Hi,
I’m looking to buy my first investment unit after building equity in my ppor. My next door neighbour wants to sell his 2 bedroom unit as he is old and not well and is moving to respite care. But he really let his unit run down. However he will sell it to me for $150K. My unit next door is about the same in size but mine is in much better condition and is worth between $190-210K (RE agents say $210K). If I buy this unit, to make it similar to mine, I will have to get rid of carpet, tile the unit 80m2, paint the unit, new window blinds, and it will need replumbing as the hot water does not work in some taps and other taps don’t work at all[xx(]. Shower and toilet work, Kitchen decor ok, and bathroom has just had new tiling. As it is near the beach at Burleigh in QLD it will rent easily for $200pw. He wants to sell it now in it’s current state with no conditions other than finance. A builder has offered him $150K cash. But the old guy said he would sell it to me first at $150K if I want. My question is does anyone know what approx cost the above renos would be worst case scenario – avg quality? I am happy to do labour. Then I can work out if it is attractive.
Thanks for any advice.
Cameroni would say about 10-15k if your doing it to make a profit. That means a lot of shopping around and bargaining. I would buy it for the fact of the capital gain, that is a good deal.
Although i dont know if its positivly geared.
:: RICHby30 ::
Mate, buy the thing now and give the old man 100 cases of beer for his future.
This thing is a steal for you. I think this is a $5-10 renovation depending on the costly plumbing stuff. The rest you can do in between having a few ales, catching some waves and rays.
I would strongly consider buying it, moving in to it and renting/selling your pad. I know there is a little pain but.. look at the gain. CGT tax free sale or pemium instant rent. Furthermore, the old man’s apartment could put an instand tax fee CGT (maybe $70k) in your pocket in the next free months or rental
Give me the address and I’ll put a package to the old man myself (140 000, 50 cases of beer, 1% of my profit, option to buy unit back for 300 000,use of the unit for 1 week a year for the rest of his life)ALL JOKES
Cameron,
Yah, thats a killer deal, Reno will be cheap. I would act fast before someone else snages this deal. I can’t see how you could go wrong here.
Slum Lord
Hi Cameron, sounds like good deal,also sounds like you have decided to buy. Keep us informed of what reno’s you do and the cost involved. As already mentioned, it should be great for capital growth too.
Cheers
Marty
Cameron
This deal is about as good as it gets at the moment. Old guy, doesnt know true value and wants quick sale. These are the kind that I am looking out for all the time. Reno about $10K plus legals etc should take you up to about $165K all up. It is not +ve geared but about as close as you will get in a good growth area like Burleigh. As others have mentioned, you could realise a capital gain of about $45K in a very short timeframe so cant loose. That is a big enough margin to absorb any correction the market may deliver in the next while as well.
Go for it!Cameron,
Not sure if you are wanting to buy/fix/sell or rent out, but if you intend to flick it straight on, here is a trick that will increase your profit. See if you can talk the old man into an extended settlement. Make sure on the contract of purchase you put the term name or nominee (this means you can assign the contract to someone else at the last minute), and get permission to access and fix the property in the time before settlement. Fix the property up, then on sell it before you have bought it. The reason for this is that you won’t pay any stamp duty. Even if you have to offer the old man half of what the stamp duty would have been to clench it, he gets more and you get more… a win/win.
Worth a thought.
Dan.
If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.
get a builder’s report and then you’ll really know what you’re up for.
Dan your suggestion won’t work.
In the first place if you want to old man to issue a new contract to your buyer he will, more likely than not, think you are ripping him off (despite being promised half of the stampduty).
Secondly, what is the purpose of adding the words ‘Or nominee’ ? After all, you are implying the suggestion to ask the vendor to issue a new contract.
Thirdly, if you want to onsell to your endbuyer using the contract with the words ‘Or nominee’ it WILL attract a second lot of stampduty.
A better way would be to sell your own unit (and not pay tax on it) and thence move into the new unit yourself.
When the time conmes to sell that it too won’t attract any tax.
Pisces133
PeterM,
Are you sure you meant “Your suggestion doesn’t work” and not “I don’t understand how your suggestion works”. If you are a solicitor, or have tried this, stop me now, before i look too silly. Other than that i will try explain myself a little better, because from your objections, i don’t think you understood me.“In the first place if you want to old man to issue a new contract to your buyer he will, more likely than not, think you are ripping him off (despite being promised half of the stampduty).”
