renovating/investing for a job

Hay guys i was wondering how many of you out there invest/renovate for a living.
I would like to try the renovating for a living path but dont know how to get started, i am finishing off my first ip which i will hold on to due to nice gearing but would like to renovate/flip/invest full time.

One thing moving me to this is the time it cn take for a propper reno when you DIY it.

appricate the info guys,

thanks

do you have enough of an equity base/bank account to do it?

i.e can you hold the mortgage, pay for the reno costs and bills, not draw a wage and survive for 6 months?

That would be the first hurdle for me.

Cartoon said:

Hay guys i was wondering how many of you out there invest/renovate for a living.
I would like to try the renovating for a living path but don't know how to get started, i am finishing off my first ip which i will hold on to due to nice gearing but would like to renovate/flip/invest full time.

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Hi cartoon,

Property investment is full time (mentally) work for most of us. I go to work so that I can pay for my negatively geared properties for sometime.

Cheers

Hi Cartoon,

This was discussed extensively here:
http://www.somersoft.com/forums/showthread.php?t=41527

You'll get opinions from both the Yes & No camps.

at the moment i cant afford to, being 26 and only just finishing my first reno and hold place. altho i have spent about 10k including lost rent and getting about 30k back.
Im more looking for how i can get to the stage where i can can afford to reno full time.

I was guessing u get some reno/hold properties and draw on the equi untill your in a good position for a reno sell place. or reno/sell n pump it into your hold properties/next deposit.

many options but what actually works i have no idea. I cant afford to buy a place, reno n service the loan with out my day job. obviously this makes the reno a lot longer than it should so thats y i was interested.

Cartoon said:

at the moment i cant afford to, being 26 and only just finishing my first reno and hold place. altho i have spent about 10k including lost rent and getting about 30k back.

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That's a good return - you should be getting $2 or $3 back in value for every $1 spent on a reno.

However, that $20K "profit" you just made, if you sell (as in a buy-reno-sell scenario) will be erroded away to almost nothing by:
REA commissions
legals
holding costs during the selling / settling period
tax
which is why buy-reno-hold-refinance equity out for next deposit works so well by comparison.

The only way I can see to make buy-reno-sell work, is with much larger numbers where the costs of selling & holding are much lower by comparison to the value add.

well my other option was to renovat and hold, draw equi as long as there positive geared places and keep doing that till my PPOR or small developments r paid for by my eqi lol.

I know cash is king and its all about getting that cash which is the hard part! so im trying different ways to get there.
This was also my first reno and i had never laied a tile or installed a kitchen ect before. i am a draftsman so i knew how its goes together on paper.
I enjoyed my reno and know where i went wrong ect and could have gotten a better return if i finished sooned but such is life. I plan to also develop one day as i belive thats where the real cash is.

But who are you going to get to lend you money for buying the next one when you have no work income?

Gools said:

But who are you going to get to lend you money for buying the next one when you have no work income?

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Good point. I don't have any problem getting finance for IP's at the moment because I have a job. Lenders love 2 things - payslips and equity in other property. They are the keys to the kingdom at this stage in my investment life cycle. Once I give up the day job, I'll find it much harder to get finance, so I'm going to go take that into consideration before I pull the pin.

Just finished reading "From Trash to Treasure" by Cathy Jane Pearce I think her name is.

All about this type of investing. bases her strategy on making your money when you buy, so buying well below moarket value at best, or market value at worst. Also varies her strategy depending on the property, location etc. So some are renovate and sell, other hold etc.

good luck with it all

farmilor said:

Just finished reading "From Trash to Treasure" by Cathy Jane Pearce I think her name is.

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Talk to some of the people who bought into her projects and you might find that they reverse that title somewhat.

farmilor said:

Just finished reading "From Trash to Treasure" by Cathy Jane Pearce I think her name is...............

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Good Luck indead. Pop her name into Google News and see how many times she has been in court over the last 12 months and also see how broke she is. Not one to use as a mentor at all.

Gools

oops ...... well there you go

better retract my last comments.

Will be returning that one to the library quick smart!!!

My strategy, for what its worth, is thus:

Buy, develop or renovate, hold if neutral or positive geared

And i think it depends. if i can buy and reno and add enough equity that a sale makes sense I will sell if the property is negitively geared - i dont want all that negitive gearing reducing my profit.

