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  • Profile photo of homersydhomersyd
    Participant
    @homersyd
    Join Date: 2010
    Post Count: 31
    July 24, 2012 - 5:43 am
    TheFinanceShop wrote:
    It really depends on the area, zoning, etc. A lot of developers in certain pockets of Sydney are purchasing older boutique apartment blocks, renovating all of them and then marketing them the same way as a new units. It is quite attractive for investors particularly those interested in OTP purchases. Higher risk but if done well there is good potential for higher return.

    Shahin Afarin – Property Finance Consultant
    http://elitepropertyfinance.wordpress.com

    Thanks Shahin, but since the area is already above average in pricing, I dont think there is much room for profit once I factor in the potential cost to renovate all 4. It’s actually an art deco unit block so i dont know if much can be done to renovate the external appearance of the building….

    Profile photo of homersydhomersyd
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    @homersyd
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    July 24, 2012 - 5:41 am
    christianb wrote:
    The only sure way is to buy all four. Any other plan is a little "hit and hope".

    You can approach the local council about any notion you may have of redeveloping the block and they will be able to give you some zoning advice and maybe some advice around council's strategic objectives.

    Thanks christianb, but unfortunately I can only afford 1, so guess that’s out… :(
    yea may approach the council to find out bit more info…

    Profile photo of homersydhomersyd
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    @homersyd
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    December 15, 2011 - 4:40 am
    Shape wrote:
    You know you can arrange with the agent to have some of your builders/ tradesmen ( find them in the yellow pages) come out and quote for the job- before you sign the contract. That way you have a fixed quote for that EXACT job.

    Regards
    Michael

    This is a good idea, thanks. Didnt think about that…now this may sound dumb (again…) but:
    1. When you find them on yellow pages/internet, what’s the keyword do I look for? ie. Do I simply “google” builders/tradesmen? Are “builders” simply like project managers who have an overall knowledge about renos and manages the “tradesmen” who are the ones doing the actual work?
    2. Do they charge to provide a quote?

    Thanks

    Profile photo of homersydhomersyd
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    December 15, 2011 - 12:36 am
    Catalyst wrote:
    Hi,
    it really depends on the house itself. Is it structurally sound? There are so many variables that no-one knows.

    eg does the house need rewiring? Is the roof OK? Do the windows need replacing? Are the floorboards usable or need replacing? Do walls need moving/replacing?
    This could vary by many thousands.

    This is all before reno costs. A basic reno after that is not that expensive assuming you know where to source materials and are willing to use a bit of elbow grease.

    You really need to have a good idea of costs BEFORE you consider something like this.
    You need to do a cost analysis including all costs (including holding costs, buying costs etc) to work out whether it is financially viable.
    You can't just guess and "hope" to make money. .

    Thanks @catalyst, you see this is the problem. I have no idea how to check for the things u mentioned:

    eg does the house need rewiring? Is the roof OK? Do the windows need replacing? Are the floorboards usable or need replacing? Do walls need moving/replacing?

    I mean is this what the building inspectors will tell me? Or do I have to get another “expert” to do this?

    Profile photo of homersydhomersyd
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    @homersyd
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    Post Count: 31
    December 15, 2011 - 12:34 am
    Shape wrote:
    It’s like me posting a picture of my car and asking you how much is it worth; without telling you the make, model, year, km etc..

    Regards
    Michael

    Thanks @shape, I know it’s a bit like what u said, I actually tried to find at some “before & after” reno examples on the web (with costs), but to no available, I have absolutely no clue on reno costs and not handy at all…

    Profile photo of homersydhomersyd
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    @homersyd
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    December 15, 2011 - 12:31 am
    sapphire101 wrote:
    No one can tell you what this renovation will cost. A good renovation needs the costs to be worked out as exactly as possible otherwise you will blow your budget. Lucky for you this won't happen because you don't have a budget. :-)

    You need to go into the property with a seriously accurate checklist and note everything down that needs doing. (Exterior, Interior, Landscape back and front). You then need to go to Bunnings and cost all the material. You also need to contact tradesmen to get costings on their work. You also need to work out your costs – build and pest inspection, (maybe separate electrical & plumbing inspection to be sure),purchase, stamp duty, lawyer, interest on loan for time of renovation and sale ( if you're selling). Add a contingency fund for unexpected costs.

    See renovations here for some help.

