Newcomer

Hello Jason,

Thanks for joinging the community and for making your post.

Let’s see if I can help you with your questions…

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How do I go about getting financing for this ? Bank ? Finacial Broker? Mortgage Broker?

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Since the deregulation of the banking industry here in Australia there has been a boom in the number of lenders and the products that they offer.

I believe that if you have an existing relationship with a lender then you should start there as a prior banking history doesn’t count for a lot, but it counts for something.

Next I’d suggest a mortgage broker – they are paid for getting the deal over the line and can help you fill in the forms to ensure you get the best chance of success.

As far as products go… you’ll probably need a standard mortgage loan for the home and then some sort of line of credit (LOC) to cover the renovation budget. If you own your own home then a LOC should be quite easy and pain-free to set up and most major lenders offer them.

Of course another strategy might be to renovate and then onsell a property during the settlement period, in which case you may only need a LOC if you’s don’t plan to settle.

Be sure to look at the worst case scenario if you can’t sell and make sure it’s affordable.

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And with the way the financing is structured can I do this full time ?

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Only you can answer this, but I’d be hesitant to go full time until you have done at least one full deal. You may find you don’t like the risk etc. I’d try to go part-time to start with so that you have a mix of wage income to pay the bills (unless your wife can cover that + enough for your joint lifestyles). Lenders will like that regular income too… so if you plan to do this on multiple occasions then be sure that you have proof of regular income.

It’s difficult to show that you are a full time successful renovator on your first deal.

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My wife and I have just bought our first house for 250k and we owe 237k .I have done some renovations to it already and have had a real estate agent value it at a little over 300k so can I use this equity to start out?

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There’s a big difference between what a r/e agent values a property for and what an independent valuer comes up with. The lender will have their own valuer and to have them provide a figure will cost between $0 and $300, depending on the lender.

I’d do this first so you know how much you can play with for your renovation budget.

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As far as tax purposes what would be the best way? a company and incorporate it?

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This is almost impossible to answer since ‘it depends’ is as close as you can get without knowing more about your situation. Having said that… I recommend going to an accountant and getting some advice before starting.

Other Issues

I’m a little bit worried that your timing might be too late in some housing markets given that the boom seems to be starting to level out.

I don’t want to give you a reason to do nothing… but, be very careful about getting in over your head. That’s why before I mentioned that it may be a good idea to consider what happens if you can’t sell and whether or not you can afford to hang on given that you will be living off your wife’s income.

Bottom line.. you need more of a plan.

Finally, if you’d like more experience in renovations then I suggest you come along to the Masters seminar in November (Sydney). The Renovation Kings have an excellent presentation and I’m confident that you would recoup the cost of attending in your first deal alone.

To find out more visit:

https://www.propertyinvesting.com/files/content.asp?cid=mpi

Bye,

Steve McKnight

Hi Jas,

You have started in the best way possible asking enormous amount of questions.
I was able to get heaps of advice from my collegues in a real estate office where I work which I found to be OK but you still have to sift through to find what suits your needs and style.
I am a great beliver in reading as much as you can. For example if a person has written a book from life experience in property or general investment and the have had 30 years experiance and you can read 10 books a year you have digested 300 years of experiance and if you can retain only 5 percent of the information you will be “in therory” 15 years more mentally astute.
5 years reading and studying as you go can expotentially increase your ability and educational experiance.
Some great books are the RICH DAD series written by Robert Kyosaki and also the Jan Somers books are great. A subscription to the Australian Property Investor mag is also woth considering. $75 for 6 bi-monthly issues.
If you know your stuff you can endeavour to ask as many questions of your advisors and you will be surprised how many answers start to fall your way.

Best wishes

Normy