But if it is neutral or positive then I will hold. The deals are out there, you just need to find them. i just got a very run down development block which is slightly neg pre tax. the idea is to hold for 2 years, get plans, build, sell one keep 2 (or keep all 3 depending on the enviroment at the time).

Holding costs over 3 years is about $11k on a cash basis (i.e before tax benefits) all up so not a hard hold.

Basically I am aiming to have this replace my full time income, so i need to concentrate on deals where i can value add and that wont require additional funds to keep going - i.e a cash flow neutral portfolio.

Then I can look at LOE to supplement income etc.

So more to the point, i would aim at doing it in your spare time (look at some of Nathan's deals as examples) until you have enough base to go it alone.

Aim for 30 if i were you - hopfully by then the economy will be back and the banks nicer to developers!

Yep....no income no serviceability...even if you have a huge positive geared property porfolio.

Banks think income from a job is safer than rental income even in a recession!

Go figure!

Rob Williams said:

Good point. I don't have any problem getting finance for IP's at the moment because I have a job. Lenders love 2 things - payslips and equity in other property. They are the keys to the kingdom at this stage in my investment life cycle. Once I give up the day job, I'll find it much harder to get finance, so I'm going to go take that into consideration before I pull the pin.

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I am note sold on LOE....time will tell.....but I think this strategy over the next 2 years is going to get a whole lot tougher.

The new strategy might be CF+ positive property...this strategy is the future.

The old guns like Margaret Lomas and Jan Somers know this well..it works in any environment because is is based on sound business fundamentals.

Belu said:

Then I can look at LOE to supplement income etc.

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cartoon, great idea, however... i dont mean to be pain in *** DG camp, however getting new loans with no job is pretty hard in credit crunch...

do as a hobby yeh.... it will be a good side income.

if you can get the cash from some oher party then thats a great goer idea... trying to ball roll this at present myself. there are numbers out tehre, but you must have the balls, and a back up plan if u cant flick it...

oh also, i know ur ip is in my area, and i remember your purchase when u bought it, i was wondering if it is in M*T*H*EN st??? fill in the blanks... i always wonderd, coz i think we may share the same strata plan on this one.

if im right then i get JD n coke off someone for having good memory, and product knowledge....

Is the place you have just finished the one you talked about in this thread and started back in June last year?

http://www.somersoft.com/forums/showthread.php?t=42586

If so wouldn't you have lost about 10k in rent excluding all of your time and money spent on materials. I think you would be upto about 30k by the time you added all of these up.

I'm not having a go at you but from my experience you need to put a price on everything including your own time if doing work your self. It a false economy to do say tiling yourself if it takes you three times as long a pro and your only working weekends. It makes much better sence to pay for the job to be done and get the place making you money asap. My experience is that I have only seen potential for making quick money from renovating in a boom or doing high end houses but it invloves more risk.

Also there are legal issues in most states with physically doing the work yourself or acting as a builder and organising subcontractors to do the work for you. If you do renos yourself with a plan to sell and your not familiar with how to do things in line with the BCA, expect to get alot of questions when trying to sell and they have building inspections done.

I'm hoping to go 'pro' soon
Just buying as much as I can before I leave the day job, I cant think of anything I'd like to do more than purchasing property for a living.

property investing full time flipping.

did you read some basic books like jan somers books, easy reading very informative and comprehensive

also a book i liked by helen coliers was 47 biggest istakes made by property investors and how to avoid them. again easy reading and makes some good points.

steve mc knight has a huge cd kit with details of how to do what you want to do . i wanted to buy it at some stage but couldnt find it second hand and didnt want to pay full price.

a big thing is being organised to renovate in a basic way quickly and then sell or rent asap to get money coming back asap.


i know someone who has done this for decades as his living
he started out buying a small 1 bedroom flat which he and his wife lived in. he fixed it up and sold it and kept doing that with bigger and nicer properties.
He has a keen eye for what to do with a property and i even saw him renovating a shop dividing it into 2 shops and getting then double rent.

people do the same with houses. the reno kings are brilliant for teaching ways to do this ways to add a bedroom back into a large living space, or making a garage into a bedroom , or putting a house on the front or back of a property so that part can be onsold or sold for higher or rented for higher.

you need to know what each area needs the type of families people living there and style that appeals to know what to do wear for best return and success.

if you go to the property expo you can get cheap or free online tickets in the weeks before and you can sit all day and learn alot of the basics of property investing .



good luck

francine.