[Jewel47Member@jewel47Join Date: 2012Post Count: 27]

January 18, 2013 - 5:26 am

Great advice Wilko, you are helping me to learn as well!  I have to add my 2 cents worth on top up loans.  Be sure you are clear on your lending institution policy on top up loans before you get the loan.  I say this because we recently refinanced our home and then shortly after decided we wanted to get a top up loan.  We found out that our lender requires 3 months of payments to them before they would give a top up loan.  So just a sneaky fact that could bite you in the butt if you aren't aware of it.

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January 15, 2013 - 6:29 am

Hello Jye and Tahnee,

I came across your pot and it caught my interest because I have recently decided to buy/reno/sell as a property strategy.  It is not where my thinking started.  We (hubby and I) were thinking of a basic buy and hold strategy.  Then we saw this unit that we liked, but it needed to be renoed so we were then thnking buy/reno/hold.  Unfortunately we put in a offer on the unit and it was rejected but it got me to thinking about a buy/reno/sell strategy!

I too have started learning how to get into flipping.  This is all new to me and I am learning everything from the ground up.  We have never even bought a house before! 

Since we are both embarking on the same journey, it would be great to have someone who is going through it as well so hopefully we can learn from each other.  I am in Melbourne and I am sure that you will may have the same challenges as me.  I actually had a real estate agent tell me that there is no money in renovations!  He said there is nowhere in Australia where you make money doing renos.  I was disheartened for 5 seconds then thought, you don't know what you what you are talking about!!  

So if you are interested in sharing knowledge, send me an email and we can conquer the reno world together or at least not lose money  .

Thanks,

Jewel

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December 31, 2012 - 6:26 am

Hello Jane,

That is a great article. I do have one question, why not have multiple trade come in at one time to give a quote?

thanks. 

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December 23, 2012 - 5:32 am

Great article!

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December 19, 2012 - 10:39 pm

Hello,

Well I never put in offer originally. Once she said there was an offer at asking, I said goodbye. If agents tell me there is on offer on a house, I say I am not getting into a bidding war. I immediately walk away.  First of all I don't trust agents so I assume the other bidder could be fake and I am not about to start bidding against myself. Secondly, as an investor I am not emotional about the property, so I don't have a need to get the property at any cost. There will be other properties. 

My max budget for the property is 5% below asking price. Any advice on what my first offer should be?  I was thinking of starting at 10% below asking. 

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December 19, 2012 - 12:58 pm

Hello Woody,

We built our home 4 years ago and I tell you that there are a lot of costs that are involved.  And what is included in a basic build varies from builder to builder.  As stated by others, there is a fact sheet that the builder supplies that will outline what is included in the build.  It gives all of the specifications.  A very important thing is that if your builder has a display home, most everything in the display home will be an upgrade!!  One builder does actually have a "what you see is what you get" display home, but the majority are not that way.  It is very important that you read your contract and spec sheet very carefully to understand what is included.

Some builders have turnkey packages for investors that include the house, landscaping, fencing, mailbox, driveway, and clothesline.  So basically nothing is required of the investor except to find a tenant.  If your builder doesn't have a turnkey package, watch out as costs for some items can be substantially higher than you anticipate.

Even with an spec sheet, costs can increase.  Site costs can be a nasty surprise because if you have a slope it increases.  We wound having to pay a few thousand dollars more on site costs.  A friend of ours got slugged with site costs of $25,000!  As everything varies from builder to builder, I have listed a few charges below.  Some of the items can be supplied by your builder and included in your building contracts, it just depends on the builder.  Some items you will have to pay for after settlement;

Site costs

driveways

fencing

landscaping

flooring

window treatments

light fixtures

Telephone connection

Because we were building our PPOR we upgraded heaps of things that I wouldn't suggest that you do for a IP.  But be aware of things as power points and light switches because even with a IP you want to have enough power points.

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December 19, 2012 - 12:34 pm

Well Well Well!

A few weeks ago we, hubby and I, had a second viewing on a property.  And surprise, surprise, surprise no less than a few hours after we viewed the property I was told another party was interested in it as well.  Then the very next day I was told the other party put in a bid at asking price and did I want to counter.  I said no thank you.  Hubby said, "There is no other party."  Amazing how this other party appeared hours after we looked that the property for the second time.  I kept an eye on the property waiting for it to go under contract and then sold.  Umm nothing happened.  Well today I get a call from the agent asking me if I was still interested in the property!!  Hubby was saying, "Tell them we have other properties that we are interested in." I asked what happened and the agent said that the other party hadn't signed the contract so they were putting the property back on the market.  Funny thing is, the property never left the market!  It was always listed as for sale and never listed as under contract or sold.  Why do agents play these games??!!! 

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December 5, 2012 - 10:30 am

Thanks Jamie!  With the interest rate being so low right now, I was thinking it would be a good time to fix. What other things should be taken into consideration?

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December 5, 2012 - 9:21 am

Hello Shahin,

Can I ask why fixing a loan hurts serviceability?  Why is wrong to do?  I am still learning, so can you please explain.

thanks!!

