Forum Replies Created
Hi Lumwood
You might want to post this question in the Value Added forum which is often visited by others doing developments.
Mum
Check out what service is (supposed to be) provided before you sign up. And also ask how many they have on their rent roll. A good PM is worth paying for if it means less and shorter vacancies, higher rent, happier tenants, and no problems when tenants move out.
Also good to find one recommended by someone independent of the PM or the agency.
Mum
Hi Matt
Check if the council has a heritage tree issue. Go to their website and check under development for their rules.
If no issue with council, then you should have no trouble removing it.
If council consideres it a heritage tree, then check if they will let you remove it since it seems to be affecting the foundations and what you need to do to get approval to remove it. You might want to consult a tree surgeon or similar who is familiar with your area and council regulations as they may be able to find another good reason for its removal (like public safety).
Mum
Matt
Where are you?
Building costs vary considerably from state to state and from town to town. At least one of the insurance companies has a calculator on their site which should help you out. Calculates replacement so it includes clearing the site and I suspect doesn’t include fences but does include landscaping.
Mum
Hi Monty
Sounds like that agent had few people interested and was looking for any sort of lead. Did you remind them that you had asked questions which hadn’t been answered?
I always ask questions when I view a property, especially if I am even remotely interested in it. It tells me if the REA has done their homework, if they have put the property on the market in a hurry and who may be genuinely interested in helping me so I can help their vendors. If I don’t get an answer immediately or at least get a call within a few days, then I put that property and the agent aside. I’m no longer interested unless the property is still on the market 3-4 weeks later and the price has not been inflated.
In a down market, the best agents will take your details and get back to you when something comes along that might interest you. Especially if it is known that you are a cashed up investor.
mum
As I see it (being a boomer myself), their will be some shift in demographics but this will not be a major upset as the changes will slowly occur.
Boomers selling larger houses which will be bought by Gen Xers and Gen Yers who want to upsize. Or even start in the sort of house their parents finished in. Already happening.
Sea change means that seaside suburbs will continue to command higher prices. Already happening.
Most boomers will not retire on enough to be able to affect the market. Average super at the moment is about $70K. Downsizing to free up some cash perhaps but SD makes this largely uneconomic and pension rules exempt PPOR but not the cash “profit”.
Mum
Hi folks,
As I understand it, a dutch auction as proposed is sort of illegal in South Australia. You can discuss what might be accepted but can’t get the details of what else is offered. There is a fine distinction between the two. The vendor can accept or offer to negotiate with one or more parties but the REA can only present the offers.
As a seller, I try to set a realistic target with REA first so (s)he can tell potential buyers that their offer will or won’t be considered. And I don’t always negotiate if the best of the offers matches what I need to get out of the sale.
As a buyer, it is not easy. If I am willing to negotiate, I let the REA know and sometimes they do come back. If vendor is after a quick sale (eg Executor Trustees) then it is often pot luck as there will be no negotiation – you have to put your final offer in the first time. I lost out on a good purchase once because I didn’t understand this or the terms the vendor was after. I learned from my experience.
Mum
Hi Units4Me
I didn’t say I was only looking at it as a reno. My first preference would be development but the block was just under the size council would readily approve a subdivision and reno was to be my backup if council (as it often does) changed its mind and didn’t approve despite the verbal OK.
I am friendly with a few other investors who also attended the auction and we were all amazed at the price it achieved. Final price was less than $20K below price for similar properties with livable and much larger house on it, house suitable for renting immediately.
Mum
Update:
Went to auction this morning. Bidding started only $20K below what my numbers say is profitable and went up from there. Slugging match between 2 bidders only. The rest of us just left them to it.
Mum
Thanks folks for the help.
PeeJ, the property is double brick and dated.
There has been quite a lot of interest in the property as a development site as it just fits the local council rules and development sites in this suburb are rare. Demolish and rebuild is my fall back position but I wanted to know what problems there may be for reno as well as down the track if I subdivide and build.
Again, thanks for the info.
Mum
Hi Lyndon.
