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$15k after all deductions and expenses? that's a very healthy return indeed!
with development projects, its my understanding you can get a good project manager on board who can effectively guide you through the whole thing. if you don't know what to do, just hire the appropriate experts. it will cut into your profits, but with the right information, guidance, plans and approvals you should be set for good profits anyway. once you've done it once with experts guiding you the whole way, perhaps the second time you'll know more about what you can do yourself to save on costs and what is better left to the experts.
i'd love to go into development, but i think i need just a bit more $$ behind me, or a JV. I want to learn a little bit more too, buy another IP for rental and do some renos before going after the development side of things.
i'd be thrilled to be in your situation!!
I have one IP, no PPoR. currently owing $190k, VERY positive geared, probably valued now around $450k. As soon as I have reached my 6 month probation with new employer, end of sept, I'll be jumping straight into a loan for IP #2. I plan to get #3 as soon as possible after that. I obviously have a lot less equity to access than you, but figure with IP#1 I have enough equity to cover 80% LVR on 3 properties without using any of my own cash. The aim is to have all 3 resulting in a net neutrally geared position within the first 12 months, and hopefully from the second year onwards they'll be +CP.
With interest rates low, and the property market in Perth in a good place, I'm wanting to jump in straight away and the only thing holding me back from future purchases will be the banks.
Don't forget with your house fully paid off, you can get a LoC loan against the equity of that which can be a fully tax deductible loan as far as I'm aware, as well as raising the LVR up to 80% of your current IPs. so you have loads of equity money to play with! use the leverage. I know if I had that sort of position I'd be going into small developing projects. But that's just my opinion.
I am wondering though why your properties are only slightly +CP when the loans are so low? Have you looked to see if you can add rental value there to raise your rental returns?
mchutton,
as a fellow perthie i have also looked at East Vic Park for IP. There was some suburb report that came out a while ago which listed units in Vic park and East vic park as being good for future growth, whereas houses in these suburbs are already overpriced. there's loads of rentals, but a lot of the units there are old and rundown meaning the large rental market is driven by international residents and students. i'm not sure of the price of the apartments that you're looking at are, or the style of them, but i don't know what the rental demand for high priced trendy apartment would be and if you could find a good long term professional tenant. a good book i'm reading at the moment said never stray outside of 20% above/below the median suburb price as its harder to then sell or rent places at the bottom or top of the suburb.
if a financial advisor hands you a package on a plate for a fee which looks too good to be true, chances are it is. they will be taking their slice, along with the developer, both of which come out of your pocket. if you have the time to find a great deal yourself you should hopefully save some $$ !
good luck
