Forum Replies Created
Peter,
I feel for you. I know exactly how you feel. your question on the property prices crashing, my view is unlikely. And if there was a crash, you are unlikely to want to enter at that point either. If a downward spiral does occur most buyers hold off until the boom starts again and it’s only the very smart money that can pick the bottom of a cylce (let’s call it luck!!)
I was earning just over $40k when I purchased my first property for $250k so 6 times income. I remember people saying the property market will crash at any time now. but one wise person said to me “land will never be as cheap as it is today”. how true that is. This purchase was in 2002. Since that purchase that house is now worth $400k.
Trust me on this. You have done the hard yards and completed further education. Big tick!! In a few years time, if you work at it, you will easily be earning 3 times what you earn today. You may not believe me. I didn’t believe this when my lecturer said it to me. But it’s true. Word hard and the income rewards will come.
Imagine if somebody told you in 4 years you will go from $40k income with 0 property to $120k with 3 properties. i bet you wouldn’t believe it. but, do the yards at work, buy something with the most money you can afford, and you’ll make it happen.
Good luck with it all. i own properties, earn good money and I still think how will I ever afford to upgrade my house to something closer to the city, newer etc. The feeling doesn’t go away, but work with what you have and push yourself to achieve and it will all come.
I still have friends doing nothing. they will continue to do nothing for years to come. I don’t blame them for it – doing nothing is the easiest thing in life, but it achieves nothing!!
Not sure if you have purchased anything yet but i think you need to consider a few things and reassess what it is you are trying to achieve.
Firstly, what does it cost you every week to live? do you have a budget? i know you have returned to work but even so, you have an existing mortgage payment to make, you must be running 1 or 2 cars, plus rates, bills, mobile phones, gifts, holidays, entertainment, nappies, doctors, health insurance and general expenses broadly would add up to say $xx a year. I really don’t know your personal expenses, but that’s the first thing you should do. Calculate everything you spend in a year. you may be suprised how much it adds up to.
then calculate your total take home pay betweent he two of you after tax. minus that from the above calculation and you have the amount you could afford to spend on an investment per week. you then need to decide if that surplus would be better off been paid down on your ppor mortgage which charges interest that is not deductable, over having an investment in a flat market.
you have to remember buying something with a tenant in it doesn’t always mean you will have a tenant there paying the mortgae. there may be times you get a bad tenant that you have to kick out, or periods of vacancy. you need to have cash to cover it. i would recommend $20k in reserves just to make sure you’re feeling comfortable and ok with what you’re doing.
then you need to consider the family aspect. you have mentioned that you have a child and your mother is looking after your child. How long can your mother do that every day? it may not be available forever. If a situation were to arise and you had to take back the daily care of your child then you would either need to consider childcare ($300 a week) or not work. This would put you in a dire circumstance if you ahd an investment property.
i know you are very keen on the idea of property investment, but sometimes you need to take a look at the bigger picture of life and all that you want from it to decide what the right or wrong decisions are.
I can’t tell you whether you should or shouldn’t be going out to purchase property, i’m just giving you some thought pattern to consider in making your investment decisions.
If i was in your situation these are the things i would be considering.
does your $650k in development cost include interest?
Will the land already have permits to complete the dwellings or will you be having to do that yourself. If so, that will take some time and you’ll be paying interest on the $380k of land for a period.
if you haven’t included the buying costs, subdivision costs and interest costs then there’ll be hardly anything left in profits.
as for the finance, you’d want to do your research first. banks say one thing then do another. i’ve heard nab is pretty good with dealing with this type of thing.
often banks end value may not be what you’re end value is if you know what i mean. they need to be cautious.
my builder would want a 20% margin on anything. I haven’t bothered approaching him on doing it at no margin because to me, then the bank will have to make the drawdowns to him, not to my contractors that I’m going to get to do the work.
Some numbers:
Land value: $130k
Mortgage on land: $58k
House contract w/builder: $160k
Other costs: $40know i know most of you would look at this and say it’s easy, just use the equity in the land. But, I’m wanting to pull that equity money for a reno on another property, hence why it’s not really available money.
