently renovating aswell and for my situation it's critical that i finish the job in order to get highest possible valuation i can, so to answer your question i think it's a great time to be renovating. There are some great opportunities out there at the moment, it's a buyers market, money's cheap and rents are up so i think it's well worth completeing your reno to put you in the best position to snap up a bargain.Hi Mike,
I'd prob go with option 2. The corice cement should hold but if you were still concerned you could also use nylon masonry plugs aswell. Have you had any quotes for your glass splash back? I was keen on glass for my splash back aswell but the cheapest price i could find was around $350 per M2 installed. I'm going with tiles now for around a tenth of the price.
Good luck
Glen
