Hi All,
I am new to property investing and have decided to go into this with a team of three of us. To give you our back ground, we all work with annual salaries of 250k between us, one of us has a bad credit rating, and a little cash between us- we are planning to get into the commercial property market within 5 years and are starting out by:
1. Buying a house to renovate and live in for the first 12 months to claim the 1st home owners grant to allow us to gain equity.
2. While doing this we plan to buy antoher house and do a similar thing with one of us on the title to claim any first home owners benefits, and repeat for the third property.Our aim is simply to gain enough equity/cash through some solid cash deals to be able to invest interstate or wherever the properties make sense.
Since we are very new to the game, has anybody got any tips as to what sort of property we should be looking for (subdivide or renovate) and whether we should worry about its cashflow position at the beginning.
Any advice would be fantastic, or any ideas as to what sort of suburbs we should be investing in!
Thanks and have a great day!!
Mark
Hi again,
We are looking for properties in the 250-300 range is that about what we should be doing?
Also, how do we find out if a property can be subdivided?
Thanks!!!
Mark
Hey Mark,
Im afraid my help is only limited, im not sure how you would go about finance for such deals in a trio(1 with a bad credit rating?) with regards to best structure for tax and business reasons….
Sub-division and improvements to a lesser extent come down to local council zoning. This varies for all locations. Basically as a general rule of thumb, older established areas closer to the city areas will be re-zoned in accordance with town planning over time. General zoning terms are Rural, residential, commercial and mixed housing(multi-unit dwellings). To find out about a specific area log onto the council website(if its a larger council) and hopefully they will have details or call the zoning or town planning department for resources in your location.
Something to look for are council or other easements on a property, which despite zoning will restrict what you can do with the property, and also council regulations if you were considering buying an existing property, subdividing the land and keeping the dwelling as to how much room is required for access to the newly subdivided property.
Keep your mind open with strategies as no two properties are the same, if you could find an older house thats still in decent condition that could be renovated on a larger sub-dividable block, that could be a fantastic way to start. I also heard a few years ago of a gentlemen in toowoomba buying duplex blocks and adding a third unit onto the back of the block and strata-titling the block…. possibly lucrative if you can find the right property.
Which state are you looking at starting out in?
Cheers
Mick
Mick beat me to it with his comments on how you intend to finance your first deal.
Realistically maximum lvr these days is 90% of the purchase price / valuation and most lenders require between 3% and 5% genuine savings. If you have any form of bad credit you will end up paying a higher rate of interest and probably some additional costs.
Your income will mean nothing to lenders these days without some form of non borrowed deposit.
Richard Taylor | Australia's leading private lender
Hi Mick,
Thank you for your comments. We are starting off in Sydney as we plan to use the first property as a live in arrangement, currently we live in Balmain (5 min from CBD) and we all work in the city, so we would be looking maybe for a unit or apartment that will require some work. We are prepared to live a little further than city but no more than 20 minutes away (unless the oppurtunity is really good) Once we have two or three properties, then we will be prepared to purchase wherever necessary.
Once again, thank you for the advice.
Thanks,
Mark
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