Hi Everyone,
Just wondering if anyone is using the above strategy in Sydney at the present climate?
I'm planning to give this strategy a go – just simple jobs like paint, change flooring, minor kitchen/bathroom, to build up some cash but i hear it may not be a good strategy to use now because prices will drop with the rising interest rate?
Would like to hear your stories and how you did it.Thanks
JoHi Jo
I asked a simular question to this about a month ago and recieved no feedback. I would also like to do the same thing. Maybe we can put our heads together and work out if its worth doing.
GYes good thinking in the correct suburbs … well established areas …
check out knock down rebuild as well http://www.realestateedu.com.au
Lots of free educational stuff … free accounting ebooks and goals coaching programs … couple of free on-line courses on the bottom of the site including free full colour emauls and audio coaching … only on in Australia … hes growing like robert kiyosaki
good luck … D
We did a project near home (SW Sydney), bought ugly decorated house for bargain in 2003.
Did nearly all work ourselves (ie asaved $$ but spent our time). Back on market in 3 months. Made profit $60K.
Not sure if it would work in today's market.If you really are keen in this strategy, I strongly suggest you check out Dean and Elise Parker (via this website).
They have a system which adds every possible expense and gives you very strong chance of successful results, (Born of their own experience of doing multiple reno deals.)eg for cosmetic reno as above, they give guidelines on buying at a good price for the area, maximum amount (percentage of purchase) to spend on your reno, how to minimise your holding time (and interest costs), etc.
Comprehensive and system works in any state.
Much cheaper than finding you have bitten off more than you can chew with your reno!
quickchickI was not able to find a feasible project in Sydney for a long time. Very rare you hear someone going well in Sydney with property (and it is always questionable). There seen to be some margin in upped market projects – but it is very uneven market and I can not justify risk. You estimate your return at +/-200K.
I’m mainly doing interstate projects for this reason.
Wealth4life, I had a look at the site you recommended and there is pretty much nothing free on there? There are a number of interesting e-books, which you can't download unless you pay $500? Am I missing something?
Hey Gobiin,
I wouldnt mind discussing ideas however I am very new to investing, just giving you a heads up. We are deciding which strategy is best for us to invest at the moment. Have you invested much before?
Jo
The biggest problem with Sydney is the entry price. Pay SD on purchase, REA on exit, holding costs, CGT (discounted if held for over a year) etc, you would need to be looking at making a gross profit of $150k to walk away with $15k. IMO not worth it. Look further afield.
Partly agree with Scott.
You need to be able to buy at a discount (eg they need urgent sale, or so ugly no-one else wants to buy it. Or, you know the agent well, they know exactly what you're looking for, and so call you before it even hits the market.)
But if you're investing in Melbourne for example, stamp duty is more expensive.
You need to find an area where the improved price will be worth your effort.
At the moment, that may be in the "nicer" areas. (But hard to manage the entry price and holding costs!)If your property had another bonus, eg land to be subdivided off it, then it would be a winner!
quickchick
I am actually looking at that exact strategy now – in Sydneys Upper North Shore. Have had a look at a few properties, but none have stacked up…yet. One REA did tell me that I was wasting my time, and that he would always recommend to a seller that they improve the property themselves before putting it on the market!
Now I have to add 'Proving him wrong' to my list of things to do!!
Your REA may recommend they do it themselves, but many vendors wouldn't want the hassle.
Or want to pay, or wait to get it through council before they can settle on a sale.So prove him wrong! We're on your side!
quickchick
Scott,
I agree SYdney is expensive and have had many advice that it's not worth the effort. I was thinking for my first investment it will be easier to start closer to home than going interstate where I have no knowledge whatsoever.Akirk,
I didnt quite get what you meant – Did you mean your REA suggest to renovate yourself instead of using traders and that's what you are proving them wrong abt?Cheers for the feedback everyone
No, the REA said that he would recommend to any seller that they do the renovations themselves before putting their property on the market. In short – that I was wasting my time looking for something that could potentially make money through a cosmetic renovation.
I just thought I’d put some input in to this one. I’ve just finished a property in melb. 1.5 years. 500k purchase. 700k sale. After taking out stamps and costs I’ll make 150k with no tax – l lived in the house so havnt included interst as a holding cost ( have to live somewhere).
I’m now looking to do this again however with one important factor: I know I might not recover the money on the next project in the short term.
The market does not need to go down for you to lose. If it does not go up you won’t recover stamps, agents fee and interest etc. I will only buy if I can afford to hold if things don’t go my way…
I wouldn’t be buying expecting the same growth as we’ve had in the last couple of years.
Hey Banker,
Agree that the market may go sideways or down during a reno job.
My aim for a reno would be that there was enough fat in the deal to be profitable in a flat market, and if the market goes up, even better! You have to buy a real bargain for it to be financially viable. But better to buy very well than be hoping to recoup stamp duty and holding costs. (And may I suggest that a mortgage on a $500K house is a lot to pay and count as rent.)
Doing a reno while living in it is great for say a couple with no kids, (If they are OK living in a mess). But no plan for a family.You have done very well with such great growth in Melbourne during the project, good on you!
quickchick
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