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January 13, 2013 - 9:07 am

In all seriousness, wilko1 thank you for that post it was probably the first one that has actually made me think of a few different options. The way you put it made me see it easier with the $100 positive per week or work on creating more equity. I personally want to get the best of both worlds ie get a property with development/subdivision potential that could be realized in the short term future. The only issue with that is I can't look in the rural areas I've been looking at currently and maybe shift my search to outer Melbourne suburbs instead. The higher yields aren't there but the development potential is, land doesn't sell at a decent enough price in the rural areas and the costs of doing a development in rural areas may not stack up to make a good enough profit to justify the headaches. 

So maybe I have to narrow down my search to the outer Melbourne suburbs which will have development potential, although lacking the higher yields your right I have to focus on building equity so early in my journey. I have a fairly decent deposit and if I look at purchasing in areas like Melton or Werribee I will still be able to find good enough yields to cope and it will be much easier for me to do any works to because it is more local for me.

This was always a very strong path for me to go down but I was in two different minds as to what I wanted to do. In the mean time I think I'll just research and see what I can look at doing which will be the most beneficial for me.

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January 13, 2013 - 8:37 am

That is ingenious wilko1, are the odds really 0.1% at $50k?

I've just had a lightbulb moment. If I get the $50k personal loan and put $100k down that would raise me to 0.2%?

Thanks Steve for creating this forum!

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January 11, 2013 - 9:02 am

Thank you very much for your reply, I totally understand what your saying and it's already a major part of my searching criteria. I think we have gone a tiny bit off topic here. So if we go back to my initial question

brendogs wrote:

What my question is, would I be better off purchasing 1 property around the $150k – $250k range in the more rural areas with decent returns then put my entire deposit onto that property and pay it off quickly, then build up some equity to purchase another identically priced property and continue acquiring properties in that fashion.

Or, should I split my deposit into lets say $30k – $40k purchase one property then after 6 or so months after I save up another $10k or so purchase an identical property.

 Any pros or cons with thinking this way or any other ideas that might be able to get me into the market.

I guess now that we have also established that I wouldn't shy away from something like a subdivision or possible future development these kind of properties are generally going to cost a few dollars more. Advice in this area is really what I'm after and I can see that all the kind people who have replied here have got some decent experiences to share. Is there any other ideas that might float my boat?

-Brendon

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January 11, 2013 - 5:25 am

Ok I understand why you are questioning my intentions I'll try and break up my steps that have brought me to where I am now.

Firstly a couple years ago I had just under $20k in the bank and thought I'm not too far away from purchasing a property. Then the more I researched I realized I didn't want to just purchase a house around the corner and rent it out. I started to read into people purchasing under valued properties renovating them, then selling for a substantial profit. I thought well I can do that quite easily so I looked into it further and purchased the renovation pack available here. I then realized I didn't have enough capital to cover the renovation costs and if anything happened to the end sale price I would have to rent it out then I would not be able to get the value out of the reno because it will then be considered 'used'.

So due to not having enough capital and I wasn't willing to take that risk onboard so early on in my investing journey I decided that strategy wouldn't work for me at that time. 

I then shifted my focus to purchase a house with enough space to subdivide quickly, sell off the remaining land and make it into a quick cash deal and/or if the perfect deal came up possibly building a single unit or house to make a larger profit (this ideally is still what I'm searching for at the moment). 

The deal I spoke about earlier was just something that came up and I quickly punched some figures around and realized it was a very good opportunity, so I pursued it to no avail. This took a lot of time and effort and felt like a huge kick in the guts because it took up so much of my time to organize everything. After this deal fell thru I was dis-heartened and took a month or so off from searching around. I then started up a second business which took up a lot of time away from me for the past 6 or so months and now I'm getting back into researching property and I've decided that maybe right now cashflow will be a better choice for my lifestyle at the moment. Hence why I've asked the question.

I'm not out to make a million dollar deal right at the minute and I think just entering the market will be more beneficial for my current lifestyle. I understand there is still great opportunities to find properties with good returns so I think this strategy is best for me. If I could purchase a property with the option to build or sub divide then that would be ideal.

