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  • Profile photo of Jewel47Jewel47
    Member
    @jewel47
    Join Date: 2012
    Post Count: 27

    Hello All!

    I am a first time poster but a long time lurker.  I feel like I already know everyone on the site!  I often speak to my hubby and say, well "TerryW said", "Jamie stated", "Jac made a good point about", "Richard suggested".  He thinks I am talking about people I know, lol.

    Well we live in Melbourne and are looking to buy our first investment property.  Admittedly we are greener than Kermit when it comes to buying a house, let alone an investment property!  We built our first home 4 years ago, so we have not gone through the process of buying an established house.  I am trying to learn as much as I can, hence my stalking of this site. 

    I have a few questions and forgive me if the seem really basic, but I did warn you that I am green!

    We have found a unit we would like to buy but it is a bit of a fixer upper.  We have never renovated anything on our life!  I was thinking about going to Cherie Barber's workshop but ruled it out for now because of the price.  I have noticed people recommend Dean and Elise and I see the Reno kings have a program as well.

    1. Has anyone done the Reno Kings program?  Would you recommend Dean and Elise over the Reno King or recommend any other system?

    2.  When do you get a building and pest inspections done, before or after you make an offer.  Like I said, the unit needs works.  So if I negotiate a price and then the building inspector finds something we missed, can I renegotiate the price again?

    3.  I want to buy a report on the property and have found Residex and RPdata both do reports.  Is one better than the other?

    4. Do you get a solicitor to review the section 32 before you put in an offer?

    I live in Melbourne and would love to talk to anyone local who help me setting up my network of solicitor, tradies and accountant.

    Thanks for all of the wonderful advice that you have given to others as it has helped me learn so much!

    Jewel

    Greener than Kermit but hopefully not for long!

    Profile photo of TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Hi Jewel,

    I cannot comment on point 1 but I will comment on the remainder. Points 2 and 4 are quite similar in that you have 2 options. First option is to sign the Contract of Sale and then do your building and inspection as well as have a conveyancer/solicitor review the COS during this cooling off period. The other option is to do this before you sign the COS. The benefit of going with the second option is that if there is an issue with the B and P or the contract then you will not lose you initial deposit. The disadvantage is that another buyer could potentially gazump you whilst you are doing this. Generally speaking I would recommend the latter if there isn't too much buyer interest in the property. I would recommend you have the solicitor ready to go with the review and the B and P as soon as you find something and try and do this within 3-4 working days. 

    Also just remember that some conveyancers and solicitor will charge you each time that review a COS whether you proceed or dont proceed and some will not so clarify this upfront. 

    Re RP Data and Residex – they are quite similar. We actually use APM which again is similar to both reports. One of the most important parts of the report is the 'recent sales'. This will give you valuable information when placing an offer and/or negotiating an offer (as you can provide a reason for your potentially lower offer). 

    Good luck!

    Regards

    Shahin

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

    Profile photo of N@than[email protected]
    Participant
    @n-than
    Join Date: 2010
    Post Count: 241

    Personally I would save your money on the courses and buy the API renovators handbook for $30. And obviously you have the internet so everything you need to know is on there! I learnt how to plaster and lay carpet from youtube and mitre10/bunninings instructions. I put up new ceilings and floors in 3 bedrooms and you wouldn't even know it is a DIY job! You will be surprised how much info you can get for free!

    Good luck with it!

    Cheers,

    Profile photo of Jewel47Jewel47
    Member
    @jewel47
    Join Date: 2012
    Post Count: 27

    Hello again

    Thanks for the quick responses!  Just to clarify, I thought you could get a clause in the contract that the purchase was subject to a satisfactory building and pest report. So if that is part of contract and I have the report done and then decide to pull out, do I still lost the part of my deposit?

    Nathan, thanks for recommending the book!  I will definitely get it as I can use all of the help I can help.  You sound like a very handy person.  My reno experience is less than nil.  Putting up drywall is a bit to ambitious for a person who has never even painted, lol.  Maybe you can make a trip to Melbourne and show me how it is done.  I am a bit of a slow learner so you better do the bedrooms, kitchen, dining room, laundry and lounge just to get me started wink

    Thanks,

    Greener than Kermit

    Profile photo of DWolfeDWolfe
    Participant
    @dwolfe
    Join Date: 2009
    Post Count: 1,253

    Hi Jewel.

    Great to hear you are part of the community!

