Forum Replies Created
I'm still shopping for demolition prices. I haven't made up my mind which way I'm going with the demo crews. They all have different things they want (ie some want salvage rights, some say take what you want first and get rid of it yourself before they get there) I am still working that bit out.
I have to have the house demolished before the new title can be created, so that's obviously my next step – although I'm holding it off as long as possible at the same time because the original old house still has tenants in it and I need to wait for the builder to be ready.
This is like juggling three angry, hungry cats – awkward, nerve-wracking, sometimes confusing and potentially ready to spring with sharp claws waiting to catch me out if I do anything wrong!
Noobie (lisa)I'm VERY pleased to say that on the 20th February I received a formal letter from the council saying the application to create a new title is now approved. It has some conditions attached – but nothing I wasn't prepared for.
Settlement is in 2 weeks and I'm ecstatic. I've arranged for a demolition company to pull down the old crusty house (one condition – they want demolition complete before new title is created) and I've already chosen a builder and even picked the houses I'm going to build. They're just so cute I'm very tempted to move into one of them myself!
This is so much fun! YAY!!
Lisa (Noobie)I know the planning officer in that council area. I went to school with him
Lisa! (noobie)No. the guy said that Trans Adelaide would move the actual stop for us. That's the good news.
The bad news is the Onkaparinga Council are in charge of the shelters they put near the stops. I have to pay half the costs of moving the shelter – which wasn't approved to be moved. So the stop is now further down the road. But the shelter is in front of my block (incidentally, blocking my sea views from my intended new house which isn't even there yet….).
I've applied to the council for them to move that, citing the intended new driveway location for the proposed house that's not even there yet. That goes beyond pants-wetting. That's brown-trousers time.
How do people do this for a living without needing several changes of clothes per day??
Lisa! (Noobie)Quote:May I ask which areas you have invested and get good yields in Adelaide as mentioned above. I just cam back from Adelaide for a holiday and driving from the airport to my friends place, the streets were very empty, could be that it is the xmas break.
I have two in Morphett Vale, two in Huntfield Heights, one in Woodcroft and one in Reynella. All southern suburbs of Adelaide. Just yesterday I bought another one in Christies Beach that is right by the sea and will be sub-divided into two new homes this year sometime. (subject to the council not making me wet my pants about doing this sub-division).
Last year I also owned one in regional Port Augusta (which did well because of the mining boom still going on) and another in regional Port Pirie. I've since sold these to access the capital (gee CGT sucks) and pay down the loans which gave me enough cash to buy the one in Christies Beach.
Most people gasp in shock that I choose to invest south of Adelaide (north is cheaper with massive infrastructure changes and big growth going on) – but I prefer the suburbs all by the sea. That was a personal choice only.
Lisa (Noobie)I guess I'll go buy some adult-sized pull-up nappies to use for the next couple of months, hey!
So far the council has been really helpful/suggestive. Let's see what happens as time goes on.
(only one nappy used today – when the planning guy told me I can't move a bus-stop to make room for a second driveway access to the road. Then he said "Oh wait. Yes I can. There's enough room for the stop over there." Only slight pants-wetting involved there.)
Lisa
(Noobie)I only invest in Adelaide – yet I was originally from Brisbane. I'm still learning, but I currently have 6.
The way I saw it was easy – I bought 2 units for the same price as 1 unit cost in Brisbane. But the rent is 1 1/2 times more than I would have received on that same cost if I'd bought in Brisbane.
So I'm out of pocket the same amount of money for purchase costs – but I got 2 properties instead of 1 and I get 1 1/2 times more rent than I would have otherwise received.
Plus there is the immigrant thing going on right now – where new migrants get extra credit for coming to Adelaide, so the demand for housing is crazy!
Just a thought
NoobieOh good point!!
I do have an offset account set up against the loan on my PPoR. I can arrange to have all income and all rents going into this and I see the point of reducing the payments on this property first as there's no tax advantage to me having this one high.
I will ring the bank now (and the rental agent) and switch the payments around. They're used to me now anyway, so they won't mind another change so soon
One really fun thing I have learned in the past two days – I went to a new bank and offered them the refinance one of the loans on one unit to use as security on the new CF+ purchase I'm making now. The valuation on this unit came in $30,000 HIGHER than the one Westpac did only a month ago.
I asked the lending girlie at the branch why this happened and she shrugged and said some banks/valuers are more conservative than others. I just found some missing equity!!! Woo hoo!!!
I also asked her – just out of curiousity – what would the estimated values be on some others. She wouldn't tell me that without me refinancing all of them. I'm not going there. Yet.