I said I was in an aggressive investing mindset because I'm not afraid of challenges like the deal that fell thru for me and I have a very open mind to learn. I have totally shy'd away from hot spotting and it's just not my cup of tea that's why I haven't looked into it.

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January 10, 2013 - 12:02 pm

I'm not a believer in forecasting growth in this market. Nor do I trust any of the sources who talk about "Hot Spots" around Victoria. So I have decided to be a pro-active investor and make my own profits or income based on good deals.

I am definitely in an aggressive investing mindset, 6 months ago a deal fell thru which was on a sizeable block in which I had plans to subdivide, building plans ready to start and I was hoping to flip it within 12 – 18 months to a builder or take on the challenge with some investors if I couldn't get a sale. I pretty much had everything ready to go when my bid on the property was beaten by a huge margin and effectively made the deal not attractive at all and far to risky with the higher price so I decided to walk away from that one.

So I'm fairly capable of taking on deals like that but for now I won't be seeking those types of projects and stick to trying to get some positive cashflow happening. I do have a good team around me for guidance but now that I'm changing my mentality towards my investment plan I wanted to get some advice from the faithful around here.

-Brendon

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April 3, 2012 - 3:52 am

Great Thread guys, I am looking down a very similar path on a deal I’m looking into at the moment!

Very Helpful information.

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March 25, 2012 - 11:54 pm

Oh ok that’s fair enough, thanks again. I think I may have been out bidded on this deal, so now it’s down to the mind games with the agent who I do not trust even the slightest! All the best with your development mate!

Regards Brendon

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March 23, 2012 - 3:48 am

I totally understand what your saying there Terryw but I should have directed my question to AALLII. Thanks for your response, I have done my research and I do believe that structure to be the best for this particular project as it is for yours. Which accountant did you get to set this up for you? I don’t have much faith in my accountant for anything other than tax returns to be honest.

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March 23, 2012 - 12:58 am

Terryw,

You say make sure you get your structure planned out properly. I am about to put an offer on a property in which I’d like to develop in 2 or so years time once I get some of the debt paid down. I am thinking of a 4-5 unit development on the block, what structure would suit it best in your opinion?

I want to make sure I have this sorted out now so if I do eventually decide to do such a project in that timeframe I’m setup properly.

Regards Brendon

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December 15, 2011 - 1:30 pm

I hear what your saying there jayhinrichs, I am only posing the question in order to gain some opinions from people who are doing it over there. I am continually hearing that these systems are not working as initially planned over there. I know it’s a hard rocky road although some people around these forums make it sound so easy and misleading I guess.

The more due diligence I put into this venture the more I am seeing the pitfalls and hidden obstacles which are never really spoken about. Don’t get me wrong, I definitely know my situation and the elevated risk I hold going into a higher debt level in a foreign country. I am an avid researcher and everyday I find myself continually looking into every possible avenue and until I find the right system or method I’ll be asking questions and absorbing other people’s experiences either good or bad.
Hence the reason I put a question like this forward on an open opinion forum. I have got quite a few personal views and I guess I’ll be putting this idea off for a 6 or so month period until I have enough cash to fund a deal like this. In the meantime I will study, research and ask questions!

Thank you for your concerns guys if there is more to add be my guest I’d love to hear other people’s thoughts on the topic.

It’s not that I can’t afford the toolbox, I just have a big family and I have crap loads of presents I have to buy! (I have a feeling no one is going to buy me the US Property Power Pack!)

Merry Christmas

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December 14, 2011 - 11:26 am

Hi Steve, Thanks for the reply I really appreciate it!

I would be aiming to pay the personal loan down with my standard weekly savings that I have been putting aside for the past year or so. Rather than bringing money overseas from the US, I would let the money pool as a reserve for a rainy day and then when I get a larger sum I would consider bringing it over in larger sums rather than monthly rents.