    I had never renovated anything, or developed anything or bought property, until I jumped in the deep end and did it!

    If you are looking at renovating, Dean and Elises pack is awesome, you'll have to try to find one second hand tho, I don't think they are making it any more.

    If you are looking at a fixer uppper, have a look at properties that are 'done' and see if there is a substantial difference in price between renovated and unrenovated. Look at rental return on the two as well. if there is not a nice big gap between the two types of properties, it may not be worth the time and money.

    Have a look at auctions, clearance places, start talking to people in plumbing shops etc to get ideas on how much things cost, before you jump in. You may think a vanity cost $250, and when you get to it, it costs $500. it's good to be realistic.

    Good on you, keep learning and sharing!

    Cheers

    D

    DWolfe | www.homestagers.com.au
    http://www.homestagers.com.au
    Email Me

    Profile photo of Jewel47Jewel47
    Member
    @jewel47
    Join Date: 2012
    Post Count: 27

    Thanks DWolfe!  I have been looking at auctions and bargain shops to get a feel for prices.  Everything costs more than I initially thought!  But by poking around I have been able to get a better grip on prices. 

    I have been looking at prices of renovated houses.  After renovating, our new rental price would put us back at the same yield as it was before the pre-reno investment.  But the value of the property is where I hope to win with the reno.  There is room to reno and push the value up quite a bit but not out of the market for the area.

    Dean and Elise reno pack is still available.  I will jump in the end and hope I don't drown!

    Profile photo of CatalystCatalyst
    Participant
    @catalyst
    Join Date: 2008
    Post Count: 1,404

    Personally I wouldn't rush out and spend $$$$ on a course unless you are planning on doing lots of reno's.

    We've done a few. I looked at Cherie Barbers course only because we are thinking of moving to buy/reno/sell and her course has lots on how to target areas etc. We do a lot of the work ourselves. She concentrates on outsourcing work so won't help with doing stuff yourselves.

    It's a great way to build equity and yield if you don't mind doing a bit of work. Hard to believe rent on a renovated property would be the same as an unrenovated one. Maybe ask another agent and/or look on RE.com

    What are you looking at doing?

    Check Ebay for items. Many shops advertise there now at discount prices (clearance items for example). We got our vanity for $600. It was in one bathroom shop for $1200.

    I went to a 2 hour workshop with the Reno Kings. Couldn't wait to get out of there. I hate screaming, yeehah look at me stuff. That's them.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    Jewel47 wrote:
    Hello All!

    I am a first time poster but a long time lurker.  I feel like I already know everyone on the site!  I often speak to my hubby and say, well "TerryW said", "Jamie stated", "Jac made a good point about", "Richard suggested".  He thinks I am talking about people I know, lol.

    haha – I love it!

    1. I don't know too much about their offerings but I do know that you can learn about renos without spending a lot of money. I like Nathan's post. I also can't tell you how many times I've referred to youtube for DIY tips!

    2. I'd usually wait until after the offer is accepted. Arranging one beforehand show's you're pretty keen (which isn't good when negotiating). If the report comes up with something a bit dodgy – you can always ask the vendors to address the issue or drop the price.

    3. I think they're much of a muchness.

    4. You can.

    House of wealth are good accountants. Not sure about tradies or solicitors.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Jewel47Jewel47
    Member
    @jewel47
    Join Date: 2012
    Post Count: 27

    I feel like a kid in a candy shop!  Everyone has given such great advice. 

    I want to get this reno under my belt to see if it something that I like doing.  If it I think I want to do more renos then I will spend the money because it would be worth it in the long run.

    Sorry for any confusion,concerning the rent.  The rent would go up if renovated but I was taking into account the money that I spend on reno and adding that to the purchase price and calculating the new yield on the increased cost and increased rent.  The place needs a new kitchen, new bathroom, painting, and all of the floor coverings removed and the floorboards sanded and polished.  I was thinking of removing the wall between the kitchen and lounge, but that depends on costs!

    I will check eBay for bargains, thanks for the reminder Catalyst.  I am a bargain hunter. 

    Nathan, I ordered the book today and can't wait to get stuck into it.

    Jamie, thanks for the heads up about looking to keen.  I want to appear cool as a cucumber even though my knees are knocking together.  Thanks for the recommendation on accountant.  I don't know if I can afford anyone called House of Wealth, is there anyone out there called House of Poverty or House of Poor?  cheeky  I will even take House of Installment Payments.

