I have just used the equity in my PPR to purcchase an investment proprerty. I have purchased the new investment property through a trust. The trust owns the property but the loan is in my name. I have also just sold a property and have $350k available to invest.
My problem is that I have used all the equity in my PPR for the first investment. I want to buy, renovate and sell a new investment property with the $350k. The $350k will cover the purchase and renovation costs and also provide a buffer for a number of months if I can't sell the property quickly. However, as I am almost maxed out on servicing my other property I can only service a small loan.
Any ideas on how I can use the $350k to purchase a buy, renovate, sell property?
A few thoughts:
1. There are still areas that you can purchase property for your budget.
2. Any particular reason you'd want to sell the property and not hold it?
3. If you want to play in the expensive pool, you could team up with someone that has some equity, or the capacity to get a loan… (ie a joint venture).
4. Where are you located?Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks JacM.
In answer to your qusetions –
-I want to buy, renovate , sell to generate an income. I will also hold some properties such as I one I just bought.
-I had ruled out JVs for the time being untl I had more experience in renovations and project management.
-I am located in the Melbourne suburb of Rosanna.inIf you plan to do that with $350k cash and no finance, you'd want to be extremely careful.
Let's look at an example.
Purchase a house for $300k.
Stamp duty costs are $14k.
Legal fees re purchase are say $1k.
Spend $20k on renovation.
Selling fees are say $10k.
Legal fees re sale are say $1k
So that's a total spend of $346k.The question is, can you add sufficient aesthetics to a property in this price bracket to encourage people to pay more than $346k for it in the resale? (Remember profits you make will be subject to capital gains tax.)
You'd want to be well educated to know 100% what every single expense, and anticipated resale price is going to be to avoid copping a loss.
Perhaps some other forumites that are actively renovating and reselling can add some thoughts for you
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks for the info.
You are right in that I would have to have a clear understanding of costs and make sure the target area would support prices for renovated properties.
My feeling is that if I renovated and was unable to sell then my fallback position would be to rent. Since I have no mortgage it would be all income.Are there any flaws in my approach?
You must be logged in to reply to this topic. If you don't have an account, you can register here.
