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Hi all,
Sorry about the delay I have been offline for a little while.
I responded to an advertisment by a large spec home builder who has just started what I call
a lease option. They are matching up their existing punter who can’t get finance with me the investor. The punter pays rent to the value of 7.39% P/I for the house/land package for a minimum 3 years. I can get finance thru them at 4.99% first year 5.79% second year then .6 below variable. after 3 yrs the buyout figure is 5% above the package price.
I don’t know if there is anything else I should be asking them.
It sounds good.Rossolot
Gday
I believe there are oppotunities in any market. I don’t think you can go and buy any old and tired property at list price and expect to make money by renovating it. BUT if you scour your investment area for the real deals (those with the hidden potential) and start making alot of offers you will buy some great projects. I look for property that is about 15-20% below the median price for the area and then check them out to find out why. If it’s just cosmetics and some lateral thought needed, then I’ll put in an offer.
Best of luck hunting, they are out there.Gday guys
I found the Gray Eisdell Matthews Auctions in Springvale Victoria to be a very good source of building supplies. They have a renovators auction every fortnight advertised on the back of the Age business section. We found paint 10 litres/$10 doors $10+ timber windows cheap cheap and all soughts of goodies.have fun
Rossco
Gday Nathan
Q1. LVR stands for loan to value ratio. An LVR is worked out by dividing the total borrowing on a property by the value of that property. You then multiply the answer by 100 to com up with a percentage ratio. ie 89 percent lend or LVR of 80
160,000 borrwing on a 200,000 home.
160,000/200,000=0.8 0.8*100=80
Banks like to lend up to a LVR of 80 because they figure in a firesale they should atleast recoup their 80%.
Q2.Sorry no idea what HUD stands for.
Q3. In a lease option you can write your own clauses but generally your payments are considered rent and can be spent as the landlord sees fit. When the buyer excercises the option the settlement amount is adjusted down by the amount or percentage of rent already paid.
Q4.The minimum insurance I would get on an investment property is building insurace allow approximateley $200 for every 100K but premiums vary greatly from place to place. I would also recomend taking up landlord protection.Good Luck
rossco
Hi
If you are in Vicoria you can go to Land Victoria in Bourke St in the city and do a title search for under $10 this will give you a name and address at time of settlement. It could be wrong but it would be a start. New Privacy laws have stopped the other avenues. Sometimes a local agent may have a listing on their database but not if it’s been owned for a long time.Best of Luck
And don’t stop asking questionsRossco
Hi Canuck
I feel I may have been slightly mis-interprted on this. I have been dealing in an area which has had significant capital growth in the past two years. Prices of completed houses had skyrocketed but land had lagged well behind. We chose to bring land prices up to a fair market value. Since we set the new level it has been rising consistantly in line with the median house price. We were not ripping people off but educating the market. We are well regarded in our area as developers for our quality of development and value provided.
As for “misrepestentation” our strategy is to keep possession of freehold property instead of taking a cash profit so all the blocks listed as sold will never go on the market. They have been sold to our trust. If you build the eight but choose to keep 3 as positve cashflow you are entitled to list them as sold ie. not on the market.
We pride ourselves on our integrity but we push a
hard bargain.As for your contract notes best to speak to your conveyancor/solicitor about the standard “special conditions” included in an off the plan contract.
Best of Luck
Rossco
Hi Canuck
My name is Ross, we have had our own family development business for 2 years now. We have had projects from simple buy/renovate to residential subdivision. In dealing with finance providers on these commercial ventures you will soon learn that their only priority for them is to mitigate all risk for themselves. They want security to cover their entire exposure (this can be negotiated down) thru the project property, your home,director garantees and pre-sales.
Pre-sales is the one you want to exploit because this is the only one that covers you and the bank.
If you can presell enough of the project to cover all construction costs you can shop around with confidence that they will all want to borrow you the money. You are in the postion of power now because they have to fight to get your business and make sure they know that you are shopping around. Drop names of people at each lender you have spoken to or make them up because they are surprisingly flexible.If your venture was mine I would get indictative costs from the architect whom drew the plans. From this work out how many units you need to sell to cover your costs. Get a local agent to market the properties on an incentive basis but only market the ones you wnat presales for. List the other units as already sold therefore displaying demand and also establishing the price as the market level. We used this tactic with our subdivision to raise the price being paid in our area from 55K to 75K per block simply by saying “look half the blocks are already sold at 75k if you don’t want to miss out this is the price you pay now.
You can then put the other units on the market once completed so people can see/touch and feel. They will always pay more for the finished product and that way you maximise your return.
If you want to have a chat email me on [email protected] and I will send some contact details.Go Get ‘Em
Rossco
