Forum Replies Created
Hi,
If you are building a complex of 5-6 units on these blocks of land and you have enough equity/cash to put into the project, then I douct that you will need presales to get finance. As long as there is a solid exit strategy at the end (i.e. either refinance to hold or sell some and refinance the rest or sll all of them) and you can either service the interest during construction or arrange to capiliae the interest during construction then you should be able to build and hold.
Also in my opinion a discretionary trust with a corporate trustee will almost always be the best structure for this, with probably a different trust for each property if you ultimately want to build multiple units on each property to hold. This will give better asset protection, be more tax effective and offer better estate planning than holding in your own name.
Buying in a company means you don't get the 50% CGT discount so this is not really the way to go.
Cheers,
LukeWow I got really confused trying to read that.
I think you are asking do you determine whether a project is feasable based on either a % return target or a cash profit target. You probably should work on a combination of both, but instead of just basing all your figures on one set of sell prices and build costs, base your calcs on a number of scenarios of lower sell prices and excalating build costs.
So you could calculate the return based on a scenario of higher than expected build costs and needing to sell at lower than expected sale prices. This would be your worst case result, and of course you need to plan for what you would do and know what to expect under a worst case scenario.
Purely judging whether something is feasible based on a % return only is not really considering everything, as a project with a cost of say $1.5m returing a likely 10% after costs with next to no downside risk might be more attractive than the same project with a likely 25% return with large downside risk. Similarly a $$ return only target is not really considering everything for similar reasons.
Cheers,
LukeAnd sorry in answer to your question- I saved approx $30k to purchase my first property. I also used the $14k first home owners grant to put towards the deposit and claimed the stamp duty expemtion for first home buyers. I am now living in a rented unit and have rented this apartment out to a nice tenant who pays her rent on time.
Luke.
Hi Wannagetthere,
Along the same lines as the above posts- Most people I know who own propetry have had $20k – $80k lying around to get themselves started. Unless you have a friendly family member who can put up equity as security or lend you money, then you will need to save a deposit.
Also, without the money management skills to save money, holding onto a piece of real estate might be very difficult.
Cheers,
LukeHi Andy- you could always let the tenant know he can move out if he isnt happy with the driveway. It sounds like you could get another tenant easily, probably paying higher rent than the current tenant if units with no car spaces/garages are renting for the same as yours. Either way, there is no way I would be paying any compensation.
Seriously, if you hurt your head by banging it against a brick wall, most people stop banging their head against the brick wall. Why the hell has the tenant kept driving their car up the driveway if it is doing damage? Not your problem I say.
Luke.
40% is ridiculous, they are clearly taking you for a ride. If I were in your position, I would let the contract fall through, get a planner like Christain to help you sort out the problem with the council, and then put the house on the market again.
Cheers,
LukeIf you can get the Renovate for Profit couse for 50% off then that is a good deal. It is very useful- spreadsheets, videos. audio etc. I do not do renovate for profit as such, but it has lots of good ideas that can be applied to other strategies like developments and subdivisions.
Cheers,
LukeAnd please make interest only payments and put any extra money into an offset account so you dont have the same problem as thousands of other people on this forum with needing to redraw money from the loan to buy an upgraded PPOR in five years time.
Luke.
I doubt it will increase the value by anymore than $10k (at best).
As I see it, adding value through renovations/improvements works best with items that make an immediate impression like new paint, new kitchen, bathroom renovation etc. These are things that add a wow factor and play on the emotional side of the buyer. Another reason is that fpr $10k, you will hopefully be able to complete renovations that would cost some people $30k to complete by doing some of the work yourself, by organising trades efficiently and by making smart purchasing decisions.
With solar panels, it is easy for a buyer to just arrange to get them installed themsleves, so if they had a choice between your house and one that was pretty much the same but $10k cheaper, they are just as likely to buy the slightly cheaper house and make one phone call to get some solar panels installed (or even make an offer for $5k more for your house as they figure they could buy your house and save money as the solar panels are already there). However if that house for $10k cheaper had a far inferior kitchen and a run down bathroom, then it would be very likely that they would pay $10k extra to buy your house because it looks much nicer and they could see themselves living there and impressing their friends with how nice the house is.
We understand that your house is new- it is just that renovations and value adding strategies are usually confined to older houses as it is very hard to add value to a new house as they typically already have all the features that the target market wants.
Anyone else have sopme thoughts?
Luke.
Trusts aren't registered with ASIC, but a corporate trustee (a pty ltd company) if one is used needs to be. Trusts are registered with the Office of State Revenue and also Land Titles Office (I think) in the state it was set up.
Luke.
Read the book "Trust Magic" by Dale Gatherum Goss, "What Every Property Investor Needds to Know about Finance Tax and the Law" by Michael Yardney and/or 'Family Trusts" by Nick Renton. These books are quite good and explain the basics.
Cheers,
LukeAnd sorry I was meant to add- a $500 stamp duty charge for setting up a trust in NSW is irrevelant and shouldnt affect your decision.
Sounds like you shoudl set up a trust based on your comment. The advantages would surely outweigh any short term negatives like negative gearing being trapped in the trust, slightly higher accounting fees and the set up costs.
As Terry said you should think long term. What do you want your investments to look like in 20 years? Would it be better in 20 years to have the assets held in a discretionary trust structure, a company structure, a unit trust, superannuation fund or in your personal names? Or a combination?
Cheers,
LukeAgree with Jamie. It will certainly make it look better on realestate.com.au and so will get more people through the door.
I would personally hold off on doing any work untill it comes time to sell, unless possibly if you were considering refinancing in which case it may result in a higher valuation and so more equity to extract out.
Of course it all depends on location.
Cheers,
LukeSorry I should correct- bonds can provide growth so that is probably not a good example.
Luke.
If you are looking for yield then Australian Residential Property is probably no the asset class to be investing in. Residential property is traditionally a growth asset class and only delivers net yields of between 2.5 – 4%, but has a history of growth.
If you were looking for yield perhaps you would be better off investing in commercial property. Even bonds or term deposits- these give higher yields than residential property although with zero growth, they are uinlikely to make you wealthy.
Cheers,
LukeFor FHOG you will need to read up the office of state revenue for the rules. In NSW I think it is you need to live in the house for a minimum of 6 months commencing within the first 12 months of settlement.
I am pretty sure there is no time limit for claiming CGT exemption- just stick to the rules for FHOG and you should be fine.
Cheers,
LukeHi c-man. That is what many people on this forum do for their first property- buy an IP but live in it for a short time (say a few months) and then move out so it is CGT free.
*yawn*
Freckle- The sky will not fall in and the sun will rise tomorrow. Some countries have a debt prioblem but most do not. I strongly disagree with your statement that every major economy is near collapse.
I am guessing that you consider yourself as a notable investor on teh world stage judging by how you speak?
Having said that, I am not privvy to the information that major institutions and governments have. And I strongly suspect nor do you- We are all generally poorly informed and only know a fraction of the full global enonomic picture.
Cheers,
Luke
