Hi Tony,
My ex and I owned a take away food shop/cafe several years ago, and let me tell you it was b….. hard work.

We opened at 6a.m. and closed around 7p.m. six days a week. Sundays we did the book work. All this work and we only just made a profit. It was in a good location (main street)in an inner suburb of a capital city.

I hope this doesn’t damage your dreams, I just want you to be aware of how difficult it may be. Also statistics are not good… 80% of small business fail in the first 2 yrs. It can be a very expensive exercise… please be careful.

If you are dead set keen perhaps you could do a small business course before you set up. The Aust Tax Office requires you to keep acurate records and send them B.A.S. statements etc. You will need an ABN (Australian Business Number), and if you are in a partnership, a partnership agreement is recommended. You should also do a business plan before you start… projected income, competitors, establishment costs for plant & machinery, strengths & weaknesses etc etc.

I think it would be a good idea if you could talk to people already in this type of business, and get their thoughts/advice. Ask them lots of questions. If they wont help, go to the next one.

Once you have all this information you will be able to judge whether it is a good idea or not.

Hope this helps and good luck.
Regards,

Sharon

Hi showbags,
Some say it’s best not to cross-collateralise. I agree. That is to say: don’t use the equity in your existing IP to borrow more from the same lender.

Instead you can set up a Line Of Credit (see your broker to do this) using the equity in your IP and draw down on it as you need money for a deposit to purchase more IP’s.

Then you have the luxury of deciding on a lender of your choice, and the property will stand alone. (Not be tied in to the same loan as your existing IP)

That way you wont have any dramas from your lender if you decide to sell either of the properties in the future. They will be independent of each other.[biggrin]

Regards,

Sharon

Hi Joel,
I would recommend you read Peter Spann’s book – $10M property portfolio in just 10 yrs. It will teach you how to locate such properties.
Happy hunting!
Regards,

Sharon

Hi Woodsy,
Muswellbrook has a population of around 10,000, and major employment is coal, agriculture, and power/energy.
This link is interesting:
http://www.muswellbrook.nsw.gov.au/business/business.html
I haven’t purchased there… yet. I think it looks good… for further investigation.[biggrin]
It has been earmarked by the state govt. for major injection of funds. There was an article in the Newcastle Herald several months ago, can’t recall all the details.
Maybe you could ask some locals.
I like Singleton and Scone in that area too, for what it’s worth. IMO they are strong regional towns.
Happy hunting![biggrin]
Regards,

Sharon

Hi Woody88
I think Steve suggests a town with a population of not less than 20,000. And preferably not relying on one form of employment (e.g. a mining town).

Other creative suggestions might be to find a place in need of renovation – add a new bathroom, kitchen, add an extra bedroom – divide a large bedroom into 2, paint, fencing etc (But be careful how much you spend) Maybe you could D.I.Y. to save labour costs.

This will increase:
1. the equity in the property, (then you might be able to buy another one [biggrin]
2. the rent that you can ask,
3. the appeal for tenants.

You should also get a Quantity Surveyors report on the new stuff you have done to maximise tax depreciation.

Also it would be good if the place you find has the house planted either at the front or back of the block and the block could be sub-divided (ask the local council) and you could sell off the newly created block, thereby reducing your overall costs of acquiring the property.

Having done that [smash]you might have yourself a +CF property.[biggrin]

I haven’t done this myself, only read about it as a way of creating +CF.
Hope it helps [biggrin]
Regards,

Sharon

Hi Spanky
This link will probably answer all your Q’s…
http://www.fairtrading.nsw.gov.au/realestaterenting/buyingselling/buyingprocess.html
that’s if you’re in NSW, but I guess other states would have similar.[biggrin]
Regards,

Sharon

Hi Dazzling,
What a freaky thing to have happen, so glad no one was injured or worse.
I have heard of claims against landlords where the insurance company states ‘the landlord is responsible for ensuring everything possible was done to prevent the accident’. How far they would enforce this is questionable. No trees allowed?
I guess all the O.H.&S laws apply to landlords too.
With this in mind I have recently installed a mains safety swithch to prevent electrocution at my IP. No trees, so I don’t have to worry about that at least.
Regards,

Sharon

From an older perspective (40 something), I wish I had paid myself 10% of my earnings every week since my first job.
With this 10% savings I would have bought properties and never sold them.
Oh to be so wise at 15, 16 or even 20.
Nevermind, it’s never to late to start[biggrin]
Life is for learning![thumbsup2]
Regards

Sharon

My understanding is that your new PM will do it for you i.e. fire the old one, or you can do what I did and just write them a letter to tell them that their services are no longer required from (date).

Before you choose a new PM I would suggest you interview them to make sure they will look after the property, and that they will see to it that the tenants do too.

Lots of other Q’s like: what are the management fees (fees vary from state to state), what will they do to find a tenant when it becomes vacant, how regularly do they inspect the property, will you be informed it the rent is in arrears, etc etc Ask them everything you can think of, even the obvious.
Once you have made your choice, keep in touch with them maybe once a month to let them know you are a landlord who is interested (some aren’t believe it or not).

A gift at Christmas to show your appreciation (if they have been doing a good job)is a nice gesture and may also help to minimise your vacany rate.

If you want to take over the management of the property yourself, please be aware that this option can be the stuff nightmares are made of.
IMO a good PM is worth her/his weight in gold.
Regards,

Sharon

No, haven’t heard of him.
If he is a baddie, Neil Jenman might know him.
Try http://www.jenman.com.au and look for ‘Cast of Characters’. He has 97 on his list.
Regards,

Sharon