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Ah, equity. Thanks for the replies; its a weight off the mind knowing that capitalising interest is possible. However, I have had a closer look at the estimated numbers:
Intended Cost of land when subdivided $75,000
Value $110000 (each block $55000) 68 % LVR.
Could try and sell but considered too risky to HAVE to sell 2 blocks in an old area of fibro and weatherboard houses.Ok then, move a house onto each block.
Land $75,000
Houses x2 $180,000
Total cost $255000
Estimated end value $310000 ($155000 each).
PROBLEM: 82%LVR!
These numbers DO NOT include any contingency for costs higher than rough quotes nor an interest cost.
With interest , could easily reach total of $275000. This is too close for my liking, as the local market is slowing and if each house sold for less than $137,500 net, I’m out of the game. I would not be able to afford neg gearing, so the strategy would be a MUST SELL.
Houses in that area have been selling for $150,000-$160,000.Good idea/stategy, but probably a property in an area where end property values are not high enough to justify the trouble (also I would be needing to borrow all the cost).
Gee, it must require a lot of skill to create equity from nothing. Will have to move further outside the comfort zone and look to another area further from home. Maybe right stategy, wrong area.Can’t fit a square peg in a round hole.
safe as
Sorry, but what is/are GRs?
safe as
As an accountant, I agree. Its not fair. I bet it suits the ATO to catch people out on this one, to prevent them claiming the 12 month period discount.
Can save alot to check some items such as that, before selecting dates.safe as
One of the principles we were taught at the Brisbane Masterclass yesterday was to keep emotions out of it, and stick to the numbers. Maybe make ONE offer only that works for you and if the agent plays up, try and make sure the vendor finds out about the offer and that it is genuine and the highest offer you will make.
The agent’s behaviour may be annoying, but it is a side issue.safe as
I drove 3 hours to be there from NSW, stayed overnight (another $100 + food) and stayed for a while after it to chat to the organisers and got home at 11.30pm! A big effort, but well worth it. I dont have any IPs yet, so I think it would be more useful to newer investors .The future masterclasses after this year apparently will have more case studies and might help more experienced people.
This is not a seminar to make you feel good and give you a pat on the back. I found it did confront me to question where I am up to and why I havent made more progress. Lack of time! It was a message that there are no excuses. If I need more time, and I really WANT this investing life, then I have to CREATE the time by taking it from somewhere else, be that work or hobbies or whatever.
The cost is well worth it, if action is taken! Dont look at the cost, look at the benefits if it is put into action!NO ACTION NO RESULTS
BIG ACTION BIG RESULTSMy time starts now.
It would be a good idea if some participants from the weekend could form a group and meet, say every three months in Brisbane/area to discuss progress, encourage, share ideas etc. Il’l even drive 3 hours to get there!
If interested post here or PM.safe as
CA’s start in accounting firms, usually in tax or audit. If you want to just work as an accountant in a company, you may as well be a CPA, as they wont appreciate any difference. If you are being employed by a CA, they will prefer a CA because they know of the extra study required. There are numerous CA’s who started in accounting firms as auditors who have moved up (or out?) of accounting to be CEO’s of companies such as Virgin Blue Airlines, Qantas etc.There are good and bad CPA’s just as there would be good and bad CA’s.
I’m a CA, can you tell? The CA programme didn’t teach me about investing.Ha.safe as
You could try the house removal companies, although they will give a wholesale price because they have to made a quid. They may offer only $5000-$10000. Normally, the houses can be moved up to 100km for the same price, so you might get someone interested who is out of Sydney.
You may be able to find somewhere that people want an older house on big acres, such as Windsor, or somewhere else out of Sydney?
Or, if you can find cheap land, you have a free house to move,! ;go into a joint venture with someone who can supply finance and split the profit!
Advertise in renovators, or owner/builder magazines?safe as
All 3 properties have different problems and all need various renovation, and rank equally in my initial assessment, but I would be buying only one. I need to be able to identify serious problems from easily fixed problems . I may then, for example, be able to eliminate 2 of them and then get final inspections only on the one left I prefer.
fnccollector
Re the September newsletter, I looked at an old property yesterday. The land was very dry except for lovely green clover growing out the front!Luckily, the owner had left the “open house” (private sale) so I had the chance to talk to the tenant and find out the problems.(What an opportunity!)
Plumbing seemed to be a major issue. The tenant also pointed out the green grass (where the pipes ran!), the water in the toilet could be heard to be leaking,there was poor pressure in the taps and the tenant happily pointed out the water leak marks in the kitchen upper wall (the roof was badly leaking).This house also had the old galvanised pipes.(Its probably had no maintenance in 40 years!)
Another issue when looking at old weatherboard houses has been rotten weatherboards outside the kitchen or bathroom. For one house, the tenant confirmed that there had been a leak in the bathroom. This must have gone on for years, to rot the weatherboards.
To summarise:
1.See the Sept 05 newsletter!
2.Watch for rotting weatherboards and rotting window sills in bathroom/kitchen areas
3.Ask the tenant are there any water problems
4.Poor roofing will lead to leaks, as well as poor guttering leading to the water escaping, maybe hitting the exterior walls.
I have found in most cases so far the fact that there is old plunbing/electrical etc has usually indicated not that the old stuff has lasted, but that it has passed its due date but its needed replacement has been ignored.TFRYAN
Thanks for the tips so far.
Yes, it could be complicated, but I need to investigate it further. I would not go ahead with it if the likely numbers would not work, considering that part of the plan would be not to do the rectification myself, but pay experts from my likely (no, estimated?) profit.What needs to be investigated:
Land cost: $50,000 max all up.
House cost: $5000
Move house and set up: $30000 (house would have to be no further than 60km away)
Fix house (?) needs to be no more than $10000
Interest costs:$4000
Value of house when completed: (needs to be $160000 to make it worth it)
Estimated rental potential (great word that “potential”!) $160-180 pw gross.
If that is the case, then have the option of:
-keep and rent out, refinance loan .
-sell and use gain to fund the start of the empire.
A second idea will also be kept in mind of moving two houses onto a suitable block and subdividing, to really use the value of the block. Multiply the above by 2 except the cost of the land!.
Obviously more due diligence needs to be done to reduce the risk of the “if” word; if it costs this, if it sells etc.TFRYAN