    Profile photo of N@than[email protected]
    Participant
    @n-than
    Join Date: 2010
    Post Count: 241

    Good to hear you picked a few things up! It's definitely a great site to learn from! Bunnings and Mitre 10 both have really good and easy kitchen making programs so you can lay everything out on your floor plan and work out what you want and what will fit. All on their websites. Floor coverings should be pretty easy to remove yourself and i'm sure if you looked on you tube or google it someone will show you how to sand and polish a floor!

    Just be careful knocking down walls without getting them checked out. If it is a load bearing wall you could find yourself in a bit of trouble!

    Keep us posted on your renovation progress ;)

    Cheers, 

    Profile photo of N@than[email protected]
    Participant
    @n-than
    Join Date: 2010
    Post Count: 241

    Derek has alot of good points there Jewel. Personally I think renovating itself isn't that difficult but renovating for profit is alot different. I know a few guys that have completely stripped there house out and re did it, and the extra value it added is no where near what it cost them not to mention the hard work and time taken.

    If you spend 20k on a renovation and it would only increase the value by about 20k or even less then in my opinion you are better off paying that 20k off your loan. You are still increasing your available equity by the same amount, just depends how much you value your time and obviously if you live in the house then renovating isn't just about the money made.

    Make sure whatever you spend it is at least adding double or even triple the amount of value to your house.

    Just my opinion anyway.

    Cheers,

    Profile photo of Jewel47Jewel47
    Member
    @jewel47
    Join Date: 2012
    Post Count: 27

    Hello,

    Yes, Nathan I have picked up a lot of info and I am very grateful to everyone!  Yes, we have to get it assessed to determine if it is load bearing.  We have a reno "Must do" list and "Nice to do".

    Derek,  thanks for posing some great questions.

    I will start with saying my research started at state level and drilled down to suburb.  The suburb is within 15km of the CBD, the less expensive step sister to a more highly priced suburb.  The suburb has seen good capital growth in the past 10 years.  With rising demand, the suburb has also seen more houses knocked down and units built on the blocks.  There is also a train station which gets you into the city in short time as well as numerous bus services.  Vacancy rates below 2% and rental returns above 5%.  The suburb is gentrifying.

    This property is in a nice pocket of the suburb.  But the property is not in good condition.  If bought at the right price and renovated, the value would increase quite nicely.  I have reviewed area property prices, inspected area units and compared this unit to others in the area.  I know my budget for reno and I know my limit of what I am what pay for the unit based on its current and future value. 

    Admittedly renovating skills are low with only painting.  But there are some things that don't require skills that we can do and I have gotten rough estimates for getting other things done.  I know my budget is nowhere near being perfect and I have allowed for a margin of error. 

    Improvements are new kitchen, new bathroom, painting, carpets removed and floor boards sanded, 1 door changed.  I would like to remove a wall to open the kitchen up but that is not a deal breaker.  I have estimated the increased value based on comparable units but have taken a more conservative estimate. 

    I have put together a timeline how how long it would take and the holding the costs.  I have not nailed it all down because I haven't got the property yet  smiley

    But it all comes down to the price that we can negotiate on the property.  If the numbers don't stack up we will walk away.  No sense in over paying for the property. 

    Derek your questions have helped me feel a bit better about the putting in an offer because I just realized that I have done a quite a bit of due diligence.  Still scared but I know if it doesn't work out at least I have given it my best effort. 

    Now when I can expect you Derek to make a trip to Melbourne for my exciting and extremely fun painting party.  (If I get the property) It will be a BYOP (Bring your own paintbrush) affair. 

    Thanks all!

    Profile photo of N@than[email protected]
    Participant
    @n-than
    Join Date: 2010
    Post Count: 241

    Sounds like you're ready to go!

    Fingers crossed you get the property for a good price!

    Profile photo of Ace_MythAce_Myth
    Participant
    @ace_myth
    Join Date: 2012
    Post Count: 3

    Hi everyone,

    I am new to this site and am trying to get some thoughts/ideas on a couple of things for a friend.

    My friend bought a unit to live in about ten years ago, then after 4 years decided to move but keep the unit as an investment. She is now at a point where the original mortgage is almost paid off and is thinking about buying another investment property.

    Should she set up a company or trust at this point and transfer ownership of the first property into the company/trust or can she just buy another property in her own name? What are the tax/legal implications?

