Forum Replies Created
Thanks for your quick reply, Terry!
I guess I should have been more specific – I'm looking at either finding a like-minded investor (with more experience) to co-invest in a project. I assume this forum may be a hub for people who would be interested in such an arrangement?
Thanks again,
Harry
Thank you to both Terry and Wilko – definitely appreciate being steered in the right direction.
In regards to GST implications, are there any definitive guides as to how GST would be treated (I.e. Margin scheme)? As you can probably see, I'm still getting my head around the feasibility analysis of development. Clearly quite a few factors to consider!
And Wilko – I assumed selling costs of 2.2%, in addition to solicitor/advertising fees. I'll definitely go back to the drawing board re construction period assumptions – I've clearly undercalled that!
From here my biggest learning curve will be building a detailed construction cost analysis – certainly looks like a challenging process!
Thanks again,
Harry
Thanks Shahin, appreciate the response.
I've consulted with NAB and their position is:
1. The LMI purchased (8k) secured against a debt ratio of 89% may need to be repaid if I sell the PPoR, even if the debt to equity ratio remains at 89% for the IP alone.
2. I cannot order an upfront valuation to determine the value of the IP – they will only do this once I advise them of sale of PPoR. I've asked whether they can order this if I even offer to pay but there seems to be no option on this.
Hopefully the LMI will stay intact using the IP as security alone (if their evaluation sits around the 360k mark which I think is reasonable) but I all boils down to their evaluation – frustrating that they can't order one without action being taken though.
Thanks Josh – your help most certainly has helped establish a conclusion.
Thanks for the insightful responses guys.
I should have clarified, but the $1.1k strata is actually per quarter (not annual). I have my other investment property two streets away with strata under $400 pq.
I guess the bottom-line is:
- High strata fees being a deterrent to future buyers in a softer market
- A couple of "ageing" issues around the building which make me feel uncomfortable (i.e. mould appearing in the top floor units that doesn't effect me)
- I suspect cost of living will > considerably with consumer goods being impacted by the continued decline of the AUD. Not sure many people are considering this just yet
I guess the two questions that also arise are:
- Is there any financial merit behind selling and buying in the same market? (i.e. releasing the equity I have in the property?).
- When is peak sales period throughout the year?
Appreciate the feedback guys, I know they aren't clear cut questions.
Harry
Thanks for that Dark Night – it's in North Parramatta.
I guess the goal isn't the short term maximisation of cash flow (i.e. what renting another room would achieve) but maximising the opportunity against the current demand context and in the process and offloading a potentially difficult property to sell when strata goes up and the property market cools.
It's a tough call I know, but I figure there may be an angle to this that is not yet apparent to me.
Hi guys,
Thank you so much for your insightful wisdom – certainly rules out the opportunity of sub-dividing the apartment.
It still seems like an interesting opportunity given the sheer magnitude of the apartment (it's the only 4 bdr that's really existed in this area for quite some time).
Given the rarity of the find, I'm finding it hard to grasp how to value a 4 bdr of this nature. Should I use 3 bdr pricing as a guide? Or would it be right to believe it would sit somewhere between the space of a 3bdr unit and a 4bdr townhouse?
Still finding my feet after successfully completing my first IP reno project a few months back now!
Thanks again for sharing your wealth of knowledge with a keen newbie.
Harry
Thanks Derek and Catalyst.
The apartment is in pretty bad shape now; the $300 rent per week reflects this, as the median sits between $350-400 in the suburb for similar properties
I understand the concept of the reno costing let's say $1.3k a year in interest, assuming I am borrowing to renovate. If I do renovate, however, I will be using cash that is sitting in an offset loan attached to my PPOA as I am borrowing close to the 90% mark (keeping below this to ensure LMI doesn't blow out).
In this instance, is it still recommended to use the cash (and therefore increase interest owing on personal debt) to renovate?
Harry – I do feel there is potential for strong value growth in the property itself given it's situated within the Parramatta area.
I guess the real question is to renovate now, or to renovate later prior to any potential sale.
Given the above further clarity, does it still make sense to renovate ASAP and thus demand a higher ASP and also manufacturing capital growth?
Thanks again in advance for your insightful responses.
Harry
