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On those figures,the 15 K saving is significant then. With land value at that level, make sure you don't spend too much on building the dwelling as you state it is going to be a renter.
Look at the 15 K saved (don't go spending that on items of instant gratification…..home theatres and the like) as another deposit on a 150,000 block. Build this house, get depreciation and the tenant to help you hold and as growth occurs, suck out some equity as a deposit and duplicate the process.
Good luck
The difference in block size ( 6.7 %) doesnt affect a tenant nor the rental.
You mention and extra 15,000 for the larger block. What is the value of the two at present. A saving of 15 K on a 150,000 block represents 10 % and may be significant to your feasibility and financial situation, however if you're trying to save 15 K on a block worth say 300 K +, then think about it further.
Are you in an area with land scarcity? What are the minimum requirements in that local council for dual occupancy (think potential value add down the track). Just because it is in a Estate, doesn't preclude denser development being allowed in the future.You've mentioned that this is a long term hold and no doubt you're using depreciation to help you with holding costs. Basically if 640 sq m (over 600 sq m) allows development of two rather than one and that 15 K is trivial in the scheme of current land value and indeed end value of the dwelling you're constructiong, I'd go for the larger block. By the way, is it a corner?
Hi Glenn,
It's a shame about your situation, however if you think it is all over……….it will be. Perception is projection. Your planning for three months will go down the drain if you allow it to.
When some one pulls the rug from beneath you………learn to dance on a shifting carpet. If you see this as failure, it will be for you.
You mention reading one of Steve's books….is that all you based your planning on?
In the stock market you can paper trade. The property market is no different………..you can look/seek properties and research the market all without leaving your desk. The internet can be used to source sales, likely rentals, demographics, even visit the property courtesy of google earth which is also free. Therefore you can run the feasibility of positive gearing or positive cash flow before you spent a cent on consultants to set you up with whatever structures you've established.
Investigate other means of creating positive cash flow by perhaps developing new town houses and having depreciation help you hold the assets whilst capital growth kicks in. Investigate all possible strategies.
If you were involved in a $ 6 Million business surely you've encountered set backs and problems before……………this is no different. ………look for the opportunity and focus on solution not the problem.
Also seek out as much info/education as you can to improve your investing knowledge. Scour this forum and the threads it contains………learn as much as you can
Chin up and………..fail forward.
Also in addition to Richard's post above, lenders usually want to see a 15-20 % return on the project end value. Check your feasibility and if it still returns 12 % you may want to consider whether it is viable for you to proceed.
Ensure that you've allowed a 5 % contingency on the construction cost for your project.and if your figures of 12 % have allowed for this and are on the conservative side, see where you can cut some costs (without ruining the project) to bring your feasibility to around 15 %.
Thanks for adding to this thread and helping with due diligence that forum participants need to do. Your insights, as with those of matt007 earlier confirm that research is important.
Property options are so specialised that undertaking courses that do not allow any other development information to be imparted are of far lesser value than courses that are more encompassing. The biggest cost in my opinion of pursuing "the wrong course or strategy" is TIME. A person can always make more money, but cannot get back our most valuable currency (our time) if it is spent on pursuits that are more difficult to achieve than the "salesman" claims.
Your insights are appreciated
Hi AJ
In your initial post you provide price ranges of $ 280-310 K. What's your actual budget and comfortable upper limit? I could then give you an idea.
For what it's worth, my bias will be toward high land content in Ringwood. Fundamentals are good. I assisted the purchase of two there last year for my nephew and sister in law……prices have moved significantly. To secure a potential future development site there with a 2 or 3 BR rental property you are looking at mid to high three's.
If you are wanting to spend less than 300 K maybe look at a well located apartment or villa unit/town house.
If you are looking for a cheapie that is well located with transport, shops, schools and in my opinion undervalued area, investigate house (on 650-700 sq m) in central Broadmeadows. Good amenity with flow on affect likely to kick in as Glenroy is becoming expensive. Try to find a place within 1 km or less to the train and main shopping centre. You will still get change from 250 K. Considered as an ugly duckling at preseent…………..we need to recognise that it is 15-16 km from Melbourne CBD. Good roads and plenty of jobs in surrounding more industrial areas. House on land that close to Melb city won';t stay at that price for long. Then there is always the potential of subdivision in the future and Hume council are pro-development.. Check it out for yourself.
