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On this I would definitely be heading to a local architect or planner who knows your local rules inside and out. Pay them for their time. The rules will be very different depending on location.
In the end what needs to be considered is product.
When I say that I mean what will you end up with and what is the demand for it in the market. Both properties need to be maximised. If you build the wrong mix of dwelling you risk turning the development into something niche and hard to sell or of lower value.
Could you live in a rented home and develop the site as an investment property to hold.
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This reply was modified 9 years ago by
Don Nicolussi. -
This reply was modified 9 years ago by Don Nicolussi.
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
I have another 60k savings also, so I’m looking to either use that or the equity that I hope I have but still try to maintain a cash buffer.
Hi Knox – sometimes a finance application is more likely to progress when LMI is not involved or the LVR is less than or equal to 80%. You have mentioned serviceability so that may have been a factor toward the advice to structure you loan that way. It could be an idea to go back to the person who helped you last time and ask why the deal was structured that way for you.
Agree with JacM that generally as investors we should be looking at our cash on cash returns and preserving our investment capital where possible. 5% deposit investment finance is also and option.
Gearing levels are something that you need to be aware of but not afraid of. LMI is a tool for investors so getting our head around that is something worth spending a little time on. The trade off is the ability to manufacture the equity you need to get back to a reasonable debt equity position. That is, put less of your own in if you can and manufacture value as quickly as you can.
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This reply was modified 9 years ago by Don Nicolussi.
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This reply was modified 9 years ago by Don Nicolussi.
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Cash flow is oxygen when building a property portfolio particularly if you want to delink your “JOB” from your ability to invest.
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This reply was modified 9 years, 1 month ago by Don Nicolussi.
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
The quote and proposal is a good development as you will see what the broker receives from the lender and also their fees if any at the outset. Often the broker will discuss fees, commissions and clawback (the fact that the bank simply takes back the commission if the loan is discharged within certain time periods) as part of the initial conversations and then develop this more if the customer moves toward application. I don’t charge fees but in certain circumstances I think it is entirely reasonable if brokers do. Most of the brokers on this forum have property investment experience that is far outside the scope of the general broking population. Some brokers don’t invest and some don’t own homes and never have (true).
That does not mean they are not or could not be good or even great. Although, I doubt you would get the passion and experience that you need from a non investor. When it comes to fees I think it has to represent value to you. For example, Stuart has an invitation only brokerage and then others such as Terry have multiple qualifications while Richard has many years of investment experience (much of it in niche and complex areas) to marry with his service. With this type of person there will be service overlaps where the value you receive would will be far above the broking transaction itself (there are others on forum that offer other complimentary and additional skills as well so sorry to those I have not mentioned this time). A fee would be entirely reasonable when you are receiving this additional added value.
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This reply was modified 9 years, 2 months ago by Don Nicolussi.
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
•Buy under market value – Negotiate hard.This helps you create equity straight from day one
•Buy properties with development potential for now or in the future – High future value potential when rezoning
•Over time add value by renovating, subdiving, etcVery sound points.
If I were to add something it would be on the cash flow risk side of the equation.
The cost of debt now is the lowest it has been since I have been investing in real estate. I guess this is the same for all of us.
However, what I am reading and seeing is that people are not focusing now on the income potential of properties and focusing a little too much on capital gain “potential”.
There is a common argument that if there is no capital growth then “leap frogging” (thanks for the term Peter) is not possible.
If you remove your PAYG income (which is the goal of most investors) then how does your portfolio survive. Does it have the cash flow to feed itself. If not what steps could you take to achieve that.
Manufactured equity. Take something and create something. Take something good and make it better.
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This reply was modified 9 years, 2 months ago by Don Nicolussi.
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
You need to build rapport with tradies – not get them off side.
Haggle everything always.
The trick (and its hard don’t get me wrong) is to get a better price while maintaining a good relationship.
I also come from a building family. The trades time is money. The more time they have to spend on bs the less time for work. There are things you can do your end to help:
* make access easy
* return calls and be easily contactable
* pay on time
* clean up
* don’t double book tradesAlso, make sure you tell the trades that price is important at the outset. Some trades have a precise quoting process and some individuals are just simply going to charge based on supply and demand of their services.
If you don’t need a job done for 6 weeks plan it now and get someone booked in for then. It will help them out to know they have work for March booked in and you may get a better price.
Don’t negotiate over the phone or email. Waste of time. Hope that helps.
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This reply was modified 9 years, 2 months ago by Don Nicolussi.
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This reply was modified 9 years, 2 months ago by Don Nicolussi.
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Hi,
* Move non structural walls in properties with wasted space to turn 2brm home into 3. – A lot cheaper than you would think. Increase yield and equity if done well.
* Introduce natural light – windows, skylights
* Subdivision – get to the approval stage without doing
* Find properties on the market (comps ) that you aspire to be like that have the same bones as yours – devise the budget to copy and see what the cost versus equity gain might be. Would have to back this up with sales data as opposed to just listing prices-
This reply was modified 9 years, 6 months ago by Don Nicolussi.
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
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This reply was modified 9 years ago by
