HiTaf,
Can you expand on the various costs.
Eg…subdivision costs ( strata or green title) Demolition if reqd. Fencing and landscaping.
And finally, how did this stack up to new market value ( did your equity position improve after completion comapred to before you started ??)
Just curious as I completed one last year as well, and currently have one on the go in Ardross.

Cheers,
KP

OK …I was in a funny mood yesterday ( over it now)
It was a tongue in cheek comment in reference to what some gurus preach about how you go about speeding up the process of property acqusition, etc. and how some ppl might blindly follow such advise.
( Someone by the name of o be one jakobi… or something like that, his courses and tapes are only $2500)
Anyway, it provoked some good responses…and I tend to agree with Acey….you’re in business after all so treat it like a busineee… its not always win/win, sometimes someone has to lose.

SO, in a better mood today as a result or receiving an offer on an IP last night with a quick 30 day settlement, so if it goes through, will be celebrating with some instant gratification…….new car, trip to Hawaii, probably pick up NZ as well as properties are so cheap there…

Nah I’m only kidding…will probably plough it back into some more proerty…

KP

TOO EASY…to be sure, to be sure… Monners,

Grreg had a good point that the finance clause should detail the name of the lender, and as such if they reject the finance application, then there is no compulsion on you seeking finance from an alternate lender.
Hence the contract falls over, but the vendor or their agent can demand that you prove by way of a letter from that lender that they have refused finance.

Thje finance clause is also a legitimate “out” clause if you decide not to proceed. COnsider the following:
You’ve read up on one of the investing gurus books, and they advise you put in “Multiple Offers”. say ten or twenty or more, etc.
So you go ahead and do just that.
But you can only afford to buy two properties.
Unfortunately, five of your twenty offers came back accepted, so you invoke the finance clause, legitimately now, as you can’t afford to settle all the accepted offers !! HOWZAT !!

BTW Congratulations Manic Squash on getting your offer accepted….(the original poster on this topic.)

Cheers
KP

HI all,
Thanks C34 for dobbing me in…and yes I am in Karratha…

There seem to be some GEHA (Govt Employees Housing Association) and Defence Housing leases around that offer longer term +++ leases.

From what I have seen, they are not really +geared, and the asking prices tend to reflect the rents received (ie…high rent = high asking price, not necessarily reflecting the market value) They are a very passive investment and may suit some investors, but not my cup of tea.

But on the positive side, you can pretty much be guaranteed of receiving the rent for the term of the lease (no vacancies) and in the case of DHA I understand they do the maintenance at their expense and replace carpets and repaint at the expiry of the lease….but their management rates are usually pretty steep.

Like I said, not my cup of tea, so am not a full bottle on all the terms and conditions involved.

I feel asking prices are too steep and hard to justify ($300k to $400k for a new 4 bed 2 bath home) and to this end am trying to organise some investors and a developer/builder from “elsewhere” (Perth) to do project building in town with a view to getting prices down to more realistic levels, and as rents are still very steep and staying high, you would end up with a true +ve property, at a marketable price with the potential to reap some gain should you decide to sell.
Thats the plan anyway…

If anyone needs more info, or wants feedback on a particular property, I am happy to volunteer an opinion..

Cheers
KP

Great advise PK,
Too many first home buyers want all the bells and whistles when they buy their first house.
Its gotta be a 4 bed 2 bath NEW house with a mortgage to match which as you suggested, keeps you poor just trying to keep up with the repayments.

The first property I bought to live in was so bad, that the bank would not lend on it not because I couldn’t afford the repayments, but because they deemed that I did not have enough savings to make it fit for human habitation ( renovation needed)

The one I bought in 2001 to live in was also so bad, that we got proior possession so we could strip the floorcovering just to get rid of the SMELL coming from the carpet.
We ended up using disinfectant on the concrete floor before replacing the carpets.
But this property had heaps of potential and has netted us a huge gain.
So short term sacrifice pays off in the end.

But to answer your question Henry, just because the property frenzy of the last few years is over, does not mean that there are still not good property buys out there.
Its not possible to advise that you limit your first buy to under $100k, it has to depend on the market you are looking at and on your budget ( ie.. income and savings etc.)

So maybe if you provided more info. you might get a more informed reply.

Cheers,

KP

I believe its a “Buy & Hold” property.
ie.. one you intend to keep……

KP

Thanks for the clarification Michael,

Tristan, contact DOCEP, you can do this on line via their website where you can download application forms and expalnation forms regarding the CPL, etc.
Worth a look.

KP

I sympathise with your dilemma phenomena, and I did take note that you said it was your first sale.
I tend to agree with you that you are paying the agent for their supposed professional service, in your case you copped a lemon.
You can be as proactive as you like, but in the end if you are dealing with a rude, abusive person ( firstly you don’t want to talk or communicate with them, its only human instinct) then you don’t stand much chance or a successful outcome.
But I would say don’t let it put you off, chalk it up to experience, as not all agents are like the one you copped.
BTW, is is standard practice that you pay all the marketing expenses.?…in WA its negotiable
, and because its so competitive, most agent wear the cost themselves.
KP

Yep, you’re right Sal,
Sounds like a good arrangement to me…do it in stages, such that you still have some cashflow from the other rentals.

By a pain, I mean you have to budget for the borrowing expense (interest) and holding costs. If you can manage this, it is no problem.

In fact you can still claim the interest cost as a tax deduction during planning and construction ( before rental income is derived ) which is a huge advantage, and goes some way to minimising the cashflow pain. Worth looking into…

As far as using an architect, and waiting for planning approval, I have found that if a property is zoned for duplex or subdivision ( the RE agent or council can tell you straight away) then all you need a a builder to come up with some sketches, and then plans (once you agree to the concept)and this gets submitted to council for approval.( by the builder)
Any reputable builder will be knowledgable on each councils requirements, regarding setbacks, open space to built up space, etc. And the cost of plans, submission, is usually included in the builders contract price.
It may be different in Vic or Qld, but in WA its a simple process and takes no more than 3 months from concept, to approval (usually !!)
The only problem is getting a builder to start on site ( currenty 12 month wait from contract signing to commencement on site due to backlog of contracts..)

KP

Dom,
Try working backwards…ie start from the final market value of the completed development, and deduct all the various costs including, completion, construction, subdivision and finally, initial purchase price. This will give you an idea if it going to be a profitable exercise and also an idea of what you must pay for the property initially.
There are many benefits doing duplex developments to keep for rentals..ie new property, max depreciation, better rent, acquiring property at cost and not market value, built in equity on completion.
I have found that banks will lend 100%+ for construction & subdivision based on end market value as lomg as LVR stays below 80%
Last one I did: purchase the initial property on 80% LVR and with all additional construction completion costs borrowed, the LVR came down to 56% based on final value. Only pain is you have to fund the borrowings during approval and construction process, without rental income coming in.

KP