Hope this helps
AJ
you need to ask yourself "why have prices decreased?" If there has been no change in fundamentals of the area i.e: a major employer leaving or people vacating a particular area/region, then you may have an opportunity to purchase. These are by no means an exhaustive list of reasons and probably relate more to regional areas rather than a metro city. You need to investigate further.
Although having said that, if you are looking at an outer suburb of a major city, check to see if they are doing a lot of new subdivision. That may dilute the stock and hence prices slide somewhat. The media keep telling us there is a housing shortage…..BUT, it comes down to what can people afford? Look at buying in a suburb where they cannot manufacture any new land with the near vicinity
Where are you based?
What suburbs are you looking at?Hi AJ
If you are looking in one or two areas (suburbs/precincts) then look at realestate.com.au SOLD props and get an idea on price ranges for varying sized blocks, house/unit size, condition, etc. You've even got photo's to give you a feel for the renovated ones (or not) and maps for location.
Look at the sales figures (for example in Melbourne – The Age every Monday) and compare that to the recent properties you've seen for sale or inspected. Pretty soon you should become confident in putting a price on a particular property just based on a drive-by assuming you've not stepped foot inside and it's unrenovated.
You need to become an expert in an area (or two or three). If you are not sure where you wish to purchase, this needs to be clarified in your own mind first. That way you will optimise your time and not waste it looking at properties outside of your current price range.
Hi Xenia,
I don't think that much has changed. The reason you are taking 20 new property management listings per month is becuase "YOU" are doing something right and those investors are not being attracted to other firms, or, indeed being repelled away from firms that are less than satisfactory.
Like you, I was brought up with the investing mindset of my parents. Unlike yours, they were not business people, however they lived below their means and invested in property. I guess being migrants from Greece they arrived ib Australia with little, and they embraced the opportunities on offer here and optimised their salary and what it could do.
Whilst I doubt they ever read The Richest Man in Babylon, the advice and values they instilled in me were right on the money (sic). In fact many of the property investing ideas/tips that my dad passed on to me are no different to those being published by some of the authors of today. Only difference is that the books on offer to us today have a more strucutured message and formula/recipe to the wealth creation ideal.
I also notice in my primary profession that the bulk of my colleagues/peers earn much and spend even more.
Good luck with your property management business.
Check out a book by Martin Roth and Chris Lang "How Investing in Commercial Property Really Works." It covers the topic very well.
The website of Chris Lang (Gardiner and Lang) is http://www.gal.com.au. They have some fundamental info there. Maybe start there and familiarise your self with the basics as it sounds as though you will be making a decision in the near future.
It's good that you seek out such knowledge, because the fundamentals of commercial investing are different to residential. I trust the info above helps you with your question and assists with your decision to go for the deal or not.
Hi Paulyp,
Don't hesitate. She is a very dynamic and knowledgable presenter. I am currently going thru her home study and intend going to the boot camp in Sydney in June. Before you order such programs it is worth attending a one or two hour seminar/workshop to ascertain if what she has to offer is for you. If you want a small snippet of what she is about search her name on you tube. I think there is a 10 minute (or so) streaming video.
By the way she is only 26 or 27 years old, but don't let that put you off. Her home study program covers developing from the basic two or three townhouse project to multi-level apartments or just gaining D.A.'s on sites and onselling to builders or other developers. She also touches on property options and provides creative ways/ideas to finance or do J.V.'s. I have spoken with Matt at her office and the boot camp covers similar topics with new material also. Should be a great networking opportunity with like minded people in the one room, viz: not just property investors, but specifically people involved or wanting to become developers. Should be some deals (J.V's) in the making just at this event.
Let us know what you think once you've seen Carly speak or sign up for her course.
Hi Matt,
your insight and honesty is appreciated. Many of us (whether we care to admit it or not) have paid for courses, homestudy kits, DVD's or CD's that have not been our cup of tea. But that's OK, because it is what due diligence is about. If something doesn't resonate with you…..better to spend a few hundred dollars or a few thousand and find that out, rather than blindly follow a certain path and lose much much more……….and most importnatly your time.
