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j hall
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@j-hall
Join Date: 2009
Post Count: 32
December 30, 2009 - 11:53 pm
i am still moving on it for now.
am going in to view the worst of the 7 units today for an intial inspection
town planner is back monday so i can reqoute the strata costs and feasabilty again.
am still waiting till monday/tuesday to hear back form local broker,however after talking to qld007 it sounds very difficult to finance.our best bet is a 65% grv loan,but its going to be very hard to work in 25% profit into the deal unless we could buy it at 700-780k.
we are reviewing our duplex development strategy again also and will re-evaluate prices and whether we can more easily build capital doing a few duplexes.
j hall
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@j-hall
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Post Count: 32
December 30, 2009 - 4:37 am
where are u based maurice? aus or what?
j hall
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@j-hall
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Post Count: 32
December 26, 2009 - 11:12 am
Terryw wrote:
You could get a 2 year option and then sell all before this time.
this is all good however its subject to the vendor and their needs too.we will know more about that in the next week or so when they finally let us into a unit to view it,the bloody vendor has been stuffing around for over a week now already.so we go in on the 30/31st sometime.thats the time we wil know if its all worth it or not.
j hall
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@j-hall
Join Date: 2009
Post Count: 32
December 26, 2009 - 7:53 am
youness935 wrote:
I agree with alani…Have you thought of options…you pay the current owner a small fee, and that will give you the control and an option to buy the units. If you can sell them, then you might make the exchange and settlement date the same as the exercise of your option.
while by no means this is easy, but it's doable. it requires careful planning and timing.
If you ask other people about this, they will most likely advise you against it…it's just way out of many people's comfort zone.
Best of luck.
Youness
yes we know about options and had considered it,however we feel its riskier that owning it. we would really need a 12 month option contract ,but our biggest issue is finance,if we cant finance they buy and have to option it,how can we finance the buy when the option is due?
answer is we cant,so then not only have we failed to sell the 7 units,but we then have to break contracts on the few that may have sold because we cant finance it and cant honour the option.
its doable,and possibly if we were more experienced,it maybe the ideal strategy on this one. but for now its a no go i think.
j hall
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@j-hall
Join Date: 2009
Post Count: 32
December 26, 2009 - 7:48 am
yes guys.it is qld.we only just got qoutes on the strata for eg last week form the planner as we priced another similar deal,but there wasnt enough in that one.
in regards to interest – we can service upto 15% and make fair money from it.
time wise we can hold out to 18 months.
even though i have qoutes i redid my maths with
10k per unit for strata and legals(which is well over costs now)
10k per unit for sales(which is also well over costs)
15% interest
if held for 18 months we are -30k in debt – so thats a no go
if held for 1 year we are 48k profit – thats a fair profit for 25hrs work.well it is to me anyway,but my not be lendable???
if done in 9 months we are at 88k profit
if done in 6 months – 127k profit
so really,we need to turn them around inside 9 months to be profitable for us. this should be doable as at 180k per unit we are selling at the bottom of the market here and 10-15k under value and for an investor,they arent too badly geared at 180k buy and 180per week rental return.
then next person could reno and increase value if they wanted,we wont touch them at all,we do not do renos.
richard,i will send u a pm,u sound good on this stuff.u may get our business.
what sort of money would have to go into the sinking fund after first sale?
ideally we would sell all 7 subject to strata in first 8 weeks.but thats a dream come true though.hahahah
if this is a no go,so be it.
j hall
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@j-hall
Join Date: 2009
Post Count: 32
December 24, 2009 - 6:31 am
Terryw wrote:
I don't want to dampen your enthusiasm, but think you might be a little low on your costs.
how so?
we have priced stamp duty at 33k
we have priced strata/legals etc through council and my town planner which is 35k
agents fees through our agents is 35k
deffered loan fees from loans broker today is 1k per unit if sold inside 12 months
interest is calculated at 10% for those examples interest only x period held
most of our costs are in town planner and agents fees more than anything else.
what have i missed thats major?
we have little items bundled in with those above,but here locally the strata per unit is actually 3k each,we are alloing 5 -6k each after legals and if we need an extra water meter,or small fence or something like that.
what else is there for this type of strata deal? cos i dont know any mroe than what we have ? and we have not been qouted any more by titles office/town planning/or agents for any of it so far,so far we are slightly over estimated on qoutes.
j hall
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@j-hall
Join Date: 2009
Post Count: 32
December 24, 2009 - 3:45 am
i forgot to say thank you so far for your inputs,any more ideas or comments? something i have forgotten?
j hall
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@j-hall
Join Date: 2009
Post Count: 32
December 24, 2009 - 3:43 am
we dont plan on buying at 900k,we want to get it in the 800-850 area as we know what he paid for it and is looking to get back out of it.
im not posting my whole feasabilty but short points im reading off my feasabilty calculations are:
900k buy and all sold in 1 year,10% inc ALL costs as u mentioned duties/commissions,strata/deferred establishment fees and so on and so on
gross profit = $161370
gross profit = 14.68%
buy at 850k ,held 1 year,10%
gp= 216370
gp= 20.73%
buy 850k,hold 6 montha,10%
gp= $263967
gp= 26.5%
to me,thats profitable,total of maybe 30-40 hrs of my work start to finish for 100-300k in returns clear of costs. i know its not the typical 80% of the population negative gearing strategy,but i am tryin to get into the business of making cash,not spending money each week.and i dont have a high income to offset by gearing.i will buy property outright for my portfolio for passive income in medium term future(3-5yr).
short term is build capital and start developing,which so far is easier to finance by the look of it(and that aint easy these days i know)
the sales prices are doable,infact we could hold them longer and sell them for 190k or more,but we would rather offer a good deal to others and sell at 175 or 180k .
if we cant finance by mid jan we will sell the deal to someone richer than us.
any more ideas?
j hall
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@j-hall
Join Date: 2009
Post Count: 32
December 23, 2009 - 9:34 pm
Qlds007 wrote:
Jas
Yes with a decent equity injection from your friend then a gross realisation loan maybe possible.
Mainly these lenders want to see either some previous experience or pre-sales or at least the deal well covered by security.
Subject to the numbers interest capitalisation could be possible but the rate of interest and set up costs wont be cheap.
We have done a couple of similar deal over the last couple of months and very few lenders with such a risk appetite.