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December 5, 2012 - 4:00 am

Hello Jon,

Welcome and good luck in your investment journey!  I am at barely on the investment road, but I will get there one day!  When it comes to renovation there are others on this board that are far far far more knowledgeable than me.  Just reading through this thread you will see that Catalyst, JP Morgan and Christianb have all renovated before.  They have been so kind and gracious in sharing their knowledge.  I am sure if you ask nicely  they can help you as well.

As for me, I had never thought about renovating.  It was never part of my investment strategy.  What happened was that I looking for a property and found one in our price range but it was a bit of a dump.  Hate saying dump, but in all honestly, it is a dump, lol.  But nothing structural because I wouldn't even know where to begin if it required structural changes.  And besides, structural changes are more costly and time consuming.  But I could see the potential in the property.  I reviewed what needed to be done and did a basic cost analysis.  I reviewed the cost of the reno, how much the renovated property would be worth and the initial cost of the property.  I also looked at comparable renovated properties in the area.  I wanted to ensure that I was not renovating out of the market, meaning once renovated that the property would not cost much more than houses in the area.  Because we would be holding the unit , I looked at potential rent gains once the property was renovated. 

So after looking at what the unrenovated property was worth and cost of renovation, I put in a offer.  Unfortunately the owner thinks his property is worth more than I do and more than what anyone else does, considering we are the only ones to have put in any offer on it!  It went to auction and had been on the market for 2 months before we put in an offer. 

I am sure that people who renovate as a strategy can give you heaps of information on how to access properties and what to look for.  This board is a wealth of knowledge and it has the most friendly people who are wiling to share advice.

Good luck!

Jewel

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December 3, 2012 - 11:59 pm

Sundance we will start the crazy wives club together, lol!

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December 3, 2012 - 11:56 pm

Hello JP,

"The brave man is not he who does not feel afraid, but he who conquers that fear."

My knees were knocking together so loudly when we submitted our offer that I was sure the neighbours heard them!  I hope it gets easier. Funnily I had never considered Reno as apart of my investment strategy. But I am learning a lot as I go through this process. 

You are three renos ahead of me.     We are looking in the northern suburbs. Looking is the right word as we haven't bought anything. One day we buy!  I just hope our first buy isn't our retirement home!

Thanks 

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December 3, 2012 - 4:47 am

Thanks JP and if this was going to be my fifth or sixth reno I would feel more comfortable and would know if the property warranted a bit extra in order to make a nice gain at the end. But as this was too be my first Reno I wanted to be very conservative.  I don't have a firm handle on costs and I didn't want to risk underestimating  what the Reno would cost and have that problem compounded by the fact I overpaid on the property.  Once I get more experienced I probably would be able to size up deals and more accurately determine value and costs. But for now, I am playing it safe.  

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December 2, 2012 - 11:05 pm

Yes PLC my hubby thinks the same way as you. He thinks that the "other buyer" will fall through due to financing.   I see now that I should have had Jac do all my negotiations, lol. 

Thanks for the advice Catalyst. I was terrified about the reno but a bit excited to see how could improve the place. This has been a big learning curve.  We evolved in our thinking to looking at the remo and only doing things that would increase the rent or equity the most. I looked at some things and knew it could be done better but asked myself would the tenant even appreciate it. But it is all moot now!  At least it gives me time to study some books on renovating in the meantime. 

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December 2, 2012 - 12:32 pm

You got fire Jac, lol. To be clear there are 2 properties   Property A, the fixer upper with buyers stuck on their asking price. Property B that suddenly got an offer on it just hours after we took a second viewing.  I didn't think it would be this tough getting a good property. Hopefully as Derek said, fewer buyers will be in the market as we get close to Christmas. 

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December 2, 2012 - 2:01 am

Well got another text saying the other party put in an offer at asking price and would I like to counter. I said I couldn't counter at that price. On to the next property!

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December 1, 2012 - 11:02 pm

Thanks Derek for the encouraging and helpful words. I just wanted my first deal to happen. All of the build up an excitement and then someone burst my balloon, lol. The offer was submitted with a 24 deadline which has long passed.  Hubby and I went to a second viewing of a house that we are interested in. Well lo and behold, a few hours after the viewing I get a text from the agent that a second party is interested in house and they would hate for me to miss out, lol. I am green but even I am NOT that green, lol.  The funny part is that it is no need to play that game because we were going to be putting in an offer anyway and I don't care if 50 people are interested we won't be going over our budget.  I think they maybe trying to get me in a bidding war with myself.  I wish there weren't so much game playing. 

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November 30, 2012 - 12:53 pm

Hello,  I am looking in the northern suburbs of Melbourne. 

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November 30, 2012 - 7:51 am

Hello Johann,

You make some really good points. If you don't mind me asking, how were you able to get the house for $220?  The reason I am asking is because we made an offer, yes it was below asking, and the owner just rejected it. No counter, just a no.  

So buying well is really the key and Reno would be the icing.   I have seen dumps go for a great price just because the buyer wanted to knock down and redevelop. Some houses have been marketed on the appeal of the block size for redevelopment. It seems that you can't even buy a dump without paying an arm and a leg these days. 

Thanks!!

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November 29, 2012 - 3:20 am

Thanks Christian, I have printed out your post and put it on the wall. I like things that helps keep me focused on the end goal.