Hi Nick

Another good source of information on how you would leverage your way into property is by Ralf De Roos “Real Estate Riches” and it is one of the rich dad adviser series

Jenny & Roy

Hi Matt

We prefer to have PM’s as saves the hassle of having to worry about the day to day matters and we don’t have to have any direct tenant contact. If there’s a leaky tap or broken window etc we know the PM will take care of it with a couple of phone calls.

If you have lots of time up your sleeve, then you can try and give it a go. But you need to consider by doing it yourself, you’re building a relationship with the tenant – what do you do when things get sticky? Are you able to do what needs doing or would you feel guilty about increasing the rent or evicting them if they fall behind in their rent?

It all comes down to what type of person you are and whether you like dealing with conflict situations – if you don’t, then definitely get a PM!

Good luck!
Jenny

Hi Yasna & Simon

$100K plus development costs is a lot of money. If I was you I would be making sure I do my research to make sure there is definitely a demand.

The last thing you want to find out after spending 6-12 months developing that you only get 20-30% occupancy.

A couple of other factors/costs you should probably consider as well are:-

1. What insurances do you require? Both for insuring against the loss or damage of their goods and also against the injury of persons on the property.

2. Will you be offering insurance options for goods through yourselves. If so can you be competitive.

3. What security options will you have in place and what’s the cost involved.

4. Are you offering just domestic or commercial storage as well

5. Who and how far are your closest competitors? Can you afford to be competitive against them without losing money on your investment.

6. If the real estate agent won’t manage the property for you, who else can and at what cost? Also legal costs for contracts need to be considered if not through a RE agent as well.

You need to do your research and work out exactly what your outgoings for this project will be, what price you intend to charge for the storage sheds and what occupancy rate you need to make it viable.

Good luck!

Jenny

Hi TwoBob

Actually believe it or not, you actually do get by, whether they’re planned or unexpected. It’s like when those unforseen bills come in and you wonder how you’re going to pay them as you hadn’t budgeted for them – but somehow you manage to pay them and still put food on the table and clothes on your back. And like the other elist members advised, children are precious, so enjoy every moment!

We actually have 2 with another due in May (all accidents but wouldn’t trade them in for the world – some days it’s tempting but then they give you that big squeezy hug and say I love you – you melt then). I actually started up an online business to hep supplement our income a bit, as going to work and leaving the kids in child care just wasn’t something I wanted to do.

What helps us the most though is the fact that we have a budget. We list all our incoming and outgoing expenses on a fortnightly basis (ie mortgages, electricity, water, incoming rentals from +CF properties, insurances, petrol, groceries, clothes, car regos, stock feed, savings, spending money etc etc etc). The important thing is if you do a budget you stick to it. To make sure we don’t go over our grocery budget each fortnight, we do up a shopping list – any extra money left over can either go towards the next shop or buying a few extra treats (pregnant women get cravings!). Money that we don’t need then and there (ie savings, car regos, clothes) we tend to put onto the mortgage so it has some benefit until we do need it – then we just redraw it when the time comes.

When you think of money and kids, think….kids are like pay rises, the more money you get, the less you see!”

Suggest creative housing STCA I saw a train carriage with 3 br, kitchen bathroom everything, for 23k. Maybe buy for 18k, spend 5k reloactikng it, even then you will need 100 per week plus for a good return. Or maybe look for a house to relocate?
Or maybe just forget you have the block and buy an established house.

Roy

Read the section in ‘0 to 130’ on Cash on Cash Return and look at the scenarios that Steve provides

OK, I will give you the good stuff.What you can do is contact the council, get the list of properties that are coming up for auction. You can access this info months in advance (will include details of last owner). I have a good relationship with a few people in different councils and they are happy to give me the phone numbers of people who are just a little behind for me to follow up on.

For the established houses, the last thing you want to do is compete at auction.
Contact the last known owner, ask them if you can buy the property from them. Make them aware that you know the property will be auctioned and you want to help them out.
If they are living in the house – EVEN BETTER. you just got your first tenants. You need to help the people (normaly retiree or young family) to see they would be better off renting as they can access a subsidy from centrelink (and minimise their outgoings). If they still want to own, put them on a rent to buy/rent option deal. They still get their subsidy, you get a house below market value.
With the alternative that the house is sold out from under them (bad), this is a win-win for sure.
Am I giving away all my good secrets here???

Hi Michael

Yeah we know, pretty good isn’t it! We actually went to some auctions prior to xmas in the hope to get a couple but as usually happens (much to the real estate agents hopes) everyone gets caught up in the auction and it goes over the price we set for ourselves.

I commend my partner though, as he goes there with a figure in mind and sticks to it. If it goes over, he forgets about it as it’s no longer a +CF deal.

But we just closed a couple of deals so now we need to save some cash for the next opportunity. But it won’t stop us from looking!

Jenny

The properties are located in regional NSW in a small country town located 45mins from a major town centre that has boomed considerably over the last year.

With the town in question, we actually purchased 2 of the properties just before the increase in prices started (about 1 month actually) – the average price for a house in the town now is $65K-$75K. For ones which require a little bit of work you can get around $50K.

With renos completed (basicaly cosmetic) on one of the residentials for a couple of $K, it has now been brought up to the $65K-$75K range, thus the reason it is now returning a rental of $130p/w with long-terms tenants.

Need to also consider that for country people it is not necessary considered cheap rent. The average wage in a country town is a lot lower than those of the corporate world and work is not always in abundance, therefore they are not all in a position to be able to buy.

We originally came from Sydney, so a house for say $50K is a bargain to us but for some country people the dream of owning your own home (even for $50K) is still unattainable.

For locals, rentals are considered on the high side – but for people coming from the major town centre (which is who we are basically targeting), it is considered a better prospective than paying $200+p/w. Due to the boom in the major town centre, people are looking further out to find affordable rentals. As our town has few rentals availabe and is only located 45mins from the major town centre, agents are having no trouble finding prospective tenants – demand is high.

The other one for $27K – yes was a great deal as it was very cheap. We actually offered almost 1/2 of the asking price due to some work needing to be done. We didn’t actually expect him to accept but as he was keen to sell he did. With renos completed it’s valued at $65K-$75K range and a rental of $120p/w.

These deals didn’t just fall into our lap – they came from research, building good relationships with the locals and agents, and hard work. We didn’t just buy properties that automatically gave us this rental return – we made them happen with a bit of sacrifice and hard work. At this stage, this is our formula for achieving our dream of having a passive income.
Jenny

There is really no limit,
We bought a community hall for 35K spent 45K and will sell for 165K
We bought a hall and will sell a 4 br home.
There is the 2-3 3-4 br tick.
There is dual occupancy
There are “fixer uppers”
where does it end?
What about asking council for a copy of the properties coming up for back rates auction? This has had some great outcomes (wrap, below value sale……)