Forum Replies Created
Okay, I understand the caveat part, but am unsure as to the difference between a promissory note and a second mortgage.
I would assume a couple of things. Firstly, in this current market, we cant just take an option and get some cap gain.
Secondly, we need to get something approved by council in a relatively short period of time.
Would I be right in assuming that the best would be an amalgamation of land for unit developments in medium density res development, and subdivision of larger estates into more blocks in the less dense areas?
Since I think there will be less developers looking for land in the near future, I am considering (but always open to other options- no pun intended) taking options/subject to’s on larger tracts of land, and getting da’s to council regarding subdivision.
Any flaws in my thoughts/plans?
OOps, almost forgot to ask.
If I buy a house for say 1M, and the vendor will lend me 100k, would he get a 2nd mortgage/caveat/joint venture/etc?
Many thanks for your replies Michael and devgar.
By the way , what is a caveat? I was under the impression (?mistakenly) that a caveat meant that you had a financial interest in the prop, and it is very difficult to sell without the caveat removed. What is the difference between a caveat and a 2nd or third mortgage?
Kabung, congrats on your departure from the dole que!.
You mention that it was your first successful deal. Did you have a few options expire, or go sour through council?
I just secured options on them with exercise prices that are less than both the median and average prices in the postcode. The land can be developed into between 20-24 units. If I told you the price i paid for the option fee you’d probably think either I was lying or the owners were a few sandwiches short of a picnic.Please, do tell, do tell us how. Did you source them yourself, and tie up with the option from phillips street, or were they advertised from rea?
Many thanks for your replies. Am especially interested in the boilerplate option agreement. I tried googling and whitepaging the resource centre in Phillips street, but was unable to find anything. Kabung, you wouldnt happen to have their phone no?
I havent done any, but if you are even thinking about it, you must jump on the net and buy “the australian lease option handbook”- a dirt cheap ebook. It talks about doing exactly that, it calls them sandwhich deals. ie you lease for 200pw, can buy for 300k, lease for 250pw, can buy for 340k. If you can line it up, cash flow of 50 per week, and a possible 40k down the line.
If you arrange simultaneous settlements, you pay no stamp duty either!
If I was to proceed (which I think is a great idea btw), I would make sure of three things,
i) the initial lease specifically allows it (else walk on to the next deal)
ii) insurance to the house, specifically covering willfull and negligent damage by the tenant
iii) the next person cannot sublease again.
Michael,
I checked out the web sites that you suggested, both look good.
Are they aussie, or, if not, how much of their resource is less than beneficial?
wrappack
Can someone please fill me in on the following hypothetical situation.
Lets say I lend someone 200k on a 1M prop, and are given a second mortgage on it. I would also assume I would have a caveat taken out over the property?
Lets say the developer goes belly up and the banks want to sell. My understanding (which may be entirely wrong, so feel free to correct me), is that the bank will have trouble selling the property to anyone other than myself, as I have a 2nd mortgage and a caveat over it.
Or, am I mistaken in that the bank could sell it to an unrelated party for say 700grand at a mortgagee auction?
Kabung, many thanks for your comment re options and Henry Roth.
I am also interested in options, then either selling them, or using the new equity to possibly develop myself.
What was the option that you took, and what was involved? (ie I assume that you had to do survey, then go to council with plans for either a subdivision or units/etc)What is a rent role?
.002c worth
i) Drinking 10 glasses of h2o a day, and spend half the day on the dunny.
ii) Scary thought number one- Ph of coke is well below three (ie acidic) it is that way so that more sugar dissolves in it, so it is sweeter. BTW Warren buffet (who owns a shitload of coke) says that most people prefer the taste of pepsi, cause it is about 4% sweeter. Now, eat a lot of sugar, and often, and get some more rotten teeth.
iii) Scary thought number two. Any ph less that 5.4 will dissolve a tooth (slowly, but surely). Yes, it may take a while, but it will erode (technical dental term describing the acid disolv ing the teeth away) any and all of the teeth. Particularly seen on the inside of the upper incisors (cause thats where it goes when you start to swallow), and on the biting surfaces of the 6 year old molars. Kiddies teeth are particularly prone to erosion, as the enamel is much thinner, kids often take longer to drink their drinks, leaving it on the surface of the tooth longer. Erosion can cause sensitivity to cold and sweet things, and is an absolute cow to try and treat (ie with fillings). If you ever see anyone with upper front teeth that seem to not be straight, the chances are that the outside enamel is starting to chip away, because the enamel has all eroded away on the inside.
