Forum Replies Created
Hi Waynel2, I have not had the experience of buying off the plan so I can’t help you with the precise meaning of those conditions except to say you appear to be doing the right thing by trying to understand precisely what you’re buying. It is normal for a council to apply restrictions to the use of a site. Not sure about it being normal to have the resrtiction lsited as condition of sale (others may know?). The council in question will be able to you give a list of what uses are possible in the zoning. These possible uses will then be restricted given their proximity to other zonings. For example a few weeks back I looked at a site which had an Industrial zoning. The Industrial zoning would normally indicate that most things were possible except that in this case a Residential One zone was on the opposite side of the street. When I checked the separation requirements from a Resi One zone many activities were not possible. Your council should be able to give you a list of activities and their separation requirements from other zones if you think this is an issue?
Hallg
One thing I would do is find out which real estate agents in the area list the majority of commercial properties. The agents in my area can give me a pretty accurate guide to both the demand for type of property and what the market is currently paying/asking per sqm in a lease. They should be able to do the same for you.
Hallg
For some reason I think you may be right about a couple of interest rate rises after the election. I plan to stay on variable rate as I doubt if there is much to be gained in fixing. I just went and pick-up a book of my book shelf called “Wealth Wizard” by Mark Bouris from Wizard Home Loans. When disucssing this subject he makes this comment on page 80 “during all my time in the finance business, I don’t think I’ve ever seen a genuine case of a customer beating the lending market when it comes to fixed versus variable. Sure, you’ll hear stories about people “winning”, but I don’t think they planned it that way”.
Hallg
Put it in my own home built 9 years ago. No problems except for 3 locations. 1) behind the kitchen sink 2) behind the washing machine 3) right near the shower door. Common theme is water (as mentioned above) The problem areas only total about 2 metres all up so in hindsight I would have found something else for these locations or perhaps I could have water proofed these sections better???
Hallg
Hi emsypoo, Baspet’s comments are pretty sound. I’m not a builder myself but due to the nature of my job I manage a couple of carpenters. Over the past few years our guys have done work for both Simonds and National Bulders. From my observations the home owner’s satifaction with both the building process and the end result can vary greatly depending on the Building Supervisor allocated the job and the sub-contractors engaged by him/her to do the work. My guys take pride in their work so they always try to make sure they did good work. In saying this Baspet’s point about the rates being tight are correct and this forces trades people to move quickly which “main” mean quality gets compromised. From what I’ve seen in the location I live, I would build with National Builders over the others mentioned (all present here) if I had to choose between them. However as I say, I believe that is relective of the local people working for National Bulders. It may not be true else where?
All the best with it
HallgGood question Devo76 but I think the responses just show that what motivates people varies greatly. Sometimes it makes it hard for us to understand each other but it’s just the way it is. Recently a friend of mine tried to tell her dad that he should sell some of his properties and spend up a bit (ie world trips etc). Thought she was doing the right in suggesting this but got an unexpected hostile response. Problem was she didn’t understand what motivated her dad. I’m not sure but i suspect his motivation was to create an assest base which his children and grand children could use to make life easier for them. At the end of the day different people find pleasure in different things.
Hallg
Hi Jon, as mentioned they are hard to come by but positive cash flow properties do exist. ( I assume you will allow a commercial example?) One purchase I made goes like this. Three and half years ago I noticed that a building in the CBD of a large regional centre (Population 100.000+) had been for sale or lease for about 4 months. Asking price to buy was $230,000. The lease price being asked was $500 per week. When I enquired about the property I found out that the organisation next door was in need of more office space and possibly may be interested in leasing the bulding. On speaking to them they confirmed this, but they told me the current owner was not interested in spending any money to bring it up to the standard they required. I asked the CEO of the neighbouring organisation that if I purchased the bulding and refurbished it to meet their needs, would they do 2 things. 1) Lease the building from the day of settlement at the current asking price of $500 per week? 2) Agree to a lease price of $2750 per month once the renovation was complete. With my home complete (including renovation costings) I then made a number of offers to the agent. $220,000 was eventually accepted. My interest rate at the time was 6.5% so even if all the money was borrowed, I was making money from day one. In the end my reno costs came in at $110,000. So if you add in stamp duty and legal costs I ended up spending $344,000. The lease that was signed was for 7 years which we are now half way through. My current interest rate is 7.7% so even if my debt was at the full amount of $344,000 it would be still cash flow positive. All out goings are paid by the tenant so the only extra expense I’ve paid in three and half years is the $212 to ASIC plus my acountant.
