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You should have insurance cover from the moment you sign the contact and during the settlement time up until it settles, at least for building just in case the place burns down and the vendor has no insurance or not enough insurance to replace.
An IP needs building insurance & content for things like carpet, curtains, stove etc
An investor renting this place out should consider landlord protection insurance.
A self employed person should consider income protection insurance regardless of property investing.
Most of your questions can be answered by insurance brokers so try ringing a few.
Hope that helps
Ian
Block Head | http://www.theblockblog.com.au
Free Property Investing Info, Tools & Resources For Investors With A Sense Of Humour & More…..
Hi Liz
Yes it is ( or was) – check how it stacks up to the neighbouring suburbs. Only 3 years ago Ashwood was the forgotton suburb in that area, while others such as Glen Waverly went "gang busters" and shot ahead in values almost to a ridiculous point.
Ashwood has some old, commission type areas which werent looked at kindly so investors avoided the area. I know a person from this community who developed a block with 3 speccy townhouses and sold them all off the plan before the foundations went down.
If prices are still considerably lower than neighbouring suburbs then I would definitely prospect more in the suburb and use the ripple effect to my advantage.
Ian
Block Head | http://www.theblockblog.com.au
Free Property Investing Info, Tools & Resources For Investors With A Sense Of Humour & More…..
Trust & Company – get to a property accountant and get the best advise. Not just an accountant. If it were me, I would probably have a trust set up to protect assets more than anything else. Have a company of which you are director, but it is operated by the trust of which you are a beneficiary. As I said, get advise as to what suits your personal circumstances.
Deposit money – Yes can do, but factor in the interest. Basically you are getting a 100% loan split into 2. Does the property make money this way? Always good to have cash to begin, add value to the property, revalue and take the cash back out to do again.
Location – Can't help with regional NSW. Major regional benefits are lower entry level and higher net returns. Downside lower capital growth. I have 2 regional properties – always made cash returns. 2003 purchase is now at 50% capital gain after 9 years.
Ian
Block Head | http://www.theblockblog.com.au
Free Property Investing Info, Tools & Resources For Investors With A Sense Of Humour & More…..
Hi Rob,
Derek has given you some sound advise and the thread overall is a good one. To iterate – start small but start with a focus, a strategy from the beginning. Often your financial position, available leverage and risk tolerance will determine your strategy. Then with what you can borrow and strategy in mind will to a degree determine the areas you can invest in.
This process fine tunes things a bit so you're not looking anywhere and everywhere ( common mistake to achieve little).
Get your goal and strategy in order, coincided with what you can borrow and your risk tolerance ie: what you can sleep at night with and then go property hunting.
All the best with your investing
Ian
Blockhead – http://www.theblockblog.com.au
Free Property Investing Info for Investors With A Sense of Humour & more…
Hi Smartcube
Similar goal to most I think. Use property and the leveraging aspect on borrowings to increase net worth and then be able to relax with residual income.
An idea may be to look at the various strategy options first, to get where you want to be. Find what is the best suited strategy to your needs over the time you are giving yourself.A simple tax saving ( which is a negatively geared option) may not be the best in the longterm. Thats for you to decide. There are many considerations but you cannot build true wealth passively and quickly by one strategy alone, except capital gain in good times. +CF properties will not build you real wealth unless you have a swag of them or your LVR is low. Negatively geared high capital gain potential strategies will be limiting because you will reach a ceiling where the negative side really becomes negative when you cannot buy anymore. It's a flawed strategy for building wealth, but great for one or two properties short term.
Capital gain is where your gains are propelled above all else, beyond your efforts, so that is a hefty consideration. Earning $5000 a year from a +CF property will not make you wealthy, but earning $50,000 per year per property from gains may do so.
A balance is where you may like to go to reduce your risk. Depends where in investing you feel comfortable and what your risk tolerance is, what you can afford, how long you give yourself to achieve success and the education you give yourself, before you start, to be able to make that decision.
My advise for what it's worth is, if it's residential, buy in as high a capital growth area as you can afford in the major cities and buy a property with an add value element to it which you can implement in your own time. For more reading you can have a squiz at my website.