You actually answered this in your second objection, but i will again anyway. I do not want the old man to issue another contract, because I have put “Name or Nomanee” or “Name or Assigns”, I simply assign it to a new buyer. There is nothing the old man can do about it.
“Secondly, what is the purpose of adding the words ‘Or nominee’ ? After all, you are implying the suggestion to ask the vendor to issue a new contract.”
See above.
“Thirdly, if you want to onsell to your endbuyer using the contract with the words ‘Or nominee’ it WILL attract a second lot of stampduty.”
There is only ever one transaction, you never actually buy the property. Why would thier be 2 lots of stamp duty?
Dan.
If you want an extraordinary life you have to be prepared to do things that ordinary people aren’t prepared to do.
Don’t forget the GST, depending the extent of the reno, when you sell, you may be liable for GST on the Sale
so if u sold it for $200k, you may be required to pay $18,180 GST on the sale, so it may not be worth it.
you should get a private GST ruling b4 u renovateDan
Watch out for the an/or nominee clause. In some states if will incurr double stamp duty.
In Victoria, you had to have an existing agreement with the nominee before you sign the contract. This agreement has to be written, like a statutory declaration. That was a few years ago, so it may have changed now.
Other states you can only nominate a related entity.
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Why GST Div.
If this is done right, both units should be sold as his PPOR. Surely there is no GST.
Surely GST is only payable on ‘trading stock’ or a commercial property?
wow, GST on home Reno’s. Didnt know bout that
one. thanks a heap pal.>>Why would there be 2 lots of stamp duty?<<
Dan have you actually done this ?
The fact is that there is double stampduty involved.. Phone the stampduties office and ask them the question.
I believe that there IS a way around this provided you know the name of your endbuyer
before you enter into the contract to purchase.
(One’s name should be noted as : ‘Dan the Man as trustee’).You would also need to have a simple deed of trust drawn up and have this stamped at the same time as the Contract of Sale is duty stamped.
However all of this is a hassle (and may cause other problems) and in my opinion it is better to just pay the first lot of stampduty and be over and done with it.
However, please check out the above for yourself as I am not licensed to give advice of any kind.
Pisces133
Under the GST act, anything that can be considered a new residence is GST applicable.
Did anyone watch the block, the sale prices of the block were GST inclusive. Ergo Kerry Packer had to pay the GST on the sale price to the ATO.
So if you were not sure and sold your property for $200k, you may be liable for a $18,180 tax bill, depending on your situation.
thats why you may require to get a GST ruling.
Here is another idea.
What about doing minimal reno and rent it out. With this idea for the future. Someone in a ealry post was discussing buy Block next to each other and then getting a DA for Sub-Divison and DA for townhouses villas etc and selling the whole thing to developers.
Given you say you are close to the Beach the value in doing this could be fanatastic.
There my take and idea.
Cheers and Goodluck.
TeyluCentral Coast NSW
“What have you done to make your life better?”
OOOPS Sorry.
I missed a very important word UNIT.
Forget my idea.
Sorry!!!!
Central Coast NSW
“What have you done to make your life better?”
Thanks everyone!
You have given me a lot of confidence. His solicitor faxed me the contract today and I’m reviewing now ready to sign.Given that most plumbers I’ve talked to say $5-6K max, it’s a bargain. [
] Think I’ll hold onto it as Burleigh is a place where many developments are planned and it’s a seachange venue for the babyboomers – just has to go up in value, you’d think!!! Although it has boomed after the last couple of years – should still remain strong for a few years yet…Now here’s a thought – what about what happens after the baby boomers have all bought their investments, are retired, keel over, then leave the rest of the population with too many properties?? Like say in 15-20 years? Will historically high capital growth investment property still be such a good investment? I haven’t read his book yet, but is this one reason why Steve suggests properties in non-major metro areas with 10%+ returns – obviously these properties are not reliant on capital growth for investment returns!
It’s starting to make sense to split property investments into potentially high growth areas (-ve gearing) and also low growth areas (+ve gearing) – that way you’re diversifying your risk. What are everyone else’s thoughts??
] Think I’ll hold onto it as Burleigh is a place where many developments are planned and it’s a seachange venue for the babyboomers – just has to go up in value, you’d think!!! Although it has boomed after the last couple of years – should still remain strong for a few years yet…The topic ‘Renovation opportunity scenario’ is closed to new replies.