    Once you have a budget of all costs you can decide whether this project is worth it. As a general rule the actual renovation cost should be about 10% of the purchase price. Once you add up all the other costs ( some listed above), this blows out to around 33% if the renovation only costs 10%.

    Add 33% to the purchase price. Can you sell the property for more than this amount? If so then it may be worth taking on.
    If not, find out what you can sell the fully renovated house for in today's market. It'll be less than the first figure and then deduct 25%. The new figure is the most you can pay for the joint.

    eg: Asking price $500k + 33% = Lowest sell price $665k. If you will only get $620k on sale, deduct 25% and you have your highest offer at $465k  ($465 + 33% = $618,450)

    If the renovation needs to be higher than 10% – say 15% or 20%, then you will add 5% or 10% respectively, to the 33 and 25 percentages to get your prices.

    Hope that helps

    Ian
    http://www.theblockblog.com
    Free Property Investment Information, Tools & Resources for Investors with a Sense of Humour.

    Thanks @sapphire101, it’s good to learn about the logic of calculating the offer price on a property that needs reno, thanks a lot! :)

    Profile photo of homersydhomersyd
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    @homersyd
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    December 15, 2011 - 12:30 am
    Housing fanatic wrote:
    As you mentioned in the original post its dependant on what price you can get materials for etc. It also depends on how handy you are with tools. If you are keen to try, most things you can do by yourself ( Being in a trade and judging the intelligence of some trades ANYONE can do it). Stuff like decking is relatively simple, kitchens and cabinetry can be purchased from bunnings and ikea and is DIY. The NEW house above has bulkheads and recesses in the gyprock can be pricy as it means re plastering. House also has full floating timber floors throughout, miele appliances ( correct if wrong) new sliding doors and windows, doors, tiles, fixtures, painted roof etc etc. Basically it depends on how extensively you want to renovate.

    To save money polish existing floorboards ( if possible), do the landscaping/ yard work yourself, paint yourself, Paint sliding doors and window frames (again if possible), paint old doors but put new handles on them, Paint concrete to give it a new appearance. Give the impression that you have spent alot of money when it may not be the case.

    Judging by the house in the top photo you can do alot of work yourself just depends on how much spare time you have and how willing you are to do it. Building report is a must if your planning to buy and watch out for nasties like asbestos can be expensive to remove and dispose of. Being an electrician if you where to install downlight like the NEW house 9 times out of 10 it will be mandatory to do a switchboard upgrade, same goes for power upgrades. ( There is a split system installed so may have already been done). Basically watch out for hidden costs and roll up your sleeves and get dirty to avoid paying too much. hope that helps

    Cheers Paul

    Thanks for the reply @Housing fanatic, I should’ve mentioned in the OP that I know absolutely nothing about renos (never even used a drill in my life). So I was actually thinking to get someone in to do it all for me (not sure how cost effective this is tho…).

    You said the NEW house has bulkheads and recesses in the gyprock? Is this really serious/costly to fix?

    The reason I post the old and new house is because I’m looking at those two properties, the new house costs about 150k more than the old – so I was trying to see if I can get the old house to look like the new under the 150k price difference.

    Profile photo of homersydhomersyd
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    December 14, 2011 - 4:51 am

    mmm…not sure why I…but i can see them. when I get home tonight i will try posting them again

    Profile photo of homersydhomersyd
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    December 8, 2011 - 10:45 pm
    Catalyst wrote:
    You mean Zaki in this months API?

    I don't know about the debt but he used a buyers agent to buy under valued properties and reno them. He did a LOT of the work himself so saved lots of money there.

    He revalled properties and withdrew the equity to buy the next one. Because they were neutrally geared (or just over or under) he could continue to borrow as serviceability was not a problem.

    He's bought 13 properties now.

    Hey @catalyst,

    You seem to know Zaki from API this month, but as @moxi10 pointed out above, Zaki actually said he never done any renos…mmm…doesnt quite add up (no offense). I’m just trying to find out how he achieved such a remarkable portfolio in 24 months…not trying to ditch anybody.

