how to make $110k 12mths without quitting my day job

Erica;1239000I have now employed Weeks and Macklin [/QUOTE said:
I will be interested to see what they quote regarding your footing allowance.They are notorious at screwing extra dollars out for extra footings.
 
I will be interested to see what they quote regarding your footing allowance.They are notorious at screwing extra dollars out for extra footings.

true that, my slab was underquoted by $12k for the last build, but I don't plan to build this one, I'm just onselling this block as a house and land package, I went with Weeks building group because they offer free advertising and free agent for selling if they get a build contract out of it
 
THats extremely cheap, what's the catch? thehey must be making money elsewhere on your project

SA prices generally are a fair bit cheaper than WA ones, or so I've found so far with my own projects / comparing with others.
 
true that, my slab was underquoted by $12k for the last build, but I don't plan to build this one, I'm just onselling this block as a house and land package, I went with Weeks building group because they offer free advertising and free agent for selling if they get a build contract out of it

I didnt know they did this,great to just sell the dirt though.How does this work though with settlement?
 
How does this work though with settlement?

Not sure, haven't listed the block for sale or signed any contract yet with Week's agent, I'll post the details here when I do, figured I'd be best to have council approval on, at least, the land use before listing .
 
Thanks Erica I'm really interested in what your doing. I'm going to need a lot of help being my first but you've made think I can. Got to be positive jump in and if it doesn't work so be it.
 
Great read Erica, good luck with everything, I am sure it will work out. Having been through some minor reno's lately I can feel your pain. Sometimes it seems like the problems are never ending, you fix one thing, then something else happens. Look forward to seeing the updates.
 
Erica good for you, keep up the good work, experience is the only way to learn, good and bad just hang in there.

Copper pipes - I know all about this - in USA people steal the copper from HVAC units (Aircond) that are located outside the homes. We actually have to pay around $400 for lock up cages to prevent this, does not always work though:eek:
 
Hi Erica

Fantastic thread. Love your candid account of your project.

I recently did a small renovation to my first investment property. Much less capital outlay / scale / risk compared to you, but I still found it very challenging at times. It's great to hear about your plan, how you are executing it and not letting obstacles get to you.

I saw your revised figure which estimated your gain at $55k. I note the purchase price is around $450k, so that's just over 10% profit? I'm not sure what the market is like in your area, but in Sydney you can probably achieve 10% return a year just by holding it if you pick the right area and if you refinance it at the end of the year (rather than sell) you don't need to pay tax. Just a random thought. I've probably missed taking into account a whole bunch of other costs and it might not be feasible for you to buy in Sydney. I love what you are doing. I've always dreamt of taking on a development project like yours. I wish you all the very best of luck and hope you make lots more profit than your current conservative estimate :D:D:D

Look forward to more updates and can't wait to check out the final result.

Cheers
 
Hi Erica

Fantastic thread. Love your candid account of your project.

I recently did a small renovation to my first investment property. Much less capital outlay / scale / risk compared to you, but I still found it very challenging at times. It's great to hear about your plan, how you are executing it and not letting obstacles get to you.

I saw your revised figure which estimated your gain at $55k. I note the purchase price is around $450k, so that's just over 10% profit? I'm not sure what the market is like in your area, but in Sydney you can probably achieve 10% return a year just by holding it if you pick the right area and if you refinance it at the end of the year (rather than sell) you don't need to pay tax. Just a random thought. I've probably missed taking into account a whole bunch of other costs and it might not be feasible for you to buy in Sydney. I love what you are doing. I've always dreamt of taking on a development project like yours. I wish you all the very best of luck and hope you make lots more profit than your current conservative estimate :D:D:D

Look forward to more updates and can't wait to check out the final result.

Cheers

Hindsight is a wonderful thing. If I'd bought 12 months ago I would've made 10pc in Sydney but if I buy today I highly doubt I'd make 10pc in the next year.
 
but in Sydney you can probably achieve 10% return a year just by holding it

Ahhh, but hindsight is such a wonderfull thing...

If you had bought a $600k median property in Sydney in 2004 your investment would still be worth only $600k 5 yrs later in 2009 (0% capital gain).

But had you bought a $300k median property in Adelaide in 2004 it would have been worth $100k more in 2009 (33% capital gain).

house-prices-sydney-leaves-melbourne-dust.jpg
I pinched this graph off Alan Kholer

So you see, each city has it's own cycle, and I'm afraid I don't have a crystal ball, but I'm taking a punt that I've bought at the bottom of the cycle in Adelaide, how long it will be until Adelaide has it's turn for some significant capital growth, I don't know..., in the mean time, I'm impatient, so I'm generating my own, even if it ends up being only 10% gain in 12 mths.
 
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Project Update

Thanks for all the words of encouragement peeps.

The reno is soooo close to being finished now I can almost taste it, and the place is looking schmiko, has come up even better than I imagined, will be sure to post the 'after' pics soon.

