Forum Replies Created
Hi Steve,
Another awesome conference. Thanks so much for your generosity providing a great night at the gala dinner on Saturday night. It was great to be part of the video and hope the team remain safe and well in Florida. The three days were energising and cant wait to get started with STEPS. I met some great people to add to my network and have already started to put in place some changes from the information provided by the speakers who were all sensational. Can’t believe its only 9 months till the next years conference. Can’t wait!
Not sure of you personal circumstances and how close to retirement, but as a property investor and an SMSF truste , I am not sold on buying property via this method.
This is just my view, based on my circumstances as I already have a number of properties outside SMSF, so have chosen a more balanced approach with CFD's, FX, shares, bonds, and some unit in a commercial property trust, with some cash for other opportunities.
I also do not like the limits placed on what you can do to the property within an SMSF, as I always like to buy property with the intent to actively create equity via sub-division and development.
Get plenty of advise on this one, For example if the SMSF can only buy one property and not other investments, thats placing all you eggs in one basket, which is one of the fundamental investment mistakes, Just remember Super is for your retirement so treat it like a golden egg!
Also ensure you are fully aware of what your responsibilities are in becoming a trustee and whether you are you wife are the trustees or if you go with a corporate trustee. There are business that will help you manage your SMSF compliance for a fee. I don't find it that hard but I am from a corporate commercial finance background so kind of comes natural to me.
All the best
Cheers
Simon
Honestly, and many may disagree as they have had success, but most experts I follow suggest avoiding buying off the plan like the plague! I would never ever do it myself! Here are some reasons I'd avoid it;
1) No one has a crystal ball, so what you buy for today bares no reflection of the value tomorrow, It could be less if there is more supply than demand
2) Generally OTP are unit in large complexes. One should avoid large complexes as your unit is like a commodity, there are many of them to choose from when you need to sell making it harder to sell for the price you'd like (plenty of stories about the GC and Docklands)
3) Mostly developers sell at inflated prices based on the fact its a new unit, it looks great, it has all the mod cons that you would want, pool, lift, gym, nice common areas, sounds great hey, then they throw in the guaranteed rental return or offer to pay the stamp duty. This is just designed to woo you in. Its all in the price and some!
4) Generally if an expert is selling you a property of the plan run for the hills as all they are an expert n is lining their pockets instead of yours!
5) If you are still thinking about buying off the plan re read the above again!
I could go on, but there are far better and less risky ways to invest in property than buying off the plan. The fact you are at the web site means you have a plethora of methods to consider depending on your preference for passive or active investing. Buying off the plan would be passive, if that is your preference, consider researching to find a hot spot and use a buy and hold strategy and repeat once you can afford to.
As always seek professional advice suitable for your own circumstances.
Cheers
Simon
Case by case with the rent. Look at the market and comparable properties or discuss with current tenant to understand their circumstances. My tenant acually like to mow the extra grass as it keeps them fit. They are even continuing to do so, so I intend to send them a voucher as thanks.
Below are some thought I have. I have been investing in property for 20 years on any off and have used buy & hold. CF+, renovations to add more value than costs, completed a remote and locla renovations, relocated a house and completed a subdivision. Next I'd like to do a duplex or multi dwellgn site where I can make enought profit to retain one for income.
My first developement was a hands on relocatable house where we purchased the land, relocated the home and rennovated. It was something I always wanted to do, and it was fruitful in adding equity and we still hold that house three years later and value can still be added in the desiign in the right market in the future.
Where I am at now is delveloping to add value without relying on the market to rise. I think that works in any market. I purchased a house sometime ago on a corner block where the rear yard had a street frontage. After my due dilligence, among other things I knew it could be subdivided. We held the place for five years and have only just finsihed the subdivision only having started that last year.
To give you an idea the value of the house on the larger block was approx 320k, The cost of the subdivsion was $40k. I choose to outsource the project management as it was the first one I have done, and to be honest that was about 20% of the costs, and meant I completed it much quicker then me doing all the liaising as I also work full time in a busy corporate environment.
