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You wouldn't pay a quantity surveyor twice. The first report is called a scrapping report, where they tally up items like old ovens, benchtops, floor coverings, blinds, baths, vanities etc and determine if there is any residual value that remains. The total of the value of items removed. This normally only costs around 100 dollars. I'm 95 percent sure BMT do it for around that price.
The 2nd part of the report is called the depreciation schedule on the new renovations. Say 650 iish: total 750 as a guide
Also oyu can have a scrapping report generated from the past. Ie if you take lots of photos of all the rooms and basically list everything you chucked out they can calculate one up for you even if you have now finished the renovation.
I think a strong rule should be.
Always have enough contingency money that you can still finish the project. This can come from savings, investors funds, lines of credit, personal loans, credit cards, most likely in order of use as well. The last thing you would want is for something to happen unexpectedly (ie expensive) and you cannot finish. The quickest way to a empty bank account. If you can't even finish your project and at least sell to get your capital back.
As alfrescodining said about delays. Development is basically red tape the whole way through. No matter how efficient and organised you are, (which you need to be, because you need to be as fast as possible individually ) you are at the mercy of councils, government, builders, subcontractors, LTO. You can pay your money and expect them to work on it, you ring up a week later and find out its still on the pile of to do things.
I think knowing your financial capability as well. If you only have enough money to pay for a deposit and stamp duty, why are you looking at a 3 unit site or even a 2 unit site? As I believe as long as you have the financial resources this eliminates some of the stress. Ie the council come and tell you have to upgrade a power transformer, you organise the power company out they tell you it's going to be 7000. If you didn't have the Financially capacity at this stage it would be a real problem on you. You've suddenly encountered a huge problem If not capacity to pay that bill is not there. Council won't approve a subdivision or your development unless it is. Money solves problems in this case. You can pay for solutions or pay for advice to get those solutions.
think I can summarize the above as
1) having access to money sources, borrowed or not
2) understanding the process, working diligently whilst making sure others are up to deadlines
3) choosing development sites within your capacity more financial then mental.
* as you said in first post
My view is that you should always have a plan for the worse, I wouldn't be putting my house on the line whilst having your investment property the one unencumbered. I'd rather lose 5 investment properties in a row and still own my PPOR so I still have a roof over my head.
Id rather take out LOC of 85k to fund the 20 percent deposit and stamp duty with a separate loan for the new investment property.
Why do you want it set up as you said? Is the property unlivable ? So you don't want a valuation on the property?
Hi mbuilding
zoned medium density residential.
They would be considered a joint person due to being married. If they were just partners and not legally tied, you possible could have.
1) short answer, your PPOR is which house you claim you live in. If you keep this property for another 3 years say. Then your still entitled to claim the PPOR excemption when you sell. Just remember that you therefore won't be entitled for the 3 years for your current home that your living in. You could decide you are never going to sell the current home your in. So having it as your PPOR would just be reducing your available taxation benefits. A example is a friends parents elderly, that lived in a home but moved out, into a unit that they planned to retire in. 5 years later their home in a prestigious suburb had gone up a lot more then their unit that they had lived in. It made more sense for them to get the CGT exemption for the expensive property for those years as they are never selling their unit till they aren't here anymore.
1 part b) if you do have to work out the site initial cost price. A simple formula used is purchase price/ land sqm. That'll give you the price u paid per square m. Allocate each block its individual proportions. That's the cost price for each.
2) if the equity from the remaining unit is enough to secure the loan then you may use surplus funds for any purpose you want. Some figures of bought sold built for expected sales and values would be helpful. If the unit Is the only property tied to the loan and you have only rented it, then the entire loan should be available as a deduction.
Are you and your brother both first home owners? You mentioned your brother is a subcontractor as well what trade?
A couple of ideas for you. Could get a 80% Lend LOC on your home.
Could look to buy a site where you could possible develop 3 units/homes etc
use the loc to finance a loan for buying the development site
build all 3 homes using your skills. Your brother claims one as his FHOG grant etc stamp duty exceptions. (Would be different each state, which state you in?), you claim one of the houses as well for your first home. Live in for 6 months to make sure your entitled to your grant.
