Forum Replies Created
Dave is right.
Ultimately it is a numbers game. See enough properties and some will be exactly what you are looking for.
Pisces
>>Am I being overly cautious here or do people share the same fears.<<
No of course you aren’t overly cautious by being concerned. Playing defense is the one and foremost tactic to use.
Over committing oneself, as I suspect many here are doing, by not having safeguards such as access to a line of credit in place so as to be able to weather the storm is the number one downfall for those who fall by the wayside.
What is that saying again ? “Better safe than sorry” ?
I guess the trick is that, in addition to one acquiring longer term hold properties, one ought to be involved in doing development deals as well so as to generate cash profits.
The only problem with all that is where would most people get the time from which is necessary to devote to the tasks of sourcing and completing an instant profit making project.
(‘Instant’ doesn’t of course mean buying today and selling tomorrow so much as buying a property which, within a period of six to twelve months, one can dramatically improve the value off.
Even a simple act of obtaining council approval for a development can immediately add considerable value virtually overnight.
Just one example is a Manly property which has cost the developer approx $ 2.7 M to acquire and which, after council development approval, has recently been valued at $ 5 M.
I understand that when he bought it (for $ 2.7 M) and a valuation done at the time actually placed a value of $ 1.5 M on it.
I am familiar with the owner and he purchased this property with virtually no money down.
I guess you can say ‘he had vision’.
Pisces
Yes Stingray, I think I can assist.
I have met an accountant rcently who is pro-active. I was impressed.
The outstanding part of it all is that he isn’t just a theoretician as he owns several very valuable properties.
Email me and I will forward his details.
He is located in Bondi Junction.Pisces
I don’t think there would be quite the problem with a concrete slab construction as you will encounter with a kithome construction as far as finance is concerned.
If you have bought the land at the right price it should support a ‘normal’ brickveneer type construction.
Why be adventurous with your first project ?
Pisces
Nothing like a good scare story to boost the ALP’s
support.The fact remains that one can never trust a politician and certainly not a desperate Labor one trying to help his fellow mate in the federal election.
Pisces
Elysium, the heading of the thread says it all : NO STAMP DUTY WITH FHOG 1ST MAY
I would think this means that (in Smartmoney’s state at least) stampduty will not be required for first home buyers as of the 1st of May.
What the exact circumstances and conditions are, perhaps someone can enlighten us .
Pisces
The 30% tax rate doesn’t come into the equation Julian as presumably the profits will immediately be taken out ?
If you have so much income that any profits would attract a higher rate than 30% if taxed in your hands [:o)] , then it would be better for you to have a another company holding your share in the company which is carrying on the development.
The tax rate would still be 30% but …………… you aren’t locked in with a partner, you are free to dispose of your profits any way you like and whenever you like.
Generally speaking, partners are no good as at some stage or other things may go wrong and you may get a disagreement because one blames the other for having made a particular decision.
Sometimes a partnership is very necessary as each of the partners may have special skills which the other one does not.
You mentioned in your post that the projects are
small development projects which raises the question in my mind “Why not go it alone ?”Pisces
>>thanks, but I don’t have foxtel<<
Good onyu Chan.
At least Sunshine and myself can get a headstart on you.[:o)]
Pisces
Thanks Kay.
Phil, you said : “I suggest that you request the agent to provide you proof of comparable sales history.”
That was done allright Phil. The problem was that the asking price didn’t allow for any profit in the deal.
The property consisted of a house on a block of land large enough to be subdivided.
The problem arose because the agent hasn’t got a clue as to what costs are involved in the subdivison process, the cost of the renovations and the holding charges nor did they appear to have a concept that whoever undertakes such a project expects to be able to make a profit.
So we had three idits putting a value on without knowing what it is all about.
Not that I mind that happening as long as they err on the opposite site [:o)]
In fact, the same agent introduced me to a commercial property deal in the same town which appears to be ‘a goer’.
Pisces
One would expect that the stampduty which is levied is whatever duty is applicable on the day the documents being are presented to the Stampduties office.
However, I am only spouting what I think is a common sense view. Much better to phone your State’s revenue office and make sure.
Pisces
Kay, a rough, very rough, rule of thumb is that the interest needs to be covered three times by your income.
As far as rental income is concerned, with St George for example 80% of rental income is taken into consideration.
Other lenders may use a different percentage.
The reason the whole of the rental income isn’t accepted as income is so as to allow for outgoings like rates, vacancies, maintenance etc.
It is also interesting to know that banks etc calculate one’s ability to service a loan by applying (for calculating purposes) a higher rate than what they will actually charge you.
The reason of course is to allow for a safety cushion in case there is a rate increase in the future.
It also is common practice to use figures on a Principle & Interest basis even though your loan may be an Interest Only loan.
As to the question when the banks stop lending is concerned, there is not really a limit provided the serviceability is there.
Some banks do have dollar limits, certainly. One bank I can think of has a $ 3 M total loan exposure (including loans with other lenders).
The moment a bank’s homeloan section (or their mortgage insurer) cannot handle it anymore you can be switched to the bank’s commercial section.
A much bigger hurdle actually are put up by the two mortgage insurers which have limits on each individual loan and on each individual’s total loan exposure.
It isn’t possible (for me at least) to provide further general details as the situation varies from lender to lender.
