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If the stumps are in good condition, and only a little bit unlevel (less than about 2.5 inches), you can get the whole place re-levelled and stumps re-packed with hardwood or fibre board. It's generally cheaper than digging out and replacing the old stumps.
A reputable company did this for me for $2600, about 1 year ago in QLD.
They also quoted $500 per stump for replacement if they were rotten or had sunken greater than the 2.5 inch distance. We did not need any replaced, which is not bad for 80 year old stumps!!
This was for the timber stumps.It doesn't look quite as schmick, but it does the same job. And for a rental it matters little. For sale, it may be less visually appealing.
In the planning paperwork for ipswich council, my local, I think the minimum width for a subdivision (unless dual occupancy) is 5.5m
That said, you need to consult the council directly. Just because the planning scheme says one thing doesn't mean they won't contradict it for a myriad of reasons…. Talk to them and see what they reckon first hand.
Great post,
My year off to a good start. Completed the bulk of building work on my PPOR, just putting up and knocking down a few internal walls and blocking up some doors, painted half the house (inside) so far, and generally taking it one weekend at a time.
Took some time off work for a proper holiday, for all of April.
Used the holiday as a good excuse to get engaged. Hooray!We are still planning on tackling our kitchen and bathroom, paint the outside and maybe even put up a carport and patio… the goal being to eventually move into the next house, and get some tenants into this one… But of course now we are trying to stash some cash for a wedding too.
It should all be manageable, but will take more discipline than we have previously employed…. our spending habits are more like a game of duck duck GOOSE…. saving saving saaaaaaving SPENDING *run around like ricky bobby on fire, and giggling like chucky*
What about a ‘saniflow’ unit or similar? They hook into your normal waste pipe rather than sewerage line… Anyone used one before?
OK so feel free to pick me apart if I'm wrong on this one, because I (sacreligious) have never read Steve's books…. so am unfamiliar with the 11 second concept.
But I just punched your no's into the commbank calculator and got a very different result.
The weekly repayment came out at only 240/wk.
So by the time you take off 20% deposit, it certainly comes very close to 'neutral' (about 190/wk).Adding buying costs like stamps etc will add a bit, but not enough to kill it, but by the time you do some gentle haggling on the price and some minor cosmetic improvements should see it bringing home a few $ every week.
Then, going 'interest only' on the loan should take it well into the positive.
ummester wrote:1. Some cities – Melbourne, Sydney, Canberra – do not have 200k units, your pushing to find them at 300k.
2. Affordable has been factually qualified outside Australia as being 4x the average income or less. Of course, we are different, so our affordability levels must also be:)grimnar – 5x income is not affordable by global standards. Not to belittle your efforts of ensuring home ownership via sacrifice – but world standards suppose that individuals shouldn't have to sacrifice as much as Australian's do just to own a depreciating material asset.
True, some people don't 'have to' sacrifice as much. But when has home ownership in this country ever been 'expected' for anyone without some form of sacrifice?
There are large parts of the world where practically no-one can afford to buy property. As mentioned above, they cram into places like cattle cars in horrible living conditions. By that standard, we got it great! Well… per capita at least.
For us, it has been this way since we settled this country. Home ownership can only occur as the result of sacrificing something for your future security or lifestyle benefits, whether that be location (decentralising and even family ties), convenience, choice of employment, or any number of other lifestyle and other needs.
I don't disagree that it's hard, but I do think that home ownership is not for everyone.
In this way, neither is the 'right' to live wherever you want, in whatever standard you want, for whatever reason you want it.We do what we need to in order to provide a better way of life for ourselves. And those who do not live within their means are sooner or later forced to make changes.
"Such is life, that whatever is proposed, it is much easier to find reasons for rejecting than embracing."
ummester wrote:Dan42 wrote:ummester wrote:say a 500k car = a 10mil house, where are the houses that equal 5k and under cars?Oh, and BTW, the difference between a 500k and 5k is proved by the qulaity of the vehicle. How does that work with housing? You can get a 5k car within 30km of a city:) And cars depreciate with age – as houses should.
