Forum Replies Created
Hi Ben,
I’ve done it extensively in my own portfolio and some of my clients have been comfortable doing it. Under WA law (it may be different where you are) there are two risks to consider;
The first is that the seller is upside down and the bank will not let them settle, you have improved the property and the bank will keep it with out paying you out. This can be common in a falling market.
The other is that the vendor pass away between the offer being accepted and the contract going unconditional. This voids the contract.A good selling agent will make you sign a condition that you will not make any additional claims once you have possession and will generally try to dissuade the seller from accepting. You would also be wise to insure the property. If you cause a problem and the house were to burn down you will still have to settle.
I have recently collected 3 months rent on one property before settlement (messy divorce where they were playing point scoring) and my previous best was two weeks rent collected before settlement. Both of these properties were renovated before tenanting.
I hope this helps
Purchased for my clients
47 Taywood Drive Wanneroo WA. Paid 375k,Its a retain and build triplex site. Land value each block 160-180k + original house post subdivision 320-340k283 Morley Drive east Lockridge WA. Paid 375k. Getting $600 per week rent. Property has yet to settle, due to ex husband and wife warring with each other, but we are getting the rent in lieu of suing the seller for late settlement. Once settled we will be subdividing off the Granny flat to return all capital
128 Walter Road East Bassendean. 3 x 1 + 2 x 1 Granny flat. Demolish and duplex site. Paid $400k CBA online bank val came up at $558,000. Client is renovating, will live in the granny flat and rent out the front by the room, which will cover all mortgage costs. Waiting for reno to be complete, will tap equity and go again
3 Kardinia St Craigie Paid $555,000
House + Music studio + Splitter block. Bank val post subdivision has come in at $480,000 for house + studio and $280,000 for lot. Building to start on lot next month. Will then try for a change of use to convert the studio to a Granny flat, which we will also subdivide off using an exemption for a single bedroom unit.What I’m currently negotiating on in Perth
3 bed house on 800m2 corner lot. Subject to some more investigations, It looks to be a retain and build site. Will convert the down stairs studio to a 1 x 1 granny flat, to produce 3 x income. Price will be in the low to mid 500’s3 bed 1 bath house down stairs. 4 x 1 upstairs. 1720m2, in a premium beach side suburb. A demolish and triplex site. If I can purchase a 200mm strip from the neighbor it will be a retain and build triplex site. Land value each block 450k, but a lot of supply in the area. Wanting to pay low to mid 800’s
This is the joy of no compeition.
I am currently offering on one of these right now for a client. Its a nice little destroyed home that the owner has smashed up when she was high. There is not much left.
In my offer, I have accepted the property as is, but it is still subject to undertaking due diligence to my satisfaction. I will not be able to request that the seller pays for any repairs, but if inspections turn up a major issues that I have missed, I can walk.
I have explained that I am concerned that Meth may have been made in the house. If it tests positive, I have told them that I will walk. In reality (with the knowledge that by law, this has to be disclosed to any potential buyers) I’ll try to hit them up for a discount. If this doesn’t work we will then walk.
They can always reject the clause. In these situations the agent is nothing more than a middle man. He has no input into the process.
Good luck
Hi Alex,
I spent a few years working in Indonesia for a mining company. When I left there 8 years ago A foreigner could only purchase if they had an Indonesian partner, who gets 51%. Corruption is rife and the government is far from honest and transparent.
I would tread very carefully. Find 2-3 people done it, get their experiences and learn from them. Risk removal is a biggie here.
I think it will end at some time in the future. We have a federal government that is unable to control spending and cannot get anything through the senate. We have sold most of our government owned assets, so there is very little left to sell off. We also have a rapidly aging population and a shrinking pool of tax payers.
Negative gearing will become a luxury government cannot afford.
I think those that all ready have an IP will be fine, but the government will either introduce a date where properties purchased after that date will not be able to negative gear, or they will introduce a cap / reduced claim %. This will be fiddled with over the years to the point where there is no discount.
Over time you will see increased rental yields to compensate. So buy well and don’t depend on it.
Hi MTR,
I work for Momentum Wealth. As part of our business model, we have 4 in house finance brokers who specialise in investor and development finance. We receive weekly briefings from them as to what changes are being made in the finance market.
APRA has imposed a continual tightening of credit on the big for and second tare lenders. The most recent change was 4 weeks ago, when they forced the banks to use an APRA formulated servicing criteria. This had a noticeable impact, particularly on clients with a reasonable property portfolio.
On the ground floor I am seeing a reduction in peoples ability to borrow based on the tightened criteria. For example a client of mine could borrow 1.1m on the Friday with CBA. On the Monday after the new were controls were introduced, this dropped to $525k.
