Forum Replies Created
Hi,
Can you give me a link to the webpage you are looking at?
Thanks,
– Steve
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
For residential property, 7%+ would be a good result in metro areas.
For commercial property, 10%+ would be a superior return.
I recommend buying the following book:
"The Property Professors Top Australian Suburbs" – Peter Koulizos
All the best,
– Steve
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
If you are looking to buy for market-based growth (that is , buy something and 'park' it as a rental while waiting for general capital appreciation), I'd agree that holding off is smart. This is because the market is likely to drift or retreat rather than rise in the near term. The price to jump in is once prices begin to correct.
However, if you want to be an active investor then it doesn't matter when you buy so long as you have a system that can make money in the current market. Active investors apply strategy and skill by buying problems and selling solutions, generally by adding more in perceived value than actual cost.
There is a lot of information on this website about various strategies, so spend some time surfing and reading and by all means ask more questions.
Merry Christmas!
– Steve
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Dave,
Not sure about specific answers to your questions as I am not an area expert in Queenstown, NZ.
Some general thoughts though…
1. Do some research online about what is available for rent in the area and also prices. See how much is available now and how much is available in the next 2 – 6 weeks. Lots of property available now speaks to excess supply.
2. Call agents in the area and pretend to be a renter and ask them questions about availability and price.
3. Call an independent agent and talk about the property. Ask them to negotiate on your behalf, which they should be happy to do as they will share the commission with the selling agent.
4. Make sure you understand all the costs of rental management. The NZ agents like to take their pound of flesh – both in management fees and also a surcharge on repairs etc.
5. Personally, I'd rather have a long term tenant on less rent and less churn than short term tenants where the re-marketing fees are higher, as is the likely damage to the property as people move in and out.
Merry Christmas,
– Steve
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Thanks for your post and welcome to the community.
To answer your questions:
Option One
1. we buy a 2bd unit for my parents and rent it out to them (they are all for the idea) and we move into their 3bd unit in bentleigh.
This assumes that your parents will go for this and either gift you or lend you their equity. Is this a realistic financial situation? That is, do you rent their unit and they rent yours? I'd like to see the numbers fleshed out or more clarification on the terms.
Option Two
2. we buy a house with a large block and empty the land/build and sell the block (this is obviously a good idea but the problem here is that I don't want to live in a house with a tiny backyard as we have 2 little kids and I want them to have lots of space to play in). Also I don't like the idea of moving from house to house as I want stability for my kids/family.
It's good that you are clear on what you want. Are you able to achieve the space / yard with option 1 in your parents 3Br unit? Also, do you have the financial capacity to buy and fund this option? I think this option will take better shape when you have a potential deal to work through – both land size, potential dwellings and also money,I would encourage you to also look at a 5 year plan, so that you do the deal and live in the property for five years and then trade up. It is unusual for people to live in the one property for life thesedays.
Option Three
3. we buy a house for ourselves to live in (not necessarily with a large block at the back)… but one that we like and will set up as our family home… and at the same time we buy another place that we can rent and possibly subdivide and sell in the end to make a profit.
This is a possibility, although it will be cash and debt intensive. Only you know what you can afford.Overall, I like the idea of being proactive of investing, but at the same time it seems like a family home is a large priority. I suggest you work out which one you want more – a home or investment property – and then build a strategy around that.
Be careful trying to turn a home into an investment property as there is a lot of emotion in homes, whereas investment properties should be simply a matter of:
a. how much down
b. how much back
c. how much time
d. how much riskMerry Christmas.
– Steve
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Welcome to the community.
I'm not aware of a specific database that records this after the sale.
If you are looking to buy foreclosed properties pre sale, then again I'm not aware of a specific service. Lenders have a duty to get the best possible price for sellers and although mortgagee auctions attract attention, lenders will go to auction rather than risk being seen to do a deal on the side with a client on fav. terms.
Merry Christmas,
– Steve
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
G'day Dave,
Sounds like an interesting project.
