Forum Replies Created
Hi Shangrila00,
We are embarking on our first renovation next year, but have learnt that 10% for a cosmetic renovation (interior & exterior paint,kitchen,bathroom,general tidy up) is a reasonable figure to use.
Cheers,
Jye and Tahnee.
Hi Waydo,
Just touching base to see how your year has ended up mate. Hopefully all going to plan.
We are still working towards doing our first reno in Perth next year. Heaps going on for us.
Would be keen to catch up via email. Are you still at [email protected]?
Our hotmail account got hacked so we couldn't use it anymore. Our new email is: [email protected]. Sorry if you had emailed us and we never replied.
Will try and get you at your gmail account anyway.
Chat soon.
Jye and Tahnee.
This is excellent Steve!!
I always thought the site had a lot of potential to be easier to navigate.
It's far brighter and professional looking.
We love it!
Jye and Tahnee.
Hey Waydo,
Sounds great mate. Yes we’re in the area research stage at the moment as well. As I said we’re looking at Perth though. Yes, lots of numbers and stats to look at, but we’ve learnt that it’s the self preparation and doing the research that will determine whether or not the project will be profitable or not.
We’d love to hear how you go with your project and we’re more than happy to let you know how we go when we commence our first one next year. You can get us at [email protected].
Cheers Waydo,
Jye and Tahnee.
Hi Waydo,
We are just starting to learn about reno's as our preferred strategy as well. What we have learnt so far – as Luke86, wisepearl, Allen_A and Catalyst have pointed out is probably most important thing to look at first is "what is your target market?" – first home buyers? empty nesters? young profesionals? reitrees? Without knowing that you really have no idea about what property you are targetting (no. of rooms, proximity to transport,infrastruture, single level or two storey, 1 car spot or 2?) Each market generally has some fairly specific requirments or things they're looking for. e.g. retirees- kids have moved out and grown-up, likely grandchildren around and increased need for medical facilities access due to their increasing age. Typically (not exactly….typically) – from other investors we've spoken to – reitrees are then looking for: 3 bedrooms; either main for themselves plus 2 extra for kids & grandkids to all stay at once, or 1 each (apparently a lot of older couples sleep separately to get a good nights sleep) with 1 still left over for when the kids and grandkids come to stay. Typically they also want an ensuite for when they get up in the middle of the night for the 7th time (don't want to be frequently stumbling down the hall in the dark), all on single level to avoid stairs, easily maintained gardens, close to medical facilities and shops as I said. This then gives you the starting point to allow you to conduct further due dilligence (most important term we're learning) into: suburbs that provide the above, allow you to purchase, add-value and sell at profit. We're also learning the numbers and finance is the key – If the numbers don't stack up – i.e. you can't purchase, hold, renovate and sell and still make profit….move onto the next potential deal. Don't get emotionally attached, don't renovate a house to include all the things you want in a house. You aren't buying it-someone else is. Work out what they want (target market)…make it for them and sell it to them (at a profit). The tricky bit is all the due dilligence, hard work, number crunching and sourcing finance bit in between. That's what we have learnt so far. We have not yet completed our first reno, but are preparing to start our first one in Perth next year. Hope this helps.
No worries lbluedento,
For us we've assessed our situation and are confident we'll be able to have our money work harder and smarter elsewhere; hence having our place on the market right now. We're not content to hope for the capital gains that are unlikely to come in our area (esp. for our dwelling type – every second dwelling in our suburb is a duplex!) and we're definitely over the fortnightly expense of owning the property. We believe with our current routine investment savings + the extra $ we'll be able to save without that mortgage + the realised equity after sale we'll be well on our way to having our first deposit and maybe part of the purchase, closing and reno costs (eek!) for our first reno. A smarter strategy for us at this stage.
Good luck with your D (decision), would be keen to hear what you decided if you cared to share.
Cheers,
Jye and Tahnee
(previously JT83)Terryw wrote:JT83 wrote:Evening all,
For all-I can confirm (through my discussions with my accountant) that in a situation we described above – where you move out of your PPOR and the rent another home you will not pay CGT if you sell it for a 6 year period after vacting it. The ATO still considers it to be your PPOR for that 6 years provided you do not purchase another home to live in . The story changes if you do that.Cheers
JT
Not in all situations.
Thanks Terry,
Obviously people need to get tax advice tailored to their own circumstances.Enjoy your posts BTW.