There are also loan moneys available from second tier lenders who have more liberal lending rules. Yet some of these do not necessarily have what I would call excessive interest rates.
I am sure other brokers may like to add to the above.
Pisces
>>In your offer put down that the drawing of the cheque indicates the acceptance of the offer.
Not sure if it will stand up but it should be enough to stop them cashing it unless they are serious.<<
I once tendered to the liquidator/receiver for a property and at the same time I supplied a cheque for 10% of my offered price as a deposit.
I wrote in the tender that my cheque was only to be cashed if my offer was accepted.
As it turned out, my cheque was actually deposited but my offer wasn’t accepted as someone else offered a highter amount.
I toyed with the idea that I may have had some claim on the rceiver for damages based on missed out profits but I never took it any further.
I wonder, if there are any solicitors on this site,
what their opinions are as to whether I would have had a genuine claim for damages from the liquidator/receiver.Pisces
>>we have Bert Newton and the panel
take that!!!<<
Aussierogue, I cannot for the life of me understand why you bring this awfull person in the conversation.
I have to admit that he is very quick on the uptake, very quick to come back with a suitable repartee.
However, to me he comes accross so insincere (that I couldn’t possibly stomach him).
Don’t other people perceive him like that or is it that you just don’t have more attractive talent there ?
Pisces
what about landlord’s insurance? is that relevant? how may that be of any advantage?
sang-froid
I have found some very interesting deals indeed… Just a matter of putting theory into practice. Anyone familiar with NSW? I’m keen to invest but am struggling for finance. Once started, then set. Anyone looking for a venture?
sang-froid
Bec, what are you saying ?
>>And make a note in the agreement that no commission will be due if the house sells for less.<<
I would hardly think that the agent will bother to bring a buyer along if he (the agent) knows he wouldn’t earn anything out of doing it.
So what is the aim actually ? To have the house sold as quickly as possible (at a reasonable price) or to avoid the agent making a living by doing him out of some commission ?
We (including myself) may from time to time sometimes
have a moan about agents but, remember, they do supply a valuable service by establishing a value for the property, put our minds at rest by re-assuring us and liaison with prospective buyers (which is ALWAYS better for us).If you are thinking that you may be like to be selling it yourself as well during the period you have signed up for with the agent that is fine though the agent normally would be entitled to a fee anyway.
Fair is fair, don’t let us turn into a scrooge.
I have also worked as an agent and would walk away from such a stingy small minded owner as I have better things to do than to be unfairly treated by an owner.For example I spent almost three months actively being very busy trying to sell a property on an openting basis with the vendor rejecting all offers ‘as they were too low’ (which they were not, actually).
The owner eventually found a buyer himself and finished up paying me $ 20 K commission anyway because (he judged) that I had worked so very hard for him. (I think he is a good judge by the way [:o)] )
Pisces
Oh what the hell am I complaining about ? If it wasn’t for the fact that so many agents are dumbwits it would be a lot harder to find bargains.
Most agents are actually working very hard trying to make a living and are just too busy to make life easier for people like us.
I find time and time again that they haven’t got a clue about what exactly it is that they are selling.
I usually ask ‘what are the dimensions of the block’ (or, ‘what is the area of the land’) and they just don’t know and it isn’t so unusual, if they think they know, that they finish up with providing me with incorrect information.
Ask them what the zoning is and what you can do with the land and you will find that they have been too busy to have bothered to make it their business to know such very relevant facts.
Well, good on them really, I actually appreciate it very much dealing with people who aren’t aware of the full facts. [:o)] [:o)]
Pisces
I stopped at the first two.
(The first one) : A rent of $ 215 per week and council rates and Body Corporate levies totalling some $ 4,000 per year.
Thus the $ 215 per week rent is reduced by $ 80 outgoings thus giving a net rental of $ 135 per week.
Oh, I have made a mistake. What about the management fees ?
Cashflow +ve ?
Not by a long shot.
I noticed that the agent didn’t bother stating the size of the living area.
The second one : Whilst the agent taks about the 39 sq metres living area I notice that he doesn’t think it important to mention the council fees and the Body Corporate levies.
BTW, what is it that I don’t understand ? How come some people seem to think it is pretty close to complying with the 11 rule. ??
Pisces
Often financial advisors are driven by motives other than giving you the best advice possible because they are either employed by an institution (and thus biased towards their funds) or else they will (try to ) place you with the fund which gives them the largest fee.
There are however financial advisors around who charge you a fee and at the same time will give you a rebate of whatever fees they receive from the institutions.
It looks to me as if that type of advisor will give you a more square deal.
Getting some advice is a damn good idea actually as they know about Super Funds and can inform one about making extra tax effective contributions to one’s Super fund.
Pisces
Hi Shaun,
From what you have told us it wouldn’t be so difficult to progress towards a multi level marketing group.
Or for that matter, what about selling some franchises ?
I think Steve McKnight mentioned that he wouldn’t mind some diversication so I think he is looking for another opportunity to put some of his money to work
in another kind of business.Once you snare him Shaun it wouldn’t be so difficult to pick up several others and you will be on your way.
I don’t know whether Steve finds time to look at all of the many posts so I suggest that it wouldn’t be a bad idea if you phoned him to see whether you can make an appointment to tell him about this wonderful opportunity. [
]Good luck,
Pisces
]
