Depends on the many factors including the location of the property. I would suggest that you map out what renovations you are considering to do including materials used. Then take this to a few agents and get their take on what works in the area. For example, the market in the area I live in dictates that only timber flooring is suitable however I have properties in Western Sydney which dictates tiles.

Last thing you want to do is spend money using the wrong material in the house. Also consider ways of opening or closing walls to make the floor plan more attractive. It is surprisingly inexpensive to do.

Make sure you deal with an Accountant you has experience with SMSF loans. You will be surprised that there are many that don't know what entities need to be created for an SMSF. The same applies for a mortgage broker or banker.

Make sure all the limitations, restrictions and costs are explained to you before you take the plunge as they do vary from traditional property purchases. Lastly be careful amount putting all your eggs in the one basket. 

Regards

Shahin

It really depends on your future strategy – i.e. how long before you want to again purchase another property? Do you have an aggressive IP purchase strategy? The answer to this question will dictate how much equity you should use.

If your property is worth $520k (btw its worthwhile doing an upfront valuation to determine the value so that your numbers are correct) then at 80% LVR you will have $76k in equity. @ 90% LVR you will have $120k (I have already deducted the approx LMI premium from this) in equity.

If you are purchasing an IP for $310k (depending on the State of course) – you will require $73k (plus another $2k for building and pest inspection and legal fees) in deposit if you want to stay under 80%. However you will only require $41k if you go up to a 90% LVR. The benefit of going to 90% is that you have available equity to purchase further properties if that in fact is the plan. Also the LMI premium that you pay will be tax deductible for the first 5 years.

The above situation is extremely common whereby a separate account is set up against the PPOR for the newly borrowing funds and it has its own offset so you will be charged interest when you begin to use the funds (ie. when you have purchased and settled on the new IP). 

Just make sure your lender doesn't have any restrictions when it comes to offsets, e.g. ING allows a max of 2 offset per client which is quite inflexible when you have multiple properties and multiple splits. 

Lot of questions but the first one is – has the Architect given you a fixed cost for the DA? To be honest I don't think an Architect is the best person to manage the DA process. Also do you have a list of costs that you have factored already? Members of the forum can plug in items which you may have missed.

Whether the DA staging is subdivide and then build or build and then subdivide – you will be able to restructure the loan so as long as you don't fix the your loans. Thus you need to keep them variable. 

Your build cost will definitely be more than $300k. Where are you building? Have you got DA yet?

Hi Ballerina,

$70k is a huge amount. Did the council give an explanation? The councils usually work off a schedule. 

Regards

Shahin

I don't think it will 2% and if it does then Freckle has summed it up really well particularly the point 'property values will be the least of your concerns'. I actually think it will climb back up to close to 4% towards the end of 2013 and early 2015. Well im hoping anyway.

Hi Waz,

Are you familiar with the area? Pros; Good cashflow. I think they have been modest with a return of $32,000 per annum and you will get good depreciation on the back dwelling however Luxford Rd is busy road and too be honest not a pleasant rd. I also don't think that you can subdivide the dwellings at a later stage due to the land size.

I think this a good buy if it can be picked up in the mid $300's.

The banks will take the expected rental letter as per the agent's letter however in most cases and particularly when servicing is tight – the bank will take the valuation on the valuation that is conducted. 

Also think about the bigger picture – for example, can i build a second dwelling in the back? Back I build a GF in the back? If so what are the costs and the expected rental returns for both dwellings?

Hi Dale,

Apologies for the delay in responding but this time of the year is pure chaos. I have just responded to your questions. 

Regards

Shahin