Depends on current age, income, other assets/income, and state of superannuation balance.

Hi Robinson

If the tenants are on a lease, then if the property is sold, the purchaser inherits the tenant and must abide by the lease. You cannot hide from a purchaser the fact that there is a tenant in place – this must be disclosed. If you sold the property quietly, the tenant would not necessarily know. All they would know about is things such as a change in property management, so if the purchaser was with the same property manager, the tenant would have no idea. However you must remember that a purchaser will probably need a loan to purchase the property, and it is likely that the lender will require a valuation be done and it is likely the valuer will need to go inside. So the tenant will realize “something” is happening.

A property cannot change ownership without triggering stamp duty, so there isn’t really such a thing as swapping without some kind of cost, unless you’re donating the property to a spouse under certain rules available in VIC.

What state is the property in? (ie vic/qld etc)

What is the current value of the property, and the current mortgage debt against it? Also is it on a fixed or variable rate? Is it a principal & interest loan or interest only? The answers to these questions will help us understand your holding costs, how long it will be before it’s paying for itself, whether a refinance might be viable to release some equity etc.

What is the reason you are looking to offload the asset? Is it costing you money, or did it just freak you out that when you tried to sell it there were no bites? Is there something else you need the money for, or are you simply itching to get out and buy more properties? Not sure what your objectives are so it would be helpful to understand a bit more about what you’re thinking and what is motivating you.

Melb Invester wrote:

How would you buy if the property is asking $750K -Land 700 SQm -3 bed Home – rent 400 Pw ?

I would not care where such a property was located. These are not good numbers. You will be severely cashflow negative with such a property, meaning that the rent will come nowhere close to covering the mortgage and bills, so you’ll have to prop it up for a lot of years by working in a job or earning income via some other means, to subsidise it, before it even goes cashflow neutral, let alone cashflow positive.

Hi Carolyn

There are a few things to say about that.

Firstly it depends on several variables such as your budget, your income (and as such how much you can afford to prop the costs of the property up for the first couple of years, or whether the rent has to do it all by itself), whether you expect growth and how much, your risk appetite (eg whether it would keep you awake at night if you ventured outside of a certain set of parameters), your intention for the property (eg long hold, flip within 5 years etc)….

I see a lot of people that procrastinate for years because they want to be in the BEST property in the BEST area. By the time they work out where they believe that is, the market has shifted, and the process repeats and they get nowhere. Best to define parameters and criteria and knuckle down and get on with acquiring a property that conforms to those rules. It is ok if it is only the third-best property in the country hehehe.

Kieth wrote:

Also how much does a nice no thrills home cost in NSW? I’m conscious that the houses in the area are often wetherboard or fibro.

Why is the search scope limited to NSW?

At the end of the day, capital growth is an unknown entity. You can guestimate based on history, but nobody can guarantee what the growth will be. However the cashflow position of a property is an absolute known, because you know the mortgage interest, council rates, etc from day 1. So you know if a property will cost you a lot, or a little bit, or produce a surplus, in year 1 of ownership.

Unfortunately the checkout lady at the supermarket has no interest in the value of your properties … she just wants you to pay for your groceries, which can only be done with cold hard cash, or a credit card. You won’t have either unless you have yield or a credit card provider to whom you have demonstrated a cashflow position (aka yield).

To answer your question – a dollar earned in a bronxy area buys the same loaf of bread that a dollar earned in a flashy area would have. The difference is how compromised your lifestyle has or has not been whilst earning that dollar ;)

Be sure that you have a solid income stream that will be able to “service” the construction loan. There is little point in acquiring a property with a view to developing it if you have no way of getting a loan to make your plans come to fruition.

Remember not to sign anything without having your solicitor look over the contract first.

Like in any situation, there is such a thing as taking the mickey. As the brokers have mentioned above, it’s absolutely reasonable to have a quick chat at the start so that both parties can determine if the working relationship will be a good one, and for the client to understand if the broker can indeed assist them given their requirements. However there is no shortage of people that treat the poor brokers as a free advisory service over and over again. There is certainly a point where it becomes just plain rude. Everyone started their investing journey somewhere with little knowledge, and had a quick chat with lots of folks while stumbling around in the dark trying to get up to speed. The key is to remember that when doing so, to be polite rather than demanding, and to remember there needs to be a limit, because at some stage during the work week, the broker needs to earn an income, so he/she cannot work for free all week.

Hi JJ

Sounds like you’re trying to buy something sight unseen? It’s a bit dicey to just pluck something off the internet. Best to be seeing it for yourself or having someone do so on your behalf. That way you will better understand the surrounding areas, whether there are any nasty smells in the house caused by things such as extensive mould, whether there are any big problems hidden by the photos, whether you feel sea-sick when you walk on the floorboards because the house needs so much re-stumping, etc etc. And depending on your approach, the demand for the area in terms of rental housing, the type of tenant you would expect, and the type of person that would not aspire to live in the area.

Hi Tom

It isn’t necessarily the case that the site would be worth more if you sold it with permits in place. You’d likely need to go the extra mile and construct the additional dwellings.