Forum Replies Created
Hi Dee Dee
Have you read Steve’s article on Negative Gearing.
As I see it the best way to approach negative gearing is to pick an area with strong potential growth otherwise you ahve the potential to go seriously backwards.
To my way of thinking, I would much prefer to do the renos and developements that put money in my pocket in a relatively short space of time as opposed to “buying and hoping”.
capial growth is such a nebulous thing, one can never be sure of it. I prefer to have a bit more control over my cash.
Also with the renos and developments I am less likely to be at the mercy of interest rates in the sense that my money is moving around.
Have a look at Steves chapter on Lazy Money in his new book – should be in the shops this week 0-270+ properties in 7 years.
In terms of being new to the property game, thats ok but property or rather any investing and or business venture that we undertake requires a large percentage of “mindset”, ie having enough knowledge and where with all to take calculated risks and of couse by improving our emotional stability in these sorts of situations, lessens the risk or perception of risk anyhow.
This is an ongoing growth process we all need to undertake in order to master ourselves in these sorts of ventures.Warm Regards
SueMIT | Owen Real Estate
Email MeHello again
I would think that you would need council approval for any structural change. Just pose a hypothetical question to them and see what transpires.
Is this place of yours currently +ve cashflow? Using The 11 sec solution it doesn’t look like it based on the info you supplied, it looks more like a Negatively geared property. Unless you have a lot of equity tied up in it.
You talk about keeping this one for retirement etc, is that why you bought this one in the first place?
You also talk about refinancing down the track. How far off is that? Are you preferring to refinance vs sell and have you thought about the reasons for doing either?
How much do you plan on spending on the changes you suggested and what is your “exit” strategy?
Oh by the way where is this property, as that to some extent will dictate the appropriate strategy.
Sorry for all the questions but there are so many gaps in what info you provided, I’m not really sure what you are trying to achieve with this property
Regards
SueMIT | Owen Real Estate
Email MeWell I joined the RESULTS program (Premium) in Oct last year, have since moved to Adel, given up my job and bought a place in Adel, demolished a house, and am planning to build two new ones for a profit of around $65k.
Currently searching for a reno to do with a money partner.
So aside from a couple of personal issues I have had a GREAT year. Met heap of wonderful people, learned lots and got right out of my comfort zone
Warm Regards
SueMIT | Owen Real Estate
Email MeAnywhere between 6-10% depending on where your property is but I would expect 7-9% as the norm
SueMIT | Owen Real Estate
Email MeHi Jenny
I paid advertising of about $2400 ( acution) for a place in Melb I sold a year or so back. The Auction didn mean a sale and then I paid about 3% in commission.
These days I would negotiate on total selling costs and expect a commission cost of around 2.5-3%.
Ask the agent to send you copies of all “advertsing” that you ahve supposedly paid for.
Negotiate a reduction in commission if not satisfied.
One of the problems with Agency advertising is that they are really advertising themselves not your property, have a look at how much advertsing space they take up in the ads they do for you and you will get an inkling of what I mean.
Warm Regards
SueMIT | Owen Real Estate
Email MeHi Stan
My first thoughts are what vendor would sell a place now for $500 with only an end price of $560?
But then I looked at your financing option of asking the financier to fund to 80% of potential end value.
This seems un-workable to me as I cannot see a ny lender wanting to wear such a risk. Usually they are so conservative that we are lucky to get 80% of actual value in the current market.
What are the risks to you if the property price falls over that period, you could end up (if a lender does come to the party) oweing much more on a property than it is really worth.
Is it worth the risk when there are Soooooo many better dals in the market right now that would put cash in your pocket rather than take it out.Warm Regards
SueMIT | Owen Real Estate
Email MeAdding an extra bedroom always adds value but you need to balalnce that out with your costs and what you eventually plan to do with the place ie rent out or sell.
It is difficult to tell without seeing the plans, what might be possible.
Feel free to pm me with the plans if you like.
Warm Regards
SueMIT | Owen Real Estate
Email MeI agree with SImon
Use your negotiating skills to reduce the initial deposit if possible and / or go for a longer settlement
SueMIT | Owen Real Estate
Email MeRichard
PM me if you would like to discuss further
Regards
SueMIT | Owen Real Estate
Email MeHi All
Seems to me from the few posts I read that people are confused about +ve cashflow properties, where to find them etc and what is considered a good return on them.
My take on this aftrer spending 12 months on Steve’s Premium RESULTS program is this.
Anything less than 10.4% on a buy and hold is not postive cashflow or so close to the bone why would one bother.
Steve is advocating an approach these days that takes into consideration market changes.
ie Renos, buy a crap house, add paint, clear garden etc “within say budget of 10% of purchase price and look to sell for a profit, taking into consideration, selling costs etc.
So one needs to be REALLY CLEAR of the likely selling price and work backwards to the potential purchase price, taking into consideration all the costs involved.
Positive cash flow properties, bought of the shelf are hard to come by, but not impossible.