    Profile photo of homersydhomersyd
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    December 8, 2011 - 4:26 am

    glad to know i’m not the only one… :)

    Profile photo of homersydhomersyd
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    June 22, 2011 - 1:55 am

    Sorry to jump on the bandwagon…can I get in touch with you also Michael? Was thinking to start my own biz too!
    I have setup a website of my own already.
    Now looking to do other stuff (most likely online, but would like to find out what offline biz I could do also)…

    Many thanks in advance

    Profile photo of homersydhomersyd
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    April 21, 2010 - 1:15 am
    INTERNATIONAL EMPIRE wrote:
    Homersyd,

    Good on you that you've bought your own property! Syd market is tipped to increase in a big way in the next few years! BIS Shrapnel.

    About your next investment property, you'd need to have at least a 10% to 20% deposit. Either in savings, equity in your home, or family/friends loan. Also there is a creative way if you have enough super saved, you could self manage your own super and use that as a deposit and lend the balance?

    Obviously you should consult a financier and they can assist.

    If you would like someone to see you in Sydney, I can refer a property investment consultant to see you and help show you how to obtain your next investment.

    Eric

    Yeah that’s why we finally bought our own property, since we heard all over the news that prices are gonna skyrocket, it was quite nerve wracking tho since we bought it at an auction…
    Which was also the first auction we actually bid at, so it was very exciting when we got it :)

    Profile photo of homersydhomersyd
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    April 21, 2010 - 1:12 am
    duckster wrote:
    So lets derive a magic formula for this
    (Loan amount in two years time + extra loan in 2 yrs time) / Value of house in 2 yrs = LVR    (0.8 is 80% LVR)
    (loan amount in two years time + 100,000 ) / (original value * (1+.07)^2 = 0.8             (0.07) is 7% p/a growth ^2 is power of 2
    Two being the term of the interest rate being two years you could use 3 years and it would be (1.07)^3
    (loan amount in 2 yrs +100,000) / (600,000 * (1.1449) = .8
    (loan amount in 2 yrs + 100,000) /686940 = .8
    multiple both sides of equation by 686940
    loan amount 2 yrs +100,000 = 549,552
    subtract 100,000 from both sides of equation
    loan in 2 yrs time = 449,552 and expected house value in 2 yrs being $686,940
    to allow 100,000 to be taken out for a LVR at 80%

    Thanks for your help duckster, I will try digest the maths and get back to you :)

    Profile photo of homersydhomersyd
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    April 14, 2010 - 11:58 pm

    so why would one actually wanted to keep LVR to 80%? Is there any benefits of doing that?

    Profile photo of homersydhomersyd
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    @homersyd
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    April 1, 2010 - 4:43 am

    WOW!! We’ll probably need a auditorium pretty soon at the rate people are joining in….LOL

    Profile photo of homersydhomersyd
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    March 31, 2010 - 12:04 am
    ryan mclean wrote:
    homersyd wrote:
    maree_bradross wrote:
    No-one will be cheaper than yourself :)

    I know…but we dont want to stuff it up as I’m not handy at all… :P

    You don’t have to be especially handy in order to paint a house.

    If you are painting your house to rent it out make sure you choose neutral colours. By choosing stark colours you are limiting your market.

    My wife is extremely handy and she is a genius when it comes to choosing paint colours and she loves painting. I would almost offer her services to you…but she is not a professional painter…she just loves making properties look awesome.

    Good luck

    Thx for the offer Ryan, but I think we might try to do-it-ourselves first… :)

    Profile photo of homersydhomersyd
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    Post Count: 31
    March 29, 2010 - 6:16 am

    One question though…since most of us attending are newbies to PI, wouldnt we need someone more experienced to be the “mentor”?

    Profile photo of homersydhomersyd
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    March 29, 2010 - 6:13 am

    oh did I mention I would like to join also??! Count me in!!

    Profile photo of homersydhomersyd
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    @homersyd
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    March 29, 2010 - 5:44 am
    maree_bradross wrote:
    No-one will be cheaper than yourself :)

    I know…but we dont want to stuff it up as I’m not handy at all… :P

    Profile photo of homersydhomersyd
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    @homersyd
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    March 29, 2010 - 5:43 am
    number 8 wrote:
    Yes I do,

    Brendan painted my entire external home (brick) for three thousand one hundred and fifty dollars (He provided the paint and spent over two weeks, two coats, windows, doors and no more gaps where appropriate). My home is two stories on the side.

    refer to http://www.birchcorp.com.au under asociates and articles for his details. I have nil ties with him. I place people on my website that offer good value, I have many properties and people often ask me who I use.

    Thanks a lot number 8, I will check out your site :)

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