The block is currently on the market for 140k and the house on the reduced block is now worth approx 270k. I am looking to onsell the block to a developer who should be able to get at least a15-20% return. So roughly its a 50k equity gain, but I should realise 100k in cash, and based on discussion with my accountant, there is no CGT when we worked out the cost base. I run a trust structure so I could distribute the cash in a tax effective way if I needed to, so structure is something you must get advise on before you buy a block etc.
If I find the right market I could possible churn out a few of these scenarions where I buy something I could do similar to, perhaps get the subdivision done while reovating the house to be sold for a small gain to cover my subdivision costs. Then I could either sell the block, develop it, get a line of credit against it to do another deal while continuing to holding it if I thought it may increase if value in the short term. Depending on zoning and size I might even be able to build multiple dwellings.As you can see there are a few options.
Until you get a couple under your belt I would strongly advise doing something small and simple without risking too much capital.
Its more about learning when you start. My first foray was a 75k town house with a buy and hold strategy in the early 90's in another state, as when I lived in Sydney its was three times as much then and I did not feel comfortable with that exposure
Cheers
SimonRoaring about the dentist/WBC comment, how I can relate! SGB wanted my last three years tax returns to verify some personal rental income was really being declared! This after week 6. There were other streams and requests from the first week. My arguement, why not ask for it all up front to save time. How can it be week 6 before you ask for this! We all win this way, bank get interest earlier, I get settlement and onto the next deal!
I just think its down to inexperience and why I am searching for a lender that has the experiece and can give me the CRM I am looking for. Some of the people you cannot understand. Call centres overseas speak better english.
I think my deals are run of the mill. Borrow no more than 80% of val , I am buying or developing land in areas that are metro growth corridoors. Supporting by good rental returns and other income within the trust and outside it by the guarantors. Sometimes the settlement is paying out a loan i.e. land content, but its fairly basic in my opinion, none of its rocket science.
I guess I will keep searching as the next deal is going to be refinancing this loan and another with WBC as all this group are going to keep is my mortagage and tranactional banking accounts. The can handle that fine. For what I pay em in interest I keep a couple of people in jobs! They must be servcing scores of people poorly and while only a small drop in the ocean to them clearly, I'll move on to the next institution and episode!
Cheers
SimonRichard/Terry
Do either of you find any lender has an understanding in this area that allows deals to flow? I am always being delayed with time consuming credit referals up to chain, before finally getting approved. It simply limited the deals I can do each year. Worst case was 11 weeks thru westpac in 2006. My latest deal thru SBG was approved yesterday. I started that process on 21/8!
Cheers
SimonRichard
Thankyou, I think perhaps we need to catch up for now and the furture! Will speak to you Monday
Tracy,
Thanks for the tip, I will certainly investigate that as a last option.
Cheers
SimonI use Westpac at the moment, and they do it, but they seem to have the same issue as ANZ with people not knowing their jobs. If you find a good bank with a good contact hold on to em! I am yet to find that but I have head good reports about StGeorge.
I wont go into it but I do not recommend Westpac as their service has dropped of considerable. I will admit my investing structure is complex, but it is a worry when the one of the big four consistently screw up my loan applications causing me untold pain ans stress.
If anyone can recommend good institutions to deal with that care I am all ears!
Personally, I'd keep renting and buy a number of IP's with a strategy to increase your wealth over th long term. You do not get any incentive tax wise with an PPOR. With the cash available you will have more chance of maximising your purchases using say 85% LVR loans without having to pay LMI.
I am not sure what your strategies are e.g. buy & hold, buy add value and sell etc! So that may changed my opinion. You may also want to consider the structure you buy in e.g. your name, company, trust structure.
Its probably good to keep your shares if you have strategy there, as you can always sell the if you need more cash for IP's as shares are liquid, where as property takes take to convert into cash.
Get a good accountant that understand property and invests in it too, same with a mortgage broker who can help you with finacing strategies also. Avoid cross collateralising loans against several properties, and get your structure and strategy sorted out first and formostly before you buy anything! Cannot stress that one more!