From another comment on this forum, I learned that I can ask the vendor if I can have early access to the property so I can do some minor works to the building before I get new tenants (the place is currently vacant). They said SURE! WOO HOO!!
So I went back to the lending girlie at the branch and showed her quotes for work I'm completing prior to settlement date (late next month) and she said I can have the place revalued AFTER settlement based on those quotes. WOO HOO!!
This forum is brilliant. I'm going to give my brother a huge hug for introducing me to you all. (I'd even run around and give you all big hugs too for all the wonderful comments you've given me!)
Lisa (noobie)I'm in Adelaide, emmajames. I'm not married and I have no kids. Just a single girl having fun. I live alone with my dog and my cat, which is how I have the spare time to work a business and a part time job.
My boyfriend invests now as well, but our projects stay completely separate. He's just got the investing bug from me (it's contagious). He's building two new courtyard homes where there used to be one daggy old timberframe thing. He's enjoying himself.
Oh – and LOC is my line of credit. I pulled some equity out of my ppor using a line of credit for investment use.
Lisa (noobie)Mortgage Hunter wrote:All your spare income could be going into your own PPOR to reduce this debt. I also reckon you should spend an hour on the phone with Richard Taylor and see what he can suggest for you. He may well come up with some significant improvements to your situation.I did this – well kind of. I emailed him privately and gave him my precise income and asset/liability position. He made some very helpful suggestions. I went and got my taxation financials done with my accountant because of that email.
My PPoR is still principle & interest. I pay more than I need to off the principal. But I'm putting extra income and the excess from rentals into the LOC. Because I have two incomes (one from business, one from part-time job) they are allocated to different things. One is for investment, the other is to pay off PPoR and living expenses.
matthewc73 wrote:1. What about starting and selling/part selling businesses?
2. What about more development?
3. What about some diversification into shares, collectables, etc?1) I have a small publishing business already, but I don't want to sell it. I also have a fledgling website/e-commerce business that's still new, but I don't think I'd like to sell that yet either. It's still growing and the income isn't anything to write home about. I wish I had enough spare time to build a few more!
2) I could look into more development/construction. I enjoyed that. But it still comes down to not having enough equity to borrow against to start the development going. I'd like to do that for my next project anyway. I made way more capital growth from my last constructions than anyone estimated before I started. It was great (and they're gorgeous)!
3) I have some shares. They suck. Property is way more fun. Income/return is better and it's more tangible. I don't know what collectables to collect!
Still more great ideas, though. Thanks heaps! I'm enjoying this thread immensely!
Lisa (noobie)I'm a noobie at this and I'm in adelaide too. I've got 5 CF+ properties around outlying areas of Adelaide now and the rates and bills for the properties is weird to keep up with sometimes.
At the advice of my accountant and the lending guy at my bank, I personally put an offset account alongside the biggest debt I have, then put all the rent each month into that. I got my rental agent to pay the rent in fortnightly instead of monthly so it's in the account for longer. The interest drops a little for the month, making your cashflow a little bit nicer and then rents start to accumulate in the account because you spent a little less in interest costs. By the time the bills are due, there's enough saved in the account to pay each of the bills! Nice.
Of course since then everyone on the forum has been really helpful about helping me figure out ways to get more cashflow into the account, more growth on the values and less costs on the mortgages. They're really helpful!
YAY!
Lisa (noobie)You've all been so helpful and supportive. Thank you
I've decided to take a multi-phase approach, based on everything everyone has posted and also on other research I've done.
1) I've switched all loans over to IO. All rent goes into my LOC, reducing that nicely. IO payments for the investment loans comes out once a month. The profit stays in the LOC and will build rather quickly now I'm not making P&I payments.
2) I've arranged some minor cosmetic work on each property. New security doors on one. New curtains in another. New basic landscaping on the older ones. Also all of the above on my own home as well. This should help raise valuations next time I'm ready.
3) I've increased the rent on the one getting new security doors. They were happy to pay more for security. The others are under review with my rental agent right now.
4) I'm saving the rest of my income madly into my LOC for future deposits on the next one.
5) I don't really want to sell anything right now. I need to learn patience if I'm going to make this work
Thanks heaps. I really appreciate it.
Lisa (Noobie)So I went and did my financials for the last 2 years. I've been underestimating my income! Who knew. But I didn't have cashflow or servicing problems, so it really didn't change anything except now I can borrow more than 80% of the values.
The guy at the bank tells me I have to pay mortgage insurance if I go over 80%, but now I have access to more equity.
