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equity is basically the money that would be yours if you sold the property.
So if you had a deposit of 100,000 and purchased the place for 300,000 with a 200,000 loan and it went up in value to 400,000.
then your deposit
100,000 plus the increase in value 100,000 is your equity.or you can say the value of the house 400,000 minus your mortgage 200,000 is your equity.
if you pay down the mortgage = more equity etc
so… using the numbers i just made up…. your equity is 200,000. the equity of this new house and land, according to you is 300,000. as you will have no mortgage.. so that is an increase of 100,000!! or if the developer is correct 150,000!
BUT thats using the numbers i made up, so check with the real numbers.
300sm places near me atm are selling for 600,000 plus… so their value really depends on the area, type of building, demand etc.
and the shape of the 1400sm block determines how best he can subdivide that space. how much is street frontage etc.
calculate the value of the house and the land that oyu will have at the end, and how much equity you currently have invested in the deal.
if the value of the new property is more then the equity you currently have invested… then work out how much better and go for it if its a good %.
if its not better, then i wouldn’t. i’d sell the property or something to get my money back.
there are lots of things like that, not something i would go into though. just not my sort of thing… i like being in control.
fractional? what do you mean by that?
hey gambler, i am just changing fields atm, i was in the stock market and making good money.
but pulled my money out a while ago, and 4 months ago put it in a term deposit just so it wasn’t sitting around.So atm cashflow isn’t good, and that will be my biggest problem with getting loans.
but i have talked to a few people and will be setting that up shortly and assessing my options.I will have access to all the money as at feb next year, and plan to start then.
Developments are definitely where i want to end up, i finish uni half way through next year. where i study construction management.
So thinking maybe a few renovations till i have the process of buying and selling down. Then move up to developments.So many questions… its hard to know exactly what your asking.
But often people talk in the 8-10% range. thats a nice return to look for.
Some get much much more, and many get a little less, in the 6-7% range..Some people are investors, so the location of the property is irrelevant, its the deal they want!
Some people love property, and want to admire what they own, or in a development see it grow.So the joy of it depends on the person,
In terms of investing amount… people will want a higher % return if they are putting more of their money on the line… so they might be happy with 8% for 100K but if investing 250 they might want a 10% return. or else they might not like the risk of putting more money on the line.
I just came from shares where on a % basis i was very successful, much more then i ever expect to be in property. but i love property, and doing deals and negotiating, so that is what i will be looking forward to when i start buying up real estate and doing developments. you don’t get the same buzz from stock market.
So basically your looking for a better return then what you would get from a term deposit, all while minimizing the risk as much as possible. and if you risk more, you want more profit to make up for the extra risk.
i am actually really tempted to use that service, i see it as risk money, but if i get what they say then ill be happy. so once i use it ill track down this post and update it with my experience…. could be a few months though.
there are quite a few like that on there.
My name is luke,
I currently live and study Construction Management and Economics in AdelaideI like business have have 4-5 different “jobs” atm… but they vary from share trading to being paid to dye my hair bright colours for youtube.
I hope to start buying properties/developments early next year.
So i am here to learn and share!My goals are rather lofty…. but eventually i want to build and own large 100 story plus energy neutral buildings all over the world.
have to check what % you get in a term deposit and the money you would make in that time vs the money you save by offsetting the loan.
I did this these the other day as part of a presentation and for the figures i had it was much more beneficial to offset. and that was with the current figures.
if interest rates rise over the next few months then offsetting will be even more of a good deal.
but run your own numbers with the figures you have, because your situation and numbers will most likely be different to mine.
we saw mice running around the house i am renting…. i put traps and bait out myself….. i’m a big boy now!
I’d just weigh up the costs of all these changes, vs finding new tenants if these ones decide to leave if the problems arent fixed.
Also weight up if they are problems most people would care about, or just these ones.
I would become more personal with my tenants, and talk to them directly, suggest traps or bait. if they really do care and you think its a worthwhile issue, maybe call in someone for a quote first… or inspection to see what it is.
hows the property performing atm? have you made money? is it going up or down in value? there are many many things to consider and calculate.
what made you want to sell?
dnshull wrote:Hi Alex,Where in Adelaide are you looking to employ your renovate and sell idea? Good luck and best wishes
regards,
Dave
I was going to ask the same thing…. Some areas have a lot of properties for sale atm… so you could be competing against them to sell… and when the market does slow over dec jan… this could be hard.
BUT if you are in an area with less competition and you do increase the desirability of the property you should still be able to sell.
there are a few things to take into account. the structure of the investments, is it a partnership? company? unit trust? etc etc.
what do both partners put into the business? time? money? both?But from reading books by steve etc, they are all big advocates of having a partner. i think you have to weigh it up. do you trust the person? do they have to same end goals as you? is the deal you have in mind fair to both partners? if you can find someone you can trust, who can fill the gaps in your own investing dream…. either cash time knowledge etc. then i think a partner is a great idea.
Maybe once you know how the whole system works, and you have your own money, a better business structure etc. you can go it alone. but partners can really help you get started i think.
The load does get paid… but it gets paid at the end of a set term… in a big lump sum… so start saving! Someone posted just yesterday or something about banks not accepting the logic of selling the property to repay the load. they wanted some extra proof that you can pay the sum off.
some things with your sum that are different to mine though…..
you assumed there are exactly 4 weeks in a month.
i prefer to times the weekly rent by 52 (or 50 if i want a buffer for vacant days)
and then divide by 12 to get monthlyso 800 *4 = 3200
800*52/12 = 3466As you can see quite different.
its a good rental return in my eyes. but do make sure you calculate the strata, rates etc…. cos they can kill any deal if they are too high.
some others might not think its as great a return, but its a 20% return on the actual cash you invested (before strata fees and taxes etc). and that sounds good to me.
hmm ok, sounds not good for me.
I can start generating some income pretty quick if i have to.but does it matter what the income is? would they care if it was stock market profits? or does it have to be a regular job income?
i have thought about buying with equity… but i don’t like not being leveraged, and having all my money tied up in just a few deals.
Im about half way through steves new book now, 0-260+ properties, he does mentions lots of things in this book compared to his last one, he mentions trusts and markets, and crunching the numbers etc. not all in great detail, but its a pretty good book for covering all the basics and some good strategies for buying property and how to find deals.
But yeah, the other books i mentioned too!
fully agree with shahabr. you can get property trend graphs for the different states etc, but when it comes down to it, its what you feel confident in doing, what the suburb stats tell you, etc.
If there is somewhere you wanted to take a business holiday trip to, then think about where you like!!
but if its purely for investing, then there are a range of areas and building types in every state, so maybe just compare a few similar housing types or prices, in suburbs from different states and see what that tells you.easyroommate.com/
gumtree.com.au/have places 10 tenants using these sites all within a day or two.
If its students your targeting then the universities have their own accommodation sites you can advertise on, and of course the paper too, but depends on who you are targeting.
i just downloaded the one that terryw linked on that page. its awesome! so detailed and well laid out.
I might make some of my own adjustments but its great!thats the link of the one i downloaded. i looked at all the others too, they were good… but this is awesome!