Jon Giaan also noted that there has been a noticeable increase in the average holding time for property. From memory the historic average is 8.5 years. We are now at something like 12 years. I think the above has some part to play in this.
Less ability to borrow will impact we investment market, as borrowing capacity has being wound back. Owner occs will be fine.
We have something like 50 countries all trying to be in the global top 20 for bank (BASIL) lending policy and security. Australia is one of these countries. Government (and banks for that matter) don’t understand the property market. I am wary that continual tightening of lending policy to be in the top 20 will flow through to restricted lending to both the property and business market. Given the way Australia’s banks survived the GFC I am struggling to understand the imperative to be in the top 20.
Try and get funding for an apartment development from the big 4, and you will see what I mean. CBA currently wants 110% pre-sales before they will finance.
Good lending practice makes scene. A Race to the top doesn’t.
Finally Sydney will continue to grow this year. However with something like 50% of purchases being undertaken by investors, I would expect a cooling in 2018, as these people no longer qualify for a 2nd or 3rd investment purchase. An interest rate rise will be what stalls the Sydney market. We have just seen a small rate rise as banks increase margins and cover an increase in the cost of sourcing funds.
I can also suggest BIG
https://www.meetup.com/en-AU/Boutique-Investors-Group-Property-Education-Networking/
A typical meeting is 30-50 people, focusing on property investing. A typical meeting consists of a networking session, 15 minute presentation followed by a 1 hour presentation and then more time to network.
This months presenter is Jill McIntyre. She is a life coach. She will be talking about mind set and how to get out of your comfort zone. She is my coach, I highly recommend coming along. You will learn a lot about yourself.
I’m a big fan of timing the cycle. Its just very hard to pick when is the top and when is the bottom, until they have passed.
I’m hearing some very crazy storied about prices In Sydney and Auckland. I get scared when 50% of the market are investors, and your yeilds are in the high 2% range, my fire alarm is ringing. People are not investing they are speculating that the market will keep on rising (bigger fool theory) However I think it still ans another year or so to run because the supply is so tight and the demand is still strong.
The advantage of a depressed market is that there are some great bargains to be had with significant up side. Eg a property I went for in the weekend was advertised for $285,000, needed 20k spent on it and it would have been worth $420k. The bonus was because of the layout it would have been easy to convert it to dual income.
I Picked up a nice splitter block for $420,000 last week. With a simple renovation the house post subdivision is worth close to what I paid for it and the Land will be worth low -mid 200’s This is the advantage of a depressed market. When its hot people overpay for these sites to the point that they will loose money if they develop them.
Too many people blindly follow the heard.
Can I also suggest that you continue to invest in your property education. This is much cheaper than you think.
Keep reading books. I started off by reading everything in the local library. There are also some great podcasts out there (every day property investing, real estate talk and bigger pockets) and then there are the investment magazines (not that I agree with every thing in them). See if you can find a local property networking group to meet with like minded people. Get on to regular e-mail lists of quality commentators for Buyers Agents and other reputable commentators.
The final thing to do is to see if you can find some one in your local area who is playing the game and doing it well. A few calls to local real estate agents and settlement agents will give you the names you are looking for.
Approach them for a coffee, explain your interest and offer to be their assistant helper. You will have to be persistent (If they are good it will be the first quality they will be looking for in some one. You will need to prove you are worthy). The knowledge and experience you will get will be priceless.
Finally if you can afford it get a coach, to over come those noises in your head that hold you back. Mine changed my life.
Remember this is a long distance run, not a short distance sprint. Too many people forget this.
Hi KG,
The answer will depend on the soil type. A minimum would be 100mm 25mPa. It will also go beyond just slab thickness. Your footings will need to be designed for the correct soil type as will the reinforcing steel. A Geotechnical report will be required first, before an engineer can give you the corect design. If you have high clay soil or lots of organics it can get expensive.
I use Structerre. Cost is about $1,800 for the geotech report.
This website will give your the basics http://howtobuildahouse.com.au/footingsystems/strip_footings/soil_clasification.html
Hi Lisa,
Further to What Benny said, you may wish to hold off on selling down your other unit. I have contacted council on your behalf. You are in a special zoning area, that allows for a minimum lot size of 180m and three stories (Its complicated) provided you have over 1500m2 of land. If you can acquire a few more units over time (you will need to hold 70%) you will have control of a very nice development site.
PM me if you want to know more details.
Hi Lisa,
The property is well located and presented as you said. It is close to all amenities and work hubs. The area you are in is from memory zoned R60, so there is a lot of infill to come.
Adding sliding doors to the wardrobes, or at least the master would add significant appeal to the property. Its is the only thing I can see missing from the house (Air con?). Bunnings do a kit that costs about $200 + doors. It would be a good low cost value add that will appeal to both tenants and buyers.