    Thanks in advance

    Profile photo of Ace_MythAce_Myth
    Participant
    @ace_myth
    Join Date: 2012
    Post Count: 3

    My apologies, should have started in a new thread

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi Jewel,

    Look I am the first to admit I am not a renovater so take what I say with a grain of salt.

    I suggest you slow down a little. While some people are very successful at renovations there are others who fall over through poor research, over capitalising their reno and not getting the return they thought, bad buying and so on.

    By your own admission "We have found a unit we would like to buy but it is a bit of a fixer upper.  We have never renovated anything on our life!"

    For what it is worth now is the time to look at the whole picture before you leap off the renovation cliff.

    What skills do you have?

    How are you researching an area?

    Why this property?

    What improvements do you intend making to this property?

    How much will they cost?

    What improvement to property value will this realise?

    How long will it take to do the work?

    Can you sustain this property without tenants for this length of time?

    Will you do it all yourself?

    Hire tradies?

    As I said from the outset I am not a renovator but these are some of the questions I would be asking myself.

    Maybe give the forum an indication of the nature of the work you see being involved in tis fixer upper. Might help with some of their comments.

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi Jewel,

    Sounds like you have done a lot of work – well done.

    Have you obtained an indicative value for the property once the work is completed? While it sounds as if you have done a lot of the preparatory work you do need to have some idea about what profits & rental increases you will achieve with the work you intend to do.

    Maybe set yourself an improvement target as a benchmark. This could be something as simple as we want to double our investment – that is spend $20K and improve value by $40K. As I said earlier I am not a renovator so I am not sure what is considered reasonable.. Maybe some of the more regular renovators can provide some guidance for you.

    Having said that bear in mind you are starting out so you may not be able to achieve the lofty heights others manage to achieve but, you have to start somewhere.

    The only other comment I would make is that I do recall renovating our home (come investment property) many years ago and one thing led to another and before long we had pretty much 'touched' everything in the house at some stage. What was financially profitable, a waste of time or neutral I have no idea.

    Hope this helps.

    PS I'll paint yours if you paint my Melb place.

    Profile photo of Jewel47Jewel47
    Member
    @jewel47
    Join Date: 2012
    Post Count: 27

    Hello Derek,

    I have looked at post value and set targets realistically. So for every $1 invested the value will increase by $2.  It is certainly quite achievable for the area. The unit value would sit within the average range.   We are not trying to renovate and make the unit the most expensive around.  I also have taken a conservative approach to potential improved rental rates. 

    The hard part is trying to get the owner to be realistic. He was asking the same price as what you would pay for a brand new unit.  So I have negotiate a good price. But I haven't put al my eggs in one basket. I am still looking for another property in case he thinks his unit is magical. 

    How about you paint my house first so I can learn. One day that line is going to work, lol. 

    Thanks!

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539
    Jewel47 wrote:
    I feel like I already know everyone on the site!  I often speak to my hubby and say, well "TerryW said", "Jamie stated", "Jac made a good point about", "Richard suggested".  He thinks I am talking about people I know, lol.

    Hahahha!!!!!!!!!!!  Brilliant!  One day there shall be a who's who of pi.com party and faces can be put to names.

    It is true that you need to be sure you don't overcapitalize on costs, but it is not black magic.  I am sure you can create a spreadsheet with a basic list of things you intend to do in the reno and what each thing will cost.  You can also wander around Bunnings just staring at all the products they have.  You'll soon start to grasp what products are available and what they cost.  Bunnings also has staff that are happy to talk to you about your particular requirement and offer an opinion on how you'd go about doing it.  They'll even walk you to the aisle where the relevant products for the task are located and point to them.  Easy.  smiley

    I'll give you a tip about reno parties… if you put on a barbeque, people will come.  They'll be dressed in reno attire, and they'll even bring some tools and gardening equipment along.  Why not.  It's part of the Australian way.  Helping other people get their first home on track.  Who cares if it an investment property.  Same same.  Helping other people who are starting out and a bit unsure.  A friend of mine was shocked to see 30 of her buddies show up to help her at her reno party… and all it cost her was a few sausages and hamburgers, and it was a very fun day for all that attended.  Let us know when your party is wink

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    ps if this guy is being that unrealistic about price, perhaps an education is in order? I wonder if he would become more realistic if other people started offering him even less than what you are offering?  wink  wink

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

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