Time line to get tenants in is now early January, just waiting on the painting to be finished and floors to be polished up last.

So how do my initial cost to profit estimates look now? Terrible :p
$445,000 Purchace price
$8,000 MLI
$25,000 stamp duty/purchasing costs
$60,000 renovation WTF!?! yep, final figures are in, all tradies bills tallied up and has come to exactly double my best effort at costing it up at the outset.
$33,000 subdivision (an extra $3k for the professional drawings which I wasn't expecting to need, as my last subdivision got approval with just a $400 concept plan)
$15,000 holding costs (slightly up as vacant longer and have drawn down my line of credit more to finish reno)
$586,000 TOTAL OUTLAY

$390,000 renovated house minimum resale value estimate
$270,000 vacant land minimum resale estimate
$660,000 COMBINED END VALUES

$74,000 ESTIMATED CAPITAL GAIN 12% before agent fees and taxes taken out, and assuming the market doesn't move up or down in the next 12mths. (Remember that nice round figure of 20% I so confidently boasted about at the start).

So peeps, you can see just how quickly things change, my first post was only 3mths ago, what is the moral of todays storey: Make sure you have a big line of credit available if you plan to undertake reno/subdivide/developments and/or large cash safety net.

Anyway, it is all a bit arbitrary really, I 'aint countin' my chickens before they hatch, gotta get em sold first, plently can change in a yr.
 
You've done an amazing job ....and if you happen to sell them sooner than the 12 month period then its actually a good dollar profit in a shorter amount of time. (can't remember when you bought the properties or maybe you plan to hold then longer than 12 months so u only have to pay half capital gains tax)
 
Ouch sorry to hear. Have you calculated how much profit will be after gst and selling costs?

We're there unexpected events with the reno or was it just under budgeted in hindsight?
 
Erica thanks for sharing I'm sure everyone on SS enjoys the read. It's great to see some true honest figures and stories. It might not be the 20% from the start, but isn't that the exact reason we shoot for 20% so there is still enough fat to make profit.

If they're minimum figures then you might be in luck, by the sounds you have done the renovation well which should yield good results for both the existing house and the vacant block (no one wants to be next to a crappy house)

All the best and goodluck with the finish, not far now.
 
Ouch sorry to hear. Have you calculated how much profit will be after gst and selling costs?

We're there unexpected events with the reno or was it just under budgeted in hindsight?

Hi Sanj
OK I'll do a little calculation exercise for everyone following this thread:

Calculating capital gains taxes on each property is rather complicated, the exact base cost split I won't know until I get the new titles issued and the council issues my new rate notices and valuations for the new vacant allotment plus the existing dwelling. But for the sake of this excersise, I'll apply the base cost split that the Valuer General came up with for my last subdivision which was 66% existing house, 33% new allotment.

66.6666% of my $586,000 spent is the base cost for the existing house =$390,666
+$12,000 agent fees and advertising, solicitor
=$402,666 is my calculated base cost
so in the eyes of the ATO I have actually made a capital loss on this sale of $12,666, and will apply a credit to any capital gain elsewhere. Therefor no Capital gains tax to pay and it is a old house so no GST.

33.3333% of my $586,000 spent is the base cost for vacant allotment= $195,000
+$1,000 solicitor costs- remember I am doing a house and land package with a builder who is offering free selling
= so $196,000 is my base cost for the land and if it sells for $270,000 that's a Capital gain of $74,000, now since I have not owned it for over 12 mths, ownership is as of new title issue only, so I get no Capital gains tax discount, so pay full marginal income tax rate, but also don't forget I am can offset the $12,666 capital loss from the house sale, so the total capital gain taxed ends up being $61,334, hubby an I are each 50% owners and, we are each in the of 32.5% income tax bracket +2% for Medicare, so we will lose a total of -$21,160 to the ATO in income tax, (and no GST for me as per my accountants advice- but get your own advice, don't just take my word for it)
(p.s. just to keep this calculation simple I'll say I haven't claimed any depreciation on the existing house/ otherwise this needs to be taken back off the base cost for when selling, but I actually will be claiming depreciation, obviously)
TOTAL CASH OUT $52,840

Are ya still following me, but I'm not an accountant, so if anyone wants to check my math your welcome, naaaahhhh, I didn't think so...
 
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unexpected cost blow outs

sheesh, where do I even start, some unaccounted costs as below, blame them on my inexperience plus a crap box of a old house
$1000 insurance excesses
$4000 electrical rewiring almost the whole house, nasty surprise there
$1000 to replace the floor boards under the lino which were damaged, nasty surprise there
$1000 plasterers (thougth I could do it myself, ran out of time, who was I kidding really)
$10,000 painter to do the whole house inside and out (thought I could do it myself with just a month off work, laughable really, tell her she's dreamin!)
$3000 more plumbing work than I expected (at $100 per hr no wonder all the tradies are driving new Hiluxes)
 
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