Hey id like to get people’s thoughts on this,
my plan is to renovate to sell the way i see it I could possibly do say 3 renos for the year and unlock potential profits between 60 to 100g.
I went to see a broker today who while wasn’t trying to advise on how to invest couldn see any other way other than the old renovate to rent, hold and wait for growth equity to build to use as next deposit for next ip and gradually build a portfolio claiming serviceability won’t be an issue… I said Yeh your probably right until I’m around 3 properties in…highly negatively geared and maxed out on serviceability also considering growth is flat lineing at the moment I could do as he says hold for 2 yrs and expect maybe 20g in equity at most his argument is selling is not worth it as the sell costs and CGT make it unworth while..If I renovate and sell I build a bank quicker being proactive in generating profits instead of just waiting for the market to go up, if I set up a structure I can get around being smashed with CGT.. and I project profits through formulas and not guessing costs blowing a budget and hoping for a an unrealistic sales price, I then purchase bye and holds with more cash down and in better growth areas looking for around an 8%ROI, I was told today I won’t get much more than 4%ROI I said there are other areas in this country…
There really obviously is a lot of speculators that do just do the same old thing… I by no means are any sought of an authority and am an absolute novis but I have a plan and am willing to learn, where I’m finding a lot of the people I’m having to deal with have no other way of thinking…
Is this way of investing a bad idea?
Hi Ty
We believe our long term wealth is in the equity we have in property and we've used a slightly different way to accelerate the building of this equity.
The cycle goes like this. We buy or take control of a property and then on-sell it with vendor finance. This sale is structured to generate good positive monthly cash flow. With this positive cash flow in place, we get a buy & hold and use the positive cash flow from the first property to support the negative cash flow on the second. Then repeat
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
I agree with Paul
Its not what you sell but how you invest, if you need money then maybe you renovate one to sell and one to hold. However in a flat market it is harder to make money from this sort of transaction so you may be better to buy renovate and hold. Lets face it if you keep the property for 12 months and sell you get a 50% discount on the capital gains tax as well.
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
Email Me | Phone MeWe have just launched a new website join our membership today
Thanks for the reply Paul
Sounds like a good system creative and sustainable…
I agree positive cashflow, holding and building equity is the way to go but for myself being a novis.. I wanted to generate profits in my own backyard just for my own experience in property transactions and manufactured profits seem to be the quickest way in this market here…
basically
do a few renos then bye and hold…
do a few renos bye and hold…
The bye and holds ideally will be bought in better growth areas and ideally positively geared
Basically just wanted to know if iv missed something? as developing a portfolio of negatively geared property in a very low growth area sounds very slow and didnt make sense to me…
Thanks again
Thanks also Nigel
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