I'm not the reno guru by any means, but a couple of tips I have come to find true.
1. Make sure you target your end reno product to the demographic who will buy it. For instance, a spraygun approach works if you want the walls and ceilings the same colour, but this is a basic finish for a budget project.
2. Carpet should be slightly cheaper than polished boards, and a lot cheaper than new flooring. Again though, cheap and nasty may impact your end sales price. That said, I think the new carpet smell is even more important than the new carpet!
3. Bunnings have pretty cheep chrome lighting on banisters. Two and three way lights that can be self-installed. These look modern and do the job. I'm using them for the kitchen, bathroom and loungeroom on my current project.
4. Rehabing the shower / bath will be cheaper if you can get away with it. Go for new tap fittings though.
5. You are on the right idea here. New cupboard handles, perhaps even kitchen benchtops. I'm not sure about the powerpoints. Call a local electrician and find out.
Go with mulch for landscaping and a few flowering annuals for colour.
Hope this has helped. When it becomes available see if you can grab a copy of Renovation Toolbox, it will really help you. It's currently out of print but there are moves to do a reprint soon.
Cheers,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
Thanks for your post and well done on embarking on your real estate investing career.
Property developing sounds easy enough, yet there are many pitfalls. Still, the name of the game is to try and get as much information on the key unknowns.
For example, you know what your purchase price will be, you can get a fixed price contract, but what sinks people is the unknown end sales price and a lack of cash to cover costs when things don't go to plan.
For this reason, I recommend that you continue to rent while you do your first development so you can have access to as much working capital as possible.
If you buy a home then some of your working capital will be eaten up as equity which cannot be borrowed against, because lenders will only offer (say) 80% of purchase price. The other 20% + closing costs sits there.I hope the course goes well. Education is important.
All the best,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
I think I'd budget in $1,400 (GST inc) per square meter.
I would have thought you'd get change out of that if it was an M class slab and a basic finish.
Building cost is working out to be about $12,000 per square at the moment for basic construction.
You may do a little better now as construction work starts to dry up at the sub contractor level.
Builders seem happy to quote at the moment, so price it around and see how you go.
All the best,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
One downside is liquidity. As you can see, with so many on the market it they may be hard to sell.
Also, these kinds of investments are typically income rather than growth focussed. If the net yield (after management, interest and expenses) is negative, why own them?
Perhaps if you could put in the details of one of the units we could flesh it out.
Cheers,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
See an experienced lawyer. People go into these things with the best of intentions, yet this soon falls apart when the deal changes or peoples circumstances shift.
That's why it is important to consider the liquidity of the deal. For instance, what happens if someone gets divorced half way through the venture? Sounds extreme but it is the unknown in real estate that costs you the most!
All the best,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Yes, owner builders do qualify, see:
http://www.sro.vic.gov.au/sro/SROWebSite.nsf/rebates_fhog.htm#4in the case of owner builders, commenced construction (laying of foundations) of a home on their land in Victoria.
In respect to the timing of payment, see:
http://www.sro.vic.gov.au/sro/SROWebSite.nsf/rebates_fhog.htm#11payment will be made to your nominated account by the SRO within 14 days of lodging your application.
An application will only be considered after issue of the Certificate of Occupancy.
All the best,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Yes, this used to be a problem.
Some time ago when I did the research either the entity had to be set up, or there had to be the intention that the entity would be set up.I have a feeling now, that at least in Vic, so long as there is no financial gain in the nomination, it is not too much of an issue. Not sure about other states though.
In any event, legal advice is worthwhile.
Further reading:
https://www.propertyinvesting.com/weeklywordsCheers,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Thanks for the question.
The short answer is… 'yes', as interest rates come down, the conditions for a revival in the property market become more present.
This is simply because people can buy more house for less money, and the difference between what it costs to rent and own decreases.
Add to this the government's stimulus package for first home buyers, and you have all the right conditions for an eventual turn around in housing markets.
However, you will also remember me saying at the seminar that markets are more driven by emotion than economics. Clearly there is a lot of fear in the market and that fear is causing people to hold off investing decisions.
