The stamp duty on each transfer would have to be at market rates ie on market value. Also. Cgt or income tax would be at market value.
In Nsw you. An generally only get owner builder license once every 5 years. However if you were a builder then no need for the license as you would have a builders licence
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
There is a confusion here between builder and an owner builder, If Ashley gets builders license he needs to open up a company name, have the license in company name and trade under the company and he wont be considered as an owner builder, more like speck builder.
If he wants to build his own PPOR then it will be considered as an owner builder, in this case you save few thousand for not paying Home warranty insurance, but yes it will be hard to get finances, not hard if you have 30% of your own money.
Ashley my advice, forget new homes do renovations, more money, less work and less stress.
This is where I am finding myself in some sort of dilemna. Can’t afford to keep the family home and buy another property to renovate, or build a new home. Have a reasonable amount of equity in the family home which will ideally be used as working capitol. My thought is to either build or renovate but live in that home until I sell for a profit. Then repeat the process, building equity as I go. Open to suggestions. My whole idea of gaining my builders licence is to be able to take a builders margin on any venture I undertake, hence building equity faster.
Why cant you borrow against existing house and buy another 1 for renovation, get another personal loan to fund for reno and repayments and you will be fine, the quicker you renovate the sooner you will get out of debt, in first 2 properties it will be hard but once you build some profit it will be easier.
If you sell your current property you will have to move out, then go on rent, then you have to find block of land, get is approved and build it, it will probably take up to 12 months for the whole process, then you move in for 6 months and sell again. Not a pleasant life, specially if you have kids.
Plus there is not much profit in new homes, specially after you live in it, it will sell as second hand property.
Thanks everyone for your comments. I think perhaps you are making things a lot more complicated than they need to be? My thoughts are to simply build a house to live in for maybe 12 months or so, then sell and repeat the process. I am simply looking at building up equity each time until we are debt free. For example, buy block of land for $300K and build new house for $300K retail value (as a builder the true cost might be around $250K). Sell for $650K. This leaves a profit of around $100K before selling costs. If I used a builder other than myself and paid retail value the profit would only be around $50K. Does this make sense?
Ashley_New Builder wrote:Thanks everyone for your comments. I think perhaps you are making things a lot more complicated than they need to be? My thoughts are to simply build a house to live in for maybe 12 months or so, then sell and repeat the process. I am simply looking at building up equity each time until we are debt free. For example, buy block of land for $300K and build new house for $300K retail value (as a builder the true cost might be around $250K). Sell for $650K. This leaves a profit of around $100K before selling costs. If I used a builder other than myself and paid retail value the profit would only be around $50K. Does this make sense?Ashley,
I am a builder and investor myself. We build houses and then sell them using vendor finance. It has proven to be a very sound business model giving us the initial profit ($10000-$20000) when the buyer moves in and then a very strong cash flow until you get the big chunk of profit in 2 to 5 years time. Good thing is you can spread some of the tax over the years and there are no selling costs.
Josh,
I had a look your website. Obviously I was trying to read it from an investor point of view trying to put myself into shoes of investor, mediator (yourself) and the buyer. The way website is presenting (to me anyway) is that you almost get this impresion that the investor and the mediator are the winners and the buyer is the looser. To improve this I would change words SYSTEM into something more positive (opportunity,..???) and also where you write about discussion between 2 people you say: "Can you get a home loan? and the answer is NO". This is also promoting impression (to me anyway) that this is rather for people who can not get homeloan and so by engaging in vendor finance they may get into bigger trouble and/or high risk venture.
I would like to read (and perhaps this can than be transfered onto website in graphical way) specific story description that is clearly showing that ALL 3 parties are winners and that Vendor Finance could be good and why. I would suggest to add calculator as well with initial figures showing the scenario of all 3 parties winning.
Wolksvagen is currently selling Tiguan for 2.8% finance. The way it works is that the seller is selling the car at higher price than they would otherwise sell (plus they also lower little bit price to a level the brand reputation can not afford to make public) it for and while bank is getting 2.8% the bank is also cashing difference between higher price and what the car seller needs to make wanted profit. They selling them in huge quantities. I would be suprised if after all the bank would not get the usual 8% at least. 2.8% in interest on higher price and 5.2% from car price difference.
Hi Cintaku
I agree, i.e. it's always helpful to show to show the win-win nature of the transaction. I find the easiest way to do this is via testimonials, e.g.
http://negative2positive.com.au/testimonials/sandra-sua# and
http://negative2positive.com.au/testimonials/ann-evansCheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Thanks for the constructive comments Cintaku!
I will definately take your advice on board. I think your right-investors want to know that they are doing the right thing by everyone including the buyers. Obiously in your mind i havent painted a picture which shows a win-win to all. There is definately a win for the buyers as they get home ownership and capital growth so ill improve on that one, thanks mate.Flipping a house for a profit has all kinds of risks involved. The biggest probably being, financially. If you don’t calculate things just right you will find yourself in a world of debt. Be very careful.
That would be a great business. Investing into property and making money out of it is a nice idea. But, first and foremost, be sure that the place where you are going to 'build your house for sale' has a nice location. So the profit will be back for you in a shorter period of time. Consider the financial stability also.
There seems to be many ways to make money from obtaining license to build, building a home, and reselling it for mass profit. Does anyone know roughly how much profit could be made from doing the same thing with a condo building?
mattsta wrote:There seems to be many ways to make money from obtaining license to build, building a home, and reselling it for mass profit. Does anyone know roughly how much profit could be made from doing the same thing with a condo building?In the case of condominiums, you will certainly earned and generate stream of income if you buy pre-selling property that has the ability to increase its value as time goes by. Just don’t forget to checked the mind behind the development which is the property developer, also consider purchasing property within excellent location.
I am one for thinking outside the square when needed. But if you don't have to why would you. Ashley you have already said you have significant equity. DOn't over complicate the finance.
There are lenders that will do good lvr's to an owner builder with builders licence. I would go down this path. no need for fraudulant documents and it's straight forward.
Whether to sell own house now and move into a rental or access equity and stay there till build is complete would be the other question i would be asking. But don't over think the finance, let your broker work that out.
regards
Dustin McMahon
Your Broker
0430 110 304
[email protected]
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