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I would have to tell you that Melbourne isn't getting a lot of positive attention right now, and the market isn't as great as it was, how long this will last, no one could really pin point it, you could also say that this type of market would present some great opportunities to secure a great deal. i would open up your options though and look for an up and coming area in Adelaide, or even going back towards QLD, places like Logan, Ipswich and Toowoomba, do your research on the areas around Australia that suit your investment strategy. to answer if you should invest in units/appartments or houses, my opinion would be houses, they come with their own title, you don't have extra issues like additional body corp fees, and over ambitious sink funds, or elevator problems, or insurance and legal issues, etc, again its just my opinion, Houses have a land content, and my rule of thumb is Land Appreciates and Buildings Depreciate, meaning, i make money when the land goes up, and get a tax write off when the building diminishes is value, and its more of an even spread, of gain and loss. this would require you searching for investmets that have at least 55% of there value is in the Land Content, so if you had a $200,000 house it would be split $110,000 worth of land and $90,000 worth of building. so i get an estimate of 2-3% of the $90,000 as a deduction off my income, and get 5-15% growth on my land value. put together, i end up with more. i don't dought appartments can be a good investment, but its a little hit and miss for me. to many rules guidelines and regulations aswell. so my advise…… Houses….. I can't advise you on what to do about the imposed tax on your land, its a pretty curley one. but maybe selling it and getting out what you can to put towards a house as soon as possible. Hope this helps a little….
I start my conversations with real estate agents by asking if they have any problem properties, you may need to ellaborate a bit, for example "properties that have been on the market for 12 months or more or properties that no one bothers to look at" these properties may be good source for "handyman specials", you'll find a lot of these vendors are frustrated and feel delighted that someone will finally do a deal and in most cases on any terms. and tell the agent that you run a business that can solve alot of vendors problems, like upside down properties etc. the real estate agent will then refer to you when he comes across problems in the future I have found with the newspapers, its better for the marketing of properties you have rather sourcing properties you want.
You need to be the first one to do the deal. its a great Business, you can make a real lot of cash in any market if you do it right, learning to do it right, unfortunatly isn't really documented, because every vendor is different, and you need to provide a solution to the needs of the vendors. the best money is made when you can secure off market deals. keep plugging away and learn from your mistakes, but educate your self on risk mitigation.
davejohno wrote:Hey, A bit of background, wife and I have recently done a full reno that is currently tenanted and taking care of itself. We loved the experience and have learnt since and would like to do a couple of buy, reno and sells, eventually doing some small development townhouses possibly. Our issue is that we are having trouble of finding suitable properties for this method (we have been looking for many months and only found a couple of suitable properties that were sold really quickly). We do a lot of the work ourselves and have good trade contacts and funding and serviceability aren't an issue. We don't want to make a huge amount of money off them but any money made, is taken up buy stamps, holding and selling costs. I read of people using this method all the time. We are looking anywhere on northside of Brisbane but keep coming up with nothing. Am I missing something,looking in the wrong area, or is this method not really relevant for the current market?A really great strategy that works for me to get a hold of these great buys before they get snapped up.
I would drive around your targeted area and look for properties that are in need of a face lift or gutting and knock on there doors and ask them if they are open to selling their properties, I admit it is very hit and miss, but it does work and has produced some really great deals and profits. if your not comfortable in knocking on doors, you could try send them a letter I use this.
Dear Property Owner, Neighbour
I am a local resident and noticed your house when walking by. I would like to point out that I am not a real estate agent nor want to be. I am simply someone who is looking to buy a house in this suburb and took great interest in your property when walking by a few days ago. I really like your property and was wondering if there is a chance I could buy it from you?
If so, I would like the opportunity to meet with you for an informal chat. I am prepared to pay a good price for your property as a private sale. This will also save you thousands upon thousands of dollars in not having to pay advertising costs or real estate agent commission fees.
If you have been thinking of possibly selling, now or in the not too distant future, could you please call me? I am a serious and genuine buyer and promise to respond to you immediately.
I sincerely hope to hear from you and have provided my personal contact details below for you to call me if you like. Thank you for your time today in reading my letter.Kindest Regards
Mr Xthe tone is kept neutral and keeps to the point. the content of the letter is very similar to how I introduce myself at the door.
you may find that you could organise to renovate the property and on sell it with out actually buying the property, I suggest getting some really good legal advise on the different strategies to control the property vs Owning the property to renovate it and sell it. you could save thousands in stamp duty and holding costs, these savings may help pay taxes or be able to be used to gain concessions from the vendors by maybe paying their rent for the period of the reno and sale, Make sure you know the numbers and never get emotional about the home, run it as business Knowing everything about your targeted area is the first thing you want to do, you want to fully understand what makes one property sell for one price and other houses for cheaper or more. really get out there understand what the differences are, and as I suggested earlier in this post, be the first to find it. talk to a good accountant that can help you with structuring your entities for this type of property trading. and freshen up on some negotiation skills.You are on the right track, you seem very persistent, I am happy if this has helped with getting some direction.
teaching/educating you how to negotiate with vendors is not
RPI wrote:Just see a lawyer who knows their stuff on vendor financing and they will give you a bit of a quick education while preparing your documents.regards
D
Lawyers are Lawyers….. Solicitors Solicit. This is their core business, teaching you how to negotiate with vendors is not, if it were, they would probably not be a Solicitor. I would suggest to you to go and work out what kind of deal you can do with the vendor, document it on a HOA (Heads of Agreement doc), then take it to get the Lawyer to do what he does best and Solicit the documents with the terms, and make it legal. Lawyers are not supposed to advise on how to negotiate a commercial deal, they can only advise the legal ways of doing it ie types of deeds to use for different types of deals. However good Property and Real estate lawyer can save you a lot of time. An eg of Vendor Finance ie Instalment Contract, Lease option or deposit finance (2nd Mortgage) would be the Purchase price of the house might be $400,000, if you can get the whole lot financed by a Lease Option or an instalment contract or if the vendor wants to just finance the deposit, you would get a first mortgage with a bank of $320,000 and a second "Irrevocable" mortgages (including cash deposit) over the remainder, so you don't lose your benefit from the deal. you can talk to brokers about financing, accountants for tax issues, and lawyers to make your deals legal and me for experiences. A really cool way of saving money in the short term, is at negotiation, ie the purchase price (that is getting borrowed), in lieu of them paying your stamp duty once the vendor finance period ends (options executed and last installment made). make the Vendor finance period long enough for the value of the home to go up in value or get the house or building renovated amoungst other startegies that improve values. I say good luck……….. go get em
Nigel Kibel wrote:There is nothing wrong with the strategy at all and I am involved in development products that do a similar thing however there is EVERY THING WRONG WITH DOCKLANDSThis is an area that will be dramatically involved in massive oversupply of property. Also do not touch the CBD of Melbourne.
I generally look inner suburbs such as Essendon however I currently link the inner suburbs of Brisbane.
Again stray away from the cbd of Melbourne and Docklands you will lose money here over the next few years
Thankyou for the info, I now know when and where to get awesome discounts and deals for the next couple of years. be smart people, these types of markets present awesome opportunities, go read a book and then get out there, I will be, see you in the trenches.
