Hi, Been reading posts on here for a year now just started posting. Anyways a year ago I bought a 1,000sq mt block 6kms from Darwin CBD with elevated 3 bedroom house and 2 one bed units underneath it, at the back of the block it also has double staory block of 6 studio units. All fairly run down but 7 units and house rented out to long term tennants at about half what i could get when i renovate. Bought at auction 669k and returns $1250 per week from day one gives me a 10% return in area where suburbs all surrounding it average house price is about what i bought this for if not more. When renovated approx 150K worth should be returning $2800 per week 21% return perfect area for capital growth potential. A studio appartment will go for 200k in area or touch under so 6 on block which can be strata titled is potential 1.2 mil and front house with other 2 units should still be 500k-600k. The way i figure it on interest only loan i should then have a hell of alot equity and approx 90k a year after loan repayments. There was a fair amount of interest in this property but surely i wasnt the only one that could see potential? I wanted to use the equity in this to buy a bunch of positive / neutral cash flow properies and pretty much live of this passive income. I have only just recently started getting into property last 18 months but surely i cant have found a way not to have to work the next 30 years?
Sounds good, but I think you will find it will be very hard to get it revalued at much higher than you paid for it. For the short term any way.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Yeah, in the condition it is in im thinking second half of next year once i can starta title the rear units and renovate. I need to sit down with a good financial advisor / accountant in Melbourne if you can recommend one. I have read alot of your posts over time Terry and you seem to know a fair bit. Let me know if you know who can help plan where to go from here. I got two other investment properties last year aswell so i need to nut out best way to keep moving forward. Thanks
Bit late now given that you have already settled on the property.
Just need to bear in mind that substiantial renovation and strata titling the units will trigger GST so you need to factor that you into your end sale price.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Because of the number of units i had to get a commercial loan the bank made me get it under a company structure so I know i need to pay GST but i plan n holding them for the rental return and use equity for further purchases. I used an accountant who i didnt find to helpful in the end to set up the company etc. Process was quite draining but its done now and pretty much paying for itself until i do the renos and get new tennants.I would like to look at refinancing it though as at moment its variable interest and principal with commbank at 8 soon to be 7.6% thought it maybe better to go IO at a fixed rate a bit lower to make it positive cashflow in meantime rather than neutral.
That’s crazy. A bank cannot make you use a company structure. Maybe they wouldn’t fund it if you bought it in your own name but a company structure is best avoided when buying property. I would advise clients against it
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
Qlds007 wrote:Bit late now given that you have already settled on the property.Just need to bear in mind that substiantial renovation and strata titling the units will trigger GST so you need to factor that you into your end sale price.
Cheers
Yours in Finance
Hi Richard,
We are learning about renovating now, but very little is mentioned about the fact you will incur GST. Understand this is more a tax question but at what point do you start paying it? Is there a profit limit or is it the cost of the reno? Obviously this will be a cost that needs to be factored into our bottom line.
Cheers
Jye and Tahnee
(previously JT83)Yep, got it at auction after police co op said they could do it never told me it was comercial until a week after auction when she must have realised herself so was left running around had no time or much choice besides commbank, so as i was borrowing full amount they loaded up security with company structure, 800k property, 580k property as security, long term job goverment job security at 150K wage and rental income from this property at 65k a year. They walked all over me but i had settlement date to work to and the bank still dragged it out with settlement after 5 months! It finnaly did though now i need a better deal.
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