I agree that land value should apreciate, to a sustainable degree.
It's quality of house AND the land it's built on. The 'quality' of the land is pretty much determined by it's location, so a block of land in the desirable inner suburbs is worth more than the blocks of land 40km from the city.
And yes you can get a $5k car within 30km of the city. That's because they have wheels
So where are these houses equivalent to 5k cars, the real budget jobs? And, if you can find me one sub 100k house in some back of nowhere location, why are 5k cars so numerous and 100k houses so few and far between?
I'm not trying to say that some houses aren't worth a motza – same as some cars. Some top end and middle tier houses are reasonably valued, no argument from me there. But bottom end houses in this country are way overvalued.
Well lets put this in perspective…
Minimum wage in Australia is 569.90/wk
supposing that 'affordable' housing comes in at 5x the individuals wage, that would make the 'affordable' housing around 148k.I was looking at a place that met that category no less than 6 months ago in Ipswich, QLD. An easy 40 mins from Brisbane…. and plenty of local work for unskilled people paying well ABOVE minimum wage.
IF it's still unaffordable, there are contingencies… like taking on boarders, for one example.
People just need to stop woosing out and actually look deeper than the intermanetz or the realestate shop window.
I should add, I believe property is definately affordable.
I'm 27 years old, and I bought my first house at 21. Then I had a ex-g/f that wanted to sell it, and I couldn't afford it on my own. We walked away with a few grand in hand… then I bought a car… and then I found myself at 25 with no money to my name, a car loan, and an average income for my age.
My partner and I decided we wanted to buy a house so we scraped together a quick deposit in a couple of months, borrowed 95% and bought a house a good 40 mins drive from family, friends, and work (all in brisbane).
We now have 20% equity in our home because of 2 reasons:
1. We bought well;
2. We have made improvements.We are looking at holding on to this one as a renter while we take on our next project. Buy, reno, and move on.
None of our friends have done the same thing, because none of them want to start at the bottom. They just bitch about how they will never be able to buy property, or they will just wait to inherit it.
They just don't realise that once you have your foot in the door, everything is possible.
Houses do depreciate with age. But land appreciates IAW demand, and so does the sqm available in housing.
If I were to buy a brand spankin new house in Milton, QLD. I will pay mostly for the land, partly for the sqm of useable space, and partly for the level of finish.
10 years from now if I sell that house without doing any maintenance on it I can expect to receive a much higher price than I paid for it because:
1. Demand has gone up in the area; and
2. The size of similar accomodation in the market has reduced due to increasing density.What I cannot expect to receive is a premium for the high level of finish I would achieve if I built a brand new house on the vacant (identical) lot next door.
For the restumping:
Allow at least $500 per stump to replace when using a professional… that was the quote price I had 2 months ago in QLD (ipswich). But you could possibly encounter higher depending on who you use to do it.
Full restumping for my 2 bedroom queenslander was quoted at around 15k, with 30 odd stumps, which matches up with that $500/stump estimate.
But if this is a place you're intending to sell on or rent out, and you don't really care whether the stumps 'look' perfect, then see if you can get away with just replacing the stumps that are rotten or have sunk more than 3 inches, and just re-packing the rest.
Repacking/Relevelling is where you identify the highest point of all the stumps, and go around one by one to each ot the other stumps, jacking up the beams to level and packing the gaps with hardwood.
In my situation, we had the whole place re-levelled for under $2500. We budgeted 5k initially, estimating 3 needed replacement and allowing for 1k overrun, but turned out all were OK….. Came out on top, which means more profit : )
Exactly right… it's easy to say "I'll go with the one that'll make me the most money", but the practicalities are often prohibative.
But you have to start somewhere!! : )
Oh, I should add too… Part of the problem with selling the rear block is the appearance of the front block… If you have sold it to someone and they decide to park half a dozen car bodies in the front yard, it's not going to do you any favours!!