I would not expect to walk into an agent’s office and buy my current situation off the shelf. However with a bit of leg work it all came together. Often I read on here that postive cash flow properties are created. I can only agree.Hallg
Don't know if there is one simple answer to your question. As you would be aware the gross income figure doesn't tell you what your actual "passive" nett income is. If one assumes that expenses end up being about $40,000 that could leave you with some where between $10,000 to $20,000 nett. If that turns out to be so, in theory you could make a 50% plus return on your original investment and I think most of us would take that. However that assumes a number of things: 1) Will the company deliver the income (contracts) they promise? 2) Can you deliver the actual work for which your business will be paid, at a cost which is well below the gross income figure? 3) Even if you do a good job at the local level, will the franchise stand the test of time and be there when, or if, you wish to sell? If any of these questions turn out to be negative, your original investment could evaporate. On the other hand if you can grow the business, into good earner, who knows?? Sorry I'm not much help. One thing I do know, and I think is worth mentioning, is the cost to employ labour for cleaning. I currently manage 5 cleaners (among other things) and according to my figures the real cost is about $23 per hour. If for some reason your partner is unable to perform the work, you may be in position of having to employ some one. $23 per hour plus other costs may eat well into that "passive" income??
All the best
HallgHi, you’re doing the right thing by asking questions. You can never ask too many in my opinion. Try and find past or existing franchisees to hear what they have to say. I know a couple of people who have purchased cleaning franchises and the common complaint I hear is that the franchisee ends up having to find their own jobs (contracts) then ends up having to pay a percentage to the franchise people. It’s ok if theyare out there winning tenders and so on, but if they are not you may as well start from scratch yourself??? If you’re looking at an existing business check out where things are at with existing contracts. Know some one one who went into a cleaning business only to find that a high percentage of the business income was lost shortly after they took over.
Not sure about the wisdom of the cash thing either. One of the problems I see with it is that you will end paying heaps more tax as the income of the business will not have been offset by your biggest expense??
All the best
HallgInteresting to read people’s comments as I’ve investments in both property and M/Funds so I often look at their respect performance. Four years ago I purchased and renovated a commercial office for $320,000. It is currently rented for $34,000 per year. Based on a 7.5% return its value today is about $450,000. Given that the interest rate on the morgage has averaged 7% over the 4 years, it is easy to see it has been cash flow positve since I purchased it. As a property investment I cannot complain. However at the very same time I purchased this office, I also purchased some M/Funds ($50,000). Today the value of those funds is 2.5 times the original investment (dividends reinvested). I know there are the tax implications to consider but from a very superficial look at it, if I had decided against buying the office and put the $320,000 into the M/Funds, today it would be worth $800,000. Am I disappointed I didn’t go this way? No I am not as both have done well for me in their respect ways and we don’t know what the story will be in another 4 years time??
In regards to having no control over M/Funds, for me the control begins prior to investing the money. Do your home work on, who they are? what it is their approach?. For me, I look for fund managers who invest my money is companies that have healthy dividends. If and when there is a stockmarket down, these companies shares will rebound quicker than most as the share price is unpinned by “real earnings”. If you are looking for this approach check out peole such as “Investor Mutual Limited” or “Hunter Hall”. I think they are 2 of the best.
Hallg
Hi Nats, I have not had your precise situation but late last year I took out a number of trees to build a tennis court. I had been to council a number of times prior to starting work and I felt sure I had all my bases covered. Despite this I still ended up with council officers on my door step threatening all soughts of things. In the end I avoided any fines and believe the main reason for this was due to the fact that I didn’t try to “beat” them. I listened to what they had to say and tried to show I valued their comments. On more than one occassion I said the the words ” I see what you mean”. Sure I explained to them and showed them the evidence of my attempt to do the right thing but I doubt whether this would have been enough in its self. The previous post is good advice. All the best
HALLG