The market is thus split:
1. Bottom / Middle: Encouraging signs of tentative price growth
2. Middle / Upper: Flat and price falling as more sellers than buyersOnce the sentiment turns though, property prices across the board will increase, particularly if real estate is seen as safer than stocks and offers a better return than cash.
Don't hold your breath though… this may still be some time away as the interest rate cut in the current market is little more than a match thrown in to a damp pile of wood.
All the best,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
There are definitely benefits of further education, and both the CA and CPA programs offer the opportunity to sharpen your accounting skills.
I'm a CA, and even though I don't work in the industry as such any more, the ability to think through a financial issue in a logical and probelm solving manner is of great help.
Gaining a professional qualification is not a walk in the park though. It requires a lot of hard work, especially if you want to learn and benefit as opposed to simply trying to pass.
Perhaps I'm bias, but if you plan to work in a large accounting firm, or work in big business, then I think CA is the better qualification. Afterall, the ICAA claims to be #1 in numbers
Cheers,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Howardcm,
Thanks for making your post.
I'm not a great fan of doing a value add project on a unit in a complex, as external visual appeal contributes significantly to the emotion of the target buyer.
For instance, if you reno the villa then you are probably adding value to the unrenovated ones as much as your own, as you increase their quality by association.
Furthermore, a project I was involved in taught an incredibly valuable lesson. And that is that it is almost pointless to do the inside of a property if the outside remains ugly.
In this case we spend 85% of the budget doing the inside of six units, and the remaining 15% on a basic upgrade to the outside.
The problem was, people drove up, couldn't get past the ugly exterior, and then kept driving!
Some feedback on your deal then:
1. The numbers look tight; purchase for $290k; $15k for closing costs; $20k for renos… that brings it up to market. Then, if you sell, $10k in sales commission and advertising.
You need to look at comparative sales to see what similar renovated dwellings would sell for, but gut feel tells me the deal is marginal.
2. That said, if you qualify for the FHOG, then $14,000 + some potential stamp duty savings may make it sweeter.
3. I'm not a big advocate of renovating then renting, since a lot of the gloss of the renovation can be lost when tenants move in. That is, the property has maximum appeal just after the reno is complete and everything looks clean and new.
4. Rental return at $350 p/w is around 6%. Assuming an 80% loan at 8% interest, the deal will be negative cashflow. This means that your profit will have to funded by growth, and so you need to ask is the villa a good growth property?
Hope this has helped.
Cheers,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Great tip, thanks Luigi.
Have you considered carpet? Or perhaps putting a floating foor on top of the old boards?
Cheers,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hopefully someone will step forth with a good word?
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Good points.
In regards to nomination, if you don't specify 'and/or nominee' at the time of purchase then to transfer later may result in double stamp duty.Regards,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi,
The forums at PropertyInvesting.com enjoy a good search ranking with Google.
Therefore, companies where their name or reputation is questioned will seek to protect that and engage their lawyers to threaten to take legal action unless posts are removed.
We are in a difficult position, as we want to be an information source for the community, but we are not in a position to fund multiple legal challenges.
Indeed, in the past we have been asked for the names and details of posters so that they could be sued for defamation.
Needless to say, without a court order compelling us to do so, we have refused as we go to great lengths to protect privacy.
With this in mind, we simply request that people who make posts stick to the facts and keep as much emotion and opinion out as possible. A good example are several posts above that talk about the properties purchased and the financial outcomes since, or the procedures that happened at meetings.
In terms of moderation, what good would it have been for the entire post to have been removed and then all the comments lost? Perhaps it is inexact to edit some, but that is still better than removing the lot.
If you think the moderation needs improving, then stick your hand up and help. It will be gratefully received.
Lastly, PropertyInvesting.com has no relationship – direct, indirect, or otherwise, with Park Trent Properties, except to say we were contacted by lawyers representing the company to have posts removed as, in their opinion, they contained content that was defamatory to their client.
Regards,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