The way I see it, St.George should be basing their lending on valuing the property at land ($130k) plus house($200k) so $330k valuation (end result will be more like 380-400k). what they are doing is saying land ($130k) plus builder contract (160k) is $290k valuation.
I am lost at the stupidity of these people down at the bank. They will lose business over this $40k dispute – this is a 3 decent size mortgage account with great serviceability for them and I will spend the fees to pull them all elsewhere pending this outcome.
The short answer is yes you can.
But you have to be committed to what you are doing. The fact you stopped at chapter 15 and didn’t finish the book makes me wonder how interested you are in the process though. I haven’t got the book handy, but you couldn’t have had long to go.
Remember that book is only one book talking about one path to an objective that steve had. your objectives and goals may be different. It may be that you want a career in whatever it is you do and you want to supplement your lifestyle with x amount over a period of time to achieve an outcome that you decide.
It is harder though when you are working full time. we both work full time and have been doing development on the side and sometimes you have to be willing to come home and spend hours doing your filing, putting things in place so that you can organise everything and have it done.
So the answer is yes, but write down what your objectives are first. There’s no use doing it for the sake of doing it.
get an application in to be heard at the tribunal immedietly. They will get notified of having to attend.
If they don’t show then there is a big chance of the tribunal ruling against them and issuing a warrant for the police to remove them if they’re still there in two week.
If you’ve given them their chances take proper steps to remove them. Don’t worry that they still have a lease, they haven’t met their obligations so they can be given the boot.
Not sure of your state but I’m in Vic. Find out your rights and take your property back. The sooner you get rid of the bankrupt duds the sooner you can put somebody with money to pay in there.
you should get your own development consultant for the subdivision component. I have been doing the same thing and my builder has helped out with some aspects for works related to him. My builder isn’t doing all the works. eg. when i got a quote for the stormwater and sewer works from my builder (spec home builder) they wanted $20k. the actual cost has been under $8k
spec builders just want to build the house, they only want the extras with massive margin. becuase they’re fixed price contracts also, they MUST ensure they meet their costs so there is a big margin in those works.
good luck with it all.
why should a tiler get paid $50 an hour. it shouldn’t be more than $35 an hour.
At $50 and hour, that is eqivalent to an income of $100k a year. Should a tiler be earning $100k a year when you can go and do a weekend course and have a bit of home training (walls first so nobody notices they’re not flat). That shouldn’t get you $50 an hour.
I know a self-trained tiler. I have discussed this exact thing with him and he says $35 a square metre should be around the mark.
1500sqm of land in that area should be able to accommodate 5-7 townhouses depending on what is proposed (singles,doubles). So, the value of the two blocks with permits (varies greatly depending on the permit you get) would be over $1m. Depends though if you are selling with or without the permits and the size of the townhouses that are approved.
remember though for you to sell your PPOR and buy elsewhere in the area will probably cost you $40-50k+ in after tax selling and buying costs so that’s something to consider if you weren’t planning on selling before.
James, what about getting a new job with a payrise which will help to fund the large amount of debt. Not sure what profession you are in, but moving jobs is an easy way to get a payrise quickly.
she might jst have to pay it out – it’s only really 3 months rent. I guess that is one of the things with building a house – you take it as it comes. Imagine if the house had been delayed and she had to live there anyway. She can still leave, just has to keep paying the rent.
Why did she sign a 12 month lease when she didn’t need 12 months? Why didn’t she jsut go month to month if she knew her house was been built?
Pete,
good area. First thing to do is get yourself a town planner and sit down for a chat. They’ll have a list of what needs to be done to complete a subdivision and it will be pretty clear to you then.
You will need to obviously do an application for subdivision. Some of the fees include:
arborist report (trees)
survey
engineering plans
landscape plans
plan for the new house (depends on who does this the price could vary vastlyi can’t think of others off the top of my head. then you have council fees that you pay for them to check things, plus you have to pay to register your new title, plus you pay the bank to release the title for registration of the new title.
