[sleepy]Just wanted to report at the end of my very first property deal. It was a rennovation aimed from the start to increase our capital base and clear some debt (the principal of multiplication by division). In Feb this year i found a block of 3 x 2br units in rural australia for $100K. They were untennanted, old and fairly run down – yet had the potential to rent for $110 per week each. My goal from the start was to rennovate, tennant, sell and go again. It has provided some good positive income during the selling period but not quite enough for me to retire on yet:)
After negotiating a 3mth settlement period with allowance of full access to the premisies for improvements, i left my job, moved into one of the units, and got to work – painting, sanding, carpeting, hole filling and everything else you can imagine. The theory being that a nicer unit will attract a nicer, mor respectfull tennant, and hence will eventually attract a better selling price. It was a hard slog and i missed my girl so much when i was away – now it has all paid off. Here’s some numbers:Triplex of units – $100 grand (10% deposit)
Improvements – a bit over 5 grand each
Legals – 5K
Selling – NOTHING!! i sold it privately
My own cash down: $35K
.. and the selling price $166K, just in time to celebrate my 25th birthday!After paying my private financier who belived in me so strongly (thanks dad, love you) i should walk away with an extra $45K (before tax obviously). Not so bad for my 3mths labour.
Cheers guys and best of luck!Thanks for letting me babble.
Dan
Dan,
Thanks for sharing. Positive stories like yours are good to hear.
Do you have another project lined up?
Best regards
There area few projects on the cards, as always. The plan is now to invest in another ‘value adding’ project as well as beginning to build a base of passive income properties aswell. The best part is that i’m now able to work (if you would even call it that) doing what i love. SOOOO much better than the meat works where i used to spend my days
Hi Dan,
Well done, although I’m still unsure why you felt the need to sell these units. I’m sure you would have been able to refinance it to access the available equity (45k) you have created in this property (and to pay your father back – has he asked for a cut of the profits yet?..lol). And from the looks of it the income from the tenants would pay ALL this properties holding costs. You could have had your cake and ate it 2.
Ben
Ben, “multiplication by division” by selling he has realized 20 plus years of positive cash flow (forgetting CG) in 3 months. I guess it all depends on what Dans goals are and what will get him there the quickest!!! Nice one Dan [thumbsup2]
Regards Thomas
That’s right thomas. Assuming i have an infinite source of similar properites (that would be sweet) i now have funds to buy 2, not just one. From there i can sell one, hold one, sell both and buy four more… sell four buy eight!! etc etc
Well done Dan on realising part of your dream.
I have to agree however with poor ol’ Ben.
After Mr Carmody and his merry men have had their way with your profits, especially given that contract to contract is less than 12 months, it’ll definitely take the shine off.
I don’t think it’s ever wise to do calculations with properties and put in brackets (forgetting CG). That’s a pretty big item to forget / ignore !!
I would’ve done what Ben suggested, collect the rent and leverage the $ 45 K equity created by your hard work. (The bank doesn’t rip 50% off you like the ATO does).
Each to his own though. It seems the freedom created by losing the meatworks shackles, like most self employed people, is hard to put a true value on.
Good luck…onwards and upwards for your budding new career. Cheers.
Once you start doing a few properties the government wants their cut as well and see’s you as ‘being in the business of selling properties’and may look at you in a different light..and have different requirements.
The developers here like Michael and Ausprop may be better placed to comment here though.
Great effort though and well worth repeating IMHO next time save one for yourself though and maybe progress that way if possible?
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorFood for thought most certainly and i appreciate all of you taking such an interest. Guess the thing is i owed my financier more than the $45K i could have refinanced the property for, so to me, it didn’t really make much sense to do so. I am aware that the tax man will come down on me, but being the only income i’ve made this financial year it shouldn’t be too nasty. I’ve been lucky in getting a ‘leg up’ from my olds and to see first hand that what seemed like a good idea in my head has doubled my last annual salary in half the time. Everything has it’s learning curve, it only gets better from here.
Great Effort keep us posted
Wasp
**************************************************Its not what you earn but what you do with what you earn
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