PS- above comments also apply to fruit juice (but dont get me started on that!)Scary thought number three. Caffeine addiction. Ah, thats crap, not me. I just love the taste, I just feel so much better after sitting with my morning coffee with friends. What utter bullshit! The majority of the above feelings are indicative of caffeine addiction. (BTW, my definition of addiction- being unable to give up something NOW, with no ill effects or ill feelings). That morning sluggishness, instantly relieved by caffeine. Told this to many people, most of whom thought I was talking crap, or an anal mormon. An old next door neighbour told me if I had told her a year ago, she would have thought I was barmy. Buy, she had given up the coffee (a six a day habit), and put up with the lethargy, the crankiness, the headaches, all instantly relieved by any caffeine. Felt much better after giving it up, but it is a hard slog. Also, is much more socially acceptable than smoking, so the peer pressure is hard for most.
Best thing to drink – water or milk. At least if you are drinking milk you are getting heaps of nutrients, vitamins, etc, and at a fraction of the price.
Random thought- Why doesnt coke advertise anymore? Remember growing up, it was always on the box, with the big ball, and the good looking girls with the huge ummmmm, Im getting sidetracked, but you probably get the drift.
Random thought number two- remember seeing a doco once, which was using iv caffeine on premature neonates. Cant quite remember why- It was something to do with the heartbeat, and possibly the lungs as well (though not sure on that last point)
Unfortunatly, the majority of the original email is crap. It may be well intentioned, with a degree of journalistic credability, but unfortunatly, is a crap email of urban myths presented by well meaning folks. Check out http://hoaxinfo.com/cokeacid.htm or any of a number of urban myth sites.
Read books by Alexander Elder- the set of come into my trading room, and his earlier ones.
Then reread and reread them.
Couple of comments. Forget currencies they are a 24 hour job around the world. Forget options, elder says that futures are actually a lot safer (and he backs it up, just pick the right market!)
Best thing about elder is his discussion of the mind, secondly the money management, and thirdly the methodology, whereas most books just spew out technical indicators.
Or, for that matter, when your friendly real estate agent tells you that the market is recovering.“friendly real estate agent”- surely an oxymoron.
According to every real estate agent who has ever walked the face of the earth in every bull, bear and sideways market, NOW has always been the perfect time to list with them, sell with them, and buy through them. I sincerely believe that in the next million years or so, all rea will always be reading from the original script!
Seriously, though, like your idea Re auction clearance rates, but would also need to have prices increased as well, or they may be mortagee sales in a really bad market.
Even after June 1st, if I only buy and then flip for 11 – 11.99% more then what I paid for the property, then I dont have the tax to pay and still make a nice little profit each time.Mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm.
So, if you mark up a property at say, 11.5%, how much of this net ‘profit’ would be eaten up before you have seen it by stamp duty, solicitors, conveyancers, REA, repairs, maintenance, advertising, and the fun of paying interest on a vacant house waiting for an owner?
Consider the simple fact of the fast paced world of the stock market. If a company announces (for any reason) a profit warning/downgrade that was previously unknown to the market, its shares will almost immediately head south.
The new VTT and the .7% holding tax will definately decrease the profit associated (in both the long and the short term) with nsw property.
Yes, we go through ups and down, or ups and plateaus, but perhaps one could consider the following:-
Just because a prop can be bought today for (say) 500k, that was 530k three months ago, does not mean that it is good value. The true value buy would be at the bottom of the market, or after the market starts to recover
I think we would all agree that the rosy days are over, that the long term outlook is very good, but we will agree to disagree on the one to four year period.
Ignoring taxes sounds like something only a half brain dead moron in a drunken stupor would believe. Changing tax laws can give a huge shift of billions of dollars one way or the other.
Example. A few years ago the ralph report gave a 50% cgt exemption to assets held for >12mo. This was a massive impetus to the property market.
Consider a few positives (at the moment) for investing in prop.
Neg gearing. If the gov overnight got rid of neg gearing, how soon would the dung hit the fan? (okay, I wanted to say shit, but we all know it gets bleated out)
Depreciation. If the gov said “no depreciation, you know the house will wear out and the taxpayer would rather pay for the old ladies hip replacements than your falling apart IP’s”, it would be another nail in the coffin.
Trusts. If all ips had to be personally owned, who would like the potential of being liable in todays litigious society. And not the limited liability company wrapped up in a trust sue me cause Ill go naked, but being personally liable, and that liability is unlimited. Okay, this would not happen, predominantly because EVERY politician has a trust to avoid paying their fair share of tax.
Mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm. Wrappack must be crappack, I hear some of you say.
Things would never change, would they?
Well, who read in the paper today about the Harts law case? The split loans saga, they took the nasty tax office to court and won. Then the ato went to the highest court in the land and won, so that now dodgy investors who want to claim interest on interest on interest on interest on interest on their original interest will be disallowed, as they bloody well should be.
A fundamental change will cause prices to fluctuate around a new ‘fair price’. Because that fair price is (imho) below prices 12months ago, we are heading into a bear market. Personally , Ill start buying after prices go up a bit, off their low point.