Have you considered advertising for both rent and sale at once. First in wins. Having it sitting empty hurts, especially if it has been around the three month time frame.
Finally have you had your loans reviewed recently. You may be able to save some money by re-working your finances to a lower rate. I recommend Ashleigh Patterson 0424 736 460. She just saved one of my clients 10K a year and got him a better rate than the bank would give him by going direct. It was 1% less than he was paying!
God luck and let me know how it turns out.
David Hall
Hello Lisa,
As a professional buyer of property within Perth, the problem you are having is one of over supply. There is simply too much stock with too many motivated vendors willing to take a haircut to get out. In Rockingham there is so much supply to come on in planned subdivisions, apartments and sub divisible land. All but the best located properties are going to struggle to sell.
A couple of questions. Is the presentation of your properties the best it can be.
Are you trying to sell with the Tenants in Place? This is a no no as you are only going to attract other investors and are bypassing 85% of buyers. It huts, to leave a property empty
What is your agent like? Are they giving you regular feed back, opening the house regularly, advertising it to get traffic through etc.In the brighter side, I am starting to see the early signs of improvement in the Perth market. There are more people attending open homes. They are not yet acting, but they are out there in winter. There has been a marked drop in stock levels. We have been averaging 15,500 properties for sale over the last 6-9 months. We are now at 14,200. If it get to 13,000 we will start to see some price movement. This in turn will improve our soft rental market,
If you have any questions, please PM me.
Hi Gavin,
The average lot size for an R60 is 150m2, with a minimum of 120m2, so the council is correct, the theoretical maximum is 5 units. Reality will depend on the block shape and what the market wants. Just because you can get 5 on doesn’t mean you should. At 150m2 including driveway, you are left with something pretty unappealing to a majority of the market. You will also have to be in a premier location to warrant the smaller lot size.
R60’s are generally better suited to multiple dwellings (apartments) on a site of this size you can get 6-7 2 bedders on it. Once again you will need to check that there is a demand for them in your suburb. Perth is well and truly oversupplied with multis in average suburbs, eg Hamilton Hill and Rivervale.
I would also check if you have a split zoning eg R20/60. You will need to confirm that your site and design meet the council requirements for the higher zoning.
You will need to undertake a feasibility study to determine if your development will work. You will have to provide more information to answer your question, eg sewer location, water location, is it a flat and level block, is soil conditions (Gonsells loves soil replacement at the moment) are developer co-contributions required? is there a house on the block, does it have asbestos?
Finally you will need to select the right bank before making your offer.Very few are willing to go into a five unit development without being in commercial lending territory.
Short answer is get an expert on your side. The costs of getting it wrong are very high.
Go and research the types of companies you want to work for. Once you know who you want to work for, find out what it is they are looking for. You will need to go an approach them directly in a friendly but persistent manner.
For my company it starts with a Passion for property, then is experience and then down to knowledge and finally qualifications. Knowledge can be learnt, but passion cannot not.
Start getting the things they want. Stay in regular touch, prove you have the persistence they are looking for. Offer to help out at events when they are in town (Read Chapter 1 for good ideas)
As Scott said it takes time, two years is typical to build up a repeat and referral data base. Work hard, go the extra mile and you will do well.
Good Luck
Gavin – The Land Division he is very”creative” I refer all of my development clients to him and he does all of my subdivisions
[email protected]
9209 3232
http://www.landdivision.com.au/Tell him David Hall from Momentum Wealth sent you and he will look after you.
Hi Steve,
I traveled from Perth and took 5 days off work to attend. Having attended last year I convinced two other friends to attend this year. My eldest son is a national level athlete. He would have benefited significantly from hearing Daniel Flynn’s story. I am kicking myself for not inviting him. He will be attending with his brother next year.
As someone who assists others to invest in property, my learnings were significant;
• People respond to emotion not logic. The investment pyramid was a great example of how to approach with logic not emotion. The two ladies who came to the stage to discuss properties they were interested in was further proof.
• Your further re enforcement of the Growth / Cash flow quadrant crystallized where I am heading with my own investing and is something I will be using to select the right fit for my clients.
• Some of your real deals, great learnings for me.
• Brendan’s focus on Systems is something I have been working on in my own life and it reinforced that what I am doing is both right and needs to be elevated in priority.I want to say a massive thanks to the speakers, the team at PropertyInvesting.com and to You. I appreciate you pushing through what was some visible pain for all of our benefit.
If I could make one suggestion for next year is “ask a question.” Get attendees to text questions to a number. The best questions can be answered in say a ½ hour session, by you or other speakers at conference. It would make a great finish to the conference. I will be seeing you next time.
Once again Many thanks! And please accept my sincere thanks for the honest education you provide to all.