Steve is also advocating “Problem+solution=Profit”
But make sure you are REALLY clear on the numbers, buy cost, hold cost, reno cost, sell cost etc and everything should work out as long as you are on time and within budget and have calculated your correct sale price.
Have a look at his latest book “0-260+ Properties in 7 Years” it is a great read if you are still confused as he provides loads of ways of analysing these things.
Also there are 4 parts to Property investing, Analysis, Buying, Managing and Selling. It is how you perform in each of theses steps that determines if you make a profti. in other words you need to nail all these parts of the process to make a profit.
Also get REALLY CLEAR on what you are trying to achieve and you will eventually get there.Warm Regards
SueMIT | Owen Real Estate
Email MeHi Richard
My take would be there would be minimal or no profit in it.
Can I suggest having a look at other options that could be better use $ wise of your time.
Regards
SueMIT | Owen Real Estate
Email MeHi Kennyboy
From waht you say and based on a 20% deposit unles you can get the rent up by a reasonable amount throught say renovating and or improving the value of the place so you can get your money back at the end of a reno. It is looking like a -22.87% CoCR.I have also allowed only $1000 per annum to be spent on things such as council rates ( if there is such a thing) 5% purchase costs – have no idea what they might end up). I also allowed management costs of say 7%.
Even if you could buy the thing outright, there would still only be a 0.65% cash on cash return. You would be better off putting the cash you have in a Cash Management account at those return rates.
Run the numbers if it works it works if it doesn’t llok somewhere else.
Sue
MIT | Owen Real Estate
Email MeHi All
I too ahve a SMSF and have heard via my accountant there are lenders who will arrange finance for SMSF / Trust JV’s whereby the SMSF owns one part of the building and the Other TRust borrows only against its portion of ownership. Tricky and I still need to clarify, waiting on comments from the org involved.
Regards
SueMIT | Owen Real Estate
Email MeI agree with all the comments so far.
Sorry Richard.
Keep trying
SueMIT | Owen Real Estate
Email MeHello again Richard
It just occurred to me that maybe the “For Sale” sign has gone up but that the house is not really “on the Market” so to speak until the place is finished. It may also look subdivided but the titles may not have been issued yet so there si no point buying till that occurs. Check with the agent to see if the place is likely to sell prior to completion but not for settlement until completion and whether the “land dividision” is actually complete yet. The seller may be planning to sell completed in spite of the sign going up early.
Either way you now have a few questions to ask.
I hope this all helped
SueMIT | Owen Real Estate
Email MeHi Richard
Can I suggest that you do some research on recent sale prices of similar houses in the area (ones that have actually sold say in the last few months), work out how much you need to spend on it to finish it, how much to hold the property whilst you complete it and also work out a profit % and also include the purchase and sale costs you might incur.
If these all stack up and make sure they are realistic, then it could be worth making an offer based on all these figures deducted from a potential sale price.
If the numbers don’t stack up then don’t buy.
Also make sure in terms of you finishing off costs that you don’t go over budget. Keep the finish in the house at a similar standard to those sold recently, keep the emotion out of the deal and manage the project effectively, you should be ok.
I do have to ask though if it is “unusual” whether there is a market for such a house, it may make it more difficult to sell?
MIT | Owen Real Estate
Email MeHi All
Another way to approcah it is to discuss the process with a surveyor or a specilaised local Development consultant ( I wasn’t thinking Michael Yardney as I don’t pursue his theories). I have hired one in Adel and it is only costing me about $550 for their services plus all the assoc costs of course.Regards
SueMIT | Owen Real Estate
Email MeHi JJ
I think you will find that whilst the 11 second solution is still applicable as a guide to positive cashflow properties in certain regional areas, that Steve is now advocating a range of Strategies such as Renovate and Sell and Subdivisions etc.Steve’s latest book is out in the shops this week and is a great read for more up to date info on how the market is going etc, how to find +ve Casflow properties and managing a property portfolio. The latest book title is “0-260+ properties in 7 years”, if you have limited time for reading there is also a bonus CD on the back jacket.
What you need to think about if starting out is what sort of goal are you looking to achieve and then find an appropriate strategy either Growth or Income to match your strategy.
You mention “this Boom” period. I am curious as to which State you are from as the only ones I know of that are booming right now are Perth, Darwin some parts of SE QLD and some mining towns. The rest of the country seems to be either flat or on a downturn.
And Yes I agree Buyer Beware is a great package as are the rest of Steve’s Products. I have most of them and find the constantly useful. I have also spent the last 12 months on Steve’s Premium RESULTS Mentor Program so have been priviledged to hear some of this stuff first hand.Warm Regards
SueMIT | Owen Real Estate
Email MeHey Derek
Good on you, for finding one.
How did you manage a 2 year guarantee on rent?MIT | Owen Real Estate
Email MeHI As41
Have a chat to your current lender, there are several ways of doing this and it is all far easier than most think
Good luck
SueMIT | Owen Real Estate
Email Me
