Hi Rob,

Make sure you check out realtor.com, and search for the area of interest.

The post-foreclosure (short sale) is an interesting option.

– Steve McKnight

Angiebabe…

Are you related to this site?

It just seems a bit odd that you would join today and then post this.

Is seems to me to be some seeding for something new.

For what it is worth, what I'd like to know are:

a. Are the original listing prices genuine? If so, are they independently verified, or is it up to the agents to input?
b. How much is paid for listing the property on the site?
c. Why are there so many google ads on the site? Makes it look a bit dodgy.
d. Who are the people behind the site? On the 'about us' site it doesn't mention names.

This whole thing seems a little odd.

– Steve McKnight

I've a couple of thoughts to add here:

a) 1 Br Apartments. These are the bottom of the market and hence are attractive to those seeking affordability. As such, they are likely to underperfom the median house price growth and rent. If you can, you are better off with a 2br second hand apartment than a new 1 br apartment.

b) How do you plan to make money from this investment? Growth, Income or Both? It is smarter to start with your profit and work backwards to your property, than to start with your property and work forwards to your profit.

c) You are right about the hidden costs. Be careful with body corporate, leasing charges, extras (pool, gym etc), carparks, noise (check construction for soundproofing), stairs / access (impacts rental if hard to move in and out – ground floors tend to rent for more unless there is a view).

d) Finance – make sure you shop around for a financier as some will not like apartments less than a certain size.

Food for thought. All the best,

– Steve McKnight

Hi,

I agree with other posts about needing the preliminaries sorted.

That said, you have a goal and if you lack the funds it is smart to invest with others. Make sure you have each role defined though, as if you are all doing the same thing then it will cause arguments.

Open communication among the partners is the most important requirement. Common goals and expectations are also critical. For example, be careful if one party contributes more time or money than others. This will be acceptable in the short term but will cause tension in the long term.

As for a structure, unless you are related a family trust will be out. Therefore, alternatives to explore are:

a) A unit trust (where the units are owned by the three parties)
b) A partnership of family trusts (each party has their own family trust)

As has been said, best to see an accountant to discuss your specific needs and what fits best.

All the best,

– Steve McKnight

Happy Easter!

I am about to sign off for some family time, but will be sure to answer this post on the other side of Easter.

Regards,

– Steve McKnight

The rules were stated when you joined up as a member.

If we allow an inch, people tend to take a mile.

– Steve

Hi,

It sounds like you are taking a pre-existing house and then renting it to students (by the room), as opposed to buying a 1-Br purpose built student accom dwelling.

As such, here are some points I recommend you work though:

1. Leasing: are you buying or renting? If you are renting the property then you will be sub-letting to tenants. That's fine, but you want to make sure your lease allows for this. If you are owning, then be aware that there will be quite a few logistical management issues with having 4,5 or 6 sep. tenants.

2. Bathroom: clearly the 1 Ba will be a problem – but only in terms of the appeal and function of the property. I don't know of any legal impairment that prevents you from renting because of only 1 bathroom.

3. Boarding house: check with your local council about what their rules about boarding houses, as with 5 tenants you may be pushing the boundaries. Just check in advance…

4. Tenants: students tend to be transitory – especially if they are from overseas. Therefore, you need to be sensitive to timing and vacancies around the start of the Uni year, holidays etc. Also, tenancies are likely to turn-over quicker as people move in and out. Therefore, your property's fixtures and fittings are likely to depreciate faster.

5. Bond – you will need to collect a bond off each tenant.

6. Harmony – given so many people are co-habitating a small space, you will need to create a good place to live. Given the lack of internal space, I would try to make good use of external areas and converting them into open living spaces that also offer some privacy.

I could go on, but instead send me a PM and I'll put you in touch with someone I know who has done really well from renting a house to tenants by the room.

Hope this has given you some new ideas.

– Steve

Hi,

Beware of the foreign controlled corporation rules, which you should ask your accountant about.

I invest in NZ and use a NZ family trust (not an LAQC).

– Steve

Hmmmm.

Seems like there are many choices.

Melton should hold up well given the price of property and that there are so many 1st homebuyers.

With that in mind though, if you buy new and sell in 1 yrs time then you will be selling to 1st homebuyers, and therefore competing against spec builders. And that's my fear, there is a chance that spec buyers will discount further if the economy falters as they clip profit to maintain volume.

Furthermore, I wouldn't buy a home in a place I didn't want to live… period.

Do your numbers on the student accom… there are sometimes many and large management and ownerships costs (such as servicing, body corp etc).

My pref would be to buy in the area you want, and then to improve the property to maintain your capital so that when you sell, you can sell for more.  That is, stay in Geelong and buy something you can improve to add more in perceived value than actual cost.

I hope this has given you some new ideas.

Warm regards,

– Steve