Hi David,

I have heard that there are extremely good depreciation advantages buying property in say NZ or Australia from Japan and as an expat. If you would like to get the details of this I can pass you onto a person living in Tokyo who knows about this strategy, which he is currently teaching others. He is also an expat.

email me at [email protected]

Ian
http://theblockblog.com
Free Property Investment Info, Tools & Resources for Investors with a Sense of Humour.

Hi U36,

Yes there is some truth in this. You always have to take into consideration the fact that the bank/financier will take the most conservative valuation of the newly renovated property.

However, there can be a considerable difference in value if you add the right things to the property for the target market. One example is converting a 1 bedroom unit to a two bedroom. Much more value than new paint. A valuer will tick the boxes of the property features for assessing value, rather than the finish of the features, so an extra bedroom gets more brownie points than a new kitchen, a garage is more valuable than beautiful landscaping and so on.

Your property buyer is right in saying banks are cautious but not necessarily for the reason he states and it sounds like he hasn't done any renovations himself. In a slow market they are very cautious, but in saying that if you look along the lines I've mentioned above, you'll probably find the increase in value acceptable to banks via their valuer and you will achieve your goal.

Learn more about renovating and what your options are.

Ian
http://theblockblog.com
The Block That Makes Money Renovating

Hi Ryallsy,

It's a common dilemma investors face. The more they look, the more they find. In that is created the burden of choice which is what you are facing. Better than no choice at all, but a problem.

You might get come clarity in this post on my blog.
http://www.theblockblog.com/propertyinvestment/4-reasons-why-you-should-kiss/

In summary, you will need to look at your investing goal in detail, then work back from there. Everyone has a different starting point as well, so look at what you want to achieve in what timeframe. Then reassess the options in front of you in that light. Some strategies will light up while others may fade.

You may see a small range of options that suit and diversify your investing which is often best. Different strategies and different locations, so you are not exposed fully to the downturn in any one market, should it happen.

Don't feel pressured into any one strategy because of a timeframe ie; the building grant. You need each option to stand alone financially without special deals. They should only sweeten the process if available.

As a newbie, keep things as simple as possible and as clear in direction as you can. This will negate that inner turmoil you are feeling right now.

As much as people can give you their experience and direction they have followed, which is always valuable information, it is you who makes the final decision, so evaluate each option in front of you as thoroughly as possible. Use spreadsheets to evaluate your returns. Look at each case scenario and compare, then decide which strategy or strategies suit your goals best.

Ian
http://theblockblog.com
Free Property Investment Information, Tools & Resources for Investors with a Sense of Humour.

Hi Beefz

Good advice from Jamie above, also by renovating you are adding value straight away so a revalue of the property once you decide to move on from the PPoR situation can release more funds, if required, for your next purchase. The original loan would also go up to the new value, so take that into account with regard to your returns and liability, but if extra funds are needed, they can be acquired this way.

Definitely get friends in for the year to help with the mortgage payments. Really takes the stress out of owning a house. Be sure though that whoever you get in realizes that you will be renovating. Living in the house you are renovating can be quite stressful, especially if it's not planned properly and worse, underfunded.

You're definitely on the right track and congratulations for getting into property investing AND getting on this forum. Keep asking questions about what you don't know. There are many people here that can help and your education in prop. investing never stops.
Love your work.

Ian
http://theblockblog.com
Free Property Investment Info, Tools & Resources for Investors With A Sense Of Humour

Basically you get what you pay for. If you spent time setting up an excel spreadsheet with all the correct configurations, you would have spent more time vs $ value then it would have cost for a good mortgage tracking software system.

Two systems I have used and do use are Mortgage Watchdog, which is an Australian based system and Home Loan Interest Manager which I think is US based but works great for the Aust market.

If you would like to see the details of these you can view them here : Mortgage Watchdog  and Home Loan Interest Manager or you can go to The Block Blog where I've got both listed ( because I use them)

I think for the money you spend on just one of these, it will save you much more than your investment in the refunds from your lender for the mistakes they make. I've been refunded $1200 on one loan and am owed $267 on another. Some users of this software have been refunded much more.

Ian
http://theblockblog.com
Free Property Investment Info, Tools & Resources for Investors with a Sense of Humour.

For that money you might be best to look at an "add value" property. The ugly duckling that you can restore, renovate, subdivide, build another dwelling, add rooms etc to increase your equity stake and rental return as fast as possible.

