Hi
Would like some advice as we are about to buy our first investment property.We have completed renovation on our own home and made a nice amount of equity as my husband is a great handyman! I was wondering if you think we should buy renovate and rent or buy renovate and sell.
I have done a lot of research and still think this would be a great idea because we can do most of it our-self. Rental vacancy are very rare around here and i already have a good team of people, accountant, property manager mortgage broker and financial adviser to help me with advice.
Would like to get some opinions of people that are property investors that renovate and use this system now. Also what do you think about property coaching programs? Thanksshell21 wrote:Hi
Would like some advice as we are about to buy our first investment property.We have completed renovation on our own home and made a nice amount of equity as my husband is a great handyman! I was wondering if you think we should buy renovate and rent
If you rent out a property- be prepared for the tenant not looking after the property or even damaging it.
Can Claim depreciation on some of renovation during rental period.
You will have capital gains tax to pay later when you sellshell21 wrote:or buy renovate and sell.
Are you living in the house as then you could claim it as PPOR / Main residence CGT exemption
You have to be careful you do not do too many over a time period as then you are regarded as a property trader.
If you live in it – you can take your time with the renovations
If you are not living in the house then you have to be aware that time taken = loan interest paid, rates, Insurance , ect (holding costs)
If you are not living in the house and not renting it out – these holding costs can be added to the cost base for reducing CGT.shell21 wrote:I have done a lot of research and still think this would be a great idea because we can do most of it our-self. Rental vacancy are very rare around here and i already have a good team of people, accountant, property manager mortgage broker and financial adviser to help me with advice.
Would like to get some opinions of people that are property investors that renovate and use this system now. Also what do you think about property coaching programs? ThanksBe careful with property coaching programs that require you to travel interstate and then buy one of their properties.
Thanks duckster for your advice
I was hoping to get a contract drawn up to have rights to access the property before settlement to cut holding costs and save on time as we wouldn't be live in the premises and would sell if the market was good or rent out and claim on depreciation and hold the property to can equity whats your thoughts on this strategie. ThanksYou have to be careful not to start renovations until settlement because if it falls through you could ge giving the vendor a free renovation.
My thoughts
Are you an active investor or a passive investor.
I have been a passive investor for 15 years but now I have one property with 260k of equity and 20k of debt. Once I earn income as I am a house dad and my kids start school in FEB I will be able to generate some form of income and borrow more money hopefully.
I am hoping to move into being an active investor but due to my low borrow capacity I will most likely be looking into joint ventures into the future.What are the likely capital growth rates for where you are buying.
If high then buy and hold can work over the long term.
If low then active investment can work.Shell shouldnt your financial adviser, mortgage broker and accountant be advising you on this action as a strategy.
Richard Taylor | Australia's leading private lender
" i already have a good team of people, accountant, property manager mortgage broker and financial adviser to help me with advice"
You should be thankful to be able to receive 'excellent' info from your team.
Why bother with 'unlicensed' basic opinion in the blog?? funny..!!!
GOM my sentiments exactly.
Richard Taylor | Australia's leading private lender
Thanks duckster for your reply. GOM and Qlds007 just getting some different opinions and educating myself with other people that may have been through this before nothing wrong with that, i think we can all learn from each other. Wasn't about to take anyone's advise over my financial planner etc. Just thought it would be good to see what other people experineces may have been. I haven't posted on here before but thought this what it was used for networking ………..???? Thanks
hi
my first reply on post
I enjoy readng all the different opinions as well, learning from each other and sharing ideas, then making up your own mind.
Can I share what we have done?
My partner and I own 4 properties now, 3 in areas of very tight rental demand, all reno rescues and renovated ourselves on very very tight budget. We basically slaved over them doing all the work ourselves,sometimes living in them, sometimes working fulltime and travelling to house, even while 7 months preganant!
Looking back we probably took too long, did too much etc but its all a learning curve, and each house has gained a lot in equity and rented straight away, one is pos gear, 2 neutral, one still reno
each one allowed us to recoup some reno costs, save up again and use equity for next purchase(usually in a years time)
people often say we must be mad, but I believe in giving it a go to your best ability, and be proud of your effortsthanks michelle
thats the road we are looking like were going down iam sure its going to be worth all the hard work and stress! did you find that after renovation the tent look after the property did you have any proplems with this ?? any advise you would share would be great. thanks for you post its good to hear from some one else that has been throught it all.
Hi,
thanks for positive reply, was abit shy about sharing
I feel its worth all the stress, but at times it was really hard, just scrape by money wise most of time, especially when I finished work to have bub last sept and the interest rates were rocketing up!! held our breath then! wer are average income couple, just didn't want the average life of slogging away, and me rushing back to work when family is little. thats what keeps us going when it gets tough.one thing we should have allowed for was ongoing maintenance once rented, being older homes things have worn out, hot water system ,sliding door, been quite expensive. one tenant did decide to let her kids use clothes line as a swing, broke it, then tried to bully me into compensation!
the two houses that rent quick are in Wingham,near Taree nsw. been looked after really well, and made the most in renovation, boosting the house value.but i find that tenants move on after a year to housing comission homes(cheap rent) which is frustrating
the house in Cowra, country nsw, is the one we are really questioning ourselves over. it only grew in value the same amount we spent on it, despite slaving over it. ahh the smell alone nearly killed us!
was great in that bought it under 80 grand, and rented straight away for 170 a week.
until a year later, tenanat lost job, went crazy, trashed house, did a runner. we had a nightmare experience , really upsetting.we won at tribunal but they haven't paid a cent, went straight into housing commision, and don't have jobs so we can't use sherrif. the insurance covered some, but the quotes and work took ages and shoddy quality.honestly I would just pay a handy man to fix next time and not claim.lost about 8 months rent with all the stuffing around. insurance didn't cover loss of rent, bc tenant had moved out…anyway they catch you on the tehnicalities….just bad luck of the draw
the house is in a rough , but impoving area and hard to rent,even though when we stayed there we had no problems, just had a stigma attached…now wondering whether to sell and be rid of it?Thanks so much Michelle
It sounds like you guys had a really ruff ride with your tenants ! It suprises me about the insurance not covering you cause he moved out !! I thought that's the whole point of the insurance ?? Ill make sure I check that out when we get cover. I ve thought about buying close to home were rent is high in demand and we can keep an eye on it. Iam still a bit worried about it all working out but i think we will have to give it a go !!!! Thanks !!Hi Michelle,
With the place in Cowra, did you get $170 p.w week rental BEFORE or AFTER renovation?
Hi YI,
rent estimate 140 /150 week before, got $170 week after reno.
not much increase but thought it a good cash flow buy. basically house was filthy and really needed reno, new paint, carpet, some retiling bathroom, tiled kitchen floor (cheaper than lino!), new curtain,blinds, garden tidy, and built a wooden deck.
we should have bought closer, travelling killed us but couldn't afford closer:)
after tenant adventure have dropped rent to 150, so not our best choice, but riding out the storm.
we like to have a clean, tidy , homely house and cross fingers get nice decent people in
Do you do many renos? I was thinking of building next time?
Michelle
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