You sound as though you are well positioned to maximise your results with the cash and what sounds like a good salary package, but money does not mean you will succeed. Lots of research, and the right strategy and at the right time will maximise you results.
Only ones mans opinion!
Cheers
SimonI am not sure of the numbers in the areas nor much about the infrastructure, rental demand and capital growth performance, in the past, and whats predicted for the future. I would suugest you compare to Ipswich and see how it stacks up. There is a lot going on in Ipswich if you talk to a lot of locals and the real estate agents. It also depend on what you investment strategy is as to what may suit you best.
Cheers
SimonWell not bad 813, we know we are well on the way to where we want to be. Excellent little tool to give you another perspective. We've always keep a portfolio spreadsheet on our net worth as a way of measuring our success, and update this as things change. Obviously like the wealthscore you want it to be getting larger not smaller!
Cheers
SimonHi Nathan
I am an ex-Sydney sider havinf relocated to Bribane at the start of 2007. Still own property there, and keep a constant eye on the markert.
I beleive the overall maket is showing signs of recovery, but is at the early stages. Some data is suggesting the action clearance rate has risen slightly and the average time a property is on the market for a private treaty sale is reduicing, allbeit, only slighlty. To me this said there is fair value in the market for investors to acquire IP's, but you still need to research the areas
Affordablility does tend to make me laugh. Most people stating this are simply not prepared to live in certain areas. The medium price across Sydney may still be 500k, there are plenty of house to buy well under that if you look and you are a first home buyer. You have to start somewhere, and I think the tendancy for most youget people is the want the 40s square home as their first home, so claim Sydney is too expensive and move to Perth or Brisbane.
I think Sydney will always be the yardstick on the property market and be the one to watch in regard to overall trends. There are pockets that are going off, and the area areas that are still reducing if vendors are listing at unrealsitic prices. That is fact if you look around and talk to agents and other investors.
Cheers
SimonHi debbie
In the process of buying one there myself thru LJ Hookers. Dealing with Kate Burchell. They seem really professional and I will be having them manage it for me once I look to put a tenant in there. Needs a refurb first.
Cheers
Simon
Hi lilyhutch
I personaly believe it can prove to be a good investment, as well as resulting in a shorter development time once you have you council approval in place.
With the relocation of the home, there are less steps in seeing the house actually on the land compared to building from the ground up. However, its a case by case scenario if it is cheaper. You'll know that when you put your costs together the whole project with some contingency in there to ensure that strategy is going to prove a good investment.
There are a number of good sources for relocatable homes. I have done a fair bit of reseach on this over the last 9 months as I am in the process of subdividing a block and doing exactly this in North Ipswich, but its only at early stages. I have a DA and I am now looking at the actually subdivision process vs. dual occupany. (the DA was already on the block when I bought the existing home)
Below are some sites I have found useful on the subject. I am actually seeking a house that needs as little work as possibe, as once I am ready to to relocate, there is minimal renos and it just a matter of connecting the service, plus other DA requirements and then having council approve for residency.
If you want to chat further on this topic I'd be happy do so. If you like send me a private email with some contact details and I'll give you a bell. Always good to network with someone looking to do the same. I find you can never know too much on these things!Cheers
Simonhttp://www.dalbyremovalhomes.com.au/
http://www.drakehomes.com.au/
http://www.eddywrighthouseremovers.com.au/
http://www.jonkerhouseremovals.com.au/
http://www.houseremovals.com.au/
http://www.wrightbros.com.au/Hi Sarah,
Rather than giving you a direct answer I think you do better if you come up with the answer to these questions yourself. I am not trying to be a smarty, but rather to suggest you go back to the start of the process in helping you decide the suburb and the area you’d like to buy into. To do that you will need very clear list of what you want.
I am sure you will get many people who will give your their opinion, but at the end of the day it would be better to come up with your decision on this yourself, and I am sure you can as you continue to research and pondering what it is that you want.