Cheers,
Jye and Tahnee
(previously JT83)PaulDobson wrote:Hi JTLuke mentioned above that Steve 'used vendor finance to build a cash flow business.' Instead of selling your Corlette property at a loss (if you sell it for what you bought it for in 2008, it will be a loss), another alternative may be to sell the property with vendor finance (VF). This has the potential to convert your Corlette property to positive cash flow and, at the same time, fix (lock in) your capital gain.
If you wish to free up your equity in the property first, i.e. before you convert it to positive cash flow by on-selling it with VF, it may be possible to redraw from your loan.
We have just sold a property close by (in Salamander) with VF. It was sold at a premium price and is now generating about $500 per month positive cash flow. Considering your Corlette property is probably extracting some serious dollars from your pocket each month, a turn around to making a few hundred dollars per month from the place (after all expenses), may be worth considering.
Cheers, Paul
Hi Paul,
Thanks for the advice. I understand the concept of VF, but doubt we would be able to successfully negotiate a +CF arrangement and sale. I say this given the stagnant state of the market and recent sales for duplexes in the area not being at a “premium” which I imagine we would need to sell at with VF. I’d be keen to hear if you think otherwise. Additionally, we are trying to get away from owning property in our own name.Thanks again for your post!
Cheers
Jye and Tahnee
(previously JT83)Qlds007 wrote:Bit late now given that you have already settled on the property.Just need to bear in mind that substiantial renovation and strata titling the units will trigger GST so you need to factor that you into your end sale price.
Cheers
Yours in Finance
Hi Richard,
We are learning about renovating now, but very little is mentioned about the fact you will incur GST. Understand this is more a tax question but at what point do you start paying it? Is there a profit limit or is it the cost of the reno? Obviously this will be a cost that needs to be factored into our bottom line.
Cheers
Jye and Tahnee
(previously JT83)Evening all,
Firstly, apologies its been so long since I've replied. Secondly, thankyou all for your input and advice-very much appreciated.
Just to clarify a few points I guess from our side of the fence – and as some of you point out – we fully understand that neg.geared property doesn't have to mean the end of the world-provided the figures stack up and it makes sense (financially) to keep it (i.e. CG outweighs losses, other opportunities for tax savings through depreciation claims etc) . The main drive in our thinking in regards to selling our property is that overall (when we consider all factors-CG to date or lackthereof, potential for CG in future, nett.loss, ability to continue funding nett.loss,etc) we believe we can achieve a greater return elsewhere than having our $ invested in this property. Does that seem reasonable if I explain it that way? That's not to say we will flipantly chop and change between buying and selling property simply because it does not make pos. cashflow-but instead weigh up all the pro's and con's and decide from there. With our property specifically – which I probably should have pointed out initially – it is not in a growth area. In fact we expect to sell it for essentially the same price we paid for it in Nov2008. Therefore the "equity" that we will realise is that which we have built into it purely through our own mortgage repayments – I didn't say that we would sell a property that was expecting capital growth (luke86). If our property was achieving significant enough CG to cover our nett. losses (and some) then I imagine our thinking would be different.luke86-I also agree with you that residential property is not the greatest vehicle for achieving +cashflow. Hence why we are keen to initially do lump-sum cash projects (renovations) and then purchase debt-free commercial property for +CF (as Steve advocates.) That's the plan.
JamieM-thanks for Kelli's contact. Have been in touch with her-she was very helpful. Will be using her for our tax returns and tax advice from here on – I did mention your name so maybe now she owes you a coffee? I'll leave that with you.
For all-I can confirm (through my discussions with my accountant) that in a situation we described above – where you move out of your PPOR and the rent another home you will not pay CGT if you sell it for a 6 year period after vacting it. The ATO still considers it to be your PPOR for that 6 years provided you do not purchase another home to live in . The story changes if you do that.
Cheers
JT
Hi Janine, Yes so do I. If I find any further info I will repost on this forum thread.
Cheers,
Jye Thomson.
Hi Janine,
Saw your post and thought I'd comment on it because we are essentially in the same position in wanting to learn more about structuring as well – via trusts and/or a company – not in regrads to having a similar equity position unfortunately.
Sorry I don't have any advice – as we are very new to investing and just making a start now as well – but I will watch this post with interest to see what advice other members provide.
Cheers
Jye Thomson
