I find them regularly. There is a range of tactics.

1 Owner and Agent know what the land is capable of and it is well marketed – in that case be honest pay market value and move fast.
2 Revers above, owner and agent may not know, and it may be poorly marketed and the market has missed it. In that case negotiated harder on price.
3 Cant find the right site, use paid data mapping services to find appropriate site and start calling owners.
4 Get approached randomly by people who know I am a BA and want to sell with no agent, I go and find a buyer who wants that kind of thing. I make it clear that I am working for the buyer and not the seller, and that my intention is to get them the best deal possible. No idea why people would want to sell this way but some people just hate paying a sales agent I guess.
5 There are probably more but this is what I thought of so far

Joint ventures are certainly possible. Rob Balanda a very well known oz property solicitor has a series of educational resources available on this topic 2 are relevant:
1 Joint Ventures Made Simple
2 Options Made Simple

In 1 you do the project together
In 2 one of you options the other’s site for slightly more than market value and does the work then buys the other out. (or the developer options both, does the work then buys you both out)

Probably 1 is better for you, but be aware you need an agreement in writing and you really (really) need to trust them – that means personality, stress tolerance, financial backing etc.

• This reply was modified 9 years, 10 months ago by  BuyersAgent.

Peter wrote:

Hello all,

I am new to this forum and new to IP.

Introduce myself first:

I m 31 yo in Sydney. I am working full time with approx 70K annual income.

I am currently living in my PPOR (house) which was evaluated at 850K with 293K home loan to pay off (interest only now).

I have an IP (terrace house) which I bought mid 2014 costing 820K and renting at 650pw, and 80% loan to pay off (interest only).

My mortgage broker is helping me get 20% from PPOR towards next IP and get the rest 80% from another bank, aiming at an IP worth upto 750K.

I am not confident with the next IP and not sure where to go, therefore would like some ideas from people on this forum.

My goal is to retire early with my rental income from IPs. Not sure how many IPs will be sufficient to achieve this goal. But I do like Richard Taylor’s idea of having 40 IPs in 10 years.

Looking forward to all you suggestion.

Peter

Welcome!

I would suggest if you main goal is rental income, that you sit down and think about building a portfolio of properties, with some good rental yields. You might want to do some value adding too (such as renovations) which will speed things up and keep the deposit money flowing. If you want to remove the emotion and buy on the numbers you should do some more research and get as much help as you can (just make sure its independent help not a sales pitch for an off the plan development!)

I get that you want a nice car – and if you are asking the questions here you obviously want to find the balance and preserve your borrowing capacity for IP’s too. Well done for asking BEFORE committing to the shiny new expense.

If you really want to salary package – here is what I once did to try and get the balance right (nice car but not overspend).

The leasing rules say you need to have cars at say 7 yrs old at end of lease. (they vary a bit but give or take)

This means you can find a second hand car and run it through the system. It doesn’t have to be that old.

I once bought a 4 wheel drive. $58k new, but I purchased ex lease 18-20 months old for 21k. Yep thats some depreciation. That is why I don’t like new cars.
Then I sold the 21k car back to a leasing company (getting my capital back) and salary packaged it for the fortnightly pre tax payment.

The payment will still effect your borrowing capacity but not as much as the debt amount is much lower.

Alternatively you could just go get it financed on the lowest interest rate and longest terms you can find.

Alternatively you can buy more properties, set up multiple offset/redraw accounts off the equity (talk to your broker and accountant to avoid screwing it up) and use the equity to buy a car. You will be servicing a lower rate.

Alternatively just buy the 21k car for cash.

Alternatively ride a bike.

Aternatively ….

Terryw wrote:

e process of setting up a trust at the moment and want to know the best way to structure it and also if I should create a business which controls that trust for future tax reasons??

+1

If going down the trust route get good advice from someone with real residential property investing experience.

I have no affiliation with Terry and I am not an ongoing client of his but I have previously paid him and his business partner to provide structuring advice (so I could cross check with my own accountant/advisor) It was TOTALLY worth the money.

Sammie wrote:

Hi knightm, thanks so much for your feedback. Just wondering if you’d know if there are articles that could give me a little more insights on the structuring strategies of the loan? Maybe examples of ways on loan structures?

many thanks!

As above Richard Taylor has a great track record and some good wisdom in this area – chat with him. As a private investor starting out I did everything in my own name but different lenders across each property to avoid cross collateralisation. Otherwise my view is that loan structuring is quite important and you should probably see an accountant (who is experienced in property and structures) and a good broker. I have recently heard from a client of Jamie Moore from passgo homeloans happy with the overall structuring advice. A lot depends on your risk profile. If you are a standard wage earner in a low risk profession (risk of getting personally sued) then own name is probably fine. If you are in a high risk profession (like a sole trader medical doctor or something) then use trusts. Trusts have commercial applications too other than asset protection but they are expensive and daunting to some, I would argue its better to make a start rather then spend years debating the perfect structure and actually doing nothing. Get the best info you can, then move forward!

Thats fine babyflynn – if you want to chat about more affordable options in Wollongong – drop me a line. I have done a bunch of sub 400k deals recently. Sydney is indeed the most solid market, and it always will be. I just worry that its had a long run of growth and people always expect this will continue forever at the end of the cycle. It doesn’t. They cycle applies there too.

• This reply was modified 9 years, 10 months ago by  BuyersAgent.

Yep no doubt some of the cheeky ads are generating interest and selling above asking price. Best of luck. Still a few in that price range in Illawarra, not many.

welcome maycefactor, good questions…

Buffers are a great idea, and the size of them depends on your SANF (sleep at night factor) many people use multiples of time, such as “what if my property was vacant for 6 months”, or “what if I was out of work for 3 months” the work out what you need to keep the ship from sinking. I advocate basic percentage if you are just doing quick calcs – such as 5% of total debt (or 10%) for the more conservative. Just put in in an offset or redraw somewhere and leave it there in case.

Regarding costs – I generally find purchasing costs to be in the 4 – 5% range (being conservative) when you include stamp duty, solicitors, borrowing costs etc.

Independence is important, but remember everyone in the property industry gets paid somehow. For example I am an independent buyers agent meaning I am paid by the buyer only, no other commissions or kickbacks and I act only in my clients interest. My business lives or dies by my working to get my client the best deal possible each time. Brokers are more independent than banks as they get paid across the board so can often get you better loan products than your local branch manager but they still get paid. Jamie M above is one of the good ones in broking (and no I don’t get paid to say that) Solicitors act for you but also charge. etc etc. Knowledge is important, and there is a wealth of it in the forums, so enjoy your reading time! Its important to build a quality team to help you progress in real estate, so check out references etc to make sure whoever you choose is trustworthy and then leverage as much of their experience as you can. This will speed things up rather than having to know everything about everything all the time.

Be careful.