Ian
http://www.theblockblog.com.au
Free Property Investment Info, Tools & Resources For InvestorsCheck out titles "USA Property Investing" ( 2 vids same title) at my channel : http://www.youtube.com/user/theblockblog?feature=mhee and there is a great little resource there for crimes in your street, let alone the suburb. Fun to use as well.
Ian
http://theblockblog.com.au
Free Property Investment Info, Tools & Resources for Investors With A Sense of Tumour.Been said that if they increase production by 1% then a billion barrels will be extracted. That's big, but yes shale oil is not environmentally friendly to mine.
Workers are living in cars in Walmart carparks I here. Well in summer anyway, I'm not sure if they could survive a North Dakota winter in an 86 Dodge station wagon.
Hotels are being constructed as fast as they can build and the strain on infrastructure is enormous for these small towns. Billions is being spent to upgrade, but like all mining areas it depends on the price ( in this case barrel) once extracted to exploration and mining cost. If the price of oil stays above $100 per barrel, then this will continue for a while.
Ian
Block Head @ http://www.theblockblog.com
Free Property Investment Info, Tools & Resources For Investors With A Sense Of Humour.No 3. – If you don't know the true value then it's hard to make an 'informed' offer. Get a valuer in asap.
No 4 – Contact the management company and ask for the documents you need or try asking people living there for the minutes if the body corporate aren't forthcoming.
No 2. See comparative rates to identify who is lending at what rate and ask them to match it. http://www.canstar.com.au
No 1 – Get the loan from another lender, based on your loan capability as it is now, not as an equity based loan on your PPoR. Use the deposit required from the equity.Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources For Investors With A Sense of Humour.Interior but it comes out a little whiter in the photos – I went 2 tone walls to skirting.
Best maybe to check it out at the paint shop for a little more accuracy and there are different strengths to the basic Hog.That house could come up really nice. The suggestions above are great from Catalyst and Solomon.
Ian
Block Head @ http://www.theblockblog.com
Free Property Investment Info, Tools & Resources For Investors With A Sense of Humour.Hey Mattsta,
I don't know anyone investing in Penn State, except me. I chose it because it was close to New York City where I was based. It has a huge range of entry prices from $1200 upward depending on the town or city and depending where in that town or city and I could drive there and back in a day.
I was buying properties from the county courthouse and at Tax Deed Auctions and onselling them to investors. Very profitable but you have to know what you're doing. The small mining towns are a goldmine for cheap rentals if you can be bothered and although the folks in them thar parts are poor and simple compared to the dog eat dog "sophistication" of NYers, they are honest folk, friendly and generally very helpful.
Ian
Block Head @ http://www.theblockblog.com
Free Property Investment Info, Tools & Resources For Investors With A Sense of Humour.Tell the buyer to p… off. Take over the sale from your Dad and relieve him of the stress, then contact Christian at Design & Build or someone like him that can represent you to council
Ian
Block Head @ http://www.theblockblog.com
Free Property Investment Info, Tools & Resources for Switched On InvestorsHey Alfresco,
Go the Hog's Bristle – terrible name – great colour. I used this as well although mainly on interiors.
If you want to know all about renovating read this article
The Best Reno System Ever Made
To see the 'Hog" colour in a reno go here : THE HOG and click on Renovation Case Study 2Hope it helps
Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources For Investors With A Sense of Humour.Mark Unwin – Kew Melbourne
http://www.mjua.com.auIan
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources for Investors With A Sense of HumourHi Emma,
There are a couple of great books that highlight how real estate agents operate – good and bad ones. Once you know these things you can evaluate your experience.
Have a read of these articles (the books are listed after the first article)
How To Lose Money Selling Your Home
Auctions – Why They're Bad News
10 Questions To Ask A Real Estate AgentIan
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources For Switched On Investors.Hi Prospector,
Some good meeting places to network are on http://www.meetup.com
Talk to as many people as you can who are active investors. The wealth of 'street' knowledge they have is invaluable.
There is also an investor group in Perth linked to the one in Melbourne – Active Property Investors (google it)Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources for Switched On InvestorsHow do you feel about paying for a gym, swimming pool and virtual golf for your tenants AND giving them a view to die for. Your my sort of landlord!
