Forum Replies Created
Hi Dean,
No there are none of our Gladstone deals left currently – all 25 were snapped up in a flash, as you’d expect. I’d have to go and find out which estate they are in as this was a deal my business partner did earlier (they just settled in the last month or so I believe).
I’m not going to argue with you Yosarian… You might want to look into it further, I was a Mortgage Broker for 11 years, mostly dealing with Non- Bank Lenders but my first paragraph is correct.
In my second and third paragraphs U am referring to Option agreements. The Option agreement allows us to nominate the buyer and the price. The valuation is the price nominated. There is definitely nothing hidden or any misrepresentation. What we do is something Developers and Property Agents have done for many many years.
Waydo, we are not purchasing the property… The client is. We secure the deal under Option and release the equity to the client under a Capital Option. Win win win all round – the developer gets to sell 10 – 20 properties and save their ass from bankruptcy court, the client receives 20% equity upfront (or more) and we receive a modist fee for our services.
Rick,
Depending on the lender, the Mortgage insurance is usually paid in large blocks of settlements. This means your loan is often not officially registered for sometimes 2-3 months. This will prevent you from changing the loan and upgrading to access equity.
With our members, we do things a little different for this very reason. We also source lots of deals between 15% – 25% BMV on a regular basis, but through our complex option agreements, we specifically nominate the bank valuation as the purchase price, then through an appropriate agreement, release the equity to the client from day one.
What this does is it prevents any lending issues, it also prevents the BMV price lowering the market (at least until there are comparable that have settled). With the right process, you can also use the equity to pay for costs such as the deposit, settlement costs … Leaving any remaining funds to go into the loan as a buffer. This preserves your cashflow for other purposes.
Sounds like a hell of a lot of headaches ahead or ‘lessons’ ahead, to me.
I think you can do a lot better! Definitely red flags for me on this one.
Think about what kind of investment YOU want and go and get THAT!
Leave the headache deals to others to worry about.You should definitely be finding another Valuer. Personally it is unacceptable for the valuation to be lower than the purchase price. That’s like me selling a car valued at $10,000 for $12,000. Sure, some will pay more for it based on features and other benefits but it’s an emotional decision to pay more.
There are always more deals and better deals on the horizon. Consider your options and be prepared to walk away. Many a time, the vendor will come back to you when you take the offer off the table… That’s part of the art of being a good ‘unemotional’ investor.
Hi skybee,
A lot of our members/ clients have received advice in the same circumstances as you are in. They opted to set up a suitable trust structure to purchase the property through. You should seek suitable professional advice on this but I thought this would help to know. Also, as advised above, there are different finance options available through a good broker.
Hi Jadatom05,
The aim of property investing is to make money right? This is always by either cashflow gain v’s capital growth. Cashflow is achieved through rent v’s costs … Therefore the more rent you receive and/ or the less costs you have the better the cashflow over time. If you can negotiate on BMV deals then the capital increases faster +!you will gain over time as values increase.
Follow the basic rule of thumb for rent returns of close to CBD, close to schools and shops, close to water. There is plenty of historical and current data for this.Most professionals involved in property will have access to rpdata or similar and would be happy to oblige.
Hope this helps with some clarity.
Don’t be afraid to ask for what you want… You might surprise yourself and get it! But if you dont ask, you don’t get!
Hi Keiko,
As most comments previously have suggested, Torrens title would be the preferred option for many reasons. The council will be able to help you on understanding the minimum allotment sizes in your zoning and council area. You should also check for easements and any other restrictions such as construction footprint restrictions and clearance from borders.
Get yourself a good town planner that will be able to easily help you.
Hi Smarcube,
You will need a good accountant and quantity surveyor to set a plan of action to maximize on your deductions. I agree with previous comments of not focusing on the tax savings only or looking to lose money thru negative gearing. The goal in investing is to make profit and balance between equity/ capital growth and cashflow gain in order to improve our wealth position for retirement planning.
There are many investments that a good accountant will advise of that are ‘tax effective’.The key now that you have good income and cashflow as well as savings accumulated, is to use those the most effectively as possible. A professional that has done this for their own portfolio as well as high clients would be preferable.
All the best!
Hi Danger mouse,
My company recently completed 25 house and land package deals for our members and a few staff. Here are the basics:
Total Val on house + land was $460k.
Clients received upfront equity of $85k upon settlement of the land.
This equity was then used to purchase the land – 20% Dep + Costs.
The remainder + 10% of deposit was used to Finance the construction
through the progressive drawdown with no headaches.Final lock-up re-valuation came up at $480k giving the clients an extra bonus!
**** End Result: Clients used none of their own money to purchase a house + land
package at $460k But gained 23% equity on completion (including the unexpected
extra $20K increase in final valuation.Maybe you could also put a cheap transportable home on the land?? There are often good deals around on these … but be sure to take into consideration all costs of transport, stumping, setting and connections etc this is of course subject to that council approving your application. The financiers will also request that the house is properly set/ anchored etc
You’ll definitely get better rent return on a house than a granny flat.
