Hey Guys & Girls,
My Wife and I are looking at the real-estate market to supplement our current income and to help us develop a long-term income stream to set us up for retirement.
We purchased our first house in June last year and after having made several ‘improvements’ we have managed to build up a little bit of equity in it and would like to use this equity to start building our port-folio.
We are currently exploring Options and property development but are unsure or where to start or which books to read / seminars to attend. We are open to both residential and commercial ventures either by ourselves or with others.
We live in a small town pop. 5500 which is located approx. 50 mins north of Canberra, 3 hrs west of Sydney, just off the Hume Highway and is currently experiencing a growth in both residential and commercial due to the demand for residence and the accompanying services within 1 hour of Canberra. There are also several other small settlements close by that could soon by heading in the same direction.
We are under no illusions that this will be easy or that it will even work for us but we are willing to give it a damn good try and would really appreciate any advice and support. If anyone is willing to share some of the lessons they have learnt from their experiences or are able to work with us we would be very grateful.
Thanks
Darryl
Hi Darryl
You mention your living a a growing town with a population of 5,500. This size town would probably support at least one vendor finance (VF) transaction, i.e. buy a "standard" family home and, instead of renting it, on-sell it with the help of VF.
This type of transaction will typically give you positive cash flow at three points, i.e. the deposit as the new VF buyers move in, approximately $500 per month positive cash flow (after all property expenses) and a back-end profit when the VF buyers refinance into a traditional loan. The back-end profit is the difference between what you buy the place for and what you on-sell it for, with VF, less what the VF buyers pay off while they're with you.
Another interesting point about this type of transaction, is that the profit generated by the complete transaction, will often be sufficient to buy two more of the same. For us, fixing our positive cash flow and our capital gain has been great for future planning. It's meant that we haven't had to rely on market driven capital gain and rentals. Sure we might miss a boom or two but they've been a bit thin on the ground in NSW of late
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
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