If you enter into a strategy with the intention of keeping a rear block, you can mitigate that risk by installing clever landscaping/screening BEFORE you sell the front house…. And it doesn't have to be expensive either… i.e. if you put in a big rock garden bed next to the driveway, and a fence, it'll be mighty difficult to use the front lawn as a parking stip for their spare parts car… Plus the fence will screen off any unmowed lawns, and you can mow the nature strip yourself any time you like… it's council land, after all.
Hi PJ,
It really depends… As in life, there are too many variables!
If it were me, I would be looking at how much potential profit there is in the deal either way, and what my goals are. Then weighing up whether its worth the risk/stress.
As for the pros and cons, some I can think of:
Building a house:
Pro:
– Easier/quicker to sell than vacant land,
– depreciation benefits if you intend to keep it,
– heaps and heaps of equity (if keeping it, you don't chew up tens of thousands in fees and taxes from sale), and
– tenants don't know how much you actually paid for it, they just pay retail rent.Con:
– Risks, including schedule and cost overrun,
– Takes a while to get some cashflow coming back in from the rent when you will be hurting most.
– If you were planning to build and sell, then you are also at risk of market fluctuations over the short term, which could go one way or the other! Planning to hold longer would not be such an issue.Building a multi-dwelling (if permitted):
Pros:
– Everything that comes with building a single dwelling x2…
– Cheaper construction cost per dwelling,
– After selling the house at the front and one of the units (assuming 2x units), the last unit may only have cost 1/2 or 1/4 its retail price!!Cons:
– More cash tied up in the deal will hurt cash flow (pre-selling or finding a partner could help),
– Higher risk and exposure,
– More complicated and more professional services required (i.e. town planning, etc.).Selling vacant land:
Pros:
– Easy for cash flow,
– Can take on more deals while waiting to sell (cashflow permitting),
– low risk, low stress!! Get your cash out, and you can pump it into the next deal.
Cons:
– Selling costs and taxes eat into an already lower profit margin.As I mentioned above though, it's all variable…
In some areas these pros and cons change a bit… I.e if you are in a development area, then selling the land 'as is' may be just as profitable as building a single dwelling on it. Where as, if you are in the sticks somewhere you're probably more likely to make more money from selling a single dwelling than vacant land.
Need to do your homework on what can be done there, how much it would cost to do it, what the market would pay for each option, and what the market forecast is for that area…. All of this should help you work out what your risks are, and the rewards, and make your decision.
Another take on that strategy that you could consider, if cash flow is tight, is to sell off the front property and use the rear property as your investment.
As Lockymac says, the rear block is often times harder to sell than the frontage block… So if cashflow is a problem for you, then perhaps a more viable solution would be to:
1. Buy the lot;
2. Do a quick tart up;
3. stick a tenant in it (but make sure they are aware of the situation to avoid having to recycle them);
4. Subdivide the block (and make any adjustments necessary to the rental agreement);
5. list the property at the front for sale.At this point you will have cash tied up for purchasing the first house + any renos required to get it rentable + the subdivision costs. (including any services to the rear block, and driveways etc.)
This is the worst point for your cashflow… and as mentioned above, it can be difficult to sell a battle axe block… So you could find that your cashflow problems stretch over a year or longer.
But the front block may sell faster (albeit at a slightly reduced price due to the loss of a portion of its land). so: IF you sell the front house, with tenants in place for a ready investor, and IF you do manage to sell it for a reasonable price then you may find yourself sitting on a block of dirt aqcuired at a greatly discounted price.
From there you have two or more options:
1. Build a new dwelling (or multi-dwelling if permitted); or
2. sell the vacant lot… Now that you have eased your cashflow, you should see a decent enough return within a far reduced timeline to waiting for capitol growth from the first house.Then you can take your profit out, and pump it into another project or investment.
Try running your numbers on this sort of deal, do your due diligence, and see how you come out…. not suggesting you go with this method, but it's something to think about.
Agree with Dwolf.
I live in Ipswich area, and the ipswich city council are always happy to talk to you about any question.
