As the others have said, flipping is strategy that was marketeered a few years ago, by people like Henry Kaye. It was in a very different RE market (a rising market) where people could basically set their own values. It was also in the days hwen OTP properties were considered to be “discount”- as in “you’ll be amazed how much this property is worth when it’s built in 2 years!” That MAY have been the truth during a short period of time, but markets change so rapidly, you would have to have paid a deposit 5 years ago for it to have gained real value. Also, 5 years ago, it wasn’t an oversupplied market, as it is in some areas now.

Get an independent valuer to see what they think it is worth. You may not be able to sell it for 30k extra on completion. In fact, you may be in a situation, when it is worth 30k LESS than you paid for it on completion- depending on where it is and what it is. There are some people who bought an apartment in an oversupplied area, with dreams of fabulous riches.. and then had to sell it in a damper market a few years later for 100k less than they paid for it.

I hate to be a pessimist :o) but would you be able to afford it if this was the case?

kay henry

hobnob- hey )

No mentor here- just an average joe, getting by on wits

I am thinking if you have 25k debt, that’s probably not a huge amount- many people have that kind of debt- like a car debt or something- don’t panic- sounds, from what you’ve written, that you’re doing well in getting it paid off.

You’ve written that you have no credit rating problem, and it seems as if you’re working. I think you could get a loan from a traditional credit provider. I think you’d be eligible for the FHOG, from what you’ve said, and may have to only save for costs.

If you want to buy in sydney… I guess you know how expensive it is. I know you are thinking of being a wrappee… but can you afford a premium and higher interest rate on such an expensive home? 20% premium on a 500k home is an extra 100k. I think that would be a last resort.

kay henry

Well, Ronulas, I am not sure all Australian voters just think somneone is too big for their boots (tall poppy syndrome) and kick them out… I think voters generally look at what they believe or what they want a society to be, and vote for the Party that suits their ideology. If the main (social) issues for Australia might be: health, education, employment, environment, etc etc etc … then one looks at those issues, checks the policies of each party, and votes for the party that suits. I doubt tall poppy syndrome would have anything to do with something as serious as how the country will be organised for the next 4 years.

kay henry

powmow,

If you buy an IP in NSW, and you sell it for more than 12% (net) profit, then yes, you have to pay an exit duty.

kay henry

Dunno now, Cel. I was really looking forward to it, but I might have to go away for a while. I got a scarey phone call this evening and I might have to leave sydney- a friend of mine’s in a big mess and I am trying to do what I can to make sure she’s safe. I may not be here for Steve’s forum :o(

kay henry

hehe Jaffa… you ask an agent how much a property costs, and he says “how long is a piece of string?” hehe- that’s funny

Maybe he’s doing that negative gearing marketing of “the property will cost you $30 a week (at the highest tax bracket and with depreciation allowances, and based upon a rental of $$ per week).” I doubt he’s suggesting that if you earn 100k, then the property will cost you 500k, but if you earn 20k, it will cost you 100k.

I reckon he’s doing the “this is how much it will cost you per week if you earn blah blah” thing.

He’s being a bit weird in not telling you the price for it. What’s he doing? Maybe he’s conducting some dutch auction. But that would be rare on a new property.

kay henry

kay henry

Jaffa,

Sometimes I just go on a $$ amount, rather than yield. For example, I know of a house that was sold for 26k recently. It wouldn’t be hard to get a 20% yield on it – but that’s only about $100 a week. It would be eaten up by repairs, PM costs (it’s remote), and other costs, so for me, it wouldn’t be worth. Actually, it might only yield $60 a week- that’s a 10% yield, but why would one have the stress of that when one still has to pay off the asset and then do repairs and pay costs? I think the money would be better off in ING personally.

One of my properties has a 9% yield and gets 3 times less than another of my properties with a 6% yield. When i look at the $$ amount coming in, I can’t help but think I am doing better with the poorer yielder, although that’s obviously not the case ))

Really though, I’d rather the cash coming in on my 6% yielder, than have the rural property I first mentioned. Yield is not everything. I may lose money on the 6%’er… and it’s possible I may gain a buck or two on the rural house (it would literally be a buck or two @ 10% yield), but I know which property makes me feel safer.

kay henry

Oops- what did I say about tasmanians? I think they’re cute- hehe

kay henry

Karen,

My first two properties had rents which paid for the mortgage, but my partner and I had a very high deposit and two incomes. We tried to pay them off as quickly as possible, so we chucked the rents, plus every spare cent we had into them. Those were in the Jan Somers book days, before I had heard of CF properties. The rents we charged were cheap, and we weren’t focussed on yield. Those properties were pre-boom.

These days, I don’t have CF properties (westan does but he’ll tell ya about it) ) I don’t do wraps and never will. I am pretty much a tortoise in the RE game, and I work, so I don’t rely on the income of it. Actually, i have no income from it- just a few mortgages which will take me 20-odd years to pay for

Steve’s new tips? Well, he’s bringing out a new book, but I think that will focus on case studies of the MAP folks, and will be discussing his past strategies. I think we’ll have to wait for his 3rd book, or attend one of his seminars (he’s having one in sydney late October, I think) to find out what he’s thinking. Or ask him on here and get the free tips

kay henry

That is VERY funny, emcdonald :o)))) hehe.

kay henry