Mmmmm. 700k at say 8.5% pa. Interest would be $59500 per year. Allowing 40% of income going towards house costs, income required to service=$148750. So how many people earn (legally) about 150k?
The hotmail account was something I set up to thwart the spammers. Have been with optus for a couple of years, and only recently started receiving offers of new jobs, generic viagra and enlargements for my hideously small penis (judging by the number of emails). Havent checked the hotmail one for a while, so I assume it must die after not being checked for xx days.
In the hope of avoiding the webcrawlers that scan for emails, I have not updated my details to this site.
If you wish to contact me, feel free to PM me, then Ill send you my details,etc.
I sympathise with your predicament, but I feel it is going to be very difficult/impossible to afford to upsize, as opposed to downside.
Is it possible to slightly change the layout of your house to suit you both. ie the house I lived in previously was 4bed, 2 bath, 2 story, dual entry. By blocking the stairs off, upstairs would be 3 bed,1bath, and a seperate granny flat downstairs. Even if it means building a wall/kitchenette, this would be less than the stamp duty and agents fees.
Ill go in to bat for fat Tony on a couple of points. (Sorry bout the long reply)
Firstly, everyone is entitled to express their opinion (even Bec), regardless of how many or few postings one has done, or how experienced or new one is to investing.
Catchy title- Good idea, if you have a dud title, it often sinks down deep, but if you spice it up, one can have long lasting threads with multiple viewpoints and ideology stated, which is what we want. Personally, I always deliberatly try to add a bit of a spark to the title.
He has stated his opinion (future correction/crash), but has not stated his fundamental reasons. But why should he? I feel his post may be more of an information gathering process on multiple responsers, as opposed to some posters who play lay down maisseire and only really want to hear their own views, opinions and voices reflected back to them via the mirror.
As for his sentiments, lets look at a couple of potential options. Huge CG in the next 3 years, plateu for 3 years, correction for 3 years.
In 3 years time, we will know the answer, until then, it is only speculation.
IMHO, only an idiot would suggest that we will have huge CG for the next 3 years, (part. in nsw), so that leaves only two left, of which a crash is one.
As for positivity, go to an Amway convention, and everything about it will be spoken in such awesome dreams, the ‘you can do it mentality’. A healthy dose of skepticism is good, to keep us away from all of the prop sharks that wish to chomp on our respective legs.
I got on to an os site, and it was similar to this one (in the fact that anyone could post), but everything was delayed, so it could be scrutinised. EVERY single post was masively positive, and most spoke of the authors wonderful ideas, books, and especially seminars (I wonder why?!) and how everything always worked. In filtering out all of the other ideas, only a crap advertising shell remained.
Just a thought- almost all of the US’s consumer spending was due to the refinancing of ppor, in the bulletin the other day it was talking about an asian country (sorry- cant remember what one- might have been singapore or taiwan), and the housing boom finished about six years ago. Prices are now 70 percent BELOW the peak. Imagine owning a million dollar unit 6 years ago, with it now worth only 300 grand. A reputable fact, not an opinion!
In OZ, I dont know anyone who has saved for a new kitchen/bathroom/car, but I know heaps of people who have borrowed, part through their ppor. Our national savings rate is at minus 3%
Lets say rates went up (greenspan has hinted that the 1% us rates may be going up later-prob after the yanks go to the polls in Nov), and a correction happened. The big killer to the economy as a whole would be a drop in consumer spending, due to ppor being valued significantly less.
If the economy is shot, who will be buying houses, when they know that they will be cheaper at next months mortgagee sales?
I am not suggesting that 70% drops will happen, but I feel that fat tony may not be too far off the mark.
I also realise that the majority of forum posters have a significant amount of money invested in property, and may not wish to entertain scary thoughts
You write on the sign “Want to sell a dead person’s house real cheap? I want to buy from YOU!” and walk around cemetaries looking for funeral parties.PS: Funnily enough I’ve found that it’s the live vendors who are more prepared to negotiate a good price than the dead ones.The previous comments are uninformed drivel, rude, derogatory, arcane, stupid comments from a brain dead moronic dickhead of a person. Which probably explained why I nearly pissed myself while reading them[thumbsupanim]
Anyway I guess the biggest prob. was finding out their assets – for example did they live in Mosman or Blue Mountains. It would be good if you could target specific areas…It is pretty easy to target specific areas. Pick up the local paper, contact the local solicitors. This will keep you really busy. My theory is that if someone dies in potts point, there is a better chance of potts point real estate than mount druitt. Personally, I trimmed things down by searching only the smh for city based legal firms where the deceased was in my area. My theory was that the executer was more than likely to be selling, than if the solicitor (and, hence, likely the vendor) lived down the road and decided to move into grannys house.