Being self employed with a long term ABN may give you a few more options … but your Mortgage Broker will be able to advise what products are suitable … especially if he is good! lol
If serviceability is an issue for the property you wish to purchase … then you can also consider finding a suitable ‘financing’ partner that has enough income to achieve what is required, and purchase together! You can also investigate setting up a property trust … this can be done very cheaply if you know where to get a good trust deed template. You can get these for about $450.
If it’s something you want to achieve … there will always be a way! Keep going… you’ll get it!If the body corporate is handled properly, it can be very reasonable … we have done some deals on a Sunshine Coast Apartment complex right by the beach … and the body corporate is only about $2400 p.a … rent return is in the range of $520 – $550 p.w v’s about $600 p.w repayments at $80% LVR. Rental vacancies are also very low in the complex. I think apartments can be very good if you pick the good ones, and you know what you are looking for! I’d also suggest negotiating a buffer on purchase (from the vendor) to that you are comfortable for a few years with any shortfall as there is unlikely to be much capital growth in the next 2-3 years in many areas (ie buying under mkt value).
Hi John,
I have attended David & Julie’s program … and in theory what they teach makes a lot of sense and can be done. However, what is in theory is not always easily executed. You must have excellent communication skills, and be able to have the vendor understand the process very clearly, and be able to see clearly the benefit to them. Point blank … if the vendor can not see a benefit to themselves, you’re highly unlikely to close the deal. It’s a numbers game and you may have to speak with a lot of vendors before you can get one through…
Hi Owl,
Welcome to the group! I agree with Josh, there are a lot of good properties out there in the mining regions that are CF neutral … we have also done many that are CF positive. If you know how to negotiate well and structure the deal correctly you can even set these deals up with a buffer in your loan to cover and costs, upkeep or shortfall for a few years.
Make sure you are thorough in your research and have excellent professionals in your team!
Always start with the end result you desire and work back from that. It’s important to develop great negotiation skills or have someone negotiate for you if you don’t feel that is your strong point. If you know the reasons why someone is selling, you can work towards solving their problem whilst negotiating what you desire at the same time. Win win scenarios are the best.
I previously purchased a property in Adelaide for $129k in Salisbury North. 5 Bedroom, 5 yrs old. Mkt value at the time was $180k as it needed some maintenance. In good condition it was worth $215k. The above info was enough to gain some insight to the property and owners. Research revealed that this family built the house, so I could work out what the build cost was and what they were likely to owe, which was no more than $100k. Knowing that and the emotional reason for selling told me a lot. The bank was about to repossess the property within three days, so my cash offer for $129k was accepted immediately because it posed no delays or hiccups or any chance of falling over.
Hope this helps
A friend of mine, Daimian Patterson, is a trusted property coach. You can simply google him and you’ll
Easily find plenty of research on him and his free e-book. He recently took a trip to USA and bought a number of properties himself over there. He’d be a great contact to give personal experience on what to do, what not to do and where to look.I believe his focus has moved away from buying in USA possibly largely due to the weakening dollar.
One word if caution regarding USA – its a very big country and very different conditions to Australia. Research is very important. There are many areas that are very cheap but also largely abandoned. Be careful. Visiting and scouting around is highly advised.
Hi All,
We recently did a deal for our clients in Gladstone after rescuing a Developer with 3 Land + construction deals they needed to finalise within 60 days to avoid a disaster.
On the tail-side of that deal … being successfully completed and building trust with them … we set up a deal for about 25 of our clients to secure a house and land package.
The creative aspect of the deal was that the clients each receive $85k equity in the deal from day 1 of purchasing the land (step 1.), rather than in dribs and drabs through the construction, making it hassle-free for our clients and therefore not having to worry about the developer and deal with cashflow concerns with the progressive draw-downs.
Result … our clients gain equity on settlement off the land – not on completion of the project (purchase price was the actual valuation). They also had the cashflow upfront to take care of any repayments during the progressive drawdown, and until the property was tenanted. The clients also used NONE of their own money to do the deal, and they had a buffer in their loan on completion.
Always mitigate risk … money in these times are hard to come by … and mistakes you make in Property can be very costly!
If experience is lacking, I’d suggest not to bight off too much and learn from other people’s mistakes not your own.It’s always very important to have a good plan … and naturally get good advice from professionals who have already done what you want to do. Focus in those that have done it and succeeded, not those that have failed and will tell you every reason why you shouldn’t do it.
Most importantly, work out what you really want to do … and put your focus on achieving it …. be sure to take the advice that is given by those that you trust and respect!
Good luck! J
Good on you Anthony & Johann …
I guess some people don’t appreciate that there are people who love to make a difference.
Wayward … maybe you should invest in an iPhone and you too can chat and make a difference between appointments
