Forum Replies Created
Hi Yanni,
Get yourself a copy of these books. ( try ebay or gumtree first)
"Don't Sign Anything" and " Real Estate Mistakes", both by Neil Jenman.REM at the very least will give you an insight as to the goings on behind the scenes with most property sales, but rather than be freaked out by it all, use this information to prepare yourself for the best possible outcome.
Also read – Real Estate Madness
Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources For InvestorsHi Michael,
Some very valid points above so take heed.
If you are considering the DIY approach than can I emphasize the importance of the tenant application checking process. This really has to be stringent and if you don't get through to people that are noted then keep trying or ask for more references.
On the application form ensure you have nothing left out as far as contact details for the prospective tenant, all phone numbers, email, previous 2 addresses, employer details in full etc etc. Also check out the applicant on facebook if you'd like a true insight into their personality. Type in their name and any details until you see their photo come up. You can even google your applicant.
Other extremely important aspects are having the correct forms and processes in place according to "the act".
If you want to read some info on being a landlord and also property managers then try this link
How To Be A Zen LandlordAll the best
Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources for InvestorsLawyer – first thing Monday morning or beforehand depending on your relationship. Was the 2nd contract also signed off with the same agent? the whole thing sounds nasty and hopefully the vendor and agent are in cahoots. Make sure your lawyer specializes in property. It helps.
Ian
Block Headhttp://www.theblockblog.com
Free Property Investment Info, Tools & Resources for Investors with A Sense Of Humour.
"An Irishman Walked Out Of A Bar ….. naaaa just kidding"If you buy flatpack kitchens ensure you have the straight benchtop. Don't expect to be able to put together a bench join without expert help unless you have done it before and or have the tools.
The last cabinetmaker I employed told me he'd almost stopped answering his phone because 99% of inquiries were from people wanting him to join their flatpack benchtops.
Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources for Investors With A Sense Of Rumour.Post is a little confusing. Are you asking about property management (programs) and associated positions or real estate sales? Two different aspects of the business.
Property management systems used by agents I have come across from a landlord's viewpoint, are often antiquated and complicated. It's almost as if the agent enjoys making life difficult for themselves and anyone else who tries to understand their process. Part of the problem is they are trying to cater for individual tenants to get the business and this compounds an already confusing system. Some pay weekly, some fortnightly, some monthly, some are in credit, some are direct debit, some are salary sacrifice, some are cash only, some are allowed to pay individually on a common lease for god's sake! … etc.
As for systems that remind them what to do on time, that can be overshadowed because they're so busy chasing their tail concentrating on the one thing that interests them. The 8% of all rent paid.
Ian
http://theblockblog.com
Free Property Investment Info, Tools & Resources for Investors with a Sense of Hummer.Hi Kenny Chlorine – great name!
You need to do some homework. No-one can answer your question as it stands because there are a lot of factors that may determine which is the best buy. A house may be best in a certain suburb, but a unit in another.
Also depends on what it is you want to do with your investing. Some investors only buy houses, others concentrate on units, both for different reasons and both strategies work for these investors.
As a rule of thumb though, land is what goes up in value while the dwellings go down, so without knowing anything about what you want to do, I'd say houses with as much of a land component as you can afford may be best. Preferably the lowest value house on the biggest size block of land ( and in the right area ).
This way you can start by either renovating the house and renting it out for the maximum you can and look at the potential of the block down the line. Either subdivide and onsell and pay down the house, subdivide and get plans and permits to build and then sell to a developer or look at developing the block yourself in the future. At least you have some options here, which don't exist with a unit or townhouse.
Ian
Free Property Investment Info. Tools & Resources for Investors … with a Sense ofumour.
Hi Wilko
A rundown terrace sounds like a great start. Fix it up – add some value and get it revalued. If you've bought wisely – suburb research – and done your figures, ( renovation analysis spreadsheet) then the new value will see some good equity in the place and you've just made your first gain in property.
Start with what you can afford and move on up from there.
There's plenty of good reading here : Free Property InfoIan
http://theblockblog.com
Free Property Investment Info, Tools & Resources for Investors … with a Sense of Humour.Xdrew is on the money here. Negotiate and settle. And welcome to the way Americans operate!
After 5 or so visits extending to periods of 6 months at a time, I would be very wary of any govt dept. They are full of people who are trained to be excrutiatingly job specific, so cannot help you with one iota of information outside their job role. This , if you get through to them at all, will lead you on a merry dance around the dept without any resolve. It's the nature of the beast over there as govt administration is so top heavy, weighted down with red tape, paperwork forms and the left hand not knowing what the right is doing. Getting things done quickly and efficiently is akin to changing course in the Titanic.
Secondly, they don't care. It's just a job and you are one of thousands that they probably can't help because there duty of durisdiction does not cover your enquiry anyway.
Expect no reply to messages and emails. This is considered normal across the board. Incredibly frustrating yes, but you have to persevere and with tact, you have to be strong in your 'demands'. Funnily enough they respond better when you're a ball breaker. Don't take no for an answer. Ask to speak with someone with greater authority and continue until you find someone who can act on your enguiry, not just discuss it.