Have your brother and you sell both your houses. Pay no CGT because they were your PPOR and you've never done this before.
Roll all that money into the 3rd homes debt, which you keep as a rental.
I reckon this is one of those situations were being patient pays off. I think it's more prudent to be patient then to be enthusiastic about the next deal.
Wait until your land is at least unconditional under contract. You can know how much you'll be getting back and what you can afford. Don't want to put your 4k down as a deposit and then have your sale for your land fall over, which you were relying on finance for the next deal.
It's just a difference in council policy. Why the council I bought in to want and require this form of development and have made it appealing to developers to get them involved.
Didn't go to a town planner. Initially I read through the development plan for the area. Looked at the requirements for the area I was in.
I then had a building designer drawn up a rough site plan.. I took this to the local council for feedback. They provided some more advice about car parking and required areas for Private open space. Learning that 2beds required only 1 carpark. And only required 11sqm of minimum POS. I had the building designer edit the original on these conditions. Which took it from 5 units up to 7 units.
The units themselves are also designed based on some townhouses being built in highly dense areas of adelaide and new developments like lights view. They are only 4m externally and 3.7m wide internally. But they have dining Galley kitchen and lounge downstairs with a toilet under the stairs. And upstairs 2 bed and separate toilet and bathroom.
What suburb is your property located in?
Right or ways usually have certain conditions like you cannot build a unremovable structure over it.
ie you could pave the area but if someone needs access your pavers come up.
is the right of way for a sewage pipe?
Whoa look at the size of the boulder in that last picture. That'll make a great water feature
In south australia in the suburb morphett vale. It's down south about 3 minutes from the new "redone properly" expressway
What it's saying is basically you can only claim your CGT exception on one property at a time with those small overlaps if your moving house etc
You missed a bit in your last comment.
you can still claim a property as your PPOR and still rent it out and receive the deprecations and deductions ie negative gearing against your income if your renting it out.
If you put a negative geared property in a trust you don't get any negative gearing effect against your income. The loss will have to be made up by your employee income. The loss remains in the trust until the point where the trust makes money and then when it makes money it would be offset against previous built up losses,
what are you figures for your new home that your building.
Bought price
build price
expetced rent and expected debt on the property.
building a new property you would receive great depriciation on a new property.
You would have to buy the property in the discretionary trust and have applicable people that you could distribute to to lower your tax. But if the trust was having a negative gearing effect. You could not take loss of your personal income statement, the losses would roll over until the trust made money. And would be offset until your tax credits were used up
So where you require the new sewer pipe for a new dwelling that you could be developing down the track there is a large significant tree.
Personally you should not have a problem. If the sewer IP is already there on the street then that is clearly earmarked as the place for a new sewer pipe to be connected, they have already installed the infrastructure. There would be more of a issue if you had to build your footings of your dwelling in the trees root system. This is a problem that i don't think you should worry about too much. Usually they will grant development permission and then say on the conditions. * the trees located on council verge on southwest corner etc of the block should have every care taken to ensure the safe development of the site; fencing off the area around the tree to ensure no harm comes to the tree etc etc.
Your not knocking it down and your being careful. Your not out to undercut the root system of the tree and have it fall on your house.
You also have to look at the borrowing implications of using those said asset protection vehicles. As hybrid trusts are very difficult to lend to. Unit trusts are a bit easier but most likely will be at commercial lending i.e. 80 percent or less. And discretionary will provide up to 95 percent with personal garuntees (almost a requirement with everything now)
When everyone talks about cross callaterelising loans. They just want you to set it up. So that instead of the bank choosing what to sell in the event of a default that they have to go through all your dominos before the get the last one.
Iie crossing loans with PPOR whilst perhaps ok for a start. You don't want to continue like that. You can garunteee that in the event of a default or a decrease in property prices they are just going to sell the property with no debt first.
I think that percentage is 80 percent. That's what it is the building industry. Work more then 80 percent even for the same employee as a subcontractor and you become a employee. The employer would then have to pay your super etc.