I have viewed the free DVD (intro seminar that goes for about an hour or so) and spoke with someone from his team, and it was clarified to me that, Yes, this strategy would require a decent time commitment, and I dare say quite expensive data feeds from higher level Google Earth and RP data subscriptions, etc, not to mention the mobile or STD phone bill when following up propspects.
Thanks for sharing your experience Matt.
Hi Gary ,
thanks for posting your review of the two books Fitzgerald. I cannot speak for Toney and have not read any of his titles (yet), however as far as the latter Fitzgerald is concerned, John is an outstanding individual. To this end, your opinion of genuine intent ( and not clever marketing) is correct.
Having worked thru his home study (Success from Scratch and Signposts to Success), read his two property books and also We Can Be Heroes (worth a read for inspiration if you've never read it) and met him in person at live events and in person (one on one) for near on one hour (very giving of his time), he is a very humble, generous man and greatly spiritual…….yes, there will be those that pander to the image of clever marketing (and John was attacked by one in the The Australian several weeks ago), but they are usually people with their own barrow to push and self interests to protect.
True prosperity involves the forensics of finance (as you nicely put it), motivation, wealth strategies, life balance and noble notions of giving and passing on the baton by way of being a custodian and ensuring we utilise our responsibility to pass on knowledge and help other to help themselves.
Hi Damo,
There are many good (and not so good) property books out there. I have read numerous good ones, and one that I read later on in my investing career is by Michael Yardney, "How to Grow a Multi Million Dollar Property Portfolio – in Your Spare Time." If there was only one book I could recommend that encapsulates most of the factors of how to grow your asset base, this would be it. Very well written and easy to read.
Anything by Jan Somers, Craig Turnbull, Steve McKnIght, John Fitzgerald and Reno Kings are also worthwhile. Just remember that you may read differing views as each author usually has their preferred method of investing. You need to be exposed to much and varied information and make your own mind up about which strategy is for you. Good luck and happy reading.
I have read two of Ed Chans Books on how to legally reduce your tax and on SMSF. I have also heard him speak twice at events run by Michael Yardney, and spoken with him in person at same. I also have a DVD home study kit where he features. He is knowledgable, gracious and humble although that should be evident from his replies to "wealth4life's" comments.
Whilst wealth4life blesses God and sleeps well, Ed Chan takes the time and replies (last post above) at 1.45 am.
I was curious and went to her website, as her name is unknown (she is branded by her domain.) Well, well well…….went to her forum link and page and under the Property category and the General Property thread (that has Q & A on all property related topics) were links to pornography.
Perhaps the moderator(s) of this forum would care to take a look at this and disallow use of the domain name as their member name. Perhaps wealth4life may also wish to explain why her website features porn links under the forum relating to property.
Whilst Ed is exercising his right to defend himself……. it appears that wealth4life (who is, of course, free to feature porn on her site) may also eventually exercise her right to exit this community as she has mentioned she may do. Hmmmm!
Why pay others for their efforts by buying their new units? I would buy an older style median priced (or less than median) house on decent land that has subdivision potential. In the S/E of Melb follow the new Eatsern Link. Ringwood/Heathmont has excellent amenity and also look at Frankston central. Buy and hold (rent out) for a year or so and seek DA for you to then develop your own portfolio.
You will find that by manufacturing another backyard for nominal cost and then building two (or maybe three depending on size)on the block your holding costs will be lower (thanks to depreciation and the higher rent for newer dwellings) than just holding the old one as a renter, even though borrowings will be higher for the overall development.
You then will have more properties to increase in value and create wealth by way of capital growth whilst the tenant and the tax man help along the way and also addressing your tax situation by gearing into growth assets. I guess it follows that you should not just buy one (above median priced) property. In case of liquidation a lower priced property will be easier to sell and also will be more affordable to more people to rent. Perhaps look at two $350 K properties and adopt the strategy above.
Hope this helps
Cheers
MIchael
A local management firm to Pac Pines is Guardian Property & Assett Management in Helensvale. Tel: (07) 5500 0245. I have been with them for nearly three years and despite some poor initial tenant choices (for which we the owners need to take responsibility) they handled all eviction notices and tribunal matters with ease. All is well now. I am from Melbourne and I find it comforting to have them manage my IP in Mudgeeraba.
As for the current tenants, with frequent breaches of their obligations (as you mention), you have grounds to remove them.
Cheers
Michael