I can recall replying to one of your posts a few monthe ago where you were looking out toward the airport, so I see you are still looking. Thats good, it means you have not yet come across exactly what you want and that seems to be of great importance to you.
A quick example for you when I bought my first PPOR and infact I still live in it! I had a list of must haves to consider buying, and I have to tell you the area I bought in was never one I was considering as it was too far out (live in sydney 25km from CBD) However, as it has my list of must haves (i wont list them, as I am sure the are irrelvant to you) it become a must buy. This was only in 2001, and I have to tell you its been very good to me giving me a great lifestyle and appreciating some 65% since then.
You will find your place that fits everything you want if you realistic about it. It may take you a while yet and you may look at scores of properties in several suburbs before you do. Keep on keeping on and don’t give up ever.
I am reading a book titled “The Insiders Guide To Buying Real Estate bu Partick A Bright. While I have boguht quite a few places it has some really good tips. Its written by an ex realestate agent whose now a buyer, and he shares some very good information on how to get the best possible deal on your home or investment property. Worth a look, I have already picked up some great tips and I am only up to Ch5!
All the best Sarah
Cheers
SimonHi Sarah
Great that you are able to move back in with your parents.
You did not mention whether this loan was secured by anything i.e. a car, boat, something tangable. If you are really keen to get into the property market I can see you may want to keep additing to that 7k. I have some suggestions you might be able to consider.
If not and you are happy to wait, It would really think is would make sense to concerntrate on knocking off as much of the PL as you can as fast as you can. You are on a good wicket earning that kind of money, so take advantage of being at home while perhaps only paying minimal board.
That 7k, while nice to have as security would be better off working hard against your loan. You can get about 6% at call in some cash management accounts, but to hazzard a guess you are probably paying significanltly more in interest for the loan??
Keep reading the book, and if you can grab a copy of the second is worth a read too. I found both book invaluable in creating my investment plan. I use to think the only way to make money out of property was negative gearing! What a fool!
If you don’t want to publish all the details on the forum, I’d be happy to share some of my ideas so PM me and I will elaborate on what I have done in the past with a few of my loans. I have a friend who is a broker and he has imparted a fair bit of knowledge my way. It may just give you some ideas where you can then head off with to get some professional advise which is a must.
While there is a heluva lot of knowledge on the forum always seek professional advise when you think you have decided what you are going to do. I have come up with what I thought were great ideas only to find out there were clangers!
Live and learn as they say, you never stop learning
Cheers
Simon CThey are around if you look. Here is one example I found doing a search. Wish I had some dollars, but in the midst of a subdivsion……one at a time
On a 20% deposit this one is roughly a 20% gross return on your cash dep which is not too shabby. Have not taken into account rates or maintenance.
Cheers
SCGrant
I have to say I am not fan of off the plan properties at all. This is just me as I think there is more potential for issues can arise.
The Perth market as you know is going gang busters. Realistically its not going to continue at that pace forever.
Look and compare what has happend in some other market. Not so long ago Sydney was flying and took a correct where median values when down roughly about 10% across the board
Here are a couple of things you may want to ask yourself about the Perth market.
1) What growth do you expect over the next two years?
2) What is the real value of the property you are considering buying?
3) How will a delay in completion effect your investment?
4) Have you factored the current inflationary effects in the market place (e.g. what if rates are 1% higher when you settle?)
5) If you have to put down a deposit, where else could you invest this now to get into the current market.I think there is still probably an opportunity to get a good return over the the next 12-24 month if you can buy at fair value. I suspect some people are paying inflated prices to get into the market or into an area they want to live or invest in. Again its choice.
Only you can decided, but I personally steer away from of the plan properties. I like to see what I am buying rather then what it may look like.
When the marker softens there is likely to be opportunity to pick up properties at a discount as developers simply want to move on to the next project. Probably some time off in the west, but have seem evidence if that in the Sydney market for some time
Good luck with it.
Cheers
Simon CIf you are trying to find the right accountant try the CPA web site and go to the “find a cpa” link at http://www.cpaaustralia.com.au