You hit the nail on the head Steve, I want to get into the property game and I know that some people may frown upon this but if it’s going to get me into the market and begin my portfolio I’m happy to sacrifice a loss in interest repayments. Considering the higher return on rent that I will have an extremely hard time finding here in Melbourne or even Australia I guess that kind of a loss would be feasible in relation to an Australian investment.

I really want to get a hold of your US Property Power Pack and go through it a few times, unfortunately the money I’m spending on Xmas presents and general bills all landing at one time I have to miss! Grrr

Anyway thank you for your concerns Steve!

Brendon

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December 7, 2011 - 11:04 am

Great post TRADEEBA,

I’m currently starting my due diligence on the whole US investment system etc…

I have looked into the DIY route, but I think I may miss this step for my first purchase or 2 as I would hate to make any mistakes! I will definitely be going through a Buyers Agent, still deciding which one is best. I guess I’m going to have to base my decision off other peoples experiences and save myself the heartache of second guessing and picking the wrong agent with the right advertising.

How is your property with TRR travelling so far and how is the experience been so far?

Regards Brendon

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September 13, 2011 - 1:35 pm

What products do you have there and where are you located Ryan?

Brendon

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September 6, 2011 - 12:33 pm

I just finished up, very fun

$50k scenario.
Funds invested – $1,260,227
Net Worth – $6,016,210
Increase PA – 11%

I went down the route of making sure 75% of the purchases were cashflow positive, then with the other 15% I purchased the highest growth towns with lesser yields which I found the renovations added far more value. Whenever there was an option to add a bedroom or a laundry I added that value and made heaps of cash for the next purchases. I made sure all my LVR's were at 75% so when they went lower I refinanced and purchased more property. Whenever a property had more than 80% CG I done renovations and sold up quick fast!
Majority houses, only purchased 3 units.

Stats:
35 properties bought, 26 properties sold, Avg profit 85%, Renovations completed 93, ROI for Reno 38%, Rent earned $2,060,532.

Great Fun!

-Brendon

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August 22, 2011 - 7:38 am

How would I find out if the granny flat is legal or not? There isn’t any plans on the section 32 of the property.

-Brendon

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August 22, 2011 - 2:07 am

HI there,

The property is located in Rural Victoria.

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August 22, 2011 - 1:56 am

Surely someone has something to add to this post?

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August 21, 2011 - 12:49 pm

Engelo10,

Thanks for the reply, how long have you had the properties for? Also have you experienced any growth in the past few years?

I recently went up there for a trip and driving through the so called less desirable areas, they seem very clean and much more affordable prices. I am definitely considering a purchase in those areas but I am definately worried about growth in the area.

What are your thoughts?

-Brendon

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August 11, 2011 - 11:54 pm

I’m comfortable sharing my situation on here with like minded people Jamie M. Nearly every user here is on this forum for the same reason and maybe my question may answer someone elses similar situation!

I don’t know who the brokers are on here, I’m from Melbourne so does it matter if I do it face to face or is over the phone with interstate brokers the same experience and result?

If anyone thinks they could help me please contact me and share some insight. My email is [email protected] or you could PM or speak through here as I said I’m comfortable with either.

Regards Brendon

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August 9, 2011 - 12:20 pm

I was reading something that made me giggle quite immensely a week or 2 ago.

"According to the latest daily statement from the U.S. Treasury, the government had an operating cash balance of $73.8 billion at the end of the day yesterday.

Apple's last earnings report showed that the company had $76.2 billion in cash and marketable securities at the end of June.

In other words, the world's largest tech company has more cash than the world's largest sovereign government.

That's because Apple collects more money than it spends, while the U.S. government does not."

 

This report was actually on the 28th of July so a week and a bit ago well before any of this debacle started. I would like to see the figures in a couple months time

 

My personal view, consumer confidence and media are massive contributors to this and also the GFC. They try to pin point and convince the average Joe Blow to do back flips in all the newspapers and media outlets. Where I believe in showing the hard facts, that no matter how bad things may be now history proves that any and every market will and has rebounded with momentum and far surpasses previous highs.

-Brendon