Hey All
New to posting on here, but long term lurker and great to read all the information on here.
I was just hoping for some help. Forgive me if these are ‘dumb’ questions, I am 23 years old and just beginning in property. I would however like to make property and adding value to property something I do full time. I have read a lot of information about property (these forums, books, websites) and would appreciate some feedback on this plan that I have come up with to begin in property.
I am currently renting but I am looking to buy my first home in the next six months. I am eligible for the first home owners grant. I intend to live here for 6-12 months then move on. I am looking in the northern suburbs of Adelaide because of high capital growth in the area.
I was planning on finding a run down (but liveable) house/unit, renovating it, then either selling it or renting it out.
This strategy appeals to me because I can take advantage of the first home owner’s grant, take my time renovating it, and then when do sell it I understand would gain a fair amount of equity from the renovations, which would enable me to move on to another property and repeat the process. The long term goal is to make this something I do for a living.
I just have a couple quick questions I’d really appreciate some feedback on:
1. Does this plan look sound?
2. I am leaning towards the northern areas because of high capital growth in those areas, and the houses in the area are relatively cheap. Is this an important factor if only going to be in the house 12 months?
3. I have been looking at doing Renovation courses (such as Ana’s or Cherie’s), but I’m not sure if these are really necessary, or whether the money be better spent elsewhere, such as a larger deposit or mentorships. There’s a lot of information out there and a lot of people willing to take $4000+ off you for a ‘mentorship’, it makes it hard to differentiate between them. Any advice here or sources to find similar information the courses offer would be great.
4. Is renovation the best option? Or would this be better spent on adding value in another way? Was thinking perhaps subdividing would be a wise choice given the council plans to increase density in the area. Plus I understand subdividing is a lot less “hands on” than renovating.
5. What sort of research should I do? I’ve undertaken research in regards to suburb, capital growth, and council plans for the area. Also have a sound understanding of the 30 year plan for greater adelaide.
6. And lastly, how much money should I spend on renovating and is there a way to find out where is best place to allocate these funds to?Thanks a lot, I really appreciate any insight you can offer as new to the game
Daniel
Hi Daniel.
Yes the plan sounds fairly solid but don't know your level of purchasing power ie borrowing capacity. Anyway, I live in Adelaide's southern burbs and lived over 20 years in the northern burbs. Now, are you looking for cheap or inexpensive? If it's cheap, checkout Davoren Park – ex SA Housing Trust semi-detached (duplex) house and land but they are all Torrens Titled and can still be bought for under $150K (but these are usually terribly rundown Daniel) but there are some real diamonds in the rough that are still sub $180K. Now what is interesting about Davoren Park is when you have the opportunity to buy 2 semi-detached homes that are joined together. You can usually buy both for under $350K, bulldoze the lot, and build 2 new free-standing homes that will be on seperate Torrens Titles. Because the 2 blocks are already a Torrens Title you do NOT have to subdivide. Just need to get Council approval for the construction of 2 new homes and it is extremely unlikely Playford Council will knock you back because they just love more money and improvements coming into the area.Worth a look!
If it's inexpensive, look in areas such as Elizabeth Downs. These are free standing Torrens Titled for usually under $250K. Now let me stress this: just about ALL the ares in and around Elizabeth and parts of Salisbury are significantly lower demographics and often do not attract the greatest of tenents and there are some VERY rough areas out there. Don't talk with local real estate agents as they will just want to flog you a property. Talk to people in the area or have a look at some of the bigger shopping complexes such as Elizabeth Shopping Centre or Munno Para Shopping Centre (both adjacent to Main North Rd).
Don't waste your hard earned money on $4000 renovators courses. If your going to sink that kind of coin into learning a skill you might as well get a qualification to boot! Check out WEA or simple Google it and learn from government approved and recognised courses that will lead to qualifications and certification. Then you can do it yourself properly and be able to earn an income by helping others. Just a suggestion Daniel.
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I hope the above helps Daniel and I wish you every success in your investing future!
CHEERS!
TC
Thanks a lot for that info TC, really appreciate it.
I will look into government approved courses, probably a lot cheaper too!
I used to live in the northern suburbs, absolutely agree some unfavourable characters around the place. The idea of selling after value-add done sounds like the best plan to avoid any unpleasant tenant situations.
I really like the idea of bulldozing and starting again with some of the houses, especially the ex housing trust ones. I will research more into this. I expect my borrowing power to be relatively small though. From the basic calculators found on most company’s websites, believe would be able to borrow around $210k. Some potential, will just have to keep an eye on the market and hopefully find a few diamonds out north.
Thanks a lot for the ideas of other ways of adding value and your advice, it’s really helpful. Know where to go from here
I think that making money via renovations is pretty tough. If you are looking to buy, renovate and sell, then you would probably be doing this within a 6 month period. You would be up for purchasing costs, closing costs, capital gains tax (no 50% discount) plus all of your renovation and holding costs so you would need to increase the value by about 35-40% to make it worthwhile. This is really hard to acheive, and you will need to put in LOTS of work to find the right properties to do this. Probably a better way to go (IMO) is building and developing- whether it be subdividing and building a new dwelling, knocking down a house and building units, or even doing a major reno which might involve adding a second story onto a house or adding a major extension. I think that the more work you do and the harder it is to achieve, then the more likely you are to make a good profit as there wont be heaps of competition from people doing a similar thing. If you go beyond the simple buying and doing a cosmetic reno before selling strategy, then you won't be faced with competition from mum and dad investors who are working on tiny margins.
I hear heaps of people talking about how they would love to do a couple of reno's a year and make an easy $200k with no stress but in reality is not like that. To make big money, then you need to have drive, passion, a vision, a great team, be really good at what you do and also need to work really hard. Nothing comes easy in this world, but if you work hard then you can acheive anything!!!
They are just my thoughts. My goal is to get into developments (maybe 4-6 unit developments) in the next 5 years or so, but first I need to build some equity and get some cash behind me. I am also going to do a few smaller projects to start off with.
I hope you acheive what you want to acheive, I am sure you will if you stick to it and have support from people around you!!
Cheers,
LukeWe renovate day in day out, we love it, its our passion & we do make sizable profits. We started small though and learned so much along the way. Vedremo, there is a lot of hard work in either renovating or developing, good luck on your journey
RenoTeam wrote:There is a lot of hard work in either renovating or developing, good luck on your journeyTell me about it – going through it right now. I actually enjoy doing the work (so don’t mind doing some of it myself as opposed to outsourcing) but it is hard work – particularly trying to find the time to get things done.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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