As Dwolf says, it certainly helps to have a read of the planning documentation… That way you can approach them with specific questions and clarifications, rather than just going "So I'm thinking of subdividing a block".
Oh… I am poor : (
Wait… I already knew that… THANKS FOR REMINDING ME Nicolas!!!
Hooray, cheaper houses!!
Oh, wait up…
This article is specifically relevant to units located in hotels and resorts, and specifically those in Cairns… I reckon there is a fairly limited demand for those among the residential buyers… I mean, sea breazes are nice but generally a kitchen sink helps when you're trying to prepare dinner for 4…
But the article also indicates that the units are being 'snapped up' at those prices by interstate and overseas investors… Which indicates to me that there is likely to be a strong amount of support at that level.
So maybe I won't get too excited just yet about the benefits of lower house prices for budding young investors like myself…
*ponders*…. Or maybe I'll look at buying a unit… Is there still time to settle before xmas holidays??? If so I better book in to get some FT sprayed on, and maybe put in some extra effort at the gym for the next two weeks!! : )
Sarcasm aside. I see little if any evidence here of a property market crash…. If anything, maybe it's just localised fluctuations in a niche market.
orks wrote:Correction – It's how high risk investors operate.All investment carries risk.
The only question is whether the return is worth the risk?
Personally, I would consider going in with three other investors much higher risk than borrowing money on my own home to buy an investment property…
I know I am reliable, and I know I have insurances to cover my **** if I lose my job or whatever. I also know that if I change my mind about how to manage my investments, the only person it affects is me.
So really it comes down to how you identify risk, and how you manage it.
In the example that has sparked this 'discussion', the first thing to consider is that the risk is minimised by ensuring that loans are not cross collatoralised. i.e. I won't lose my own home if I can't afford to make payments on the IP anymore…
(That's not to say there are not negative impacts still. I will lose my IP when the bank sells it, I will have a bad credit rating as a result, and I may still owe them money when the property has been sold. Does the risk of this occuring outweigh the potential benefits of achieving success???)
Secondly, just because you have cash does not mean the best way to use it is to blow it on a deposit for an investment property that you are planning to buy regardless… i.e. the interest paid on the IP can be tax deducted, where the interest on your car loan cannot.
Thirdly, the gamble is that you anticipate property values to increase… I mean, why would you buy the place if you expected it to go down in value? right???
So if the property does increase by the amount you anticipate, then you must have calculated that the anticipated increase over the anticipated time is worth enough to overcome the higher debt and interest repayments…… and of course, is enough to outweigh the risk of failure.Is borrowing money on equity to buy an investment property a 'high risk' activity?
Personally I think not. But you must make your own decision…The point of my 'discussion' though is to clarify that 'making your decision' and 'shoving your personal opinion down someone elses throat like they're a bunch of morons' are two completely different things. Whether you think you are right or not, you don't have to be rude about it.
So how bout for post number 6 of your membership here, you show a bit of respect for others here who are just trying to learn and help one another.
Also if you are a couple/family, think about whether you really 'need' 2 cars.
My partner and I just got rid of our second car because it was costing us a fortune… even without loan repayments or the occasional fuel expense the car was costing us $40-50/wk to leave it sitting in the driveway.
Funny to think about it actually, the number of young blokes I know with 2 cars and a motorbike just for themselves… And these are the same people that whine about the fact that they will never be able to afford a house.
I should clarify further… And financial types can explain better…
If you do 'cross collatoralise' your IP against your PPOR, you will essentially be borrowing the full amount against the investment property. You will resultantly be paying interest on every penny you borrow, but it will all be tax deductable interest.
If you take out a line of credit, as v8ghia mentions above, you will similarly pay interest on the amount borrowed… But you should consult a professional about whether you can claim that portion of your loan on tax as a cost of borrowing for investments, since it is still attached to your PPOR home loan…
As above, depending on your circumstances there may be better ways to use your cash savings to reduce non-deductable interest, such as the portion of your PPOR loan that is not tax deductable.
I hope I have not confused you…