I decided to switch one unit's title and loan to a new bank and borrow against that equity to buy again.
As I see it, it doesn't solve my problem. Once I buy a new CF+ house (I already put an offer in on one yesterday) then I'm over 80% with my loans and will run out of equity yet again once I've eaten into the new equity I've unleashed.
What happens when I'm up at 100% of everything? I'm still out of equity and stuck for how to keep moving forward. At 100% borrowing, the fees are awful, so it's harder and harder to make any decent profit.
That puts me in the same position I'm in now but with less equity and more costs than before.
Now what??
Lisa (Noobie)Vesson wrote:I have no specific advice for you, but to be frank I don't think you should 'give up' and work harder. Working hard will get you nowhere fast. I think you should continue what you're doing (ie trying to get more property now) & read more, or invest more money in your education (seminars, courses). <snip> or look into setting up a small business on the side… anything but working harder in a shift work jobLOL good points.
I do have a small business on the side.
I work part-time in Customs – afternoon-shift AND i own a publishing business that's been running nicely for 5 years (that's my "day-job"). I took the night job so that I could invest every cent I earn from it. It's my way of separating out the incomes nicely – one income for me and my personal home/lifestyle/savings/travel etc and the part-time income all goes into more investments. It's how I got where I am today.I see more opportunities for more worthwhile investments on a regular basis, but I'm just frustrated that I can't access more money. Yet.
Oh – and since I wrote that last post, I've rung a few more people around me – accountant, brokers, real estate agents, a valuer to ask what could increase valuations and a few more rental agents, asking what they would do to increase rents given the properties I have.
I'm working on it!!
Thanks again
Lisa (Noobie)Thanks for the tips blueheeler.
I rang two other banks today, plus two local broker houses. They all told me the same thing – either I need more equity or I have to find deposits or I have to put up with higher interest rates to get more money out. Not happy with either suggestion and still stuck and confused.I rang a real estate agent who's been good to me in the past. She gave some great tips on small things that could increase valuations without spending too much money.
::sigh::: I guess I'll just switch over to afternoon shift rates, work a heap of overtime and spend a year paying down some loans then. That seems to be the only option people keep giving me.
Thanks anyway
Lisa (Noobie)
Thanks heaps v8ghia. And thanks for the congratulations. You're the only person thats said that. My family think I'm insane
I rang a different wankpac … um … westpac branch and spoke with a different lending lady than my usual guy. She said i could maybe go up to 82% with no mortgage insurance to pay (at least that's what i think she meant… I'll check that out). Might not help – but 82% is 2% higher than I had before. She spent a bit of time going through what kind of things the valuers look for that might help get a bit better valuations too.
I wish the guy i normally use had done these things with me instead of the 'go away little girl' routine he used on me.
The new lady suggested I change all my investment loans to interest only payments instead of principal & interest. Then I should put all my profit from the rents back into the line of credit to help get that down that quicker, plus my own savings/payments into it. Then I should have money for deposits again sooner rather than later.
I'll have to ask my accountant if thats a good idea tomorrow though. I'm a bit unsure about how that works.
Does that sound like something I should do or not?
Thanks again
Lisa (Noobie)I don't have servicing problems. And they're not cross-collateralised as a whole – just some. Cash flow is just fine. I'm with Westpac. They offered me a 0.7% discount on my loans but I can only go to 80% loans on the values of each house because I don't have any financials to show them. They won't let me borrow any more because that would take me over 80%. The guy at the branch says to wait until I have more equity before buying anything else.
That's where I'm stuck. Where do I create more equity?
I'll give you an idea what I've already tried:
My first unit I bought with only 5% deposit plus the FHOG (I had financials then!). I painted it, new kitchen, new floor boards, new curtains, moved out put a new tenant in. Had it revalued and bought another unit. Renovated that one, had it revalued. These two are cross-collateralised.
Then I built two houses. I got the land cheap and got a discount on the construction, then had them valued at actual market value instead of cost. So the cashflow was great the moment they were complete. But there's no more room to build equity as they're already new and completed now. These two are cross-collateralised, but separated from the others.
I had them revalued at a lot higher and bought a new house in a regional area. This one has now been renovated/fixed-up and revalued. This one I paid a deposit on, taken from the line of credit against my own home.
But the bank says I can't go over 80% so I can't borrow any more and I don't have any more funds to take out of my line of credit.
The smart @$$ at the bank said "work some more, spend some time paying off the loans and wait another year or so to try again".
I don't like his answer, so I wanted to know if there's another way to do it.
Thanks!
Lisa (Noobie)