Your borrowing capacity will tell you the suburbs you can concentrate on. I don't know Sydney as well as I know other areas, but I would guess that $350-$450k limits you to the outer suburbs to a degree.

Then look at the type of property available for that price in more well to do suburbs. The ones a notch above and maybe next door to the first suburb list. Get as specific as you can with the type of property and area, then approach all the agents to go out and find one for you. Let them do the leg work, thats their job. It's free.

You need to be ready to pull the trigger when they find one that meets your criteria, so have all your finances in order before contacting them and make sure they understand that you are ready to buy today.

Ian
http://theblockblog.com
Free Property Investment Info, Tools & Resources for Investors with a Sense of Humour.

You may want to look at established businesses in Detroit that have been buying and selling property during this downturn and know everything there is to know about the city with regard to property returns.

An  investing strategy in Detroit i have been involved with is Rent To Buy as we call it. There I think it's called land contracts. You purchase the property for x amount – say $30k. A retail buyer ( on a waiting list) then pays you $50k for it using a deposit of x amount – say $10k, reducing your exposure to $25k. They then take over all outgoings, (maybe except insurance – you might want to ensure you have a property safe while the deed is in your name). They also agree to pay you rent or vendor finance payments, whatever you want to call it of x amount. Let's say $800per mth for the next 24, 36, 48 months, whatever you negotiate. At the end of the term they either own the house or pay you a balloon payment after renegotiating with a bank or lending institution.

For $100k you could control 4 properties with no outgoings, no management problems, no vacancies. The local Detroit company handles all the contracts, finds the buyer and collects the monthly income. If they, the retail buyer defaults, then the vendor finance option reverts to a rental contract and they can be evicted in 45 days ( or less). You then sell the option again and get another $10k deposit reducing your initial $25k exposure down to $15k

It's actually better for you as an investor if the retail buyer defaults.

Ian

http://theblockblog.com
Free Property Investment Info, Tools & Resources for Investors with a Sense of Humour

When renovating and revaluing your property its a good idea to talk to a valuer about what additions would add the most value as well as the real estate agent who will tell you what the market is looking for. Remember the market is very different if you are going to rent out the property as opposed to selling, but because you want to revalue from the bank, then it becomes a toss up between the 2. How much do I spend doing the place up to rent only and will the bank revalue this place in my favour enough as if I were selling it?

Also you can only borrow against 80% of the new value AND you still have to be able to service the extra loan amount.

Orange wouldn’t have a high capital gain % so you have to buy really cheap and add as much value as possible.

The 2nd stage is when you do run out of borrowing power – called ‘the glass ceiling”. This happens when you are moving faster then the values of your properties are rising and you cannot access any equity to keep going or your wage doesn’t  allow you to borrow more or both.

Now organise money partners and joint venture deals to keep going. It means you split the profits or you pay a bigger interest bill on the money you borrow, but it means you can keep going without waiting for capital gain and equity to kick in.

In other words you are controlling the market rather than the market controlling you.

Ian
http://www.theblockblog.com
Free Property Investment Info. Tools & Resources for Investors with a Sense of Humour.

Hi Ben

Welcome aboard.
You could google Mark Unwin Accountant – Kew Vic. Steve McKnight uses him I hear for good reason ( and so do I)
Just wrote a little post in my property blog on investor beginnings that may help. Also Darren's Property Investing Tips site is a good one. Other than that keep researching and define the area you want to invest in. Look closely at that outcome you want to achieve then break down how to get there.

A small add value project is an excellent way to start, but even though it may be small, it requires the same level of planning as a big one. Maybe moreso 'cause it's your first.

All the best with your investing

Ian
http://theblockblog.com
Free Property Investment Info, Tools & Resources for Investors with a Sense of Humour.

Agree with HighIncomeProperty with regard to company set up. It's also important you have a well set out operating agreement especially if your LLC has multiple members.

In answer to transferring property, not sure you would need to do this unless you purchased in the wrong entity or the county wrote the deed in the wrong name, which they do by the way.

You can transfer property between companies, but you will have to pay the transfer tax for each and other smaller fees. This is worked out differently in each state and sometimes counties, so make sure you have the right information beforehand. It's also based on the tax assessment at the time, not what you may have bought the property for.

Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources for Investors with A Sense Of Humour