Forum Replies Created
Hi Andrea,
I agree with DLPP. Positive cash flow properties are still out there but are getting harder to find. You will typically find them in regional towns.
Regards
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hi myabode,
Just so that I understand this, is your client and the vendor one and the same party?
If not, is your client looking at “rent to buy” option?
Regards
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Dear vluu75,
I got my house fully rendered couple of years back. I cannot remember the exact cost but I think it was around $36 per sq mt. I’d say the cost of rendering will probably be close to $8000 (professionally done).
Looking at the amount of time and effort required on the work, I will not think about doing it myself. If you are a accomplished handyman then its a different thing.
Hope this helps
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hi suffragette,
It depends on what you want to achieve out of it. If you want to have a positively geared property, you probably need around 6.5-7% yield plus decent depreciation.
If you are looking at cash flow positive property, you need around 10-11% yield.
You can still find some positive cash flow properties in regional towns.
Regards
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hi again,
Forgot to mention, Steve has released his new book ‘From 0 to 260+ properties in 7 years’. Its very good. You might want to read that one as well.
All the best
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Dear small_time,
First of all, welcome to the forum.
To answer your questions:
1. Equity = Property Value minus Outstanding Loan
You can get a rough idea about the property value by getting a property agent to give you an appraisal or keeping an eye on what’s happening in the area. However, for the purpose of financing, the lender will get a registered valuer to value the property.
2. There are two types of equity – (a) equity due to extra loan repayments which you should be able to redraw easily (assuming your loan has redraw feature, (b) equity due to capital growth. To borrow against that you need to apply for a loan and go through the financing process.
Using your numbers:
Market Value: $270k
New Loan: $243k (at 90% LVR)
Equity available to invest: $13k ($243k-$230k)
Keep in mind there will be some bank fees (application fees, valuation fees, Lenders Mortgage Insurance, etc) so you are not likely to have the full $13k available.
That said the property value would (should) have gone up in the last 6 months or so the market value should be > $270k.
When buying the new property, you ideally should have 10% deposit plus closing cost (approx, 5-6% of the purchase price). That said, some lenders lend upto 100% of the property value. You would need to speak to your broker.
Hope this helps and good luck with property investments.
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hi vkolker
At a very high level, they offer two services:
1. Spotting a property
2. Negotiation during the purchase.
Typically, they charge about 1% for each service.
Have a look at the Real Estate Buyers Agents Association of Australia website for more information.
http://www.rebaa.com.au“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
G’day Terryw,
I recommend ‘Transforming Debt into Wealth’ by John Cummuta. In this CD series/book, John teaches about simple yet very effective techniques to reduce your bad debts in the quicket manner.
Regards
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hi Nathan,
Why don’t you put the kit on ebay for bidding? You might be able to get good price there.
Regards“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hi Dr. Spock,
Good on you for sticking with the challenge.
I think your next step depends on your circumstances. If you have credit card debt then put the saved $1000 towards it and keep saving in the future as well. Try to pay off the high interest bearing debts before you really embark into property investments.
Regards and good luck
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hi ao
The inspections are definitely worth. At the end of the day, they are there to protect your investments and if there are any issues, it gives you an opportunity to renegotiate or pull out of the deal.
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hi seanj
You can use the services of a buyers agency to minimise the risk. I have bought couple of properties without actually visiting the property and can’t really complain about my investments.
Regards and good luck,
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hi jack620,
Buying off the plan (OTP) is not all that bad if done properly. Few good things about buying OTP:
1. If you get into a 12 month plus settlement with the developer then at the time of settlement you can refinance using the increased value of the property. You mentioned your target area has gwown 17.4% pa over the last 10 years or so. If the trend continues, you will have a no cash down investment opportunity. For e.g. you buy the property today for $300k with more than 12 month settlement. The property grows at 15% pa and you settle 12 months from now. New valuation is $345k. Bank will lend you 90% of the new valuation ($310k) but your price is $300k. That leaves you $10k for funding closing costs.
2. You can negotiate the deal with the developer in a way that you only pay a small deposit and no progress payments. You then pay the money at settlement only. That way you do not loose interest on your cash deposits until settlement. You can use instrumnets like deposit bends to fund initial deposit.
Hope this helps.
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hi ruf,
You need to consider the transport cost of your strategy.
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Dear woodo,
If I were you, I will use the equity in my current property and the cash from sale of the business to invest in properties.
The trust and company set up is the way to go from asset protection point of view. Bear in mind there will be ongoing fees (ASIC, accounting, etc) but its a small price to pay to protect your
ass(ets). You will need to seek legal and finance/acountint advice if you decide to do a trust and company setup.
All the best,Sanjiv
“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hi ttman,
I believe over a long period of time, inner city suburbs will offer better capital gains.
One important thing to consider is in a property downturn, you will find properties in inner city suburbs hold their values better. But you need to be careful about what kind of properties you buy. You need to buy within +/- 20% of the suburbs median price. If you buy an extremely expensive property then it will fall in value in a downturn.
Inner city suburb properties with (some) land component will definitely be long term winners.Regards
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
PosEnterprises,
You need to consider Capital Gains Tax as well if you plan to buy and sell within 12 months. I think the bank exit fees will be a smaller consideration compared to CGT.
My suggestion, don’t sell within 12 months. If you want to release the equity, I believe you can always get the property revalued and refinanced.
Regards
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hi yeohkt,
I suggest you look for a 2BR unit. I believe they offer better capital gain and rental yield because they cater to a bigger market (both buyers and tenants).
Have you considered “rent to buy” for yourself. You can rent a 2BR unit with the intention to buy in 6-12 months time. That will give you enough time to save a bigger deposit for the extra price of a 2BR unit.
Also, in areas like Hawthorn/Camberwell, I will not buy a unit without carspace/s. These are inner city suburbs and street parking is an issue. You will find the resale price is affected if there are no parking spaces.
Hope this helps.
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
G’day Peachy,
You would get a pre-approval and then buy a property. After buying the property, you have the option of organising the finance or building/pest inspections.
The sequence depends on whether you are expecting any issues with the finance and/or inspections.
If you believe you will struggle to get the finance then organise the finance approval first. When finance approval is obtained, organise the building and pest inspections. That way you are not spending hundreds of dollars on inspections.
If you believe there may be some issues from building/pest inspections, then oragnise that before finance approval. That way you are not spending hundreds of dollars on loan application fees, bank valuations, etc.
Either way, you would spend one lot of money but all that is to safeguard your investment.
Lastly, the purchase becomes unconditional only when all “subject to” clauses have been ticked off. You get the colling off period after the purchase has become unconditional.
Hope this helps.
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hi,
Try Jason Whitton (www.sourcewealth.com). I am going through their 12 month mentoring program and am extremely happy with it.
I have also heard about property mentoring program offered by Dymphna Boholt (www.dymphnaboholt.com).
Both Jason and Dymphna are speakers at Tony Robbin’s Wealth Mastery seminars in Australia.
Hope this helps.Regards
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