i think i will ring u straight after christmas regarding a loan structure.
the security is there for sure.
we want to borrow ideally
the purchase – 900k ,hopefully less after negotiations
and preferably the 90k in costs – if not we may cover this with our own LOC ourselves
so we are looking at a lend of say 1mil + capitalized interest till the end so maybe 1.1mil all up

now place that loan against security of the property being loaned on. its 7 older style small units on a 1017m block 1 street form beach. anything is this town selling at 180k is an absolute dump,so we figure if we sell at 180k for these ones they should dissappear real fast.
so security is 180k x 7 = 1.260mil

1.1mil loan/1.260mil security = 87.3%lvr if we borrow the lot start to finish

if we pay the strata fees
1mil/1.260mil = 79.3% lvr

if they valued at 170k x 7 and fully financed= 1.19mil
1.1mil/1.19mil = 92%lvr
the security is their in my opinion.
what sort of interest are we looking at 10? 12? 15%?
does it require our financials to be good?,as really this loan is not based on us paying anything back during the loan period anyway,purely from a projected feasabilty point of view.
this is our first attempted deal,we have done courses etc to get to where we are today,but have no previous on the books deals completed as a portfolio.
if we have to walka way we will,we will sell this deal to anyone interested who can actually finance it. there is upto 300k profit in this thing,we want it bad,but will sell our feasabilty and deal if we have to.
j hall
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@j-hall
Join Date: 2009
Post Count: 32
December 23, 2009 - 12:00 pm
Scott No Mates wrote:
Are bank bills still an option? Do you have the $ for the 40% deposit on a commercila loan?
i am waiting to hear back on commercial loans now,its 30% lvr on commercial,i have 70k in LOC ready to go,this should near cover the strata titleing costs.
as a res loan i only have capacity for 123k now as my wife just lost her job.its easier for us to input out LOC funds and pay for the strata costs.
i have a friend with 105k combined income/230k loan against his 550k property,good credit,he can res finance upto bit over 400k currently.
so as a deposit assuming we paid the full 900k,we need 270k deposit,but my broker is still saying it wont work like that.
what i want to do is …..
my friend pays uses his borrowing power to get a 270k loan which is then used as a deposit for the comm. loan
i pay for the strata costs etc
then we start selling subject to strata and rest is all covered in sales no worries
then once sold off completely,we pay back the capitalised interest on the loan for time held,so maybe 6 months to 1 year max.
if done in under 6 months with sales of 7 x 180k i can have a 20% gross profit in development loan terms,so its lendable from a feasabilty point of view imo.but it just wont work like that unfortunately.
any ideas,or know any lenders who will lend on "merits" like a develoment loan,or on grv terms of the costs vs sales feasabilty?
whats a bank bill?
jas
j hall
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@j-hall
Join Date: 2009
Post Count: 32
December 23, 2009 - 11:43 am
sorry it should say jv not jc partners