As an example of how things work, when I first filled out an ITIN form over there, I went into the Inland Revenue office ( twice) to ensure that the form was filled in correctly and I had the correct associated paperwork. Two IRS staff double checked everything before the form was passed on. Eight weeks later I received a letter from the IRS saying my application was invalid. The form had been filled out incorrectly. When I rang and told them that your IRS staff had filled out the form, they shrugged and said too bad. Its wrong… start again.
Good luck.
These issues are one of many reasons I chose to buy, rehab and sell in the US. I have enough landlord problems in Australia without the extra crazy issues that fly around over there.
Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources for Investors… with a Sense of Humour.I'm familiar with a similar model being used by friends in Detroit. It works well as you 'the bank' are in a win win position. The retail buyer agrees to purchase at ???? … say house 1, $50k and pays you a deposit that would be as large as can be negotiated. Let's say $10k so your investment in house 1 is $25k on which you are receiving 9% with no outgoings and a $15k profit at the back end.
Being paid the note ( full sale amount less payments made?) is ok and 50% of net equity I dont get. Surely the business who have presented this want their cut of the action as early as possible, not at the end.If the retail buyer defaults, then make sure your contract to purchase reverts back to a simple tenancy contract. This eliminates a probable foreclosure process which can take an eternity. As a tenant they have 45 days to leave. You then resell the property and collect another deposit lowering your exposure further.
Strangely it is better that buyers default then not. All part of the win/win.
The contract term seems long at 5 years. The ones I am familiar with are 2 – 3yrs. Depends on the price set to purchase and the repayment amount.
Everything seems ok except the final part.
I/m happy to chat to you about this if you want. Contact me at [email protected]
Cheers
Ian
http://theblockblog
Free Property Investment Info, Tools & Resources for Investors with a Sense of Humour.Hi Janice,
Always a good idea to contact the council in the area you intend to buy and find out the requirements before you start putting in offers.
Is it a subdivision you are doing or a build as well. I'm a bit confused by your post. A simple subdivision won't cost too much at all.A great little resource came my way today that may be of some help. It's a 16 page pdf doc called "7 Step Guide To Subdividing Your Property" by Peter Bozinoski. You get it for free at his website : http://www.projectfacilitator.com.au
Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources For Property InvestorsCurrent owner may allow early access to get your money. Sounds like a good swap. Yes you are correct in that if the settlement does not go through, besides the usual financial problems, you will walk away from your renovation and have to pay to get it into a livable condition or back to where it was, plus costs to date.
Sounds grim, but if you've done your homework the above situation wouldn't happen.
The obvious benefit to you is not paying interest on the loan for the time you negotiate and having a property ready to go by settlement. I've had a complete renovation refit done to a 4 bedroom house over 12 weeks and back on the market before settlement. Negotiating early access is common to renovators and the market now lends itself sweetly to it.
Ian
http://www.theblockblog.com
Free Property Information, Tools & Resources for Investors with a Sense of Humour.Sells papers………..
hold on to your hats investors and keep that LVR low.
To balance your portfolio – this strategy may help … Positive Cashflow Injection
Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources for Investors with a Sense of HumourYippee Ky Aye Eric!!!!
Just go ahead and buy it – sight unseen…. great idea. Give me a call when you have the title and I will be the first to come out shooting!
Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources for Investors with a Sense of HumourGood returns can be made from every real estate market, it's just easier when it's trending up. Personally I'd avoid shares this year but that's just me. Wait till the fall out in Europe has been fully played out. No one I know has made any money on the share market since 2008 and I think 2012 is set up to be extremely volatile.
Look for property where YOU can create the gain in today's market. With the prices lowering and the buyer having an edge in many markets, it's a great time for investors with a creative and lateral thinking strategy.
I look at 'the glass always being full' – 50% water and 50% air – just a matter of how you approach the situation and how you are looking at attaining your goal.
Now as far as your ' bit of money' goes…. depends what total you have, and what your property goal is.
I am looking at purchasing a 2 bed unit next week with the intention of adding a 3rd bedroom. Then renting the unit by the room. If your 'bit of money' is $15,000 then you too can do this tomorrow. Purchase price $100k – reno $15k – rent $465pw New value $135k. It's a sweet little deal and I will end up with no money down once the property is revalued and +CF, plus some.
How you move forward totally depends on your goal, so asking us on the forum what to do tells me you haven't quite worked this out. That's ok, but it may be a good time to reassess your situation for you and decide… ok what is it I want?.. and go from there. Going through this process may help highlight what it is exactly you should do with your $$$$ for the short and long term.
Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources for Investors with a Sense of HumourI send out for free, over 500 useful website links for investing in the USA via The BlockBlog.com if you are interested.
Ian
http://www.theblockblog.com
Free Property Investment Info Tools & Resources For Investors with A Sense of Humour.Hi Ben
I take my hat off to you! Bloody well done on tackling this little project. If you are starting this way Ben you will go a long way in property investing and you will be very successful.
