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You should read this thread….
http://www.propertytalk.com/forum/showthread.php?t=15810&goto=newpost
Spain is a third world property market, I wouldn’t touch it.
Don’t you get hammered with a huge land tax bill Richard, with so many properties in Queensland?
Interesting to note rents in Dysart are dropping all the time, now as low as $400 per week to get people in and as low as $450 for a 3 bed in Moranbah.
I get the impression the glory days are over for a while.
Hi Richard,
I work in a specialist part of the bank head office that doesn’t deal with lending.
Just trying to find out what options are available in the general market. Also currently on holiday in NZ, not in the office. I’ll look into it in greater depth internally when I return.
Yeah I had thought of that Terry, borrowing the money at a higher interest rate, to fund a term deposit to secure against the bank guarantee. It has the same net effect as what I want to do. It would save me money however compared with just outright borrowing the funds.
Thanks Terry, I’ll try it anyway. I don’t need to draw down the loan, I just need to have the facility to access the funds that are being guaranteed by the bank.
With a personal loan, do they have the equivalent of an offset account? If so, that is another way I could do it potentially. Borrow the money, but hold it in the offset account as security for the bank guarantee.
By nature, an easement will need to be accessed.
From http://www.conveyit.co.nz/free-property-advice/easements/
The most common types of easement give the owner of the dominant tenement rights:
– to convey something, eg water or gas pipes, telecom/electricity cables (see also the Electricity Act 1992);
– to drain water or sewage;
– to go over neighbouring land (rights of way, for example).If they are using the land for gas, water, telecoms and electricity, whatever you put down, will need to be ripped up every few years and replaced at your own cost. I imagine the utilities companies wouldn’t allow you to do it, or would demolish anything you put there as soon as they needed access.
Where do you fit into the deal? The owner is dealing directly with the developer, what is your role?
I’m surprised that the onus would be on Delamar to sue. Surely the other party has paid a deposit that you are entitled to if they never settle. It would be up to the other party to sue you for the deposit back if they felt they had a case against you for breach of contract.
Note I am just saying how I think the system should work, not how it does work. If it doesn’t work that way the seller has no protection and the deposit is meaningless.
Hi Wealth, can you please share the options strategy that lead to $2M profit in 8 months from a small outlay?
Your contract says vacant possession?
I have always said that the worst possible thing to happen was the huge reduction in interest rates, combined with throwing free money at people to buy homes they couldn’t afford.
When combined with stupid lending practice from the banks, it is an accident waiting to happen. Just look at what was happening less than 2 months ago from NAB. http://www.news.com.au/money/property/first-home-buyers-urged-to-beat-rate-rise/story-e6frfmd0-1225791082144
They are happy to lend at least $450,000 to those with an income of $61,000. When interest rates hit 8.5%, interest only repayments on a $450k loan will be $38,250 with an after tax salary of only $48,000. Good luck trying to live on less than $200 per week, pay your rates, food, transport, power, water, clothes etc, let alone make any dent in the debt actually owed.
The scenario as it has played out was the worst possible for first home buyers, lured in at inflated prices, which increased by more than the additional grants and before they have even made their first payments, interest rates have already spiked by almost 1% and are sure to continue to increase.
It sounds like you should be considering buying cashflow positive properties. If you are negatively geared over a portfolio with interest rates as low as they are right now in NZ, there is something wrong.
P.S. NZ has basically no defence force, so count that suggestion out.
I was going to say anywhere except for Detroit. Yes they are cheap, but where will growth come from, it is a dying town.
Personally I see a lower price for a similar property as a huge bonus. Let’s say that a property without the restrictions would be $450k rather than $350k. You see them as having equivalent satisfaction value to you (utility in economic terms).
At a 7% interest rate, the cost to hold the $450k property is an extra $7k per year. Over the next 5 years, the $450k property would have to increase in value by more than $35k more than the $350k property. This may or may not happen, in the meantime you are guaranteed to save money compared to the more expensive one.
It seems that the key to solving the problem, is finding the right lender… get a good mortgage broker on the job. Maybe ask the real estate agent to find out which bank the previous owner has their mortgage with and use that to get the same deal they got.
Yes you have managed to borrow most of the $1.3M. I am finding potential deals, but a lack of cash is holding me back.
I currently have my funds tied up and in April will have about 50k available. Not enough to take on a deal like yours unfortunately.
Wow great result,
How much cash did you need to have available to do it? Seems the old adage that you need money to make money is true.
How much did your development cost per sqm?
Hi Dwolfe,
How much profit was there in the subdivision you did?
Thanks,
MattSteve McKnight says that Commercial is the direction all residential investors should head long term. He states that typically commercial returns around 8%. Because there are no outgoings, this is 8% net.
Typically in commercial property there are no outgoings. The contract with the tenant will almost always state that they must pay for them (as long as you have a tenant of course).
The main restrictions with commercial are higher interest rates, lower lvr, higher entry cost and longer vacancy periods than in residential.
$3,000 per month is alot to pay for a 40sqm studio, even in that location. Not sure that it would continue to rent for that when vacated.
I live in central Sydney and pay $1900 per month for a 50 sqm 1 bed with parking.
