finance for Reno on Investment Property

Gidday All

Im new to the forum so I welcome anyone who can pass on some threads that will let me know the answers.

I have a home we live in.
We have an investment property
Im looking to buy another investment property (or I might PPOR) that Im thinking I may buy and reno to sell to make some $$.

Questions are
how do people fund the reno other then using there own cash?
EG I can get the $$ to buy from the bank, they are ready to sign but i dont have the cash to fund the reno yet.

Im looking in to going full time renos and property investment in the coming months/years, so long term if anyone has any experience with being full time doing this type of stuff love to hear your thoughts.

Thanks

Rob
 
They either set up a LOC or another Loan with offset facility attached then draw down as funds are needed.

I hope this helps.
 
Ok Understood and thanks for the info

But can this be done to proceed at settlement or very close after??

Or do most use spare cash to do the reno early on?
 
Hi Rob,
R u going to do the renos yourself mostly, or hire others? Makes a BIG difference about how much money you will need and how you should go about getting it...
JB
 
Gidday Bradje
I was a carpenter by trade in the 90's and I have a dad who can do most things and pretty much anyone can paint!
The plan is to someday go fulltime EG most days spend on site and get the reno done so I can get it back on the market and make the $$ from it.
I would look for houses like the one I did in 09
Bought for 278k in Jan 09
I spent 11k on the reno and did about 80% myself
It was valued at 370k in Sept 09, if I turned this one over I could have made some good $$ in approx less than 3 months.
(The reason the reno was slow was because I was living there at the time and working 2 other jobs. I only started the reno in Late July and If I had a fulltime run at it I think it could have been done in 3-4 weeks.)

But what Im thinking is how do the banks loan you the $$ when you have not got a fulltime job for them to feel like they can fall back on??
 
The short answer is they dont. You may be able to get a low LVR loan for the purchase. You can then, after settlement, approach the bank for a new loan if you have a fixed price contract for the renovations. the bank then gets a valuation off these plans and lends you a percentage of the valuers opinion.
Its time to talk to a broker or lender to get an idea of whats possible for your specific case. From what you have said on here, unless you have borrowable equity from another source, you might have to stick to small renos you can fund/do yourself to start with until you have the cash.
Most people doing these 'flips', buying run down properties, renovating and selling for a profit, use their own cash to fund the reno's initially, then either sell the property or refinance to release the increased value afterwards. Getting finance first is another layer of complexity/time and risk.
Also, from a tax perspective you cant claim the CGT exemption for this sort of development, the profit is simply added to your taxable income for the year.
 
Mooney,
You might want to consider how much of that growth was from "natural" growth and how much from your reno.

No disrespect, and you very well may have done a fantastic job, but in a rising market, sometimes it's the time, not the reno that makes the difference.

Cheers.
 
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