Seriously though, all the advice above is great. With highrise apts you have one that looks and feels like 100 others right next door. If you need to sell in a hurry, it's likely that other owners do as well and depending on circumstance, may discount more, leaving you where? Apts are great in small boutique buildings of 8 or maybe 12 – no more, in my opinion.
The other great advice already given, was look for an IP that you can add value to that is well within your loan capacity, not on the limit. This way you are mitigating your risk and taking control of the market by the value add, not waiting for it to add to your bank balance by itself, which in these times is unlikely.
Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources for Investors with A Sense of Tumour.If you are in Vic – go to http://www.land.vic.gov.au/
Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources For Switched On InvestorsIf we can bring this thread back to just Australia for a moment, even though the information Freckle has passed to us all is enlightening and scarey, I think a quick assessment of what the figures here in Australia tell us today and then a basic projection for only 12 months will tell you what position you are in with your IPs.
You can then assess the impact on your portfolio and decide whether you are on a winner or nor, whether to sell off a few, batten down the hatches if that is your decision or sell up now and count your losses if any.
Here are some current valuation figures courtesy of the REIV ( whose credibility is always on the line anyway in my mind) but if these figures can be validated via RP Data or siimilar, then you look at the change of value of your IPs suburb to suburb.
These are for MELBOURNE – Click here
As an example we can take Cheltenham as it seems to sit in the average price range for Melbourne of around $550k. The downtown is recorded at 13.3% for the year. That's a pretty big hit. In 2005 when the sky was falling in, Melbourne values dropped about 4%, in 2008 when the GFC hit, it wasn't that bad, but would have been if Krudd hadn't thrown the gov't surplus at the problem and now after all the hype and banter and billions spent to stablilise the ship, it's bobbing like a cork in the Tasman Sea.
OK so project this same loss for the next 12 months. We have a depreciation of 26.6% in 24 months for Cheltenham and now if 13.3% wasn't enough, ask yourself the question, "Has the boom ended?"
Can you financially handle this scenario? Add to the loss your break even costs per property of another 6% at least and you have a truer loss figure for your investment. For people with a low LVR and multiple +CF properties, their reaction may be poles apart from those of you with high LVRs and neutral or negative IPs, to whom the banks will be sending urgent letters to sooner rather than later.
What is your exit strategy, if required? Do you need to do something now rather than later, if this scenario eventuates.
Your decision.
Time to stop trying to figure out the world's woes here and bring it down to the micro economy in your back pocket.
Common sense tells us that the global situation is not being solved in any of the countries majorly affected by this downturn so far, otherwise we wouldn't be hearing the same problems over and over, except worse. Australia's economy has not been growing for some time, contrary to govt and public opinion. Go back to 2008 -2009 and if you eliminate the resource and banking sectors from the analysis, then we have had no growth in our economy eg: manufacturing, retail etc, for years but nobody wanted to believe it.
Ian
Block Head – http://www.theblockblog.com
Free Property Investment Info, Tools & Resources for Switched On InvestorsI'd be scrubbing the floorboards as well, with the magic baking soda, vinegar water mix. Cleans everything and if you want a nice smell, add a cup full of fragrance to the water.
Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources For Investors With A Sense of Tumour.Hi NHG,
Option 2 is best if option 3 means you have overspent relative to value. Depends on how long you want to keep the property as well.
If capital to fund option 4 is available and you are going to hold this property long term, then I would be looking at that option and twisting it a little. This does depend on the resale value you mentioned being below costs. How much so?
Either way from the suggestion below you will see I've combined options 2, 3 and 4 which may get an even better result.
a) by joining the 2nd dwelling to the first and renovating both you will most likely add the most value to the project. A simple design tweak will allow access to dwelling 2 as if it were separate from the main house, but to the valuer a door from the main residence into this area is all that's needed to value it as one and in reality the new design suits both purposes. This way you can maximise rent as in option 4
b) you can add the 2nd separate (legal) dwelling as stage 2 and maximise rent when you wish to. I would look at this as soon as I could to realise the nearly 10% gross return.
c) revisit your costs and see if there are any ways, via design, materials, granny flat purchase price, installation, connection etc that you can reduce your costs.Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources For Investors