Suggest you research Steve’s resource of Wealth Guardian (go to the on-line shop and navigate from there). For a novice in asset protection, it is money well spent.
You may find people are reluctant to give you specific answers as it could be construed as financial advice. Read up on trusts as well as companies for the protection issues and the tax issues.
Mum
LifeX and GrossRealisation, deposit bonds are getting to be common for auctions. Especially for people who are organising for the deposit from the equity in other property and the second loan may not be completely set up in time for the auction. We do quite a few deposit bonds for people in these circumstances.
If the auction has already happened, then you need full loan approval before the deposit bond can be provided. But, if applying prior to the auction, then you can get the deposit bond based on a conditional approval as long as the only conditions are a valid purchase contract and valuation of the property. In this latter case, the bond can be valid for 6 months which allows people use the bond for subsequent auctions if they miss out on the first one.
If you want me to look into getting you the bond, then email me or send a PM.
Mum
I’m not quite sure of the dates but the size of the numbers is correct. You might want to get a coy of the May 2006 edition of Australian Property Investing as there is an article in it regarding building depreciation, what you can allow for tax purposes and the pitfalls.
Mum
We can provide deposit bonds for our clients but do not have the facility to do this where the finance approval was obtained elsewhere.
Sorry.
Margaret
A good thread.
We have a partial succession plan in place. And we are teaching our kids all we know so they don’t make the same mistakes. One of them is planning on being debt free and with $100K investment portfolio by the time she is 30 and looks like making it.
We didn’t have mentors. Both sets of parents have no idea about money, really. (Although my dad worked in a bank all his working life, they spent their super on overseas trips and had nothing left when Dad got really ill 20 years later and needed bailing out.) Books and learning from mistakes is how we had to do it.
Now we try to pass what we have learned over the years to others and not just to our children.
Good point, Simon, about the level of mentor. And explains why we never found a person to help as we seem to be always a step or 2 ahead of our acquaintances. Perhaps we need to look elsewhere for friends.
mum
Replacing carpet should only cost $2-3,000. I have just recarpeted 2 townhouses with good hard-wearing carpet (stairs are involved and cheap carpet deteriorates quickly) for less than $5,000.
Check with your accountant as to whether it can be expensed since the replacement is obviously due to wear and tear or whether it has to be depreciated. If the latter, don’t forget to claim back the residual value of the carpet that has had to be replaced.
mum
Also, this is not the first REIT. It may be the first listed residential property trust but REITs have been around for a while. There are several unlisted residential property trusts and many listed commercial REITs and mixed REITs. I regularly get sent information on unlisted ones.
If anyone is contemplating investing in a listed REIT, a good stockbroker is able to give advice as that is the market in which listed REITs operate. All the big stockbrokers have regular information sheets on the market segment.
mum
Hi Righton
Average (and I stress average) gross yield on residential property is around 4½-5% for both houses and units.
What is a good area depends on what you are looking for. Every area is good to someone. I know of people who will only invest in suburbs I wouldn’t touch with the proverbial barge pole.
I tend to invest in areas where rental accomodation is sought after such as the inner suburbs, especially the inner south. The added bonus for me is that is roughly where I live and I don’t have to drive far to become an area expert.
My suggestion to someone new to Adelaide would be to look at the properties advertised on Saturday in The Advertiser – both for sale and for rent. Then drive around looking at as wide a range of properties as you can until you start to home in on what you find comfortable. Then become an area expert, looking at anything and everything in that area, talking to all the agents in that area, until you find something.
And, don’t worry if that takes a while.
Good luck and keep the forum informed of progress.
MargaretIt depends on the state.
In SA, you can transfer PPOR from 1 spouse to another (i.e. 2 becomes 1) without SD. But there will be fees for lodging and altering the title. At least you could 12 months ago and I don’t think those rules have changed since.
Margaret
Hi Pursefattener
Having one wall of a room part of the outside wall of the house means you can put window in for ventilation and light. Without this, there has to be some other provision to get light and ventilation required by the building code.
That is what I meant. I hope this is clearer.
Margaret