Richard has pointed out some very valid facts, but put that little personal lending obstacle aside for the moment and see if you can work out if this project is still viable with the new facts.
Let's say you are not 16 with no job or credit history. Let's assume you have a reasonable credit history and can loan the finance, or someone you know can and re go over the calculations and due diligence again just to see if your 'hunch' is in fact a good investment. I think this exercise will be more valuable to you.
Recalculate the total costs of the project. ( purchase, closing costs & lending costs, holding costs over the time allocated for the project, construction costs, subdivision, plans, permits, council costs & fees, finishing costs ( landscaping, fencing, water, elec, phone, etc). Allocate what amount is required from a lender to see what cash you will need to put in.
Then work out your returns. If you rent, how much income after prop mge, interest, rates, insurance, utilities & maintenance will you be left with. If you want to sell, what is the sell price that you can attain today? ( less sales costs – agent & settlement fees).
All the best with the project.
Ian
http://www.theblockblog.com
Free Property Investment Info, Tool & Resources for Investors with a Sense of Humour.Buy an old Queenslander, close to town with as large a land component as you can afford.
You won't go wrong with so much happening up there. You also will have options down the line to add value and extract much more from the property in terms of cash return and possible development. ( even if it is your PPoR).Ian
http://www.theblockblog.com
Free Property Investment Info, Tools & Resources for Investors With A Sense Of Humour.Before you put in an offer you need to know what you are up for in costs.
This means spending some money on inspections as well as costing up all materials, labour, time etc. Dont scrimp on the building inspection either. Hire a reputable company and specify your areas of concern to them in person. Also accompany the inspector on the job and takes notes of everything he is saying. This may help you decipher the final report with much more confidence. The inspector may be able to give you ball park figures of costs to correct problems and if a competent inspection, then you should receive a separate sheet with all these figures written down.If you feel you need more detailed analysis, then engage an electrician and a plumber to go through the house specifically for those areas.
Ian
http://www.theblockblog.com
Free Property Investment Information, Tools & Resources for Investors with a Sense of Humour.No one can tell you what this renovation will cost. A good renovation needs the costs to be worked out as exactly as possible otherwise you will blow your budget. Lucky for you this won't happen because you don't have a budget.
You need to go into the property with a seriously accurate checklist and note everything down that needs doing. (Exterior, Interior, Landscape back and front). You then need to go to Bunnings and cost all the material. You also need to contact tradesmen to get costings on their work. You also need to work out your costs – build and pest inspection, (maybe separate electrical & plumbing inspection to be sure),purchase, stamp duty, lawyer, interest on loan for time of renovation and sale ( if you're selling). Add a contingency fund for unexpected costs.
See renovations here for some help.
Once you have a budget of all costs you can decide whether this project is worth it. As a general rule the actual renovation cost should be about 10% of the purchase price. Once you add up all the other costs ( some listed above), this blows out to around 33% if the renovation only costs 10%.
Add 33% to the purchase price. Can you sell the property for more than this amount? If so then it may be worth taking on.
If not, find out what you can sell the fully renovated house for in today's market. It'll be less than the first figure and then deduct 25%. The new figure is the most you can pay for the joint.eg: Asking price $500k + 33% = Lowest sell price $665k. If you will only get $620k on sale, deduct 25% and you have your highest offer at $465k ($465 + 33% = $618,450)
If the renovation needs to be higher than 10% – say 15% or 20%, then you will add 5% or 10% respectively, to the 33 and 25 percentages to get your prices.
Hope that helps
Ian
http://www.theblockblog.com
Free Property Investment Information, Tools & Resources for Investors with a Sense of Humour.Take heed of Jay's advice!
My last visit to the USA was spent recovering properties stolen by exactly the same type of criminal as Jay talks of.
Full title insurance,a lien or lis pendens on valuable property you own can be just the thing to deter all nasty types. When you sell, you get your attorney to 'lift' it from the property so as to get clear title.One other thing to be wary of is to make sure that you register your LLC in the state you are doing business in. If a Delaware company for example you will need to register in Florida to sell property there ( not buy ) but its a good idea to do so anyway. Basically you need to register to do business in any state so they can tax you.
When I say you register it, I mean you personally and not your trusted agent, manager, attorney. We entrusted our manager to do this for one company. He registered our company OK, but as a separate state company. We therefore could not register to do business in that state under our name.
What then transpired is he sold all our properties as the managing member of our company ( with the same name as his) using our signed operating agreement, to another company that he owned.
We had previously filed an affidavit at the county courthouse outlining a change of managing members and stating that this person no longer has any right of decision or to sign off on behalf of our company. It was ignored and the titles were duly transferred into his company.
Things don't work as they should in America – so be careful.
Over the next 5 months using an arbitrator, our attorney, numerous threats of jailtime and $3000 later, we managed to get corrective deeds filed for each property and back on the market for sale. We also lost our first buyer for one of the properties due to this debacle and subsequently sold it for 30% less.
Ian
http://theblockblog.com
Free Property Investment Information, Tools & Resources for Investors with a Sense Of Humour.