After that you also have to do all the connections to the property. Because you’re on a corner it should be ok – we’re doing one in maroondah and connecting down the back of a 60m block isn’t cheap when everything’s running from the front.
lastly – start subdividing NOW. Because it takes a long time to get it completed through council!
PM me if you want to chat about it – i can give you details of a town planner in the area that I’ve been using if you want to go and have a chat with them.
we started with an IP that is now our PPOR and then used equity after 2 years to buy an IP. We have then subdivided that and now have land that we’re in the process of building on which will become our 2nd IP.
From there we will use the equity of IP’s only to buy another development site.
You don’t have to put your PPOR as security against the IP. since we still had a mortgage on our PPOR we just applied for more cash out of the house at a new valuation. This gave us the 20% deposit we needed to put down on the IP. But those funds could’ve been used to take a holiday, buy a car, whatever. The PPOR title is security to the bank over the house we live in, not the IP’s. as long as you can service what you’ve borrowed then you never have to worry about any of it.
i believe that you can claim this. In the event these costs are over $100, then you need to tax deduct the costs over 5 years. can still lead to a pretty decent size deduction if you’re going to 100% finance the mortgage.
please note that this is only my thoughts and you should seek professional advice
Do you care to share the list?
Norby, from reading the post, the last post on this was a year ago. Because you are building with National Builders you have obviously done a search to see what other people have to say and posted.
The prior posts by a bunch of people who have only placed one post on here didn’t look so legit, so to all members on here let’s give Norby, a new member here, a chance.
I’m supportive of you because I am in the process of building with National Builders and finding things have gone very smoothly so far. Our sales person’s name is Renee and she has been great.
If people think it’s false advertising for a building company to advertise a from price they’re nuts. The realities of building for anyone who knows anything are that you get what you pay for. For $4600 or whatever is advertised, you’re going to get a house that meets council regulations, but reality is people want the flash bang stuff added on. If you want wood windows, then it’s going to cost you a lot. The cheap houses are the spec homes with no extras, built to the drawings that the builder already has in place and has built dozens of times before. Change anything, and costs will start to creep up to normal building prices.
It seems the national builder’s MD was even on here offering his number to call him direct (and if i hit any hitches in building I will be calling him!!) so to me it doesn’t look like an organisation that doesn’t want to service their customers.
Let’s give Norby a go anyway. And as I’ve said in another post, if anybody does have any questions about National Builders I’m happy for you to PM me and i can give you details of the development I’m doing with them.
depends what sort of concreting job you’re doing and how the units would but based on block size to concrete a drive down the side of the block to enter all the units I would budget $10-15k.
what about pits and so on? on a 4 unit development the site coverage in any council would require pits to be installed etc.
in our PPOR we have some walls like this. they are a big pain to paint and take a while, but because we had painted everything else, laid new carpet etc, it looked dull and old without painting them.
i think painting the whole house brightens it up and demands a better rental return.
I am guessing you are talking about National Builders based on the info you have provided.
The ‘from’ price doesn’t include a lot of things. They are offering that price on the basis of building you a house that doesn’t have floor finishes other than the wet areas, is on a perfectly flat block with no issues in the soil, has connections that only extend 6m amongst a bunch of other stuff that will go wrong.
For townhouses $10k is about right for a finished product. townhouses are smaller but require the same number of rooms as a bigger place.
I am building with national builders at the moment so if you want to ask anything about them PM me.
If you don’t have a mortgage and have a job why can’t you take out a personal loan to do the maintenence work that you want to complete? she shouldn’t be paying the maintenance if you’ve been living there 17 years rent free.
Instead of buying the house off her couldn’t the following work:
– you start paying a nominal rent to her weekly of say $300 a week.
– i imagine this rent would be below market value, but considering you look after the property maintenance and rates and other expenses this would be reasonable
– in her will you will gain ownership of the propertythis solves the problem in that she doesn’t have to sell the property, she has an income from you to survive on and you have a house to live in.
Could some arrangement like this work?
